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While there may be some instances where renting and investing the difference might be a financial win usually it isn'. My Case in point bought my house in 2011 for 315k put 65000 down. My piti payment is $1565 but comparable rents are $3000/month. My house is now worth $650k if I took that $65000 down payment 5 years ago and invested aggressively I would be lucky to double my investment in 10 years. Whereas I have grown my investment 400% in 5 years by using that money to buy a house. Not to mention the $1445 a month I would be spending in excess for a comparable house renting.
Basically, it generally is assuming longer term. Usually five times as much or more. You have to count all the expenses of owning vs renting and assume an S&P like return. Generally, it's not even close.
People over-estimate maintenance because we are middle class people that have higher standards & want to do a lot of elective maintenance & improvements.
Is the plumbing working, electrical working, roof keeping water out, siding & windows keeping water out? In the yard, are the weeds mowed? lol. Or a one-time cost of putting down some cheap xeriscaping.
You think people who own low end rentals do anything other than that? Ha! Those landlords do just enough to keep those units from being condemned. They don't spend jack on maintenance.
I bought a low end rental to live in because it was a bargain. It had been a farmhouse, converted to a rental in the early 1980s which it remained until I bought it in 2014. Over the course of 30 years I bet the previous owner spent MAXIMUM $15K on maintenance and upkeep. From what I could tell, it had wallpaper/paint/carpet from the 80s - $1500 in the money of the time? The cheapest roofing shingles money could buy put on circa 1995 - $3K?, vinyl windows installed $2K?, the cheapest stove possible & cheapest fridge possible early 2000s, $1250. I had to spend some money fixing what he had 2nd rate handymen do.
Last edited by redguard57; 06-09-2016 at 03:44 PM..
what someone spends on their own home for maintenance is quite different then what they would spend on maintaining rentals if they owned them . . when we had the house in pa in the early years we couldn't leave the house without buying something for the house that we would not be buying if we were renting .
Last edited by mathjak107; 06-09-2016 at 04:51 PM..
I have calculated that if I receive a 3% salary increase each year over the next five years (and reach $80K) then I will be able to comfortably afford the PITI payment on a decent home worth $250K in central Connecticut as a single householder, by the age of 36. If not, I will continue to happily rent.
what someone spends on their own home for maintenance is quite different then what they would spend on maintaining rentals if they owned them . . when we had the house in pa in the early years we couldn't leave the house without buying something for the house that we would not be buying if we were renting .
If low-end renters can live without it, then owners can live without it.
If low-end renters can live without it, then owners can live without it.
Well, sure, but a big part of my pleasure in homeowning is to have the lifestyle we want for our family while we're alive and in our salad days. That doesn't happen in an apartment, for us. And for the judgey-judgesteins on C/D, no this does not imply I'm filling my house with knicknacks and jet-skis.
It's been said before, but not strongly enough, that most people don't rent the same type of place as they would buy, so it's not useful to talk about how you can replicate apartment living in a home. In my world the purpose is NOT to do that.
I'm not stripping my life and my family's lives down to the bone just to prove a point. Yes I save and yes I contribute a lot to my SEP-IRA.
Well, sure, but a big part of my pleasure in homeowning is to have the lifestyle we want for our family while we're alive and in our salad days. That doesn't happen in an apartment, for us. And for the judgey-judgesteins on C/D, no this does not imply I'm filling my house with knicknacks and jet-skis.
It's been said before, but not strongly enough, that most people don't rent the same type of place as they would buy, so it's not useful to talk about how you can replicate apartment living in a home. In my world the purpose is NOT to do that.
I'm not stripping my life and my family's lives down to the bone just to prove a point. Yes I save and yes I contribute a lot to my SEP-IRA.
Oh sure, I get that.
My point was that many people on here say that owning is SOOOO much more expensive than renting because of maintenance. But when you get down to it, middle class owners are typically doing some combination of the following:
elective improvements like remodels, painting or landscaping
updating finishings / appliances according to latest fashion
buy much more space than they rented
moved "up" in neighborhood (HOA fees, etc...)
All that's much more than just keeping the place dry, the electricity running and the water flowing.
Owners don't have to do that. I made a number of elective improvements to my home, but in reality I could have bought and actually spent less than renting had I elected NOT to do the remodel. Like I said, my house was a former rental. I could have lived in it as is and actually spent less for a house than I did on a 2br apt. Even the remodel will pay for itself if the appreciation & rental market increases continue the way they have been. For the record I had no idea the value would appreciate that much.
When I went house shopping my main goal was to remove myself from having neighbors across the wall & floor/ceiling for about the same monthly payment. So I looked at a lot of foreclosures & low end rent-houses for sale. To put it mildly I was shocked at what I saw with regard to the rent-houses. I used to think landlords cared about providing a decent situation for their tenants' money. Boy, was I wrong!
Last edited by redguard57; 06-09-2016 at 05:52 PM..
Well, sure, but a big part of my pleasure in homeowning is to have the lifestyle we want for our family while we're alive and in our salad days. That doesn't happen in an apartment, for us. And for the judgey-judgesteins on C/D, no this does not imply I'm filling my house with knicknacks and jet-skis.
It's been said before, but not strongly enough, that most people don't rent the same type of place as they would buy, so it's not useful to talk about how you can replicate apartment living in a home. In my world the purpose is NOT to do that.
I'm not stripping my life and my family's lives down to the bone just to prove a point. Yes I save and yes I contribute a lot to my SEP-IRA.
I feel exactly the same. While we are diligent with saving for retirement, we were not willing to live in an apartment for 40 years just to retire with more money. And then continue to live in an apartment. What's the point if you're miserable for half your life? Quality of life is something I am willing to pay for.
The thing you forget about renting in such an area is the opportunity cost of appreciation, principle pay down, and tax benefits on said taxes and interest.
<---lives in greater Seattle and owns a few houses...
I've been a renter for about 20 years all of my adult life and it sucks. It's not about finances all the time it's about happiness. Apartment renting has a long list of problems more then owning. I lived in a house owned by my father when i was a kid and we never had the issues i have renting.
Paying someone elses mortgage and more for years and walking away with nothing doesn't make sense to me. Also no freedom or feeling of a real home in an apartment. You have to worry about the littlest things like putting a tack in the wall and losing a security deposit. I can talk about all the negatives about renting but it would take too long. The only positive i find in renting is you can move fairly easily.
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