Renting vs. Buying Home - What makes more financial sense? (Pittsburgh: sales, insurance)

[shadowfax]

Originally Posted by SteelCityRising

What happens when you have a nightmare landlord?

I move.

[ferraris]

SCR your post almost comes off as arguing against buying a home. It will take you two full years of "instant savings" to recoup the closing costs. Take another $10K in various right-off-the-bat repairs and you're looking at another 5 years in "instant savings" to recoup that cost (not including your time and stress I might add). Your financial breakdown started off well, but then you started to brush off a lot of things without keeping a running tally of their costs and the time to recoup them from your savings. You could even calculate it with your savings increasing each year due to assuming that rent increases by 5% or whatever. I know it's hard to talk specifics when you don't have a specific house in mind...but don't you dare go buy a house that needs a roof, furnace, hot water heater, windows, foundation sealing, sidewalk, and driveway right off the bat! I hope you were only trying to paint a worst case scenario.

By the way, isn't your 33% rent increase including the move from one unit in your building to the other?

[selltheburgh]

Two things that home buyers don't factor are:

- Tax advantages - You can deduct your property taxes and there is the mortgage interest deduction.
- Hidden costs of repairs and upkeep. You should budget at least $1,000 per year for unknowns. Maybe triple that if you are buying a house that is older and in somewhat sub par condition.

Another rule of thumb is that you should only buy if you are going to stay for at least 4 years. Preferably 5. Otherwise, the costs to buy and sell will offset the financial advantage to owning.

You should make one extra payment per year from the beginning and you'll pay it off in about 23 years instead of 30.

Do a 15 year mortgage if you can afford it.

Finally - the biggest advantage to buying and staying long term is that in 20 years, your $800 / month apartment will definitely be more expensive, but your principal and interest will be the same and your house will mostly be paid off.

[PreservationPioneer]

You can find a perfectly liveable home that probably won't need any immediate major repairs. Over time, things will need to be replaced, but it's not going to happen all at once unless you're buying a house that needs complete rehab. My old house was a major fixer upper, needing tons of work (mostly cosmetic). The roof was older, the windows were older, the furnace was ancient, the electrical system and breakers were older than I was. The water heater was going on 17 years old. But here's the kicker: everything worked just fine. I lived in that house (for 4 years) without replacing any of those items except for a few windows at 199 / piece. I also eventually replaced the front porch, which was a big expense, but I could have lived with the old porch. I just wanted it to look pretty. I had the flat roof recoated for about $500. Granted, I owned a small row house. You can easily run into more expenses on a larger house (with larger roof). Just get a good home inspector and be aware of what items you need to watch for repairs.

#1 rule of home ownership: if it isn't broken, don't fix it.

[Caladium]

Originally Posted by SteelCityRising

Don't be deterred by these fear-mongerers who proclaim your house will always be falling apart and will need an infinite supply of money to maintain.

I don't think anyone is trying to deter you--they just want to be realistic. Are houses always falling apart? Well.... yes. The way you phrased it is extreme, but essentially the answer is yes. Houses do require ongoing maintenance and all sorts of things need to be repaired/replaced. Do you need to replace big ticket items every year? In my experience, no--but every few years is realistic. Yup, no matter how well made your house is.

More importantly, watch out for those small items. They add up faster than you think. And be realistic that there will be a variety of reasons you will not be able to do all repairs yourself (no matter how handy you may think you are).

So which is better, renting or owning? Depends on your life situation. Renting is perfect for people who are in transition or people who don't want the bother of owning a house (because houses are a big commitment). If you might want to move in a few years, think you might want a new roommate, want to travel and not worry about the place back home, etc. then renting is perfect. But, if you are going to stay in a neighborhood for several years and like the thought of caring for a house, owning is ultimately less expensive than renting (and more satisfying too, IMO). Smartest thing I ever did, IMO.

Regarding "fearmongers"...... can't speak for anyone else, but why would anyone want to "fearmonger" you when watching someone go through the process of learning to be a homeowner is bound to be interesting? We could use an entertaining change of topic around here, and it's always fun to watch someone who thinks he knows all about something before actually trying it discover the realities (good and bad). And yes, there will be good realities to home ownership as well as the bad ones--so give it a try.

I personally would LOVE to see you get off the pot and buy a house already. I mean jeez, you say the desire to own a house is so strong it regularly wakes you up at night--and you've been saying this for years and years now. So go ahead, get a realtor and get some sleep already. Pursue one of those links people keep posting for you. And that means it's time to do more than look at a computer. Get going and start a genuine search. Go ahead, bite the bullet.

[PreservationPioneer]

Originally Posted by Caladium

Regarding "fearmongers"...... can't speak for anyone else, but I personally would LOVE to see you get off the pot and buy a house already. So there's no fear mongering coming from me. You've been talking about it for years and years, but never get beyond the "looking at internet listings" sage. I'd like to see you bite the bullet--I'd like to watch you buy a house in a non trendy starter neighborhood and then watch as you learn to love your new neighborhood even if it isn't trendy. I'd like to watch as you learn to care for a home and try out all the various ideas that new home owners try. I remember that phase fondly, and would enjoy seeing you progress through it. It's a challenge, but one that I think you could bloom under--and at least it would be a nice change of topic. So, nope, no fear mongering coming from me--just reality checks.

This! Yes, SCR needs to buy a house, already. I understand if you don't have the money yet, but if you do, get with the program.

[shadowfax]

No fear mongering here. Just saying make sure you know what you are getting into. Be realistic. To many people walk around with a fantasy about what home ownership should be that isn't real.

[PreservationPioneer]

If you're worried about lawn care and roof repairs, just buy a row house, particularly a brick one. Roof repairs on a flat roof won't be bad, brick is low maintenance (assuming it's not badly in need of repointing), and little to no yard work to speak of. They also seem to have lower heat bills, because at least one wall is connected to another house.

[FreightTrainRunning]

So one factor that no one has mentioned is inflation. If you buy a house, you've locked in the monthly payments for thirty years while rent will keep going up. If I'd kept my house on S. Graham in Friendship that I'd bought in 1990, the monthly payments would still be close to the $500 that we were paying back then. There's no way that you could rent a house in Friendship for less than twice that price now. Of course insurance and taxes go up but nothing near the rate that rent goes up.

We've been in our house for six years and plan to retire here but we've already seen Northside rents skyrocket in that half a decade. Who knows what they'll be in 2037.

[okaydorothy]

I say just go buy one if you have the money saved up. Like you, when we were younger, we debated the buying side for about 3 years ; eventually we just bit the bullet, put 20% down, bought the worst house we saw, sold it for over double 12 years later.
We bought here when we moved because we didn't want to move twice and for us, renting is a waste of money ; that is not everyone's opinion I understand.

No house will be perfect ; there will always be things that you don't like, you don't get but that is where compromise comes in. In Pittsburgh, it is so cheap to live, it would be a shame to continue renting.