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i am in nyc and very few renters ,self included ever rent as much house as we would buy so comparisons are never apples to apples .
homes in bay terrace queens run in to the millions . but you can rent a 2 bedroom 2 bath apartment with pool for a fraction of the cost . we have loads of rentals in high rise's .
so renters in some areas never rent what they would buy .
most high tax area's are high cost of living and high tax for a reason . that is because generally that is where the better paying jobs are .
but it is a double edge sword .
back in the 1970's when we all bought our first homes those homes were 30-35k . that was a load of money in those days .
well today the mortgages are paid off and looking at affordability ,the fact you paid off a 30k mortgage means nothing when taxes are 12k a year .
that retired mortgage won't even cover a utility bill .
but the flip side is that 600k house that averaged 3% appreciation a year saw a whole lot more of an increase in dollars than the same 3% on a 150k house in cheapsville .
retire to cheapsville and not only do you have a windfall from the house but your social security is based on the wages in that high cost of living area .
so a transplant from a high cost area can have far more wealth than locals in cheapsville if they relocate .
Last edited by mathjak107; 05-21-2017 at 04:19 PM..
I'm surprised that your math has the monthly cost of ownership being higher than renting, even in areas with high property taxes. In my area, property taxes are about $17-22k for the houses I've been looking at, but in every scenario, renting a similar house costs more than mortgage+property taxes. Otherwise how would the landlords be able to pay their mortgage and property taxes on the rental property that they are renting to you?
We were in a tight spot and needed a place to live on short notice so we ended up renting a house for $5,500 per month that would cost me $4,875 per month all in if I buy it (it was both for sale and for rent when we took it), probably more like $4,500 or less when you factor in the mortgage interest deduction. It's not quite as bad as it looks though- in order to get that $4875 payment you have to give up the interest on a $200k down payment, which in a plain jane S&P 500 mutual fund is probably equivalent to about $1,000 per month in normal markets.
I find that owning nearly always beats renting but not by much in the early years of the mortgage when you're essentially just paying deductible rent since the mortgage payment in the beginning is nearly all interest anyway. The math gets better over time due to inflation though- it's awesome to lock in your housing costs (aside from prop taxes) in today dollars. In 20 years, your mortgage payment looks like pocket change as a percentage of your monthly income.
I think it's partly bc I'm single and the majority of houses to buy are 3 bedrooms. I wouldn't have to rent the type of housing that I'd have to buy, if that makes sense? There's not many 1-2 bedroom homes in the areas I'd want to buy in.
i am in nyc and very few renters ,self included ever rent as much house as we would buy so comparisons are never apples to apples .
homes in bay terrace queens run in to the millions . but you can rent a 2 bedroom 2 bath apartment with pool for a fraction of the cost . we have loads of rentals in high rise's .
so renters in some areas never rent what they would buy .
most high tax area's are high cost of living and high tax for a reason . that is because generally that is where the better paying jobs are .
but it is a double edge sword .
back in the 1970's when we all bought our first homes those homes were 30-35k . that was a load of money in those days .
well today the mortgages are paid off and in the affordability area the fact you paid off a 30k mortgage means nothing when taxes are 12k a year .
that retired mortgage won't even cover a utility bill .
but the flip side is that 600k house that averaged 3% appreciation a year saw a whole lot more of an increase than the same 3% on a 150k house in cheapsville .
retire to cheapsville and not only do you have a windfall from the house but your social security is based on the wages in that high cost of living area .
so a transplant from a high cost area can have far more wealth than locals in cheapsville if they relocate .
I have to do more research on the future of Orange County. On one hand, I think it's positioned to have a major rise in value since people are getting pushed out of westchester and Rockland but it's also kinda rural/boring for most people and the kirayas Joel mess is going to implode in the next 10-15 years.
It's the exact point everyone else has been making in this thread.
Right, but that's not my point. I can't help that there's a difference in rental vs sale property. I'm asking about the dollar figure, not the qol issue.
Yes, and that is without reading the replies. If you BUY SMART. If you can afford your taxes in the area you buy that hopefully (and believe me you really would prefer for those prices to be increasing) will increase. The myth that housing is an investment ONLY WORKS if the housing prices increases. That includes your taxes for that property.
You realize that landlords pay property taxes too, right? Often higher than homeowners because they aren't eligible for certain exemptions. Those landlords just pass those high taxes on to their tenants in the form of rent.
Also wanted to add that I can write my property taxes off on my federal income taxes. Can't write off any portion of rent.
You realize that landlords pay property taxes too, right? Often higher than homeowners because they aren't eligible for certain exemptions. Those landlords just pass those high taxes on to their tenants in the form of rent.
Also wanted to add that I can write my property taxes off on my federal income taxes. Can't write off any portion of rent.
Of course, I'm not a moron. I can still rent for less than my Piti would be. It would be a smaller place, though. I already explained that I looked into buying a duplex and the reported rent only covered the property taxes and a very small portion of the mortgage. Didn't seem worth the hassle of being a LL.
You realize that landlords pay property taxes too, right? Often higher than homeowners because they aren't eligible for certain exemptions. Those landlords just pass those high taxes on to their tenants in the form of rent.
Also wanted to add that I can write my property taxes off on my federal income taxes. Can't write off any portion of rent.
i wish as a landlord every time an expense goes up i can pass it along .
markets don't care if you need a roof , a boiler or even have a mortgage and the building down the street doesn't .
markets determine rents not landlords expenses .
actually the renters have the better tax deal . many fly the empty seats . as a couple they have little to itemize so they get money back they never spent . the homeowner actually pulled that money out of their piggy bank . if they are lucky they get back 1 dollar for every 4 they pulled out ,.
in fact most homeowners can't itemize and get no tax benefits and spent the money .
most renters can get thousands back from the standard deduction they paid little actual money out for . .
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