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Old 01-25-2018, 07:38 AM
 
33,046 posts, read 20,720,491 times
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Quote:
Originally Posted by GeoffD View Post
For most of us, it's the freemkt misconception that home ownership is the path to wealth that bugs us. For anyone who has ever owned a home, you have a lifetime of $1,000 plumber bills, roof replacements, dead appliances, and all the rest that a landlord magically takes care of.

Home ownership is the escape velocity required to escape rent inflation. It is the stabilization of housing costs and the capture of future value appreciation.

Try doing THAT with rent.

Renters pay for new roofs as well, PLUS a premium for profit.
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Old 01-25-2018, 07:48 AM
 
33,046 posts, read 20,720,491 times
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Quote:
Originally Posted by Quietude View Post
If you're lucky. And for $1000-3000 a month.

I once listened to some idiot relatives-by-marriage explain how because their pickup needed tires that would cost $400, they bought a new pickup for which the payments were the same $400. A month. On a 60mo loan.

Most arguments for the financial advantage of renting/leasing don't come up to that standard.

I won't argue that home ownership is some kind of perpetual gold mine or even a net wealth builder in the long run, not with mortgage costs and those $1,000 plumbing jobs. But historically long-term ownership has shown appreciation that more than exceeds most routine maintenance and minor repairs. Flippers, suckers and millennials who are going to chase jobs across the country every two years excepted.

For me, there are two overarching benefits of home ownership, any price appreciation is gravy:

Nobody is going to raise the rent/kick me out/decide to sell or convert to some other use as long as I make timely payments.

I am the Decider (TM GWB); I get to enjoy indefinite and unimpaired residential use of the property and to choose who else lives with me (which also affords the opportunity for rental income).
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Old 01-25-2018, 07:52 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
4,112 posts, read 3,404,360 times
Reputation: 5638
Quote:
Originally Posted by freemkt View Post
Home ownership is the escape velocity required to escape rent inflation. It is the stabilization of housing costs and the capture of future value appreciation.

Try doing THAT with rent.

Renters pay for new roofs as well, PLUS a premium for profit.
This exact concept of yours was discussed on another thread. Why don't you get it? Costs and profits are not always received when owning a rental property. It is what the market will bear.
I already told the story of two rentals I owned where each cost $600k. The down payment was $200k on each and the mortgage was $2k per month. The rent was $2k which left nothing for taxes, insurance, vacancy, or upkeep. Those costs were covered by me. The renter got to save well over $10k a year by not owning plus did not have to come up with $200k to have a place to live.
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Old 01-25-2018, 08:21 AM
 
33,046 posts, read 20,720,491 times
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Quote:
Originally Posted by aslowdodge View Post
This exact concept of yours was discussed on another thread. Why don't you get it? Costs and profits are not always received when owning a rental property. It is what the market will bear.
I already told the story of two rentals I owned where each cost $600k. The down payment was $200k on each and the mortgage was $2k per month. The rent was $2k which left nothing for taxes, insurance, vacancy, or upkeep. Those costs were covered by me. The renter got to save well over $10k a year by not owning plus did not have to come up with $200k to have a place to live.

What the market will bear is a function of supply and demand. Local governments artificially restrict the supply of rental housing for the benefit of their homeowner constituents (who don't want MORE rental housing in their neighborhood than already exists).

Only in depopulating areas are rental markets vulnerable to unprofitability, while in booming areas the sky is the limit because restrained supply always lags behind demand.
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Old 01-25-2018, 08:39 AM
 
5,502 posts, read 3,357,853 times
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Quote:
Originally Posted by aslowdodge View Post
I already told the story of two rentals I owned where each cost $600k. The down payment was $200k on each and the mortgage was $2k per month. The rent was $2k which left nothing for taxes, insurance, vacancy, or upkeep. Those costs were covered by me. The renter got to save well over $10k a year by not owning plus did not have to come up with $200k to have a place to live.
The question is, why would you put so much money into buying two expensive rentals for which the rental income was no more than the mortgage payment? What was the point? There has to be more to this story as no sensible person would do such thing.

Last edited by saibot; 01-25-2018 at 09:21 AM..
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Old 01-25-2018, 12:19 PM
 
Location: Portland, OR
9,594 posts, read 9,427,321 times
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Quote:
Originally Posted by freemkt View Post
Home ownership is the escape velocity required to escape rent inflation. It is the stabilization of housing costs and the capture of future value appreciation.

Try doing THAT with rent.

Renters pay for new roofs as well, PLUS a premium for profit.
You continue to romanticize and overestimate the value of home ownership. Not all homes increase in value. Not all landlords raise rents year over year. For most of my renting life my rent has been stable. When I moved into my present digs there were two increases in quick succession. There has been an explosion of construction in this area. A landlord that tries increasing rent right now in this area on their legacy rental stock is just asking to have their tenants leave for a new construction unit as soon as it is finished and offered for lease. So... (cross fingers) no recent rent increases.

You need to put ~20% down on a home purchase. You need broker fees, closing costs, you may need to start oil service. Security. Etc. What if you invested that money instead? For many people buying the house is a good thing to do. But not for all. I don't know you terribly well but nothing I've gathered from casual acquaintance suggests that life would be materially impacted for the better for you joining the ranks of property owners of North America. Peace.
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Old 01-25-2018, 12:45 PM
 
Location: Aurora Denveralis
2,999 posts, read 1,023,325 times
Reputation: 3819
Quote:
Originally Posted by Leisesturm View Post
You continue to romanticize and overestimate the value of home ownership.
There are certainly some fairy-tale threads in any reasoning to own a home instead of other options, but I don't think you can reduce the decision to hard dollar-cents, either.

What's the security of no lease renewal, rent increases, or even refusal to renew a rental for many reasons worth? Maybe not much if you're a single or couple who can move in a couple of Prius loads, but for most of us it's a big, expensive hassle, and not without stress/well-being consequences either.

What's stability for kids (schools, friends, neighborhood, "own room" etc.) worth? Zero if you don't have kids, I guess.

What's being able to redecorate or remodel at will worth? For people who live in a chosen box and don't know which end of a paintbrush to hold, not much, I guess. But even in my rental days I went with landlords that would let me do (appropriately skilled) painting and remodeling. Not many of those around, though.

So even in an economics discussion, there's a lot more to it than assumed equity increase vs. zero maintenance, upkeep and other collateral costs.

I've pretty much done it all in the housing game. Renting sucks, even under the best conditions. If owning my home costs me more (which it doesn't, by a long shot), I'll take it.
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Old 01-25-2018, 01:33 PM
 
33,046 posts, read 20,720,491 times
Reputation: 8928
Quote:
Originally Posted by Leisesturm View Post
You continue to romanticize and overestimate the value of home ownership. Not all homes increase in value. Not all landlords raise rents year over year. For most of my renting life my rent has been stable. When I moved into my present digs there were two increases in quick succession. There has been an explosion of construction in this area. A landlord that tries increasing rent right now in this area on their legacy rental stock is just asking to have their tenants leave for a new construction unit as soon as it is finished and offered for lease. So... (cross fingers) no recent rent increases.

You need to put ~20% down on a home purchase. You need broker fees, closing costs, you may need to start oil service. Security. Etc. What if you invested that money instead? For many people buying the house is a good thing to do. But not for all. I don't know you terribly well but nothing I've gathered from casual acquaintance suggests that life would be materially impacted for the better for you joining the ranks of property owners of North America. Peace.

Just as there are Two Americas, there are two rental markets. The low-end / subprime rental market is distinct from the mainstream rental market.

Low-end / subprime renters do not have the option of leaving their current rentals for new construction which is unavailable / unaffordable to them. Captive markets can be exploited precisely because they cannot exit the market.
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Old 01-25-2018, 01:59 PM
 
Location: Saint John, IN
10,638 posts, read 3,316,997 times
Reputation: 12748
Quote:
Originally Posted by NYC refugee View Post
They're not being robbed blind for medical care and "insurance" premiums.
AMEN!!!
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Old 01-25-2018, 02:46 PM
 
11,697 posts, read 16,450,382 times
Reputation: 16354
Quote:
Originally Posted by freemkt View Post
For me, there are two overarching benefits of home ownership, any price appreciation is gravy:

Nobody is going to raise the rent/kick me out/decide to sell or convert to some other use as long as I make timely payments.

I am the Decider (TM GWB); I get to enjoy indefinite and unimpaired residential use of the property and to choose who else lives with me (which also affords the opportunity for rental income).
All I can say is "dream on".
Unless you own your house outright - the bank owns it. You are making payments
Unimpaired use of the property within federal, state, municipal and HOA laws/rules/covenants
Indefinite use of property - please see "bank"
Choosing who else lives with me - see unimpaired use
Raise the rent - I do not recall when our real estate taxes did not go up in TX/OK
Kick me out - google 'eminent domain'
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