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Even if you rent, you should own the building you live in.
For example, buy a 4-unit apartment building, live in one of the units and have tenants in the other 3 units.
The rent from the other 3 units will cover the monthly mortgage payment.
Not really true as a blanket statement.
For one thing it is actually costing you the rent you are not getting by consuming it yourself .
You may do better living somewhere cheaper and renting out all the apartments.
But more important it may cost you more then what you would buy to live in yourself or it may be in a great location but a place you don’t want to be in .
We had those 9 coop apartments over looking Central Park .
While it would be interesting living there ourselves , the cost of living in that area would blow our expenses out of the water ….plus the traffic and congestion is awful .
But from a location standpoint that building was voted the second most desirable building in all of Manhattan.
So life for us is much better in queens than even a desirable place like manhattan.
Plus it can cost a pretty penny in many desirable areas for a 4 family multi family dwelling , well beyond the budget of many small landlords .
Many here are owned by corporations , partnerships or developers because of the fact they can be so costly.
So that means usually other investors are involved and they want full market rents from any partners that choose to live there and occupy a unit.
They just put up 2 family homes across the street from us …just 2 family are close to 1.7 million .
So buy a multi family house and live in a unit as a broad statement may not work , or be a good idea for all as general advice
Location: Formerly Pleasanton Ca, now in Marietta Ga
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Quote:
Originally Posted by mathjak107
Not really true as a blanket statement.
For one thing it is actually costing you the rent you are not getting by consuming it yourself .
You may do better living somewhere cheaper and renting out all the apartments.
But more important it may cost you more then what you would buy to live in yourself or it may be in a great location but a place you don’t want to be in .
We had those 9 coop apartments over looking Central Park .
While it would be interesting living there ourselves , the cost of living in that area would blow our expenses out of the water ….plus the traffic and congestion is awful .
But from a location standpoint that building was voted the second most desirable building in all of Manhattan.
So life for us is much better in queens than even a desirable place like manhattan.
Plus it can cost a pretty penny in many desirable areas for a 4 family multi family dwelling , well beyond the budget of many small landlords .
Many here are owned by corporations , partnerships or developers because of the fact they can be so costly.
So that means usually other investors are involved and they want full market rents from any partners that choose to live there and occupy a unit.
They just put up 2 family homes across the street from us …just 2 family are close to 1.7 million .
So buy a multi family house and live in a unit as a broad statement may not work , or be a good idea for all as general advice
One factor is that if you buy the 4 and occupy as mentioned, you will get lower cost financing and probably a lower down payment than you bought a 4 plex and rented all the units out. 5 percent down could be a lot less than 20 percent down out of pocket.
Lower down payments today would only be met with bigger loans at higher rates
The reality is in most desirable areas even with higher down payments it can be tough to afford as buying is usually initially way more expensive then rents bring in day one
Our rentals were long term investments and took a few years before rents even reached breakeven
Especially in cities where you have competition from rents on many of the offerings decided by a city board
Dealing with multi apartments and living there can be a misery.
We had 9 coop apartments in a high rise with 24/7 maintenance crews if needed …we still had Douglas Ellerman handle everything …I couldn’t imagine living in the same building with multiple tenants and no maintenance crew lol
We have very few if any 4 family .
It never paid for landlords or develops to put up less than at least 6 .
Lots of perks and breaks kick in at 6. .
Also with the cost of land so high in many areas developers are not going small ….
We are dominated by high rises because of land costs , where you can really fill a space vertically
Last edited by mathjak107; 11-20-2022 at 10:09 AM..
It is what it is. Millennials have more options than previous generations in that in many industries, they are no longer geographically limited in the jobs they can take. There are still large stretches of the country that are still relatively affordable.
If you want to live in New York for instagram likes and you can't afford to buy a house, that's your fault.
I say this as a Millennial.
They're more culturally diverse, adaptable, and some speak one or more languages. It's easy to live abroad. However, the theft, burglary, and kidnapping can become outrageous abroad.
So the conclusions one draws about buying vs renting living in rural Alabama ,as a one size fits all statement about renting ,may very well not apply to those renting elsewhere.
It needs to be realized, that NYC and LA are starkly different from the traditional American approach. The culture is different, the demographics are different, the finances are different. What works sensibly and reliably here, may be very much the opposite, elsewhere; and vice versa. The mistake, as you noted, is to ascribe one universal recipe to all circumstances.
When I lived in the small-town Midwest, it would have been suspect to be a renter long-term. Though my own adventure as a homeowner was a failure, as already amply documented here on this Forum,... it should be admitted, that had I been renting for 20 years, it is unlikely that my finances would have been much (if at all) advanced, compared to owning. That is patently untrue here in LA, where it is possible to rent an apartment at a very substantial discount to owning even a small condo.
Quote:
Originally Posted by BigCityDreamer
Even if you rent, you should own the building you live in.
This is certainly plausible, from the financial viewpoint. But it trades away some of the principal lifestyle advantages of ownership: privacy, prestige, the aesthetics of one's own unassailable personal redoubt. The same holds for doing Air B-and-B, auxiliary dwelling units and the like. Ownership recalls the country dignity of the landed gentry. To share the manor-house with paying guests, would sully the gentleman's dignity.
Exactly the case .many markets are very different which is why cookie cutter advice is going to work in some places but not others .
All these areas that are different are the reason I hate when one size fits all advice is just posted as if it just applies to all.
Many many people live in these areas which makes the odds pretty good cookie cutter advice will not work .
Like i said nyc has more people then the entire states of alabama and Mississippi added up . So that is a lot of people to just throw mis leading advice out to when it comes to blanket statements that may not work or apply.
Other areas are the same as us , so you can see that the exceptions to what may work can be a huge amount of people with these big population center areas being so concentrated with people.
40% of the countries population just lives on the coasts yet that accounts for only 10% of the contiguous land mass .. 83% of the country lives in cities and not rural.
So there can be loads of exceptions concentrated in just a few areas
Last edited by mathjak107; 11-20-2022 at 12:02 PM..
Thanks Mathjak, for the info you posted earlier. Very interesting to compare the way markets operate in different places.
A coming problem here is that our government pension system has been arranged in a way that almost assumes that retirees will have a fully paid off home. If this pension is their only source of income and they rent, living is very difficult. It is a non-contributory pension but income and assets tested. Our compulsory superannuation scheme is designed to supplement pensions and ideally replace them, but there are always people who fall between the cracks and end up with few assets.
So Millennials here who do not buy a home are often setting themselves up for poverty when retired. In theory, they should be able to invest but in practice they often do not.
What is also happening here is that regional rents are soaring and vacancy rates are almost zero because of the damage we have had over the last three years from bush fires and now severe floods. So the traditional places that were cheaper for living in the regions are no longer a refuge. All repairs are going very slowly as there is no accommodation for builders and anyway all builders are fully employed in the main cities. So a vicious circle.
Since the creation of social security the premise was no single income stream was supposed to be self supportive .
Since day one , social security, pension and one’s own savings formed the proverbial 3 legged stool .
For most that has become a two legged stool …
But back in the day of pensions being popular we didn’t have tax advantaged retirement accounts either like 401ks where workers could sock away large sums of money ..
Plus with easy mutual fund access through work plans many have access to compounding from markets which they never took advantage of before 401ks and everything went in to a savings account or ira with a low limit ..
some workers actually may have seen higher wages and perks to make up for not having a pension .
I know in my own case I was part of the refrigeration and air conditioning dept and non union as opposed to the electrical side of the company that was in the electrical union .
Union workers had a pension but union workers were locked in to union increases.
As a non union employee I was part of a company profit sharing plan and got higher increases so I did way better at the end of the day then our union electrical counterpart.
Plus my higher wages got me a bigger ss check
Last edited by mathjak107; 11-21-2022 at 03:43 AM..
There's going to be a big backlash against investors holding single family residential real estate. This includes realtors which collectively probably own 75-100 homes in our town of 25,000, all rentals.
Its not sustainable expecting middle class to pay these prices.
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