Why are Raleigh Townhome rents so high?? (rental, HOA fees)
Raleigh, Durham, Chapel Hill, CaryThe Triangle Area
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I've never heard of renting as being "not socially acceptable"
A better choice of words (on my part) might be that it is more understood by many that because you rent doesn't mean you can't afford to own a home.
I'm thinking not of big cities (where renting is absolutely necessary) but of typical suburbia -- in a historical sense.
In traditional suburbia (since the fifties), people were far more likely to own the house they were living in than to rent it. Renting meant you couldn't afford to buy. And that whole concept has now changed.
Growing up, I didn't know one renter in my middle-class neighborhood. They were all homeowners. Owning a home was the American Dream. Apparently, not any more.
There are a few rental townhomes in my neighborhood that rent for $1800-2400/month. They are usually rented almost immediately after becoming available so there is no shortage of people willing to pay high rent for a nice townhome.
$900-range sounds pretty good to me for a 2 bd townhome if It is in a decent neighborhood!
I own several homes (free and clear/no mortgages) in Wake/Johnston County that I rent out... I have a great property management company that takes care of everything to do with them. They send me a statement once per month and notify me ONLY if there is a major problem. They are WELL WORTH the 10% they charge me.
As for where I personally live? I rent a great apartment in Raleigh... If my plumbing leaks, I call someone to fix it. I don't have to mow grass or rake up leaves or powerwash the deck. I have a very nice fitness center, pool, billards table and lots of other amenities available to me. Plus, I don't worry about how the market is doing, if it drops by 30% and I need or want to move, I give notice at my apartment and I am gone. I pay no property tax, insurance or maintenance. Renters insurance is less than $100 per year. If something major breaks down, NOT MY PROBLEM! It is so very freeing!
As for my rentals, since they are investment properties and I don't live in them.... I can write off the 10% the property mngt company charges, the insurance, property taxes, any repairs, maintenance and even depreciate the dag-gum things.
I have NEVER considered renting to be socially unacceptable or only for people who can't afford to buy.
We were renting a 1100 2br/2bthrm townhouse style apartment in Raleigh for $785 this last year. Then we purchased a 1375 3br/2bthrm house in Garner with a fairly low downpayment and mortgage payment of $723. It was crazy for us NOT to buy. I moved to Raleigh in 09 and lived in 3 diff apartments since then, and noticed the rents very quickly increasing from year to year. I moved into the last apt because my previous rent in a 1/1 was going from 500/mo to low 700's if I renewed.... crazy! So basically, rent is going up everywhere and I would imagine private renters would want to benefit from that just as much as apartment complexes are. If you can buy and know you like that area, I would look into it.
The last time I rented was in 1988, and since then I've owned a condo, a townhouse and 3 single family homes. In each case, my mortgage payment was substantially less than what I would have paid in rent. As other people have mentioned there are other costs involved with buying, but overall I did very well as a homeowner. My current mortgage payment is less than $1K a month, and it would cost at least $1500-$1600 a month to rent in my neighborhood (maybe more). I'll own my house outright in 12 (or less) years. Probably the biggest reason why I can't see myself ever renting again is because I have three large dogs.
Anyhow, to the OP - I don't think you will pay less on a monthly basis by renting, but you will have more flexibility, lower upfront costs, no unexpected repairs, etc. This is why people who can afford to buy choose to rent and it's a decision each person makes based on their own unique situation. Oh, and the cost of a comparable mortgage has no bearing on rents - when I was stuck being a landlord (never again!), some years I lost $150 a month because rents were low, and other years I broke even or had a positive cash flow.
kito42, I'll be joining you. I currently own 3 rentals and converting my current residence to another. Signed a lease on a 1 BR apartment where I'll move to shortly. Owning a house means maintenance and responsibility - I like collecting rent to compensate me for the decision making that's involved.
I could own a house again but I feel like I'd rather buy land now and build exactly what I want. Most 3 BR homes are too large and energy inefficient for a single person.
Sean_CLT, It is the best of both worlds. You get to write off pretty much all the expenses to do with home ownership, and maintenance fees.... including getting to DEPRECIATE your rental homes, and then in your apartment, you don't have to worry about anything.
Being a self-managing landlord is a thankless job, I can tell you that if you get a GOOD property management company then they more than pay for themselves. Anytime they had repairs done, they did them much cheaper with their contacts then I could get them done for myself.
Only in comparison to being able to purchase an identical unit in the next building, comparably upgraded, with a monthly mortgage payment of $500.
To everyone who thinks they do not pay property taxes, HOA fees, maintenance costs, exterior upkeep costs, structure insurance, etc. when you rent; you are mistaken. You still pay all these costs but they are lumped into the monthly rental fee rather than being separate bills you must pay.
But you are correct that these costs must be subtracted from the $420 difference between renting and buying costs in my example. There are also the Closing Costs and Down Payment amount to be considered. And "No", I don't feel purchasing real estate should automatically be considered an investment, rather it is an optional means (usually lower cost means) of providing shelter for yourself. As my Financial Planner told me, "You only reap the gains of your real estate investment when you sell it, and where will you live then?"
Renting results in greater flexibility as opposed to purchasing and for this greater flexibility you should expect to pay more, I was surprised by the ~90% percent increase.
Sean_CLT, It is the best of both worlds. You get to write off pretty much all the expenses to do with home ownership, and maintenance fees.... including getting to DEPRECIATE your rental homes, and then in your apartment, you don't have to worry about anything.
My parents were private landlords and the depreciation advantage is a double edged sword. It sounds great until you decide to sell the property and discover your purchase price has been reduced to near zero by the accummulated annual depreciation allowances. You will then owe Capital Gains taxes on the entire difference between your sale price and greatly reduced pruchase price. These taxes are only 15% currently but we all should expect Capital Gains taxes to increase back to near their historical levels of 45%. Far higher than most income tax brackets!
There are IRS Section 602 (?) provisions which will allow you to swap the property for other of similar value without incuring the Capital Gain taxes, but even this only delays the inevitable bite of the Tax Man.
Only in comparison to being able to purchase an identical unit in the next building, comparably upgraded, with a monthly mortgage payment of $500.
To everyone who thinks they do not pay property taxes, HOA fees, maintenance costs, exterior upkeep costs, structure insurance, etc. when you rent; you are mistaken. You still pay all these costs but they are lumped into the monthly rental fee rather than being separate bills you must pay.
But you are correct that these costs must be subtracted from the $420 difference between renting and buying costs in my example. There are also the Closing Costs and Down Payment amount to be considered. And "No", I don't feel purchasing real estate should automatically be considered an investment, rather it is an optional means (usually lower cost means) of providing shelter for yourself. As my Financial Planner told me, "You only reap the gains of your real estate investment when you sell it, and where will you live then?"
Renting results in greater flexibility as opposed to purchasing and for this greater flexibility you should expect to pay more, I was surprised by the ~90% percent increase.
As I said earlier, this area is very popular. We're hip deep in people flocking to the area looking for affordable housing, lower taxes, jobs...
The rental prices reflect it.
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Far higher than most income tax brackets!
