Should We Buy A Duplex In Upstate New York? The Rent Or Buy Calculation For A Part-time Destination

We’re not actively looking to buy more real estate right now, but every week or so, I look at certain geographies I’m interested in – one of which is upstate New York near Albany. We already know the area because I helped a friend who lives there come up with viable alternatives when a rent-to-own deal went bad. There are several small towns clustered together, and as it turns out, there’s a duplex, walkable to the town center, in our favorite of the small towns.

A duplex within three hours of NYC for under $150,000!

We like the town because it has a bigger town center than the other small towns nearby, with shops, restaurants, library, post office, even schools within walking distance. The duplex itself is steps from the town center, making it ideal for me, since I don’t like to drive.

I’m amazed that you can still get habitable property within three hours of New York City for under $150,000. This duplex is 2 bedrooms and 1 bath in each unit with generous kitchens and living rooms. Both units are currently rented, with a longtime renter living upstairs. This renter has school-age kids in the home and has a small garden in the backyard – two good signs that they want to stay. This would give the duplex an immediate income stream.

We’re still waiting for information on both leases on the duplex, but we’re not as concerned about whether the lower unit tenant stays because our idea would be to keep the lower unit as a short-term, vacation rental. This would increase the revenue potential of the unit and enable us to use the unit for ourselves during trips to the Northeast.

It’s no secret that the Florida heat is punishing in the summer. Scott loves outdoor exercise – he wants to run a marathon in all 50 states and is getting ready for his next marathon in November (New Hampshire, here we come!). Ideally, we would spend June through August someplace where it’s cooler. Yet, traveling in the summer is chaotic and expensive. In recent years, we have avoided it and instead hunker down indoors all day – not a desirable or healthy alternative.

Should we buy or rent something we would only use part-time?

Buying a property solely for our summer use is too luxurious for us. However, since we’re looking at a duplex, there would be an upstairs tenant, as well as some vacation renters downstairs to provide income. That said, carrying a property (whether rental or residence) comes with expenses, such as maintenance, property taxes, insurance, capex, etc. That said, buying real estate means acquiring an asset that potentially appreciates v. renting real estate for vacation is 100% consumption spending with no possible return….

I found myself going around in circles on this, hence this blog to summarize the pros and cons for myself and perhaps to help any readers, wrestling with a similar decision.

On the Team Rent side:

1. We can experience different destinations each summer, instead of being locked in to returning to the same place again and again;
2. Renting is simpler from a time and money standpoint. We enjoy our summer and don’t have to worry about the unit for the rest of the year. We pay the summer rental fee, and no other costs;
3. The money we spend to buy could instead be invested in a CD, with the interest easily paying for a summer rental. maintenance and other things. For example, let’s say the purchase is $150,000 (though it could be more with closing costs and startup expenses to get the unit ready for guests). There are some CDs and online savings accounts paying 5%, which gives you $7,500 of annual interest, or $2,500 for each summer month of renting.

On Team Buy:

1. Owning is more comfortable than renting. There’s nothing better than sleeping in the bed you choose with the furnishings you pick out than even the comfiest hotel. This has proven to be the case when we return to our Condo Boom in Tamarindo, Costa Rica; Plus, the Northeast near New York City is a destination we know we’ll be coming to regularly – if not every summer, then most summers.
2. Buying in the North gives us a long-term climate hedge, as average temperatures in the South continue to rise. The walkability of the town is another hedge on the aging US population and the increasing desirability of real estate assets in locations that don’t necessarily need a car for daily living;
3. While future appreciation is always speculative, real estate has been our best-performing asset by far.

The rent v. buy arguments cancel each other out, and we’re deciding based on our priorities

With good reasons for both buying and renting, ultimately it will come down to what our priorities are right now.

Variety, simplicity and liquidity for Team Buy? Or comfort, hedging and appreciation for Team Sell?

We’re waiting on some additional information before making our final decision, and we’ll post about it in our newsletter, so make sure to stay in touch there!