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Old 02-19-2012, 09:32 PM
 
805 posts, read 1,507,154 times
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Quote:
Originally Posted by DillThePill View Post
When you own the worry is you can't leave, when you rent the worry is you are forced to leave.

So concisely and accurately put!
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Old 02-24-2012, 02:49 AM
 
106,056 posts, read 108,015,953 times
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Quote:
Originally Posted by rfr69 View Post
You may be able to rent for lower than the cost of home ownership depending on situatin but your rent will be higher than a mortgage. It's common sense hwoever your renting from has a mortgage most likely so your going to pay their rent as well as their property taxes. People rent to make money not to lose money, for the most part that is not necessarily true in todays economy.

That said the place own for $860 per month rents for $1200 per month, my pmi and taxes are included in that $860.

Another thing and this is my biggest beef about renting. I like privacy and owning my place. I can do what I want to it when I want to without asking somebody.

I also like the privacy part. Many landlords these days want to do inspections every three months. It's understandable seeing as how some people treat rental properties but I dont like the idea that every three monthys landlord is going to come by to approve of how I'm livving and potentially come by more often for repairs or other things.
depends on the deal and location as to which may be the better deal from a financial point. there are loads of non financial reasons for buying but financial reasons may or may not work out better.

there were properties we bought as investments that had as much as a 30% difference between renting and the costs of buying with renting being cheaper. in our area those are decent deals too as buying far eclipses the costs of renting for quite a while to come . real estate is a long term investment here in nyc . some of our properties especially those near central park really paid off eventually when we sold them but it took many years to become a profit center.

at 3% or so rent increases it took almost a decade until renting was more than owning.

i bought my first rental in 1987 2 weeks before the stock market crash. property values plunged in nyc and it took almost 10 years of rent increases until rents crossed that line.

in most decent areas its hard to break even from day one when comparing buying costs to rent.

even the building we are living in has renting the better deal. a 2 bedroom like ours is between 325-375k . just the income from that money we arent spending on buying earns more than our rent is .

even if we paid cash we would have to pay another 1k a month maintaince.

it would cost us about 12k a year more and at the typical rent increases thats a long time off before it would be cheaper to buy.

all the while the invested money is paying those rent increases and still growing more and more after covering the rent increases.

what a renter does with the down payment money and the extra each month that he is saving in the early years determines how he fares compared to buying.

when we sold our first co-op we bought back in the 1980's we bought as insiders . when we sold we had enough to pay cash for our house we bought.

the house was 169k in those days... we sold the house in the early 2,000's for 335k.

not a bad deal until you realize that the same amount of money invested in the simple mix of fidelity funds i have would have been worth 1.9 million.

subtracting out all those decades of rent i would have paid over that time frame left enough left over to buy 2 homes today...


renting can be a huge financial advantage sometimes over buying but each situation and location is different and can pan out with opposite results making buying cheaper...

if there is a rule about which financially is better it is there is no rule.each deal and location stands on its own . if your lucky and the deal works better from day 1 then thats great but if not then you have to look at your other options.

i always say buy if you want a home for all the things a home offers thats non financial.

Last edited by mathjak107; 02-24-2012 at 03:40 AM..
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Old 02-24-2012, 02:25 PM
 
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I know a family that bought a modest home in Brooklyn for $45,000 in the early 80s. They lived in it for 30 years and recently sold it for $248,000. They are now spending their retirement years in a beautiful home in Georgia.
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Old 02-24-2012, 04:10 PM
 
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hindsite is great but if they put that same money in just an index fund back then they would be buying a couple of those homes in georgia even after subtracting out the rent for all those years they would have paid.

we bought our house in 1987 and like i said above that worked out to almost 2 million over that time from the markets.

of course you cant count on that happening again but then again you cant count on that home appreciation either.

about the only thing you can count on is rising expenses for the home, higher real estate taxes and higher rents.
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Old 02-24-2012, 06:35 PM
 
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How does the cost of rent factor in to your analysis?
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Old 02-24-2012, 07:00 PM
 
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i figured out what our home rented for over that time frame ,multiplied it by the years and subtracted it out.

figuring the rent is easy because the entire area are cookie cutter homes so they all are identical. townhouses.
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Old 02-25-2012, 07:45 PM
 
Location: Southern California
12,695 posts, read 14,836,280 times
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There's nothing wrong w/ renting your whole life it's that's what you want. My cousin's 50+ & has rented her entire life. She's divorced w/ no kids. A longtime friend of my mom's who never got married finally got her 1st home at age 65 or so & had always rented prior to that. My boyfriend's divorced mom had always rented since being divorced.

Who knows, I may like renting too!
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Old 02-26-2012, 04:17 AM
 
106,056 posts, read 108,015,953 times
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i love renting but as a renter now of our primary home, a homeowner of our 2nd home and real estate investor ,let me say this about renting .

most renters who can afford to buy end up taking that down payment money and any differences they may save in the early years and blow it.

renters tend to just spend more on an apartment, more vacations,nicer car etc but they dont plow that money into a different appreciating asset.

thats the problem... at least the homeowner is forced to tie up that money in the house. of course thats not to say they cant borrow it back out and have nothing but at least they are forced to put it in.

thats why most renters find it tough to build wealth ,it has nothing to do with housing costs as much as it does what the renters options are for other appreciating assets and whether they have the discipline to carry out a plan.

sorry to say ,most do not.
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Old 02-26-2012, 06:29 AM
 
106,056 posts, read 108,015,953 times
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one thing i want to add is this.

i once saw an ad on tv about drunk driving. it was one of those ads that throw some statistic out at you to make a point.

they said 40% of all accidents involve drugs or drinking.

i said to my wife " see its actually safer to drive drunk, the other 60% of the accidents are caused by those that are straight.." statistics as you see can be made to show anything anyone making a point wants them to.


the points is you always see some statistic about how people are wealthier who own homes but the flip side is they can afford to buy homes because they are wealtheir and doing better financially.

home ownership isnt the reason they appear wealthier in surveys, the home is a result of that wealth and not the cause of it more ofton than not..


real wealth is created by having things that appreciate over time and compound long term. very few of us retire on what we mangaged to save from our paychecks. its the compounding of growth

over 30 and 40 years of what we manage to save and invest that builds real wealth .

without owning something that compounds, renters can be well behind the curve long term unless they are discplined enough not to spend that extra dough on non appreciating assets.

today im getting ready to retire well before 62 not on the money i saved over a lifetime but we are retiring on the money that we managed to save and what it compounded into by investing. there are market days we make more in a year then both our salarys added together . of course the reverse is true ,we can lose more too. but the point is over decades thats what the amount has compounded too.

there is no reason a renter cant do well except their own discipline and plan.

while you work for your money its critical your money works for you at the same time.

Last edited by mathjak107; 02-26-2012 at 06:51 AM..
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Old 03-01-2012, 12:49 AM
 
Location: Soon To Be Philly
220 posts, read 474,350 times
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You make it sound as if home owners are "responsible" and they save and invest. Have you read a newspaper in the last 4 years?

I think the issue has been with homeowners, not renters.

Tough to build wealth? Are you saying using your house as a way to build wealth? WOW.......I guess some people never learn.

Renting or home ownership.................It's a lifestyle choice. I'm 38 and I've never owned a home. I've been saving and investing since my parents started me back when I was 14.

I think your "argument" is weak at best. No matter how you slice it. In addition to the investing, I'm involved with E-commerce, work a great paying full-time job and within the next 18 months will purchase a "sizable" business. OF course I will not be working for anyone when that happens.


Renters and home owners are one in the same as it relates to not saving and investing. Building equity in a home has never b een and will never be an "investment"


Quote:
Originally Posted by mathjak107 View Post
i love renting but as a renter now of our primary home, a homeowner of our 2nd home and real estate investor ,let me say this about renting .

most renters who can afford to buy end up taking that down payment money and any differences they may save in the early years and blow it.

renters tend to just spend more on an apartment, more vacations,nicer car etc but they dont plow that money into a different appreciating asset.

thats the problem... at least the homeowner is forced to tie up that money in the house. of course thats not to say they cant borrow it back out and have nothing but at least they are forced to put it in.

thats why most renters find it tough to build wealth ,it has nothing to do with housing costs as much as it does what the renters options are for other appreciating assets and whether they have the discipline to carry out a plan.

sorry to say ,most do not.

Last edited by TheHitman; 03-01-2012 at 01:21 AM..
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