Should you keep renting in Portsmouth or buy and plan to sell in about five years? If you expect a PCS, a job change, or you simply want flexibility, a short time horizon can make this choice feel tricky. You deserve a clear, local look at the full cost picture, not just a monthly payment. Below is a simple framework tailored to Portsmouth so you can compare total five‑year costs and make a confident move. Let’s dive in.
The 5-year math in Portsmouth
Buying can build equity, but the first five years include front‑loaded interest and selling costs when you exit. Renting can be simpler month to month, but rent growth and move costs add up over 60 months. The best answer depends on your property type, neighborhood, loan choice, and whether you will need flood insurance. Your goal is to total every cash flow for both paths and compare the five‑year net cost.
Ownership costs to include
When you model buying, include all up‑front, monthly, annual, and exit items.
- Up‑front at purchase
- Down payment
- Buyer closing costs, commonly 2–5% of price
- Immediate repairs or appliances
- Monthly and annual
- Mortgage principal and interest based on your loan terms
- Property taxes at the city rate, plus reassessment timing
- Homeowners insurance
- Flood insurance if required by the lender or prudent based on the location
- HOA or condo dues, if any
- Maintenance and repairs. A common rule of thumb is about 1% of the purchase price per year, adjusted for age and condition
- PMI if you put less than 20% down, unless you use a loan that does not require PMI
- Utilities you will now cover as an owner
- Opportunity cost
- The return you could have earned by investing the down payment and closing funds instead
- At sale in year five
- Agent commission and seller closing costs
- Minor prep, touch‑ups, and potential buyer concessions
- Mortgage payoff balance after 60 months
Renting costs to include
Renting has fewer line items, but they are real over five years.
- Move‑in and recurring
- Security deposit and first month’s rent
- Monthly rent with expected annual increases
- Renter’s insurance
- Utilities not included in rent
- Parking, pet, or amenity fees if applicable
- Mobility costs
- Possible lease‑break fees if you move early
- Professional moving costs
- Opportunity benefit
- If your rent is lower than an ownership payment, you may invest the monthly savings
Local factors that move the numbers
Portsmouth is diverse by neighborhood and housing type. A few local considerations can shift a five‑year outcome more than you might expect.
- Military and port employment
- NAVY and shipyard activity support demand and turnover, and VA loan usage is common for eligible buyers
- Neighborhood variability
- Olde Towne, North End, Churchland, and areas near the Jordan Bridge can have different price points, rents, and flood profiles
- Flood risk and insurance
- Some locations may require or strongly warrant flood insurance, which can add a meaningful annual cost
- Property taxes and reassessments
- Know the city’s real estate tax rate and how often assessments update
- Mortgage rate environment and loan choice
- 30‑year fixed and 15‑year fixed rates, plus VA loan options for eligible borrowers, directly impact monthly cost and equity build
- Rent growth and vacancy
- Local rent trends set your five‑year rent projection
Example math: a simple 5-year comparison
The following is a hypothetical illustration only to show how the moving parts fit together. Plug in your own numbers before making a decision.
- Purchase price: $250,000
- Down payment: 10% ($25,000)
- Loan: 30‑year fixed at 6.5%
- Buyer closing costs: 3% of price ($7,500)
- Property tax: 1.1% annually
- Homeowners insurance: $1,200 per year
- Maintenance: 1% of price per year ($2,500)
- PMI: 0.5% of loan per year until 20% equity
- Selling costs: 6% of sale price
- Appreciation: 2% per year
- Comparable 2‑bedroom rent: $1,600 per month, 3% annual growth
- Investment return on idle cash: 4% annual
What the example shows
- Estimated monthly principal and interest about $1,582 based on these assumptions
- Sale price after five years around $276,000
- Estimated selling costs near $16,600
- Remaining mortgage balance after 60 payments roughly $232,000
- Net sale proceeds about $27,400 after paying selling costs and the remaining balance
Interpretation
- In short horizons, a large share of early mortgage payments is interest, and selling costs can be sizable. Owning often costs more than renting over five years unless you benefit from meaningful appreciation, a lower interest rate or larger down payment, or program and tax advantages that reduce your effective cost.
Break-even and what changes it
Your break‑even is the appreciation rate or rent growth at which owning and renting cost the same over five years. It changes when you adjust a few key levers.
- Home appreciation
- Faster appreciation raises your year‑five sale price and improves owner results
- Mortgage rate and down payment
- Lower rates and larger down payments reduce interest and PMI, speeding up break‑even
- Selling costs
- Lower exit costs improve owner results, especially in a five‑year window
- Maintenance and flood insurance
- Higher upkeep and flood premiums push the owner break‑even higher
- Rent growth and invested savings
- Faster rent inflation and disciplined investing of monthly savings can tilt results toward renting or owning depending on your cash flow
Build your own 5-year worksheet
You can map your decision in about 15 minutes. Set up a simple spreadsheet and enter the following.
- Inputs
- Home price, down payment percent, loan rate and term
- Closing costs, annual tax rate, insurance, flood insurance if needed, maintenance percent, HOA, PMI percent if applicable
- Selling cost percent and expected annual appreciation
- Current monthly rent, expected annual rent growth, renter’s insurance, deposit, and moving costs
- Investment return assumption for any cash you keep invested
- Ownership timeline
- Month 0: down payment + closing costs + immediate repairs
- Months 1–60: mortgage P&I, taxes, insurance, maintenance, HOA, PMI
- End of year 5: sale price, minus selling costs, minus remaining loan balance equals net proceeds
- Renting timeline
- Month 0: deposit + first month + moving costs
- Months 1–60: rent with annual increases, renter’s insurance, utilities
- Compare
- Total five‑year net cost for each path and the average monthly cost, then test different appreciation and rent growth scenarios
Who usually comes out ahead in 5 years
There is no one‑size‑fits‑all answer, but patterns do emerge.
- Renting can be cost‑effective if you expect to move within five years, have limited cash for up‑front costs, or find a rental with stable rent and some utilities included
- Buying can win when you secure a favorable rate, avoid high flood premiums, buy below market in a stable area, and expect at least modest appreciation
- Extending your horizon beyond five years often improves ownership outcomes because more of your payment goes to principal over time while selling costs are spread across more years
VA loans and flood zones
For eligible military buyers and veterans, a VA loan often means no down payment and no monthly PMI, which can improve cash flow in a five‑year window. Be mindful of the VA funding fee and how it affects your total cost. In parts of Portsmouth, flood zones can trigger lender‑required flood insurance. Even when not required, you may consider coverage based on location and elevation. Confirm the property’s flood profile early, since premiums can materially change owner math over five years.
Ready to run the numbers together?
You do not need to guess. We can help you pull neighborhood‑specific prices and rents, model taxes and insurance, flag flood‑zone implications, and outline VA and local assistance options. If you want a clear, side‑by‑side five‑year plan tailored to your move, connect with The Foundry Group for a quick strategy session.
FAQs
What is the biggest cost buyers overlook in a 5-year plan?
- Selling costs at exit and the fact that early mortgage payments are interest heavy, which can limit equity growth in a short window.
How do I account for flood insurance in Portsmouth?
- Check the property’s flood zone and include an estimated annual premium in your owner budget, since it can materially change five‑year costs.
Can a VA loan change rent vs buy outcomes in five years?
- Yes, for eligible buyers the lack of monthly PMI and potential zero down can improve cash flow, though you should factor in any VA funding fee.
Do I get tax benefits within five years of owning?
- Possibly, but it depends on whether you itemize and other limits; also know the capital‑gains exclusion rules if you sell after living in the home two of the last five years.
How much equity will I have after five years?
- It depends on your rate, down payment, and appreciation; early payments are interest‑heavy, so equity growth often relies on appreciation and principal paydown.
What rent growth should I assume for a five-year model?
- Use recent local rent trends as a starting point and test a range, since rent inflation is a major lever in the five‑year comparison.
If I might move in three years, should I still buy?
- Often renting is cheaper over very short horizons, unless you can buy at a discount, avoid high carrying costs, or expect strong appreciation.
