We currently live at 45 Sycamore Ave, unit 1528. Our rent is $1,500 per month and, as a tenant, we are responsible for all utilities except water and sewer. Our lease expires in two months and were trying to decide whether to remain renters for another year or buy a condo in the same complex. Another unit in the complex, unit 638, is being offered for sale at $219,000.

Both units have 3 bedrooms and 2 baths and a single-car garage. Both units have the same 1,221 square feet and have similar interior finishes. The HOA fee for the apartments is $400 per month and includes water and sewer, in addition to the amenities such as the swimming pools and outdoor barbeques. Landscaping and exterior maintenance are included in the HOA fee.

We like the location of the Concord and have lived there for two years. It is a fifteen-minute commute to MUSC in the morning and it close to several grocery stores, restaurants, and bars in the West Ashley area. We expect to be in Charleston for another five years as we finish our educations at MUSC.

We have savings of $100,000 and would have to take out a mortgage to purchase the condo. It has been recommended that the down-payment should be at least 20% of the purchase price to get an attractive mortgage rate. We have our savings in mutual funds, so we would need to liquidate about half of our savings to make the down payment and cover the other expenses. We expect to take a 30-year fixed-rate mortgage and current rates are 3%.

Closing costs: We expect closing costs such as a home inspection, legal fees, title search and title insurance to total about $5,000.

Property Taxes: We expect property taxes to be $1,100.

Insurance: We have a quote for homeowners insurance of $500 on an annual basis.

Maintenance: We are factoring ongoing maintenance into expenses. One popular rule is that you should set aside 1% of the purchase price for ongoing maintenance. However, because the HOA fee includes exterior maintenance and landscaping, we are only going to assume 0.5% of the purchase price as ongoing maintenance.

Assuming we are expected to stay in Charleston another 5 years, should we rent or buy? What if we were only going to stay 2 years? Does it matter what our view of future of home prices and rents are?

Create a spreadsheet that shows the before-tax cash flows for owning the house, mortgage payments, rent, after-tax cash flows and the after-tax IRRs. Use the spreadsheet to make a recommendation to the family. Use the template that I have created.

Conduct all your analysis in a single Excel file

Answer rating: 100% (QA)

Rent vs Buy Analysis Condo in Charleston This spreadsheet analyzes the financial implications of renting vs buying a condo in Charleston considering a ... View the full answer