Jan
11
Rent or buy house in a town that is based around a single big company ?
By
I live in a town/ small city with only 1 big company nearby.
Almost all other buinesses in this area do support functions which tells me if for some reason this company decides to move to another place or shuts down this plant, the real estate will tank and the town will become a ghost town.
Does renting make more sense in such an area even if I plan to stay here for the next 10 years?
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2 Comments
January 14th, 2010 at 11:14 am
I’d look at the possibilities in a risk/reward scenario. Sure, you could make a little bit of money if you buy a house, live there for 10 years and then move onto something different/better. You could also buy a house right as the company goes under, or moves 100 miles away for cheaper site fees and lower wages for the workers. If that happens, you’re screwed. Unless you’re a renter. I’m pretty conservative when it comes to financial risk, so I would probably rent in this scenario.
As a renter, you are missing out on equity, but you’re also insulated against serious hardships if this company is removed from the equation. Google the “current Detroit Housing Market” if my explanation doesn’t make sense.
January 16th, 2010 at 11:01 am
Renting is a real option under these circumstances or buy the least expensive properties and rent those out for the most you can get from a market standpoint. Consider the leases that you write if you go for a more moderate rental rate-perhaps the option to renew could be for a longer timeframe and if there is a big town within reasonable driving distance you may still be OK.