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If you had just bought a small house in the first place you would have saved a lot of money and probably wouldn't have filled it up with so much stuff that you now hate to part with, even though you never use it anymore. Many decades earlier, people lived in much smaller houses, even putting more than one child in the same bedroom. Guess what? The kids survived, and probably learned a lot more about life and how to live with other people. People stayed in their homes much longer back then as well. Mainly because when the kids moved away, they didn't have all that wasted space.
Yeah, but it's the people who grew up in a generation where kids shared rooms (Baby Boomers) who the ones who decided they wanted McMansions and separate rooms for every kid plus a more rooms besides.
The situation is time dependent. Rent for a little as possible even if it is uncomfortable while saving enough for a down payment. Buy when your get the savings and income allow. Then maintain as necessary and sell off when you have to move or get too old to live there. We have lived frugally, bordering on cheaply, for a very long time and can finally afford some travel now that we have the time.
Do not expect an early pay off from frugal living. If you want all the goodies now then rent everything and spend more then you earn. When they call in the debt bankrupt and start over with anyone foolish enough to lend you money or rent you anything.
In my market, it is far more expensive to buy than to rent. I can rent my SFH for $1100 a month. The same place would cost me about $1500-$1600 a month in PITI based on current appraisals. If you are asking how my landlord can afford this and don't they always have to charge more, the answer is, he built the properties 20 years ago and paid cash. Everything is gravy now as he is beyond stinking rich and really doesn't need the money.
My last landlords were not professionals and 'forced' into it for economic reasons. We rented the SFH for $1200 when it would sell for $375k. My landlords refused to accept any less than $475k (lololol), so they just decided to rent it out until the market improved, but the market never really did. In this area, the market wouldn't support a higher rent, so yeah, that's how we got that deal. I don't know what happened to it after we left to move to our current place.
So yeah, it is in my case, far cheaper to rent than to buy. I have absolutely no intention of buying any home in this area because it makes no financial sense. I could take the 20% down payment I would need here and have 50%+ of a house paid off in a LCOL area where it actually does make more sense to buy than rent.
Have friends who decided to buy because the mortgage payment would be less than the rent. Unfortunately they didn't consider the ongoing upkeep/maintenance of home ownership and now they're kicking themselves around the block for their bad decision.
I think for many seniors, it's more frugal to rent, especially low-income seniors who can get into low-rent senior subsidized housing.
For instance I know a senior who makes about the same income I do, and she really wants to buy a mobile home in a park (discussed above). She'll use up her savings, have to pay for her own maintenance, and will have park fees she can't rely on staying the same, etc.
In subsidized senior housing, her rent would probably just stay the same percentage of her income.
There are trade-offs either way. But, as far as one costing less than the other, renting an apartment would be less costly. IMO.
I agree with Lacerta about how to decide when to rent or buy, for someone who is not a senior - buying a home is normally a long-term investment, and buyers need to be realistic about the real total costs.
I lost my house in the recession because I was laid off. Had almost paid credit cards but couldn't afford the mortgage payment. I am now in senior housing & really enjoy it. Rent is 30 percent of my income, utilies are paid & cable is $30 per month. My only other larger payments are cell phone, home phone & internet. It was cheaper to bundle phone & internet, which is crazy but, that' s why I chose the bundle. Last month was $74, which isn't too bad. I chose Consumer Cellular for cell phone & it is reasonable.
I should say I was living in the city (St. Paul, Mn) rent was very reasonable, $550 for a large 2 bedroom apartment. I was making a good salary so decided to buy a small fixer upper. Paid $98,000 & was valued at $125,000. Thought I was getting a good deal but the fixing was extensive. The first year, heating was expensive. Had nephews help with insulating the attic space. When that was done I closed off the attic because it was going to be my last project. Planned on turning it into loft bedroom and office. Heat costs went down almost 30%. I then w as going to redo the walls in front room & bedroom. Took off thr ugly paneling (stupid, I should have known paneling was an easy fix for problems). There were holes in the walls and the only insulation was tar paper. Bought insullation & wallboard & fixed the problems. Can't remember the costs but it included tools to cut & put up the wallboard. But, as I said, I was making good money. And the house was taking all of it. I was enjoying fixing it up tbough. Figured it would only make the house more valuable. It had already increased to $150,00. Then came the recession & by the time I was laid off, the value went to $54,000. I couldn't even break even if I could have sold it. I still owed 78,000. Finally decided to go bankruptcy after talking to a housing rep the county was paying for. She said it was the only thing I could do because no one was hiring a highly skilled 58 year old. Her mother was in the same boat as me so she understood my predictament. I took her advice.
I moved to my brothers on the family farm. Good thing as my mother had dementia & was getting worse. I moved there in October & she passed away in January. I had those months to help care for her & give my sister a break. Since gas was so expensive, I couldn't visit often after I was laid off. So, it was a blessing in disguise.
I think it really depends on your area. In our area, rent for same size house would be 1300, our mortgage is 950 (taxes and insurance included). We had a 1 year warranty on our home which helped for some major things that needed to be fixed that first year.
Honestly, we were ready to have a house. We were sick of waiting for landlords to fix things, we have a large garden where we grow a lot of our own food and I've always had dogs which is a PIA when you rent. I have 2 greyhounds that have never damaged anything, but because of their size people wouldn't rent to us.
We didn't listen to the real estate agents who told us we needed more house. We bought a 3 bedroom 1200 sq foot house. my inlaws have commented what a nice starter house. NOPE not a starter, this is it.
We also spent more on our inspector, who was highly recommended by other buyers we knew. He found a lot of issues before we bought our house and we were able to either get them fixed or get the price lowered so we could fix them. He saved us a ton (we needed new roof, new AC unit, and multiple other things). ALSO our real estate agent told us we were asking for too much because we wanted our seller to fix everything. She countered she would pay for everything except 2 minor things (which was more than we were hoping for), so don't be afraid to negotiate!!
I thought landlords made killer money. So I became one when the opportunity looked good. Homeowner taxes are high...can easily be 3-4 months of rent. Insurance can be 1-4 months of rent. Management fees are usually 10%. Then you have vacancies and advertising. Vandalism and theft are not unusual. Then you have air conditioning, heating, hot water heaters, stoves, refrigerators, leaks, fences, septic systems, floors, roofs, paint, washers/dryers, termites, cockroaches, rats/mice, fences, and a host of other problems like getting emergency calls on week-ends and holidays.
Many landlords will brag about how great things are. Others are driven to literally bite a bullet.
The answer lies in home prices vs rental prices in your area.
And let me know when you find an easy way to make decent money.
Renting low end housing can be dangerous. Most of the landlords who purchase low-priced housing almost cannot maintain the place. Eventually, it becomes a slum lord situation as the place starts to fall apartment. Almost no maintenance is done on rental houses anyway...You may find yourself fixing stuff anyway so it will be safe for your family. Recently, I rented a house with gas furnace. The landlord was having trouble with the furnace which can cause death by carbon monoxide poisoning. When she had the maintenance guy stop by, he just pushed a button to reset and left refusing to do more. When I called a local HVAC company, they refused to work on it because the landlord needed to authorize it.
In past, I had purchased a home of same payment as rental cost for this place. At least, I could have the furnace serviced when something broke or seemed to be going wrong and I did not need to worry about carbon monoxide poisoning possibilities.
If you have to rent a low end place, do consider a unit with all electric water heater and furnace to avoid this problem.
On rentals, most roofing is left until a storm handles the job leaving tenants to deal with roofing leaks and mold from rot.
For a person of modest income, ownership of the house was a great improvement over renting. No roaches, no fighting, no rodents, no filthy place next door sharing a wall and attracting all the varmints.
This is the advantage of living in low cost of living area. Home ownership is almost never an option to lower-income people in high cost of living areas.
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