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Renting is also when you pay for someone else to take on basically all of the responsibilities of property ownership - taxes, maintenance, insurance,etc.
It's a trade off.
Yep, I own a house. When it needed to be painted last year, I wrote a check for $5000 for it to be painted. When we built a fence, we wrote a check for $3600. When the AC went out, we wrote a check for the repairs. When we replaced the flooring, we wrote a check for $17,000. When the dishwasher died, we wrote a check for $900 for a new one (our latest fun). When the property taxes went up, our mortgage went up.
When I was renting - need a new dishwasher? Call the landlord. Fence needs replacing? Call the landlord. House needs to be painted? That's up to the landlord. AC out? Call the landlord. Flooring needs to be replaced? Not my problem.
The owning side of that means you can have things replaced as you want or need them. I have an old stove in my rental that was manufactured in the 80s. I have finally gotten the landlord to replace the stove. The air conditioning works, but poorly. If I owned the place, I'd simply have bought a new stove (I can afford one) and had a private contractor service the air conditioner. As it is, I'm at the mercy of the landlord to perform repairs and can't really choose what I get.
Most people just aren't willing to do that. I have an ex-girlfriend who graduated either in 2013 or 2014 with a criminal justice degree back home. The only employment she's had since graduation is waiting tables at a seafood restaurant and working at a clothing store. Her gross income last year was under $20,000. She did well on her LSAT and planned on going to law school, but never did. I've spruced up her resume as well as I can and tried to get her to apply in bigger cities with better employment markets. Who knows if she ever did, but she constantly gripes about it.
I had a really down year financially and personally in 2013. Looking back on some of my threads on this board from back then, it's easy to see my mental health wasn't so hot, in large part due to the financial circumstances I was in back home.
You see something similar with people posting from the mega coastal markets about how everything is so unaffordable. They could go somewhere else, but inertia keeps all these people from taking any action at all.
The most people who are not willing to move have found a way not to move... they may not be happy in their situation but have found a way to make do.
There is nothing wrong with renting - or with owning - when it is a valid option. It's arguably not an option for most renters.
As for dishwashers, the only dishwasher I've ever seen in a rental was at my aunt's apartment after she sold her house and moved to Portland. It was, of course, an upscale rental (and owned by a major REIT) and she bought hers when it went condo.
Interesting. I've rented in numerous cities and towns over my lifetime and nearly always had a dishwasher in the rental. These were just average places - not upscale.
Yep, I own a house. When it needed to be painted last year, I wrote a check for $5000 for it to be painted. When we built a fence, we wrote a check for $3600. When the AC went out, we wrote a check for the repairs. When we replaced the flooring, we wrote a check for $17,000. When the dishwasher died, we wrote a check for $900 for a new one (our latest fun). When the property taxes went up, our mortgage went up.
When I was renting - need a new dishwasher? Call the landlord. Fence needs replacing? Call the landlord. House needs to be painted? That's up to the landlord. AC out? Call the landlord. Flooring needs to be replaced? Not my problem.
Adding to the above, maintenance-costs don’t greatly differ from one real-estate market to another. But the cumulative effect on one's finances can differ greatly.
Consider a modest older single-family house in the rural Midwest, selling for $80K. The same house costs $800K in Palo Alto, CA. Replacing that fence and roof and dishwasher might be a little less expensive in the rural Midwest than in coastal California, but only slightly. 10 years later, the Midwesterner has spent $50K on maintenance, while the Californian has spent $70K. Meanwhile the Midwesterner's house has depreciated to a market-value of $70K, while the Californian's has appreciated to $1.2M.
Now tell me again: which place has the higher cost of living?
The owning side of that means you can have things replaced as you want or need them. I have an old stove in my rental that was manufactured in the 80s. I have finally gotten the landlord to replace the stove. The air conditioning works, but poorly. If I owned the place, I'd simply have bought a new stove (I can afford one) and had a private contractor service the air conditioner. As it is, I'm at the mercy of the landlord to perform repairs and can't really choose what I get.
So work on your situation till you can buy a house, like nearly everyone who has ever bought a house had to do.
By the way, we bought a stove last year. $2500. Get ready for all that fun!
Homeowners don't know (or admit) how good they have it. Preferentially low property tax rates in most states. CAPS on annual property tax increases in many states, with taxes on rental property sometimes not capped. Property tax deferrals and exemptions in some states.
Capital expenditures (like roof and furnace) should be budgeted for monthly accrual so there are no unfunded surprises. If you think a new roof in Year 15 is a burden, try renting for the same 15 years and let us know if you are better off today than you were 15 years ago.
If home ownership is better than renting why do people still choose to rent?
Last edited by Ultrarunner; 02-16-2016 at 01:13 PM..
There is nothing wrong with renting - or with owning - when it is a valid option. It's arguably not an option for most renters.
As for dishwashers, the only dishwasher I've ever seen in a rental was at my aunt's apartment after she sold her house and moved to Portland. It was, of course, an upscale rental (and owned by a major REIT) and she bought hers when it went condo.
So many homeowners walked away from homes and now are bitter...
Only one person listened to me and decided to stick it out... she said she could rent the same home for $2500 a month instead of the $4000 it was costing her to own.
She was underwater and now is 250k above... I can't tell you how many times she has thanked me because the Foreclosure notices had already gone out and ALL her friends said walk away and she almost did.
A lot of people simply did not want to be Home Owners anymore...
I lived in SoCal for 8 years. Starting in 2007 until last year when we moved to MN. Lived in OC specifically. Ladera Ranch. CA has become a joke. Seriously, the average income in OC is around what $75k? People buying half a million to a million dollar homes on that salary or even $150K is not sustainable. If you just look at the last 15 years and how crazy home prices have gotten in that state it's absurd. My wife and I were both making great salaries bringing in almost $200K+ a year and it still felt like we couldn't get ahead. We now live in MN and wow it's such a breath of fresh air. We went from a 1600 sq ft no yard, not even a damn driveway "detatched" house to 3 acres, 3700 square feet 3 car garage amazing home and our income is cut in half. Schools here are WAY better than even in South OC Mission Viejo area. Lots of foreigners have moved in and driven up the cost of real estate too. This is exactly what's happening in Vancouver. Lots of foreign Chinese money coming in and driving up real estate so much so locals, people that are BORN there can't even afford it.
You can have the damn weather in CA. It's not THAT great. Sure if you can afford to live close to the beach communities etc. But even in Ladera Ranch it was getting hotter and hotter longer and longer. 90 degree weather in February? Everyone in the OC walks around like a financial zombie hoping they will get ahead. Reality's consequences will set in over the next few years and it will be a cold, hard, brutal awakening for most living in SoCal or CA in general.
I hope people keep believing the upper Midwest is fly over country! States like MN are truly hidden gems. It's nice to know there are still areas in America where middle class people can get ahead. The entire west coast is becoming unsustainable for all but the upper crust of the middle class.
Holy crap, I totally agree with EVERYTHING you said 100%!!!
Lived in the OC for over 20 years now and already sick of it! Sure, weather is nice but even that has getting worse every year, like you said.
SoCal in general is being propped up due to all the money flowing in from corrupt oligarchs wanting to launder their ill-gotten gains in real estate.
The owning side of that means you can have things replaced as you want or need them. I have an old stove in my rental that was manufactured in the 80s. I have finally gotten the landlord to replace the stove. The air conditioning works, but poorly. If I owned the place, I'd simply have bought a new stove (I can afford one) and had a private contractor service the air conditioner. As it is, I'm at the mercy of the landlord to perform repairs and can't really choose what I get.
My home was built in 1958 and everything is 1958... Formica, Linoleum, stove, oven, toilets...
Home was built by a retired Navy couple and they lived here until they moved to a retirement community... even with ancient original furnishings... everything is in excellent condition.
New is not always better.... sometimes it is only new.
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