Using 'The Rule of 15' to Help Fence-Sitting Homebuyers

Due to the current changing and volatile nature of our national and local real estate markets, determining whether to rent or to purchase a home is a topic of conversation that a lot of families are having today. In order to make a good decision, you’ll need some research tools, trusted professional opinions and information, and a plan of attack.

Are you familiar with "The Rule of 15?"  It can be a useful tool to assist in the process of figuring out whether it makes sense for your family to rent or to purchase a home.  

Here’s how it works: Assume that a family is looking for a three-bedroom home or condo:

1. To begin your analysis, you’ll need to research the current rents for the area, community, or subdivision that you’d like to live in. Some convenient places to do your online research might be Zillow.com or Trulia.com. Another great source of information would be your local, preferred real estate professional. Do the math and calculate what you would spend on rent for a year. (For example:  $1000 monthly rent x 12 would be $12,000 annually.)
2. Next, take that annual figure and multiply that number by 15. (For our example that would be $180,000)
3. For the next step, your real estate agent will be an excellent asset! Now, you’ll need to find the current purchase pricing for the same size comparable homes, in the same area, that you did your rental research for.    
4. Compare your "annual rent x 15" number with the median home prices for like homes in your desired area or community. If the figure for home buying is significantly higher than your "annual x 15" rental figure, that particular neighborhood or area’s home values may still be in a decline. For that area or community,  it would probably make better sense to rent rather than buy, if your heart is set on living there.   

Don’t forget that the time that you plan to stay in your home, once you buy, is also another key factor to take into consideration when making this most important decision. If you plan to stay in your Manatee County home for 10+ years, buying in this opportunistic real estate market with ample inventory, distressed property deals, and overall great pricing is most likely your best bet. 

I would also be remiss not to also point out that mortgage rates are also, currently, the lowest they’ve ever been, since the government first started keeping track back in 1977!   

Utilize both online resources and local real estate and mortgage professionals with targeted expertise for Manatee County, along with the "Rule of 15s" tool that we just discussed, and you’ll have a clearer picture of the facts. 

That just leaves on thing ... your decision! Buy or rent?

Crunch the numbers, look at the facts, and then make the best decision for your family and for your personal situation. Don’t sit on the fence, wringing your hands, wondering if you should make a move to buy a home. Find out, before you miss out on a historic opportunity to "buy low." Do the research, do the math, call your agent, and find out for sure.

Here are a couple other cool tools provided by The New York Times and HGTV’s Front Door to help you do a more detailed analysis:

BUY VS RENT CALCULATOR

DEMOGRAPHIC AND REAL ESTATE DATA