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I don't think maintenance cost are being overblown. You have to be prepared for them or skipping them can have a negative impact on your home value as does having a yard that looks like crap.
I don't think maintenance cost are being overblown. You have to be prepared for them or skipping them can have a negative impact on your home value as does having a yard that looks like crap.
A few grand at most from the sale price Landscaping never pays off anyway.
Location is BY FAR the most important factor. The previous owners of my mom's house had done probably $15-18K worth of landscaping work - very nice garden beds and irrigation system. It had no effect on the sale price because the overall neighborhood was in decline. It sold for what the median house does in that neighborhood. Actually less because they had trouble finding qualified buyers before my parents put an offer in.
But what people are overblowing is how well owners maintain properties for their tenants.
I looked at A LOT of renthouses when I was on the market (it was what I could afford). They are not providing great maintenance service by and large. I imagine some of that is because tenants are not always respectful toward the property.
A few grand at most from the sale price - nowhere near what it costs to keep the yard looking perfectly green and flowery.
Location is BY FAR the most important factor. Landscaping never pays off anyway. The previous owners of my mom's house had probably $15-18K worth of landscaping work. It had no effect on the sale price because the neighborhood was in decline. It sold for what the median house does in that neighborhood.
It doesn't cost much to keep your yard looking decent without flowers and without weeds and it can't certainly have more of an impact than you imply
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But what people are overblowing is how well owners maintain properties for their tenants.
That's not actually relevant to the rent vs buy discussion
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I looked at A LOT of renthouses when I was on the market (it was what I could afford). They are not providing great maintenance service by and large. I imagine some of that is because tenants are not always respectful toward the property.
We have been renters and never owned a home. I have seen few topics/discussions on this topic, but purely on numbers and ignoring everything else - how would the monthly expense of renting compare to living in a home? As mentioned, we never owned/lived in a home so don't have the full picture there and some items mentioned below will make you
Right now - we spend $1100 a month on renting a 1 BR apt (this includes rent + Renters insurance (around $15/month mandated by landlord), water, electricity). -- Around 1K for rent/insurance and 100 per month on Utilities.
Lets say we are living in a 3 BR house which we bought for $300K (hypothetically speaking).
We paid the 20% down payment (to avoid PMI in the numbers).
20% of 300K = $60K
Remaining balance $240K
I think property tax is 2.3% of current home value = 2.3% of 300K = $6900 per year or $575/month
Also lets assume we are in the 25% tax bracket.
Not sure about this but I think you get back 1/3 of property taxes back when you file tax return?
If that is true: our "actual" Property Tax is $385?
Home Insurance: I don't know but we play safe. Reasonable to say monthly home insurance is $200?
Mortgage - 4% loan for 30 years and 240K principal
Per month = 1,145
So monthly = 1145 + 200 (insurance) + 385 (property tax) = $1730
Utilities lets add $150 == so this becomes around $1900
Plus you get back some of your mortage interest payments back when filing taxes. Would that be around $100 per month? If so, then amount now is $1800.
Also I know living in home has lots more of other factors like maitnenace (home, lawn) that I don't have to factor in when renting. Lets say on average it is $100 per month.
So we are still $1900 (3BR house) vs $1100 (1BR Apt).
Thanks in advance for any feedback.
Why are you comparing a 1 BR apartment with a 3BR house? Of course, your apartment is going to look "better" because you pay less rent for less space. If you want an honest comparison, compare a 3 BR house to a 3 BR house of approximately the same market value, one purchased and one rented.
Thanks, but I've already corrected that in a subsequent post. I meant - and should have said - that about 50 percent of Americans would PROBABLY benefit from itemizing - and I gave the sources for that opinion.
Thanks, but I've already corrected that in a subsequent post. I meant - and should have said - that about 50 percent of Americans would PROBABLY benefit from itemizing - and I gave the sources for that opinion.
Your assumption is incorrect. 50% of Americans wouldn't benefit from itemizing. Only a third or so do itemize and that's not because 15-20% just decide not to do so even though it would benefit them
Thank you for pointing this out! Ultimately, if the value of one's house rises - swings and hiccups notwithstanding - then owning becomes the superior proposition, more or less. But if one's house relentlessly declines in value, decade after decade, then renting starts to look more attractive.
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Originally Posted by Linda_d
Why are you comparing a 1 BR apartment with a 3BR house? Of course, your apartment is going to look "better" because you pay less rent for less space....
Because, if owning one's domicile is an "investment" and renting is a "liability", then the most generous comparison is between minimal liability (a studio-apartment) and maximal investment (a mansion).
Most things owners change -- or most changes owners make to a home -- are indeed elective improvements....and some owners keep up their properties, some don’t.
As long as the person factors that into the rent vs buy equation so they get the TRUE cost of ownership - all is well.
As for the yard, I don’t expect any neighbor to “landscape” the yard. Some "landscaping" I've seen is a frigging mess. Try living next to, or selling you house next to, someone who likes the "wildflower, natural" kind of garden…where you ask "what the hell is THAT jungle?" I DO want them to mow the yard – BEFORE they get a notice from the county.
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My house was a rental for 20 years and it was clearly not kept up. The previous owner did just enough to keep the place standing and operating, nothing more. Every fix was a patch. It probably needed re-roofing for at least 5 years because my roofer told me there were a bunch of unprofessionally patched shingles.
He was so cheap that he bought the cheapest stove on the market for that house - a $300 Hotpoint. It gave out... instead of just shelling out $300 or (gasp!) $400 for a better replacement stove, he had someone re-wire the burner, incorrectly I might add, so the heat level settings didn't work right on one side of it, but it at least turned on again. (The previous renter occupants told me about that when the house was pending sale).
And because of all that you were able to buy your house for less than you would have if he had done the maintenance/repairs.
Clearly you were willing to buy a house that needed work. Some buyers who are willing to do that can get a very good deal – which – to keep the conversation on the topic of rent vs. buy – could tip the numbers more in favor of the ”buy” column.
My elderly neighbor had 25 year old carpet in her house (the brown/rust mottled shag type popular DECADES ago) and said “look at my carpet it’s great, I raised five kids in this house and you’d never know it.” I thought to myself, “Uh, hello, this carpet is 25 years old. YOU don’t mind it and can’t see it’s outdated...you’re an original owner, you liked it when you picked it, you still like it – and in your head you can’t see the “wear” but trust me – it WILL affect your sale price. And as long as you’re OK with that. More power to you.” Houses that aren’t updated sell for less money. ((Many elderly people or depression babies are ALL ABOUT function. If it ain’t broke – they ain’t fxing it. If the carpet doesn’t have holes and the faucet still works, they’re not replacing them – just because.))
I think way back a few years ago I asked in a thread – how many people moved into a house and didn’t spend another DIME on anything – not curtains, not furniture, not a new rug – NOTHING. From the answers that posted it was NOT most people. It’s not rocket science to figure that if you buy a new home from the builder – you shouldn’t have to spend anything on maintenance or repairs, I’d say, for at least 10 years. But if you stay there loooong enough...soomething will need to be fixed. Just factor that in to the rent vs buy equation as the years go along.
Homes in my neighborhood are more than 50 years old. One was featured in the local paper for STILL having every original appliance and fixture. Sooo, CLEARLY those owners haven’t done many, if any, ELECTIVE changes. And they may come out ahead of others who have updated through the years.
If you, as an original owner, buy a house for 16K in 1964 and sell it in 2014 for 216K you may NET MORE, than someone else who’s remodeled the baths and kitchens and changed the carpet or repainted and sells for 256K. The sale price difference is 50K, but an owner could also have put more than 50K into changes and updates over the years – and technically they made LESS NET MONEY than the owners who never touched the place. Again, that’s all part of the rent vs buy bottom-line calculation of NET profit/ROI.
It may be the first, second, third, fourth or fifth owner -- but over the course of 50 years -- SOME owner is going to just by the timing of their ownership -- be the one who does some updating or makes some changes. If the first owner does them, then the second owner won't have to, but may do something else….OR may get lucky and get to sell before they have to do ANYTHING at all. Whatever is done -- or NOT done -- spent or saved….just need to be figured into -- the rent vs buy equation.
It doesn't cost much to keep your yard looking decent without flowers and without weeds and it can't certainly have more of an impact than you imply
That's not actually relevant to the rent vs buy discussion
Again how is that relevant to the rent vs buy?
If I decide to sell or when I get more disposable cash, I'll fix up the yard; it'll be fixed soon enough, but unless I plan to sell the only downside is the disapproval of one neighbor. This year's disposable cash went toward the roof. That should be good for the next few decades. Next year or the year after the yard will get a good facelift. At this point I don't plan to ever sell because the rental value is so much more than I pay for it monthly and I should have it paid off in less than 15 years at the rate I overpay the principal. I did not plan that or even plan for the house to be an investment but also did not predict the trendiness quotient that exploded prices and especially rents in my area. That was luck.
I spent a good amount on elective improvements, but my mandatory maintenance has only been 5600 over 2.5 years... that includes a roof that should last 25-30 years.
It's relevant because people are saying maintenance costs as a reason that renting > buying. What I'm saying is that owners don't have to spend a ton on maintenance if they don't want to. Mainly you just have to keep the place standing, dry, and meet city/county code. With no HOA maintenance costs can be quite low.
It's also relevant because renting is not a perfect solution to the maintenance problem. If you have a high end rental, maybe they care about fixing stuff well and quickly, but if you can afford that then buying is probably not a problem.
I never lived in a rental where maintenance was quick or even good. It was always minimal, or as the owners called it, "as needed." I had a friend that just lived with a broken sliding glass door, which she patched with duct tape for almost 8 weeks before the property managers did anything about it. So maybe renters aren't responsible monetarily for maintenance, but unless they're paying high rents relative to their area, they may not be getting much maintenance at all. Serious plumbing issues are pretty much the only thing that will bring out the maintenance guy quickly and even that sometimes they don't respond for a few days.
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