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Old 07-23-2014, 08:33 PM
 
Location: USA
581 posts, read 650,233 times
Reputation: 587

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Everyone says it all depends on your preferred lifestyle.

My wife and I (both in our late 20s) have been in the market for a condo in Florida for the past 7 months. Unfortunately (or, fortunately), we had two deals fall through for different reasons. I have since come to the realization that home ownership may not be for me. Here's why:

- I am the farthest thing from a handyman -- nor do I have any interest in repairs
- The motto I live by: KISS (Keep It Simple Stupid): low-stress job, low-maintenance living
- I've never intended to buy a place as an investment - I do not want to worry about having to sell or rent it out later
- I'd rather travel and leave my free time for what I love to do most (read, write, etc.) than work around the house
- I'm not sure if I'll ever have kids -- if I do, I'll only have 1
- I don't care about renovating, decorating, etc. I see a place as providing shelter and nothing more
- I am contemplating switching jobs in the next year or two; it's a little riskier when you're stuck with a mortgage
- The thought of being in debt for 30 years -- yikes
- My wife is a teacher, and things in that profession can be unstable

Our first thought was that a condo was a reasonable compromise between a house (too much maintenance) and renting ("throwing your money away"). However, now I'm not so sure. I continue to ask myself:

- What if you have loud, disruptive neighbors?
- What if the HOA is hellish?
- What if the HOA fee shoots through the roof?

With a rental, you can always move if you have unruly neighbors or if the rent at your current place skyrockets. With a condo, you don't have that flexibility and will be forced to sell or rent the unit out if such problems become intolerable. From what I've read and heard, selling a condo is no easy task.

When I compare living in a rented apartment vs a purchased condo, I don't see much of a difference other than the fact that I have a piece of paper that says I own the place. The biggest downside to renting, as I see it, is that your landlord can one day tell you that he's selling the place and you have to move. Your rent can also go up.

It seems buying a condo carries a lot more risk than buying a home. At least with a home you won't be slapped with assessments, and you don't have to pick up the slack when your neighbors are unable to pay their bills. Then again, when you own a house, you're responsible for all the maintenance.

I love the thought of calling someone on the phone to handle all my repairs. I loathe handiwork!

I am not ruling out buying a place sometime in the future. I may just save up for a few years to buy a condo or house -- in cash. Otherwise, I'll continue to rent. Indeed, it seems renting suits people who prefer a hassle-free lifestyle.

Do you agree? What is your take on the buy vs rent argument?
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Old 07-24-2014, 02:38 AM
 
49,370 posts, read 50,769,624 times
Reputation: 31098
nothing is a bad idea. it all depends on what you eventually do with the money not tied up in the house .

later on it will all depend which gives you better cash flow when you retire. cutting expenses by having a paid off home vs renting with higher expenses possibly but higher income on that invested money that isn't in the house.

we are approaching that junction now as we get ready to retire.

living in nyc ,we can buy a similiar co-op to the apartment we are renting for about 290-300k.

but that 300k even in a muni bond is generating 14-15k a year... that goes towards my rent.

i can buy the co-op give up 15k in income but cut housing costs down to only 12k a year.

we are watching that line carefully with each rent increase but so far renting wins.

for us renting wins by a landslide since i was able to buy in to a real estate partnership many years ago with the money that would have been tied up in a house .

today that partnership made so much i can buy many homes .

so it really is going to be a case by case situation depending on your finances , available cash for investing and investing skills..

getting ready to retire i am not as an aggressive investor as i once was so my reference point is now a muni bond. that puts a different spin on the results compared to when it was pedal to the metal generating much higher returns.

the fact is most americans suck at investing and they have even less discipline to save so the cost cutting ability of ownership may be the better deal .

Last edited by mathjak107; 07-24-2014 at 02:48 AM..
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Old 07-24-2014, 10:18 AM
 
4,872 posts, read 3,945,151 times
Reputation: 3927
Quote:
Originally Posted by Wordsmith12 View Post
Everyone says it all depends on your preferred lifestyle.

My wife and I (both in our late 20s) have been in the market for a condo in Florida for the past 7 months. Unfortunately (or, fortunately), we had two deals fall through for different reasons. I have since come to the realization that home ownership may not be for me. Here's why:

- I am the farthest thing from a handyman -- nor do I have any interest in repairs
- The motto I live by: KISS (Keep It Simple Stupid): low-stress job, low-maintenance living
- I've never intended to buy a place as an investment - I do not want to worry about having to sell or rent it out later
- I'd rather travel and leave my free time for what I love to do most (read, write, etc.) than work around the house
- I'm not sure if I'll ever have kids -- if I do, I'll only have 1
- I don't care about renovating, decorating, etc. I see a place as providing shelter and nothing more
- I am contemplating switching jobs in the next year or two; it's a little riskier when you're stuck with a mortgage
- The thought of being in debt for 30 years -- yikes
- My wife is a teacher, and things in that profession can be unstable

Our first thought was that a condo was a reasonable compromise between a house (too much maintenance) and renting ("throwing your money away"). However, now I'm not so sure. I continue to ask myself:

- What if you have loud, disruptive neighbors?
- What if the HOA is hellish?
- What if the HOA fee shoots through the roof?

With a rental, you can always move if you have unruly neighbors or if the rent at your current place skyrockets. With a condo, you don't have that flexibility and will be forced to sell or rent the unit out if such problems become intolerable. From what I've read and heard, selling a condo is no easy task.

When I compare living in a rented apartment vs a purchased condo, I don't see much of a difference other than the fact that I have a piece of paper that says I own the place. The biggest downside to renting, as I see it, is that your landlord can one day tell you that he's selling the place and you have to move. Your rent can also go up.

It seems buying a condo carries a lot more risk than buying a home. At least with a home you won't be slapped with assessments, and you don't have to pick up the slack when your neighbors are unable to pay their bills. Then again, when you own a house, you're responsible for all the maintenance.

I love the thought of calling someone on the phone to handle all my repairs. I loathe handiwork!

I am not ruling out buying a place sometime in the future. I may just save up for a few years to buy a condo or house -- in cash. Otherwise, I'll continue to rent. Indeed, it seems renting suits people who prefer a hassle-free lifestyle.

Do you agree? What is your take on the buy vs rent argument?
I agree with you, I'm the same way. I'll probably rent forever. Mainly, I don't want to be stuck in one place forever, I don't want to do handyman stuff - love when the maintenance guys come and fix things ofr me, and I don't want to do yardwork and maintenance, etc.

for you, you might want a townhouse type mortgage, you can live in a house, but have the advantages of the home owners association taking care of maintenance, but you still have to fix your own sink if it gets broken.

You sound like a renter to me. I'd do what I WANT to do, not what others expect that I SHOULD do.
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Old 07-24-2014, 10:28 AM
 
7,577 posts, read 10,599,285 times
Reputation: 4771
Quote:
Originally Posted by Wordsmith12 View Post
Everyone says it all depends on your preferred lifestyle.

My wife and I (both in our late 20s) have been in the market for a condo in Florida for the past 7 months. Unfortunately (or, fortunately), we had two deals fall through for different reasons. I have since come to the realization that home ownership may not be for me. Here's why:

- I am the farthest thing from a handyman -- nor do I have any interest in repairs
- The motto I live by: KISS (Keep It Simple Stupid): low-stress job, low-maintenance living
- I've never intended to buy a place as an investment - I do not want to worry about having to sell or rent it out later
- I'd rather travel and leave my free time for what I love to do most (read, write, etc.) than work around the house
- I'm not sure if I'll ever have kids -- if I do, I'll only have 1
- I don't care about renovating, decorating, etc. I see a place as providing shelter and nothing more
- I am contemplating switching jobs in the next year or two; it's a little riskier when you're stuck with a mortgage
- The thought of being in debt for 30 years -- yikes
- My wife is a teacher, and things in that profession can be unstable
After reading your analysis, I can find no fault in your logic. Even better, you can live in a rental either forever or maybe one day you'll change your mind and nothing will prevent you from buying your own residence.

The arguments against renting forever is that it is more expensive than owning. The additional expense of renting may be worth it to you.

I have a friend who is in his 70s who I estimate must have a net worth well over $1 million, and I ask him, "Why don't you buy a nice condo instead of living in this 1BR rental?" He always replies, "I'm happy the way things are. Why should I buy?"

He did point out the advantage that he can easily have a change of scenery whenever he wants if he gets tired of living there.
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Old 07-24-2014, 03:54 PM
 
Location: Clermont Fl
1,706 posts, read 3,380,157 times
Reputation: 1202
The only thing I see is you will have payments for the rest of your life not just 30 years and rent will only go up, a house payment will not. If you buy when you both stop working you would not have a payment but rent will be always going up, will your income be going up also.
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Old 07-24-2014, 04:01 PM
 
4,764 posts, read 6,538,612 times
Reputation: 4850
I didn't buy a house until I was 44 and sometimes I regret it. I've only owned it for about 2 years, so I don't have a lot to offer except that the freedom to move is a big deal (I pass up jobs sometimes because I feel I'd sell my house at a loss).

I really do miss having a guy to call to take care of things but if I found a great handyman that would take care of that.

One plus for buying for me was that I wanted full control over how I decorate - I was totally over the idea of landlord restrictions on paint, etc. Prior to buying I lived in a rental house that needed so much work, and I always wanted to just take care of things myself, and I felt it was finally time. But if you find a good rental, I suppose you really could just stay a renter. I will tell you that I do have one hellish neighbor as a buyer as well, but at least I don't share walls with them. Maybe rent a house for a while and see?
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Old 07-24-2014, 04:07 PM
 
49,370 posts, read 50,769,624 times
Reputation: 31098
actually all that money tied up in that paid off house can be generating lots of income for a renter..

i bought my first house in 1987 for 169k. i sold it in 2003 for 335k.. not bad right?

that is until you consider that same amount of money in some plain ole fidelity funds was worth 1.8 million over the same time frame.

after subtracting out all the rent for decades and taxes there was still enough left to buy two houses. ,

each situation will be different and yes sometimes renting can leave you with a whole lot more.

the fact that we sold the house and i rented made the funds available to me to buy in to a real estate partnership with one of americas biggest real estate moguls.

it was the best thing i ever did although there was risk.

but the point is if i still owned and didn't rent i could have never ever taken that chance with the partnership as my working capital would be tied up in the house.. no way could i have paid an equity loan waiting for things to work out.

never under estimate how well someone can do because they rent. renting may have higher housing costs but it can give you the opportunity to generate greater wealth and income to go with those higher costs.

renters are a wide mix of very poor ,very wealthy and everything in between . some renters will always be poor and have no money to invest elsewhere. others who have the finances can make all kinds of faster growing investments that make paying rent the better option..

usually when you hear the words renting is throwing out money you are hearing it from someone with little to no real knowledge about investing and limited financial skills. .

Last edited by mathjak107; 07-24-2014 at 04:31 PM..
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Old 07-24-2014, 05:52 PM
 
10,030 posts, read 12,211,890 times
Reputation: 9791
What does your wife want?

FYI...The landlord doesn't only ask you to move when they want to sell the place. There can be many other situations where the landlord requires you to move and you either move or get evicted(and then move) as long as your lease has expired(usually the lease is renewed yearly or defaults to month to month after the first year in many cases).

You might be required to move with only 30 days notice even if you are happy in the apartment and want to stay put. Even if you are having health issues (let's say you just had surgery) or in the middle of a European vacation or very busy at work, you might have to drop everything and find a new apartment, pack, find movers, switch over utilities, all within 30 days.

This is a huge issue and, IMO, one of the biggest reasons to buy versus rent. Basically, someone else can choose when you have to move(even if you don't want to move).

You might gain 'freedom to move' by being a renter, but at the same time you lose the 'freedom to stay put' that a homeowner has.
The only time they can't ask you to move is during a lease term. But again, leases usually expire annually or sooner and you can be told that they aren't renewing the lease at that point.

Last edited by sware2cod; 07-24-2014 at 07:18 PM..
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Old 07-26-2014, 01:12 PM
 
Location: Oregon, formerly Texas
4,437 posts, read 2,255,881 times
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Depends on your area. I started looking to buy when rents in my area started to go insane. I got absolutely sick of shared walls, so tired of hearing what my neighbors do inside their apartment - their TV blaring, their kids screaming, them having sex. I was willing to deal with it when apt rents were cheap. Then the economy started to pick back up a bit.

When my apt raised rents by $25 one year, then $100 the next year (an absurd 18% increase in two years), I was done. A 2br apt or condo here is going to cost $800 minimum (crappy apt) up to 11-1300 (decent condo/townhome). I got a buyer's agent and started looking at properties.

The cheapest rental houses in my area are at least $1000 and for decent houses $1300 up to $2000 is the norm. So that was out of the question.

I ended up finding a house for under $100k. Mortgage, taxes, and insurance combined and the payment is a good $50-60 less than I was paying for my apartment. Add the water/sewer/gas bill to that and it will be about equivalent to what I was paying at my apartment.

It's going to take about $10K of work up front on the inside of the house and another $10-20K over time if I want to do some decent landscaping, paint the outside, etc...

Freedom depends on how you look at it. Yeah, spending 20K over 3 years, that's like renting a townhome or nice apartment around here (extra $500 a month). But it's still cheaper than house rent and for the me, the freedom of not having shared walls & living around a bunch of shady neighbors in the same complex is worth it.

With the improvements I'm doing to it, my house will easily rent for $900-1000 or more if I want to move and I can't sell it quickly. People are dying to rent houses in my area for less than $1400.

The trick is to buy a house you can afford. I looked only at houses that were 30-50% less than what the bank was willing to loan me, so it took me a while to find something. I knew what I wanted to afford and that was in the ballpark of what I was paying in rent. The loan I took out was 36% lower than what the bank would lend me.

I used to be like you -- wanted flexibility and no hassle. After I turned 30 it was like something just clicked and I no longer wanted to be a renting person, wanted a little more control and with that comes more responsibility. Rising rent was the last straw.

Last edited by redguard57; 07-26-2014 at 01:23 PM..
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Old 07-26-2014, 04:38 PM
 
406 posts, read 327,804 times
Reputation: 554
I've owned a house for 16 years now, from age 26-42. Last year I decided I was tired of it. Now I'm in a duplex and (knock on wood) a couple of weeks from closing on my house sale. Maybe I'll buy again someday, but for now I'm really happy with the idea of not spending every single free second feeling that I should be weeding, or fixing, or painting, etc etc.
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