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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 .
I don't think I'll ever understand where you're coming from. My PITI is hundreds of dollars cheaper than what the same house would rent for. As a renter, I would still have the same expenses for utilities and routine maintenance, such as yard work and snow removal. And now that I'm 65, my property taxes will go down significantly, a benefit a landlord wouldn't get. At the end of 30 years, I'll have a paid off house worth hundreds of thousands while a renter would have a pile of receipts. If I want to invest, I have more money to invest vs a renter. Yes, I could rent a dump for a few hundred a month less than I pay for my house, but that's an apples/oranges comparison. I don't want a lower standard of living, so I'm going to compare buying vs renting the same home. So to me, I'm money ahead by buying, because I am putting out less money over the years, especially when you figure my monthly payment will remain pretty much the same vs steadily increasing rent rates. I would say this applies to almost every one in the US.
I have lived in rental units all my life. These were apartments. At one point in my life, I decided to rent a house for a year to see what I may have been missing.
Worst experience ever. Brats living in the house adjacent to my backyard would climb a tree in their yard and fling apples at the cats and me when we were in my yard. Parents laughed and wouldn’t make them stop. I warned them they didn’t believe I would do such a thing but I carried out my threat to pelt them with the “ammunition” they used at me while they were in the tree.
Every time they would try to climb down I threw apples just below them preventing them from climbing down all the way. Much screaming and yelling ensued. They were treed as good as any squirrel. Only a promise they would leave my cats and me alone were they allowed to get down. No neighborly feeling between that family and me.
To my left, the old geezer in the house next door hacked up a lung every morning. I felt bad for him and if course couldn’t complain but he was so loud it woke me up mornings during the nice weather and we both kept our windows open.
The neighbors to my right were nice but constantly telling me how to keep up my lawn and landscaping. My rental agreement said that was my responsibility and I tried but apparently not enough for the neighbor’s approval. I hated every minute of the outdoor work.
After my lease was up, the owner asked if I wanted to buy the house on contract. Nope. I couldn’t wait to get out of there into a nice rental unit that was cheaper, less upkeep and I could move when my lease was up if I wasn’t happy.
Renting has always been preferable to buying for me. Buying made me think of being too tied down. To each their own.
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.
All that stuff your landlord does for you isn't coming out of his pocket in the end. You're paying for that through the rent you pay. And anything that can be depreciated, he gets the depreciation on his Schedule E, not you. You're also paying for that heat and hot water and the property taxes. Just because you don't pay for it directly doesn't mean it's free. In the end, it's renters like you who will pay for your landlord's remodeling of an old house. As for me, I just bought a new low maintenance house that shouldn't need any major repairs in my lifetime.
I don't think I'll ever understand where you're coming from. My PITI is hundreds of dollars cheaper than what the same house would rent for. As a renter, I would still have the same expenses for utilities and routine maintenance, such as yard work and snow removal. And now that I'm 65, my property taxes will go down significantly, a benefit a landlord wouldn't get. At the end of 30 years, I'll have a paid off house worth hundreds of thousands while a renter would have a pile of receipts. If I want to invest, I have more money to invest vs a renter. Yes, I could rent a dump for a few hundred a month less than I pay for my house, but that's an apples/oranges comparison. I don't want a lower standard of living, so I'm going to compare buying vs renting the same home. So to me, I'm money ahead by buying, because I am putting out less money over the years, especially when you figure my monthly payment will remain pretty much the same vs steadily increasing rent rates. I would say this applies to almost every one in the US.
what is so hard to follow ... i never said the housing costs are cheaper ... what i said is the opportunity cost on the money tied up in a house has been so much better elsewhere that today we can buy multiple houses after subtracting out decades of rent ... that money we had tied up in the house once we were no longer homeowners grew in to multiple 7 figures between investing it in commercial real estate and equities.
again , you need to look at housing costs and the investment side of home ownership vs renting and the investment opportunities on that money elsewhere... for us it was no contest ... even now the income and appreciation we would give up on the money we would buy with does not favor buying ... the higher housing costs of renting when coupled with the higher rate of return give us more cash flow renting and investing vs lower housing costs and having 300-400k less invested because we bought generating less cash flow ..
All that stuff your landlord does for you isn't coming out of his pocket in the end. You're paying for that through the rent you pay. And anything that can be depreciated, he gets the depreciation on his Schedule E, not you. You're also paying for that heat and hot water and the property taxes. Just because you don't pay for it directly doesn't mean it's free. In the end, it's renters like you who will pay for your landlord's remodeling of an old house. As for me, I just bought a new low maintenance house that shouldn't need any major repairs in my lifetime.
rental property is very different then a home you are consuming ...it is like owning a business... i rent , but i am also a landlord . at one time we owned as many as 11 co-op apartments , 9 of which over look central park , plus commercial lease rights .... today we are down to just 2 left in retirement , everything else was sold .
had we bought another house instead of buying in to this very lucrative real estate venture we would have a fraction of what we do today ...so now do you follow?
The big advantage to renting is you are not invested. If you want to move, or have to, you can with little cost. Selling a house is a big thing. And buying one is a big investment. The neighbor thing is really true. I owned a house once and the house next door was sold three times. First neighbor was good, second was not great, and third was neighbor from hell. If you can make a checklist of bad things, this guy had them all. Dog, boat, drum set, stand up pool, blaring stereo, and fights with his girlfriend and son. I came home one night at about 10 PM and they were having a knock down drag out fight on the front lawn. I sold the house and when I left the guy actually said "too bad you can't stick around for our wedding" - no kidding.
Yeah it completely depends on each individual. For me, I bought my house with the express intention of NEVER moving again. I DESPISE moving, I moved a zillion times in my life and I never wanted to again. I bought a home with a good sized yard ( I love gardening) and privacy. Also I’d never want to live in anything other than house - no condo or apartment for me.
where we live now , my wife has been in this apartment for 40 years .. it is a great area , a terrific building , we have a pool and tennis courts and there is really little reason not to rent from a housing perspective .... on the other hand i have owned 2 co-ops i lived in , 2 homes and a 2nd home ... i hate chores so i don't miss the homes at all .... where we live is transparent to our way of life... we are always on the go doing things and basically eat and sleep here .
It's a trade off. If you figure you will be in a place for awhile, buying can make sense. No matter what, a house is a big cash outlay and a big commitment. And no matter what you cannot control some things. The neighborhood is the wild card.
Location: Miami (prev. NY, Atlanta, SF, OC and San Diego)
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Since its inception the S&P has averaged a 10% annual return, much higher than real estate's 3.7 - 4% average annual return... In addition, I could--but choose not to--control even more of my funds via margin. You can make make money on the way down in stocks. I can participate in real estate via REITS and alternative investments. I can make $25K, 50K, 100K or more profit in one stock in one day (Beyond Meat value increased 40% just today). It provides greater annual returns and is far more liquid than real estate (I can pick up and move at the conclusion of my lease, regardless of the state of the economy or what the landlord paid for their property). Stock market gains can and have paid for my rental costs the past few years (though that's no guarantee every year). It's not for everybody--most people still need a place to live and the majority of their wealth is tied up in their house, not stocks--a reason many, NOT all, Americans have less than what they need for actual retirement and have to adjust their lifestyles, including downsizing and moving to less expensive cities.
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.
Last edited by elchevere; 06-07-2019 at 05:05 PM..
My husband did a study on our real estate investment. One property we made 24- 28 times, the SP500 was 4 times at best using our initial investment. Real estate is called leverage for a reason.
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