CA 111 Assignment 1 Rent vs Own

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Feb 20, 2024

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Bohrer CA 111 Assignment adapted from www.ngpf.org Is it Better to Rent or Own? Choosing to rent or own a home is often a difficult decision for most adults because of the differences in cost and the fact that each person’s financial situation and preferences vary. In this activity, you will use an interactive calculator, which takes the most important costs associated with buying a house and calculates a comparative monthly rent, to answer the questions below. Part I: Renting vs. Owning 1. What do you think are the advantages and disadvantages for renting and owning? List your ideas in the table below. Renting Owning Advantages Disadvantage s For the next part, an interactive calculator will be used from NerdWallet to help you with the analysis. On the right side of the website are two categories, Your Details and More Options. The case study will provide you with the information to help. Leave current boxes with the information provided if not given to you. Also, assume 12 months in a year and 30 days in a month. Part II: Case Study - Should Bill rent or buy? Bill is undecided about whether or not to purchase a home and is using this interactive calculator to help him make a decision. Bill works at a local financial services firm in Omaha, NE and plans to stay in the area for at least five years . The median home price in Omaha, NE is $200,000 (according to Zillow https://www.zillow.com/omaha-ne/home-values/ ). He has $32,000 available for a down payment and is wondering if now is a good time to buy. He doesn’t know all of the other variables in the calculator off hand except that he expects his maintenance costs will run about 2% per year and his utility bills are expected to run about $400/month .

Bohrer CA 111 Assignment adapted from www.ngpf.org Based on this information answer all the following questions 1. Input Bill’s information into the calculator and determine whether he should rent or buy. Insert a screenshot of your results below. 2. Fill in the sentence according to Bill’s results: If Bill lives in Omaha, NE for ________ years, and he can rent a similar home for less than $___________ per month, then renting is better. 3. Since Bill is staying in Omaha, NE for at least five years, it is possible that he will stay longer. Play with the “How Long Do You Plan to Stay?” slider and offer advice on how the amount of time he plans to stay Omaha affects his decisions to rent or buy. Write your advice below. 4. Use https://www.rentcafe.com/apartments-for-rent/us/ne/omaha/ to take a look at the rental market for apartments in Omaha, NE. Scroll through the available apartments for rent to get an idea of the cost for similar housing. Based on the average rent for apartments , do you think it is likely Bill will find a house to rent for less than his budgeted amount per month (you answered this in Question #3)? Explain your reasoning.

Bohrer CA 111 Assignment adapted from www.ngpf.org 5. Besides cost, what other factors should Bill consider before deciding to rent or purchase a home in Omaha, NE? Part III: Develop Your Own Case Study Using the case study above for Bill as an example, you will now make your own case study for a character. Note: use a different city, different price value, etc. 1. Get started by recording the information in the chart below. Each section of the chart aligns with the sections of the interactive calculator (the same one you used for Bill). You may want to use this opportunity to do an actual comparison for you or your family. Do not use the same information from above (other than those not provided): a. Which city and state will your character live in? b. What is the median home price in this city? (Use the search bar at the top of this Zillow Chart to find the data for the city.) c. How long does your character plan to stay in this living space? d. What are the mortgage details? (If unsure, use the default percentages & amounts in the interactive calculator) e. What does the future hold? (If unsure, use the default percentages & amounts in the interactive calculator) f. What are the tax rates? (If unsure, use the default percentages in the interactive calculator) g. What are the closing costs? (If unsure, use the default percentages & amounts in the interactive calculator)

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Bohrer CA 111 Assignment adapted from www.ngpf.org h. How much will your character pay in maintenance and fees? (Do not use the default amounts & percentages in the interactive calculator; change this to personalize your case study.) i. What are the additional renting costs? (If unsure, use the default percentages & amounts in the interactive calculator) 2. Using the information in the chart above, and using the Part II Case Study with Bill, write your own case study story in complete sentences below. It may be helpful to start in a similar manner to Bill’s case study above and provide information such as you did for Bill in questions 2 and 3. 3. Go back to https://www.rentcafe.com/sitemaps/average-rent-market-trends/ to take a look at rent trends for apartments in your case study character’s city . If your city is not available, use Zillow ( https://www.zillow.com/omaha-ne/rentals/ ) and enter the city you have chosen. Would you recommend the character in your case study rent or own a house based on the information you have found? Explain your reasoning.

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