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Old 02-14-2016, 09:42 PM
 
352 posts, read 432,028 times
Reputation: 743

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One of the things that must be realized is that "living in a not so nice neighborhood" may mean living in a dangerous neighborhood and there ARE dangerous neighborhoods in the bay area. So if you want to live in a neighborhood without gangs, gun violence and drugs, you will have to pay more, much more to live in a safe, but run-down neighborhood. If you want nice, updated neighborhood then expect to pay over $3000/mo to rent, over $1 million to buy. I don't recommend buying in the bay unless you have a fail safe job.

And the guy who suggested looking at your NET salary is right on! You can make 100,000$ a year in Cali, but you will only take home 50,000$ a year after state and fed taxes. Minus the $36,000 a year for rent you'll be paying you are left with $14,000 a year to pay for utilities, groceries, child care, gas for your 2 hr plus commute each day, and other necessities. Good luck!!
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Old 02-15-2016, 12:24 AM
 
Location: SoCal
20,160 posts, read 12,664,722 times
Reputation: 16993
Quote:
Originally Posted by mossly View Post
Of course it's possible to rent well in the Bay Area. But it costs significantly more than renting well in almost any other part of the country. Therefore, renters feel some of the same pressures as owners when they move here - pay more money or have fewer bedrooms, or worse schools. You can't get away from that dilemma and the associated emotions just by renting.

You're not wrong that there are advantages to renting - I rent as well - but being able to maintain the same level of house/neighborhood when you move here from somewhere else is not one of them. Some people care about that more than others but it's still part of the conversation regardless of renting vs. buying.
But that's why you get pay more. Honestly, there seems to be lots of complaints here. My kid rented in a crappy neighborhood this summer. She had no choice, temporary housing was hart to find. If she moved there permanent, she would be able to rent a nice 1br apartment with her salary.
Yes this is a kid who was born into the lap of luxury. But she had to do what she had to do. I'm sure she would have found better house in better neighborhood elsewhere or even where I live, but the jobs were not there. She rather took the job to give her the experience that she needed for future career growth.
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Old 02-15-2016, 06:46 AM
 
169 posts, read 231,568 times
Reputation: 116
Quote:
Originally Posted by NewbieHere View Post
But why do people want to buy a house, renting is better. The problem with the Bay Area is that you don't guarantee your job will be there, in the boom time it's great, but when you are laid off, both spouses( like in my case) and many others, you can just walk away.
Wow! 13 yrs ago, if I followed your comment, I would be still a renter now.
13 yrs ago, we rented 2 BR condo for $1400/month. But then we decided to buy a condo for $315K. At the interest rate of 5.625, we would pay mortgage about $1445 /month, HOA= $215, property tax.. which added up to total around $2100/month. My agent suggested us to buy a single house instead ( we had enough cash for down payment and had 2 incomes.) but I did not because if something happen to one of us, we could still handle the monthly expenses.
My wife told me " We buy the house/condo it's look expensive now but it will cheaper in the future. Rent is always going up, but our mortgage will go down when the interest go down."
Now, my rental condo mortgage is $945/month. HOA $394, property tax ~$400/month and total expenses is $1739 . I am renting out below the market at $2100 months, where the average in North Valley is $2500 at least. I still make >350 months... and the principle.
We moved up to single house 3,4 yrs ago and we saved enough money for down payment without selling the condo and we plan to keep it for my daughter's college expense.

My question is when both of spouses get laid off, you can just walk away from the rental unit.. but to where??? A Street ?
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Old 02-15-2016, 10:05 AM
 
816 posts, read 960,528 times
Reputation: 539
I bought my first house when I was 28 or so, that house has since doubled in value. (not in the bay area).

I was paying 2200-ish for a luxury 1BR 800 sq ft home. I pay a little more now in mortgage for a 2200 sq ft townhome.
Paying mortgage in America is a no brainer given the interest rates and tax code. Granted, the challenge is the down payment. Getting to that in the bay area is tough. Really tough.

When you pay mortgage, your interest and property taxes are deductible. Your mortgage contains principle repayment ( about a 1/3rd in the begining), which is NOT a cost. You are paying back yourself.

You real cost is ONLY your interest cost + Property Taxes less the taxes your get deducted. Net-Net, I pay LESS for owning a house than I would for trying to rent the same place.
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Old 02-15-2016, 10:07 AM
 
816 posts, read 960,528 times
Reputation: 539
TO me, you are obviously , on the right track. And I am sure you have gained a fair amount of equity as well.
To answer the question, people want to buy home to get financially secure.


Quote:
Originally Posted by Lanienguyen View Post
Wow! 13 yrs ago, if I followed your comment, I would be still a renter now.
13 yrs ago, we rented 2 BR condo for $1400/month. But then we decided to buy a condo for $315K. At the interest rate of 5.625, we would pay mortgage about $1445 /month, HOA= $215, property tax.. which added up to total around $2100/month. My agent suggested us to buy a single house instead ( we had enough cash for down payment and had 2 incomes.) but I did not because if something happen to one of us, we could still handle the monthly expenses.
My wife told me " We buy the house/condo it's look expensive now but it will cheaper in the future. Rent is always going up, but our mortgage will go down when the interest go down."
Now, my rental condo mortgage is $945/month. HOA $394, property tax ~$400/month and total expenses is $1739 . I am renting out below the market at $2100 months, where the average in North Valley is $2500 at least. I still make >350 months... and the principle.
We moved up to single house 3,4 yrs ago and we saved enough money for down payment without selling the condo and we plan to keep it for my daughter's college expense.

My question is when both of spouses get laid off, you can just walk away from the rental unit.. but to where??? A Street ?
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Old 02-15-2016, 10:48 AM
 
Location: SoCal
20,160 posts, read 12,664,722 times
Reputation: 16993
Quote:
Originally Posted by Lanienguyen View Post
Wow! 13 yrs ago, if I followed your comment, I would be still a renter now.
13 yrs ago, we rented 2 BR condo for $1400/month. But then we decided to buy a condo for $315K. At the interest rate of 5.625, we would pay mortgage about $1445 /month, HOA= $215, property tax.. which added up to total around $2100/month. My agent suggested us to buy a single house instead ( we had enough cash for down payment and had 2 incomes.) but I did not because if something happen to one of us, we could still handle the monthly expenses.
My wife told me " We buy the house/condo it's look expensive now but it will cheaper in the future. Rent is always going up, but our mortgage will go down when the interest go down."
Now, my rental condo mortgage is $945/month. HOA $394, property tax ~$400/month and total expenses is $1739 . I am renting out below the market at $2100 months, where the average in North Valley is $2500 at least. I still make >350 months... and the principle.
We moved up to single house 3,4 yrs ago and we saved enough money for down payment without selling the condo and we plan to keep it for my daughter's college expense.

My question is when both of spouses get laid off, you can just walk away from the rental unit.. but to where??? A Street ?
Not only you can walk away, you don't lose your down payment and you can move to lower cost area where you can live off savings. The point is you don't have to live in high COL if you don't have high paying jobs. I know plenty of people moved to Las Vegas, Arizona, Colorado, Oregon.
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Old 02-15-2016, 10:51 AM
 
Location: SoCal
20,160 posts, read 12,664,722 times
Reputation: 16993
Quote:
Originally Posted by Lanienguyen View Post
Wow! 13 yrs ago, if I followed your comment, I would be still a renter now.
13 yrs ago, we rented 2 BR condo for $1400/month. But then we decided to buy a condo for $315K. At the interest rate of 5.625, we would pay mortgage about $1445 /month, HOA= $215, property tax.. which added up to total around $2100/month. My agent suggested us to buy a single house instead ( we had enough cash for down payment and had 2 incomes.) but I did not because if something happen to one of us, we could still handle the monthly expenses.
My wife told me " We buy the house/condo it's look expensive now but it will cheaper in the future. Rent is always going up, but our mortgage will go down when the interest go down."
Now, my rental condo mortgage is $945/month. HOA $394, property tax ~$400/month and total expenses is $1739 . I am renting out below the market at $2100 months, where the average in North Valley is $2500 at least. I still make >350 months... and the principle.
We moved up to single house 3,4 yrs ago and we saved enough money for down payment without selling the condo and we plan to keep it for my daughter's college expense.
It works out for some and not so well for others. My cousin knows someone who bought 20 houses in San Jose and lost them all during the housing burst. I mean it's not a straight line up.
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Old 02-15-2016, 11:31 AM
 
816 posts, read 960,528 times
Reputation: 539
that is indeed true, A cautionary tale to be taken seriously, we live in highly leveraged times. Whats great for me today, could be wiped out fast.

Comes down to risk tolerance and personal experiences. Once burnt by housing, people are likely to be very cautious.
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Old 02-15-2016, 06:11 PM
 
139 posts, read 191,782 times
Reputation: 139
Quote:
And the guy who suggested looking at your NET salary is right on! You can make 100,000$ a year in Cali, but you will only take home 50,000$ a year after state and fed taxes. Minus the $36,000 a year for rent you'll be paying you are left with $14,000 a year to pay for utilities, groceries, child care, gas for your 2 hr plus commute each day, and other necessities. Good luck!!
The tax you applied to 100k is similar to those of single people in California (actually less), why does a single person need to live in a 3000 a month property (A single person does not need a 2 bed 2 bath renter) and pay for child care (are you assuming this person recently got divorced and has not moved out of his property to a cheaper one)? Lets not scare people now.

The post I see here really make me wonder if any of these people posting actually live in bay area , earning an income, and living on their own without support of their parents or government.

Then you got people saying that renting is better because you can possibly get a better property and if you lose your job you do not have to worry about losing much. This claim does not make sense unless you put a minimal downpayment and bought the most expensive property your bank approved you for. Many people should have put aside some money for those worst case seniors were your household income can equal 0 (emergency funds to help stand for couple of months). As someone here stated before what if you lose your job and your can't afford rent, were in the world do you go? Everyday I hear people saying "do not buy its a bad time". People have said this 10 years ago, its like never a good opportunity to own property unless you can pay all cash and even then people hesitate because the property may go to $0 apparently. They are some cases in which I can see renting being more beneficial but if you can afford to own property for a mortgage that is similar or less then your rent, have a reliable source of income, have some kind of emergency fund for those worst case scenarios, then I do not see why one would rent.
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Old 02-15-2016, 10:14 PM
 
Location: SoCal
20,160 posts, read 12,664,722 times
Reputation: 16993
Quote:
Originally Posted by plot View Post

Then you got people saying that renting is better because you can possibly get a better property and if you lose your job you do not have to worry about losing much. This claim does not make sense unless you put a minimal downpayment and bought the most expensive property your bank approved you for. Many people should have put aside some money for those worst case seniors were your household income can equal 0 (emergency funds to help stand for couple of months). As someone here stated before what if you lose your job and your can't afford rent, were in the world do you go? Everyday I hear people saying "do not buy its a bad time". People have said this 10 years ago, its like never a good opportunity to own property unless you can pay all cash and even then people hesitate because the property may go to $0 apparently. They are some cases in which I can see renting being more beneficial but if you can afford to own property for a mortgage that is similar or less then your rent, have a reliable source of income, have some kind of emergency fund for those worst case scenarios, then I do not see why one would rent.
If you have the down payment, sure from stock options. But people here are complaining that they have to pay a $1M for 1200 sqft, delapidated house, then the answer is dont buy it. I didn't, my friend bought in Palo Alto, North of Oregon Express, which at the time was $560k for a 35 years old, probably 55 now, dilapidated 1700 sqft house, in 1992, because of the school district, but that was a lot of money. I refused to buy that kind of house and continued renting. I had much nicer place for less money. Eventually when I saw something I liked then I bought at recession price, but honest if I knew my husband and I would both lose our jobs at the dot com burst, we probably would not take the plunge.
Also do consider the fact that people move every 7 years on average when you decide to put down root.
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