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the whole rent vs buy thing is usually skewed because very few , especially in metro areas rent as much house as they would buy or even rent in the same area they would buy . metro areas tend to have multi family dwellings and apartment houses as rentals . 1/2 of all rentals here in nyc and the boroughs are in multifamily buildings . they house millions . other cities are likely the same with lots of apartment houses .
a home here starts at a million for a small starter home , if you can even find one in that range in a decent area . you can rent really nice apartments for a fraction of the cost of buying and have plenty left over to invest elsewhere .
The rental market for full family homes around here is atrocious.
If you can afford to fork over $3000/month for rent, why not just pay a mortgage?
And if you have an idea to buy a full family home and rent it out, just a warning about the type of prospective tenants you'll encounter ... it ain't pretty.
My perspective was coming from renting versus buying an apartment.
The rental market for full family homes around here is atrocious.
If you can afford to fork over $3000/month for rent, why not just pay a mortgage?
And if you have an idea to buy a full family home and rent it out, just a warning about the type of prospective tenants you'll encounter ... it ain't pretty.
My perspective was coming from renting versus buying an apartment.
we don't have a lot of homes that are rented out for long periods of time in our area . they are usually rented by people who are looking for a house to buy , not a co-op or condo and don't want apartment house life for the year .. the single family homes are more transient and temporary rentals.
we get a big turn over in our building for the same reason . lots looking to buy homes and just rent for the year and gone . they really like our area so they want to be here , but they tend to buy elsewhere , not in the area because it is just so costly to buy with homes starting at 1 million for the smallest .
Last edited by mathjak107; 12-13-2018 at 03:39 AM..
we don't have a lot of homes that are rented out for long periods of time in our area . they are usually rented by people who are looking for a house to buy , not a co-op or condo and don't want apartment house life for the year .. the single family homes are more transient and temporary rentals.
we get a big turn over in our building for the same reason . lots looking to buy homes and just rent for the year and gone . they really like our area so they want to be here , but they tend to buy elsewhere , not in the area because it is just so costly to buy with homes starting at 1 million for the smallest .
There are homes less than 20 miles from Manhattan that you can buy for $250K in north NJ.
there are homes you can buy every where that are cheaper then the desirable areas . but these are no where i would ever want to live just so i could buy . personally i can't even stand the drive visiting new jersey and my kids live there . i dislike everything about new jersey . they charge those big tolls when you take any of the bridges and tunnells to leave nj because it is worth it lol . real estate taxes in good school districts can be high too in nj . i think our kids pay close to 10k .
we have cheap places in nyc , we have cheaper places in long island but again , if you want a nice area you will pay the price . even our area in queens starts at a million or so for a small home .
I can't give you the exact calcs right now because I'm working, but I can give you rough calcs (while I'm working ). Haha.
So, let's take an example of a property in my area. 2 bdrm. Forget about price right now. You're going to buy and sell for the same amount. Property taxes ($6300), maintenance fees ($600/month), utilities ($1700/year), construction/maintenance ($1000/year), insurance (~$300/year).
So, I can rent a similar place for $1850 with everything included.
So, you're saving $5000-6000 a year. Is that a good amount, yes.
Is it a monstrous amount considering you're literally paying cash for a home? No.
One might argue you could make way more in equities if you knew what you were doing and the market was hot..
Of course, that was a hypothetical situation.
NOW, add in interest over the life of a 30 year loan which almost ALL of us will have to pay...
I can't do those calcs for you now, but rest assured, I HAVE done them and that changes things a lot. That was my point.
So where is the landlord getting the money to subsidize the rent?
I think this is a good example of reasonably concluding when it's good to rent vs. own.
In some markets, it actually may make a lot more sense to rent. For instance, NYC and San Francisco have some of the steepest RE prices in the entire country. To own a home, forget about it unless you're some sort of high end professional or trust fund baby. Renting is generally the only financially feasible option for the vast majority of working professionals or blue collar workers.
One really must evaluate rental costs versus home ownership costs DEPENDENT on their local market. In some markets, unless you got in during the 60s or 70s or 80s pre-boom era, owning a home is simply far more expensive than renting.
I don't think anyone is trying to argue that there are no exceptions, but they are just that, exceptions. The vast majority of people don't live in NYC or San Francisco. The vast majority of people aren't exceptions. So the vast majority of people will be much better off owning rather than renting. They may choose a condo or townhouse over a single family home because it fits what they are looking for better, but they are still better off owning. Finding exceptions doesn't prove that all these people who think they're better off renting endlessly are right.
and it is just because there are others who do very very well who don't buy and rent instead, that across the board statements about buying or renting being better are just not fact all the time . i would never say because i found fabulous investment opportunity that anyone else can easily do it . by the same token others saying i am throwing money out the window renting is false as well since there is a price to pay for having that much money tied up in a house .
there is no "better " way , there is only what applies to you
There is a way that will be better for most people though. Just because there are exceptions based on specific situations doesn't mean there is not a factual reality that one is better for more people. Lots of people may not find themselves in that majority, but one method is better for more people.
People renting endlessly are usually doing more harm than good by doing so (yes, there are exceptions). They would be financially better off if for no other reason than they could get the 'rent' (mortgage) to stop at some point if they owned. That alone would cause them to come out ahead the majority of the time. On top of that, all that rent they spent isn't gone, it's in equity that they still own. That alone will also cause them to come out ahead. They may just want a condo the same size as their apartment and in the same area, but they would still be better off buying instead of renting for 10, 15, 30 years or more.
it really depends on how "under funded they are " and where they live .
it is like when my daughter got married they could rent in the "best " area where we are . or they could buy a co-op in a good area for the same money , except for the needed down payment as 25% is required in most co-ops . so while co-ops are cheaper then homes , you do need as much as 25% down .
it made more sense to buy the co-op in the good area . however if they could not afford that co-op in the good area yet , i would sooner see them rent in the good area then buy in an area i would not want to see them living.
there are always cheaper homes , but you reach a point where once it no longer meets your standards or is safe then the cards are off the table as far as buying yet .
So where is the landlord getting the money to subsidize the rent?
He's not subsidizing the rent.
As others said, and you actually inferred yourself... mortgage does not go up.
Some people have a rental property with the mortgage paid off or perhaps have one from 1995.
So, they bring down the competitive rate of rentals.
Meanwhile, you're trying to rent out the same apartment from a loan that you just purchased in almost 2019.
Will it pay off if you're alive 30 years from now?
Probably yes, but I was never arguing that point.
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). Haha.
