[ScoopLV]

If I had rented an "el cheapo" place compared to buying nice place. There is no way to make an apples-to-apples comparison skew in favor of the renter over time. In the short term, fine. But give it a decade or two and the homeowner does better financially than the renter.

[TomKay]

Rent vs. Own: Renting does not require a large cash Down Payment, Property Tax, Required Insurance, Home Maintenance Costs (and the time spent doing that), and that Bank Interest! Plus the freedom to move at will. Ownership is not always nirvana or the smartest financial move.

[ddrhazy]

Not always but if you have a belief that you will be in that area for longer than 5 years, it is usually a safe bet.

[bayview6]

The housing bubble was a terrible time to buy in LV but the folks who bought then if they own for 20 years will come out ahead of those who rent for that period. Housing is all about the use of the property, tax benefits, land appreciation, and inflation protection.

For those who bought during the housing crash are already ahead $$$$. And we are nowhere near getting back to the long-term trend line. Barrons recently ran a story of future housing appreciation in the top 40 markets in the US and Las Vegas came out on top with a projected gain of 50% over the next 3 years.

[BBMW]

It tanked as hard as it ever did. Given that we're talking about peoples homes (sometimes) there are always going to be a good number who ride it out, because they can financially and they don't want to move. I think the fact that it dropped as much as it did shows how much it was being driven by investor, and panic buyers, who bought at any price to avoid being priced out as they anticipate the market keep up it's rate of increase.

The people who bought in 2009-10, will probably always be okay.

Originally Posted by ddrhazy

Well nobody is a fortune teller BBMW. And it's because of people who didn't panic that the market didn't tank even harder than it already did.

[ScoopLV]

Originally Posted by TomKay

Rent vs. Own: Renting does not require a large cash Down Payment, Property Tax, Required Insurance, Home Maintenance Costs (and the time spent doing that), and that Bank Interest! Plus the freedom to move at will. Ownership is not always nirvana or the smartest financial move.

Renters pay the property tax, insurance and house maintenance costs. (They usually pay more for maintenance because of the lack of DIY incentives.) It's all bundled into the rent, along with profit for the landlord. Let's not forget about that. Landlords don't become landlords out of the goodness of their hearts. They do so with the expectation of making money on their real-estate investment. Besides, the interest is deductible for those who buy.

We have already established that renting is the smart choice in the short term. But if someone is going to live in a place for many years, and a mortgage is less per month than rent*, than it makes absolutely no sense whatsoever to rent when one can own.


* People with awful credit should put their financial house in order so that the monthly cost of a mortgage is less than rent.

[BBMW]

If we're talking decades, I agree, mainly because over that time frame, I'd expect significant appreciation, even if there are dropouts along the way. Of course the same could be said of the stock market. Also, after a certain point, you principle pay down in the mortgage payment starts to be significant. This decreases the sunk cost of the mortgage payment (but also reduces it's tax deductibility.)

The problem comes with being able to predict how long someone's going to be in a particular house. Given that you're jonesing to get out of Vegas, is a decade or two a realistic time frame? When you bought in 2007 how long were you planning to stay?

When you start going from house to house over that time frame, transaction costs are going to eat into your return.

Originally Posted by ScoopLV

If I had rented an "el cheapo" place compared to buying nice place. There is no way to make an apples-to-apples comparison skew in favor of the renter over time. In the short term, fine. But give it a decade or two and the homeowner does better financially than the renter.

[BBMW]

Originally Posted by ScoopLV

Renters pay the property tax, insurance and house maintenance costs. (They usually pay more for maintenance because of the lack of DIY incentives.) It's all bundled into the rent, along with profit for the landlord. Let's not forget about that. Landlords don't become landlords out of the goodness of their hearts. They do so with the expectation of making money on their real-estate investment. Besides, the interest is deductible for those who buy.

Landlords would like to make a profit on their investment. They certainly would like to be cash flow positive. Often the market doesn't allow that.

We have already established that renting is the smart choice in the short term. But if someone is going to live in a place for many years, and a mortgage is less per month than rent*, than it makes absolutely no sense whatsoever to rent when one can own.

You're saying mortgage is less than rent. This is somewhat likely. But is (mortgage + HOA fees <if any> + taxes + insurance + basic maintenance and repairs + lost investment return on cash invested) - (principle reduction + tax deductions + appreciation) less than rent?

[ScoopLV]

Originally Posted by BBMW

You're saying mortgage is less than rent. This is somewhat likely. But is (mortgage + HOA fees <if any> + taxes + insurance + basic maintenance and repairs + lost investment return on cash invested) - (principle reduction + tax deductions + appreciation) less than rent?

Yes, CONSIDERABLY less. That's why the housing recovery was so top-heavy with cash investors -- because rent returned so well. It's going back to normal now, and the big cash investors are fading away. (I don't see much from King Futt's anymore.)

Rent: ROI of zero.
Own: ROI of better than zero.

Short of living for free in someone's basement, I don't see any way around the above rent vs. own.

[Raiderman]

Originally Posted by BBMW

Landlords would like to make a profit on their investment. They certainly would like to be cash flow positive. Often the market doesn't allow that.


You're saying mortgage is less than rent. This is somewhat likely. But is (mortgage + HOA fees <if any> + taxes + insurance + basic maintenance and repairs + lost investment return on cash invested) - (principle reduction + tax deductions + appreciation) less than rent?

I was thinking about all of that the other day. I looked at the records for the house we're renting, and the landlord paid $250K for it back in April and is renting it at $1500 to us. I can't see that he's making much by doing so. Is my math off?