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If you buy, you have equity, if you rent you have old rent receipts. I will stay in my condo apartment.
nonsense .... we have multiplied the money not tied up in a house many times over by renting and investing elsewhere ... we can buy multiple houses today with that difference ...
there are two aspects to what you are trying to compare ... there are the costs of housing you whether you rent or buy and then there is the investment side of things .
the more resources you have , the more money you have available to buy with , the greater the choices in investing elsewhere become
i love the fact my landlord has his money tied up in our apartment so it frees my money up for all the wonderful investment opportunities we have had over the last 15 years.
renters range from very poor to very wealthy .. the poor renters will always be poor renters .. but as resources are greater and greater so are the choices and opportunities elsewhere .
by retirement many of us sell real estate and business's or inherit money and there are lots of investment opportunity elsewhere while renting .
a perfect example is we can by a co-op for 6k less then we pay in rent ... that is the part most people stop at when comparing .
however the hundreds of thousands of dollars that will cost will stop producing a minimum of 15k a year in income since it is no longer invested and generating cash flow and appreciation .
that is at least an 8k hit to our income in retirement , the last 10 years would have been far greater ... so you need to examine the entire situation before making a comment like renters get nothing .
Last edited by mathjak107; 06-07-2019 at 04:20 AM..
I have been here 2 years (renting). In that time, LL's have put on a new deck (large), replaced 6 skylights in the kitchen with a real roof, replaced sliding glass doors, replaced the fireplace damper and installed a chimney cap, and replaced the range hood. If I owned the place, that would have all been on me. Plus they provide heat and hot water. The whole place will need painting soon and the roof is old. So no, I am not interested in "building equity".
You might say, well it's an old house - buy something newer. My friend looked at a fairly new condo complex and almost bought one there before she found out about problems they were having with leaking pipes in the slab floors. Then she DID buy something in a newer complex and had to re-do the kitchen due to mold.
That's not to mention property taxes, which I don't have to pay, and the difference between renters insurance and homeowners insurance.
And if you have to sell during a market downturn, there goes your profit. Especially if you bought high.
Stocks have historically outperformed real estate.
That would be true if you pay cash for your house purchase. What you're neglecting to factor in is that you can control much more real estate than you can stocks with the same amount of money.
If, for example, you compare investing $500k in the stock market with buying a house worth $500k with a $50k down payment, and the stock market goes up 10%, but your house only appreciates 5%, you can claim that stocks are outperforming real estate (and even that you have done twice as well). The reality, however, is that your stock market investment would have garnered you a 10% return whereas you would have made a 50% return on real estate (25k appreciation on your $50k down payment "investment.")
And, yes, I'm aware that the above example doesn't factor in a lot of costs associated with buying and selling, (and I'm assuming that the mortgage payment equals the stock investor's rent payment so they cancel each other out); I'm just making the point that you can't just make a simple statement that stocks outperform real estate, without factoring in a lot of other variables, not the least of which is that you're controlling a significantly larger amount of real estate for the same investment dollars.
don't forget as time goes on you are using more and more your own funds in the real estate as more and more principal is paid until it is eventually all your money .
the big choices really come later on when retirees have to decide whether to plunk it all down in another house or rent and invest it all elsewhere ..
many times retirees have to even plunk a big part down in order to qualify for a mortgage in retirement..
of course whether the mortgage acts as leverage or a weight or not depends on interest rates and returns on your own money
Last edited by mathjak107; 06-07-2019 at 06:44 AM..
I'm single, no ties to my current place in New England. One of the most thought-provoking posts I ever read was on another retirement forum where a retired guy explained how he got rid of almost all of his stuff and just lived like a nomad in Europe. He'd rent a place and when he got tired of it, go somewhere else. The critical piece of this was being free of stuff.
I'm about to take my second trip down to central Florida to hopefully secure a year lease. At first, I was set on buying into a 55+. Now I'm not sure I will buy at all. I've been retired for 3 years and have spent quite a bit of that time on outdoor and house maintenance. I don't enjoy it.
None of my furniture is worth transporting. There are a few lamps and end tables that have sentimental value. The rental will dictate how much I will bring. If you don't have too much stuff, it is much easier to move to another rental if you have a neighbor or other problem.
From the posts in this thread it seems like most people are moving to the situation they don't have now.
Rent out 2 properties that are well-managed, renting a small upscale apartment in a very central, walkable area for hospitals, shops and restaurants. Few possessions, call whenever something needs fixing....what's not to like?
My elderly mother rents in a large apartment complex in Los Angeles, after having lived in houses she and my father owned for most of their lives. They moved to this apartment roughly a decade ago, before he passed, after selling a house that was getting difficult for him to get around in (too many stairs).
Every situation is different.
A lot depends on whether you actually own your house free and clear, which they did not. They still had large mortgage payments in retirement, which is a real burden.
She loves not having to worry about maintenance, and having an elevator, and being in an urban setting where she can walk to things.
I made my last mortgage payment in Feb 1997. What have I lost by not paying rent for the last 22 years?
how much is your house worth ? i can tell you my house in ny when i bought it in 1987 was 169k and 950k today ....
however the same dollars in the fidelity insight growth model i have been following since then is 5 million today , even the s&p 500 is 4.50 million ... i can subtract out out decades of rent and taxes and buy a few houses today . so there is your answer as to what could be missed by having the money tied up in the house.
opportunity costs lost elsewhere can be a lot . i am not saying everyone should rent and invest but if you want to know what can be lost there is you answer ....our investments did very very well and allowed us to retire and live a very nice lifestyle in nyc . we would likely not have retired here if i still had the house instead of the investments
After having owned 6 places in 4 different states over the course of 26 years, I now rent and am loving it!!!!
Now that I am retired, it gives me a lot of peace of mind that I don't have to worry about some unexpected housing expense like
a new a/c , water heater etc...
Now if I can only convince my better half that renting is the best way to go every thing would be just Grand!!!
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