Should I buy my house from my landlord?
Never buy a house unless you really want to buy that house. If you want to buy a rental, look around and find the right rental to buy; saving a few hundred on moving costs isn't a good reason to buy the wrong property at the wrong price. Can he legally break your lease if he sells the place?  If not I would just keep renting. It doesn't sound like you love the house and you plan on moving or would prefer a different type of place long term. Unless you yourself plan on getting involved in being a renting it out to others in the future - just rent and move on at some point. If he can break your lease upon sale of the property then I'd be casually keeping an eye out for another place to rent if that happens. There are probably thousands of houses that you could buy. If you want to buy a house, it is very unlikely that the one you are renting right now is the best possible buy.  Usually people living in the houses they own are more interested in the quality of their property and the quality of their neigborhood than people who are renting, so I'd say that you are generally better off finding a home to buy in an area where the majority own their homes.
It depends on the terms of the lease, but it's hard to imagine a lease that would allow to do this unilaterally with no strings attached.  That means it actually depends not on how much you like your landlady, but on how much she likes you. In general, by signing the lease you assume a contractual obligation to pay the rent every month for the entire term of the lease.  In theory, you can be sued if you don't do that. In practice, a lot depends on your relationship with your landlord, as well as the rental market in your area.  If the landlord can easily find a replacement tenant, they may be willing to allow you to leave early.  If the rental market is slow, they will be more likely to hold you to the agreement.  Obviously, if you have a good relationship with the landlord, they may be more inclined to go easy on you. As far as telling your landlady you want to terminate the lease early, unless she's a particularly nasty person, you can just go ahead and tell her you'd like to leave early.  What you can't do is actually stop paying rent.  If you're on reasonably good terms with your landlady, you could just tell her your situation and say you'd like to move out.  She may be willing to work out an arrangement where she lists the apartment while you're still living there, allows prospective tenants to view it while it's occupied, and then has you move out if and when someone else wants to move in (e.g., at the end of the month).  Again, exactly how this works will probably depend on the rental market. Assuming you're in the USA, here is a useful page with some info on breaking a lease.  As mentioned there, the legal details vary by state. I don't know enough about taxes and real-state in the Netherlands to be super helpful in determining whether or not a rental property is a good investment. One thing for certain is that there's some risk in spending everything on a rental property. It's wise to have some buffer, an emergency fund of 3-6 months expenses. If things got dire, you'd still need to live somewhere until your tenant was gone, and you'd want to be able to handle any major repairs that crop up. So, even if it is a good idea to buy a rental property, you should probably wait until doing so doesn't leave you without a healthy buffer. As for owning a rental, you described a scenario where you'd get 6% income on your investment each year if there were zero expenses associated with owning the property. Are there property taxes? Is there a monthly cost to maintain the building the apartment is in? Are rental incomes taxed more heavily than other investment income? Just be aware of the full financial picture before deciding if it's a worthwhile investment. I'd talk to a solicitor and see if you can structure the purchase in a way that breaks the property into three pieces. One would be the freehold of the whole building, one would be a long lease on the downstairs part (on which you would get a residential mortgage) and one would be a long lease on the upstairs flat (on which you would get a buy-to-let mortgage). Since there's essentially no price premium for freehold as opposed to long lease, you should be able to raise enough money from the two mortgages to fund the purchase. If it was me, I would consider selling both properties.  Unless of course your renters from the first house are very, very good; and you have a good handy man in the area.   Managing real estate from a distance is tricky, and $400 per month is not a lot of wiggle room.  You would be taking on a lot of risk with only 40K in the bank, a 200K salary, three mortgages (one likely a jumbo) and a student loan.   Yea, if it was me I would sell both. "It's a decision that only you can make. What are the chances that you'll want to take another loan (any loan - car, credit card, installment plan for new fridge, whatever else)? What are the chances that with the bad credit you'll find it hard to rent a place (and in Cali it's hard to rent a place right now, believe me, I bought a place just to save on the rent)? What are the chances that the prices will bounce and your ""on-paper"" loss will be recovered by the time you actually need/want to sell the house? You have to check all these and make a wise decision considering all the pros and cons in your personal case." Unless the taxes are above 3000 per year it looks like a good deal to buy (the 30 year mtg) You could also consider getting the 30 year loan and add additional principal to your payments.   It looks like your PMI might be about $50 per month.   You will get to deduct over $3000 in interest payments the first year as well as the real estate taxes. Depending on your tax rate that might be something like $100 per month or so of incentive to chose buying over renting.   The big issue to consider is the risk of big ticket items to repair. You should keep a fund for this kind of thing... water heater, roof, fridge, cesspool, etc. good luck A lot of people do this. For example, in my area nice townhouses go for about $400K, so if you have $80,000 you can buy one and rent it. Here are the typical numbers: So you would make $350 per month or $4,200 per year on $80,000 in capital or about 5% profit. What can go wrong: (1) The property does not rent and sits vacant. You must come up with $2100 in mortgage payments, taxes, and insurance every month without fail or default. (2) Unexpected expenses. A new furnaces costs over $5,000. A new roof costs $7,000. A new appliance costs $600 to $2000 depending on how upscale your property is. I just had a toilet fixed for a leaky plunger. It cost me $200. As you can see maintenance expenses can quickly get a lot higher than the $50 shown above... and not only that, if you fix things as cheaply as possible (as most landlords do), not only does that decrease the rentability of the property, but it causes stuff to break sooner. (3) Deadbeats. Some people will rent your property and then not pay you. Now you have a property with no income, you are spending $2100 per month to pay for it, AND you are facing steep attorney fees to get the deadbeats evicted. They can fight you in court for months. (4) Damage, wear and tear. Whenever a tenant turns over there is always a lot of broken or worn stuff that has to be fixed. Holes in the wall need to be patched. Busted locks, broken windows, non-working toilets, stains on the carpet, stuck doors, ripped screens, leaky showers, broken tiles, painting exterior trim, painting walls, painting fences, etc. You can spend thousands every time a tenant changes. Other caveats: Banks are much more strict about loaning to non home owners. You usually have to have reserve income. So, if you have little or no income, or you are stretched already, it will be difficult to get commercial loans. For example, lets say your take-home pay is $7,000 and you have no mortgage at all (you rent), then it is fine, the bank will loan you the money. But lets say you only have $5,000 in take home pay and you have an $1,800 mortgage on your own home. In that case it is very unlikely a bank will allow you to assume a 2nd mortgage on a rental property. The more you try to borrow, the more reserve income the bank will require. This tends to set a limit on how much you can leverage. I'm going to assume that you will spend the money to fix the mold problem correctly.  Using your numbers, after that is done, the home is worth perhaps $280k. To evaluate whether or not to sell, the amount you have spent on the house is irrelevant. The only thing you need to ask yourself is this: Would I spend $280k to buy this house today? You might, if you were happy with the rental income that you were getting. If the house is fully rented, it earns you $24k/year, which is an 8.6% return if you had purchased the house today at $280k. Of course, you will have vacancies, taxes, and other expenses bringing that return number down. Figure out what that is, and see if you are happy with the return based on those numbers.  If you decide it would be a bad investment for you at $280k, then sell the house.  By the way, this question works for any investment, not just real estate. When deciding whether or not to sell stock, the same thing applies. It is irrelevant what your cost basis is. You only need to ask yourself if the stock would be a good buy for you at the current price. "There are loans. Usually they're secured by the assets, and you also cosign them personally. Your own credit worthiness comes to play, your own assets are in jeopardy. As to what it is that you're buying - no, it is not necessary for the seller to sell you the building. You might buy the business, but not the actual space it occupies. In fact, the space may not even belong to the seller. You may find yourself taking over the lease, which is in fact a liability, not an asset. You should agree with the seller on what exactly it is that you're buying. You should ask for a full inventory list that would include all the assets and the liabilities that would be transferred to you. Lease, as mentioned, but you might also ""buy"" loans, debts, lawsuits, and god knows what else that is attached to the business." Let me add a few thoughts that have not been mentioned so far in the other answers.  Note that for the decision of buying vs. renting a home i.e. for personal use, not for renting out there's a rule of thumb that if the price for buying is more than 20 year's (cold) rents it is considered rather expensive. I don't know how localized this rule of thumb is, but I know it for Germany which is apparently the OP's country, too. There are obviously differences between buying a house/flat for yourself and in order to rent it out. As others have said, maintenance is a major factor for house owners - and here a lot depends on how much of that you do yourself (i.e. do you have the possibility to trade working hours for costs - which is closely related to financial risk exposure, e.g. increasing income by cutting costs as you do maintenance work yourself if you loose your day-time job?).  This plays a crucial role for landlords I know (they're all small-scale landlords, and most of them do put in substantial work themselves): I know quite a number of people who rent out flats in the house where they actually live. Some of the houses were built with flats and the owner lives in one of the flats, another rather typical setup is that people built their house in the way that a smaller flat can easily be separated and let once the kids moved out (note also that the legal situation for the landlord is easier in that special case). I also know someone who owns a house several 100 km away from where they live and they say they intentionally ask a rent somewhat below the market price for that (nice) kind of flat so that they have lots of applicants at the same time and tenants don't move out as finding a new tenant is lots of work and costly because of the distance.   My personal conclusion from those points is that as an investment (i.e. not for immediate or future personal use) I'd say that the exact circumstances are very important: if you are (stably) based in a region where the buying-to-rental-price ratio is favorable, you have the necessary time and are able to do maintenance work yourself and there is a chance to buy a suitable house closeby then why not. If this is not the case, some other form of investing in real estate may be better. On the other hand, investing in further real estate closeby where you live in your own house means increased lump risk - you miss diversification into regions where the value of real estate may develop very differently.  There is one important psychological point that may play a role with the observed relation between being rich and being landlord. First of all, remember that the median wealth (without pensions) for Germany is about 51 k€, and someone owning a morgage-free 150 k€ flat and nothing else is somewhere in the 7th decile of wealth. To put it the other way round: the question whether to invest 150 k€ into becoming a landlord is of practical relevance only for rich (in terms of wealth) people. Also, asking this question is typically only relevant for people who already own the home they live in as buying for personal use will typically have a better return than buying in order to rent. But already people who buy for personal use are on average wealthier (or at least on the track to become more wealthy in case of fresh home owners) than people who rent. This is attributed to personal characteristics and the fact that the downpayment of the mortgage enforces saving behaviour (which is typically kept up once the house is paid, and is anyways found to be more pronounced than for non-house-owners). In contrast, many people who decide never to buy a home fall short of their initial savings/investment plans (e.g. putting the 150 k€ into an ETF for the next 21 years) and in the end spend considerably more money - and this group of people rarely invests into directly becoming a landlord.  Assuming that you can read German, here's a relevant newspaper article and a related press release. "The flaw in your reasoning is that you are assuming that renting a house is easy and automatic. Who is going to manage the property? Your parents? What are you going to do if the tenants burn the place down, start having drug parties there, or secretly have 6 cats who piss everywhere so noone will ever want to rent it again? What are you going to do when the house goes unrented for a year and you have to pay a year's worth of mortgage payments with no rental income? What are you going to do when some deadbeat decides to stop paying the rent, but won't move out, and when you try to evict him, he goes to court to stop you? You going to fly to NJ to make the court appearances? Unless you sell your existing house, or your parents buy you out, then you need to stay. You should not attempt to own two houses at once with one of the houses located not where you are at. That will not turn out well. Also, just as an aside, 30-year mortgages are not an ""investment""; they are a way to lose money. Usually people get them because they want a big beautiful house that they cannot afford, so they borrow the money. That is not ""investing"", that is wasting money to live in luxurious circumstances. If you want to become wealthy, buy a property you can afford, not something that you have to string out payments for 30 years." what I should think about. If you decide to do this - get everything in writing.  Get lease agreements to enforce the business side of the relationship.  If they are not comfortable with that much formality, it's probably best not to do it, I'm not saying that you should not do this - but that you need to think about these type of scenarios before committing to a house purchase. I would advise against this. My main reason for saying so is that you are in a time of major transition, and transition equals uncertainty. What if the new job turns out to be a bad one, and at the same time the house is more difficult to rent out than you expect? That seems like a situation that would be worse than the sum of its parts. Some other things to consider: first, if you want to buy a house where your new job is located, you will not be able to borrow as much for that house.  This is especially important if you are moving to a city with a very high Cost of Living. Second, your margin on the rental doesn't sound like it would leave much room for profit. A $100 difference between your mortgage and your rent amount will be eaten up very quickly through property management fees and maintenance.  If the value of the house does not rise like you expect, that could mean you put in a lot of effort for very little or no gain. Finally, this will require a good deal of time management. Between relocating, closing on this house, and beginning a new job, it sounds like you'll have a lot going on. This may not concern you much, but it's still worth considering. Yes, it's a buyer's market. If one is looking to buy a house, comparing the cost to rent vs own is a start. Buying a property to rent to a stranger is a different issue altogether, it's a business like any other, it takes time and has risk.  If today, one has a decent downpayment (20%) and plans to stay in the house for some time, buying may make economic sense. But it's never a no-brainer. One needs to understand that housing can go down as well as up, and also understand all the expenses of owning which aren't so obvious. Ever increasing property tax, repairs, etc. "Bad areas are tough to value as a owner-occupied property, because the business model for being a slumlord is to rent apartments in absentia, usually to tenants receiving goverment subsidies such as Section 8 vouchers. The vouchers are based on a prevailing rent, which are often on par with nice suburban apartment complexes due to how that ""prevailing"" rate is calculated. So the value of the house is really an annuity calculation. You figure out the potential rental cash flow and apply whatever your local market premium is. The point is, doing an apples to apples comparison is going to be tough, and justifying the cost of repairs that aren't remediating health and safety issues probably won't be recoverable from a home valuation standpoint. A buyer would probably rip out your central air conditioner and sell it! If I were in your shoes, I'd look at the time horizon that you think you're going to be there and amortize the cost over that period. Assuming your mortgage is small and you're staying for about 5 years, spending $10k costs you about $170 a month. Your reward is a modern A/C and heating system. Compare that cost to the cost of moving and your desires and see if it's worth it to you."