We have a solid plan in place to purchase a house within 12-18 months. We’re on our way to having a substantial down payment within that time frame. In the meantime, we’re still renting and that rent is going up. When we first found out our rent was going to increase $87 a month, we immediately began discussing the idea of moving someplace less expensive. We even checked out a very small house that was A LOT less expensive than our apartment. However, that rental unit was asking for a hefty deposit and didn’t have a garage, which was an issue.
We weighed the pros and cons of moving to a smaller, cheaper place and are still a bit on the fence.
- We could save an additional $400 – 600 each month (that’s a huge bonus)
- We’d possibly increase our chances of purchasing a house sooner than our time frame
- We’d be more motivated to get the heck out of a smaller place
- Our rent increase will push our income to rent ratio close to 40%
- There’s no way in he!! that all our furniture would fit in a place smaller than 1,200 square feet without a garage – we’d have to store it (additional cost: $100 per month)
- Deposit on a new place would range from $500 (though we’d get our $1,500 back from our current place) to $3,600 (that’s what the house we looked at was asking for)
- We’d have to hire a moving company this time which would increase our costs (estimating $350+)
Once we crunched the numbers, our rent increase over the next 12-months will cost us an additional $1,044. If I factor in the cost to move, that amount decreases to $694. That’s still money that could be saved towards a down payment, but the hassle factor is also a deal breaker. Most of the rentals we’ve found where we’d save enough money to make the move worth while are very tiny, which means we’d be storing quite a bit of our belongings. Though we haven’t completely ruled out moving just yet (we have to decide within the next day or two), it’s looking like we’re staying put for now.
What would you do?
Hmmm….. I suppose for me it depends on how VERY much smaller the other rentals are and how much else I have going in my life — as the hassle factor does definitely have value!
From a purely financial perspective you’ll save a little over $3,000 a year by moving. I figure monthly decreased rent at $400 — less one-time expense of $350 to move and monthly expense of $100 for storage rental. Over 12 months that works out to $3,250.
BUT other factors come into play like your time, neighborhood safety, and finding an enjoyable balance in life. You’ll find the right answer for you, no doubt.
@Jean – The size would decrease to almost half, which is a big deal for us. Our strategy is to just make more money over the next year to cover the rent increase.
Can you negotiate with the landlord? Maybe get a little lower rate than they asked.
It’s just a huge pain to move. Getting a storage unit would suck too.
@Joe – That’s a good point. We will try, but we’re living in a complex owned by a large company that owns a bunch of other complexes. We’re paying less than the “market value” as it is since they raised rents by $200 on our units over the past year, but could only raise us 4%. Los Angeles housing is insane!
I would try negotiating too, telling them it is just for 12 months. The cost of vacancy is big and they should be happy to secure good tenants for a year.
I’d stay. The hassle isn’t worth it since you are only planning to stay about a year. I wouldn’t want to move twice in the next 2 years.
I also agree with Joe – can you negotiate? As a landlord myself, I’ve lowered/not raised rent because the tenant was a good one that I wanted to keep.
@Jon – We’ll try to negotiate, but we’re still paying “below market rate” for our unit compared to the other units. The Los Angeles area rents have increased by 38% over the past year – housing is just totally out of control!
Unless there is a major price difference it probably isn’t worth it just a few hundred dollars. Moving is such a hassle and to do it twice in a year is rough. Usually I like to slow things down if I can. Usually I don’t have regrets slowing things down, but I often have regrets by jumping too soon. Just have to feel comfortable with what you want to do. Gut feelings usually are the right ones.
@Lance – My gut tells me we should have moved last year! Oh well, now we’re committed to another year. Hopefully, we’ll be able to make a final move in the next 12-16 months!
I’ve been considering moving for a few years now…. The main thing that’s stopping me is that my monthly payments would probably double. I’ve owned my house for almost 8 years now so my monthly mortgage has gone down because I refinanced at a low point, plus I have 2 roommates whose rent has only increased over the years. Hence my portion is significantly less than the market rates these days. I just REALLY want to not have roommates anymore. One day I’m sure I will prioritize having my own space that I don’t have to share over the money saving aspect. I’m just not sure when that will be. If I were in your situation I would probably stay put personally. Moving twice within a years timeframe would be a huge hassle to begin with and I think it would take a larger financial motivation to get me to want to do that.
I wouldn’t move if I knew I would be moving again in the next couple of years. Having said that, have you had any luck in locating a rental with a garage? It might be a good time to declutter and get rid of some things! Best of luck to you!
@Paul – The thing is that we want to keep all of our furniture for our “house” so there really isn’t anything to get rid of. Our current storage unit downstairs holds our camping equipment and bikes and that’s it. The only way we’d get rid of things is if we made a drastic lifestyle change and said we didn’t need a dining table, coffee table or curio cabinet. But that’s not happening anytime soon.