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It's all a tradeoff and I'd much rather live in a place that I love and work 2 jobs than live in a place that I hate. I could buy a home in Podunk, Oregon for $50K but what would I do in my spare time...sit around and watch the cars rust? On the other hand I could live in a great city that I love even if I have to work 2 (or 3) jobs to pay the bills. I'd rather have the latter than the former.
Renting is a good option in most cities for a few months at least. You need to get a feel for the area. Rent, save up your money, THEN buy the home you want. Renting may be throwing the money down the drain but that's life.
I'd rent in a place I wanted to live if I couldn't afford a house. Better if you can rent and still save up money to buy one if that's what you want though home ownership isn't for everyone.
If I found that I wanted to live in a particular area my first buy would be a two family home (if that were an option in the locale), preferably one where the incoming rent paid the mortgage or the majority of it. That would give me the option of either staying put or saving for something better. I'd keep the rental home in any case.
I rent a 1+1 apt because thats all the space I need to be comfy here in southern cal. I don't spend much time sitting around indoors for a large part of the year. I have a garage for some extra storage place and as a place to park my 4 bicycles and a car. My rent is around $1350 per month. Sounds like a lot, but that's less than some people pay just on insurance, property tax and homeowners fees around my area. Most tract homes in my area sell at $700K to $900K.
The one cheap thing here is utilities. My combined gas and electric bill averages $35 per month. I hardly ever use heat or AC because the temperatures are comfy most of the year. If I moved somewhere else that would go waaay up.
I have looked into a job transfer with my company to other parts of the country. I applied for an almost identical job that I have here, but the pay was at least $15K to 20K less. Sure, I could go and buy a nice house for $130K in Omaha or Wichita, but that big of a pay cut reduces my contributions to 401K, social security, etc (I want to retire in a few years). Heck, my rent is less than the pay cut to move elsewhere, and I still would have spent more money to make my monthly home payments elsewhere. It just didn't add up for me.
I rent a 1+1 apt because thats all the space I need to be comfy here in southern cal. I don't spend much time sitting around indoors for a large part of the year. I have a garage for some extra storage place and as a place to park my 4 bicycles and a car. My rent is around $1350 per month. Sounds like a lot, but that's less than some people pay just on insurance, property tax and homeowners fees around my area. Most tract homes in my area sell at $700K to $900K.
The one cheap thing here is utilities. My combined gas and electric bill averages $35 per month. I hardly ever use heat or AC because the temperatures are comfy most of the year. If I moved somewhere else that would go waaay up.
I have looked into a job transfer with my company to other parts of the country. I applied for an almost identical job that I have here, but the pay was at least $15K to 20K less. Sure, I could go and buy a nice house for $130K in Omaha or Wichita, but that big of a pay cut reduces my contributions to 401K, social security, etc (I want to retire in a few years). Heck, my rent is less than the pay cut to move elsewhere, and I still would have spent more money to make my monthly home payments elsewhere. It just didn't add up for me.
This is why rent can work for people in your situation. $1350 a month is very cheap rent for a desirable CA location. Would I stand correct if I estimated $400k to purchase a condo similar to the one you are renting? Its no wonder your happy renting till you retire and relocate. The insurance/taxes/HOA/interest, etc on a $400k condo is gonna end up costing more than your rent. The locations that im interested in, its 2 to 3 times cheaper to buy than rent because houses can be had for a few thousand while rent is like $400 a month=ripoff! Even one year's rent is a bad deal when thats almost enough to buy a whole house! You probably get a high salary which would be alot less elsewhere. Im self employed and make the same no matter where I live so it makes no sense to live where id be in poverty, see?
Need, you cannot calculate your self employed income until you've been doing it for a few years IMO. Otherwise you might, let's say make $30k in 2007, but then move to somewhere in 2008 and make $5k. You need a steady income first for several years. That or a real job.
I'd definetly rent if in a good location. It'd be worth it. For example, if I wanted to be near Disneyland in Anaheim, California, I'd do the $1500 a month rent just because of the things to do and weather there.
Besides, in an apartment you have less to lose if the building got torn down somehow (and obviously you survived). Okay, your furniture and all that is gone, but at least you should be able to find another apartment, faster then you'd find a home.
Moving to an area and buying a home is a huge risk. I know you think you want rural, but if you get there and hate it, you're gonna be stuck with that house since I have a feeling they don't sell well in Oil City. So then you'll renovate it, but where will you get the money without a steady sure income? You might end up trapped.
Renting isn't even THAT expensive. As long as you're in a normal city, a 1bd should be less then $1,000.
$1000/month for a one bedroom apt. ISN'T expensive??? I pay $750 here in Anchorage and I think that's too high! $12,000/year on rent is too much for one person, I think. I wouldn't even move to Santa Barbara for rents like that (unless I was rich), and I LOVE Santa Barbara.
In regards to the original question- no I would not be willing to move to a great city if it meant having to work two jobs. And I wouldn't live in a rathole even it were free, unless I were so broke and desperate that I had no choice. I think I'd sooner turn to stealing (of course, it depends on how ratty the rathole is, but anyway...) I think there's a happy medium somewhere. I don't see "work yourself to death or live in a crumbling waste treatment plant until you die of typhoid" to be a valid set of choices. Sure, that's not what OP said, but... when you don't say just HOW bad... I can make up anything I want.
Oh, wait, OP did specify. My bad. I guess I was getting carried away.
That gives me an idea- would you guys rather get a roommate in order to afford living in a city you love, or not have one and still be able to afford a place in a so-so city?
You find another city that you like (not a random city as in your first scenario) and you buy a home. Pick a city that is a happy medium that provides low crime and things to do. Cities like that actually exist! That way you truly become part of the community, build equity, etc.
$1000/month for a one bedroom apt. ISN'T expensive??? I pay $750 here in Anchorage and I think that's too high! $12,000/year on rent is too much for one person, I think. I wouldn't even move to Santa Barbara for rents like that (unless I was rich), and I LOVE Santa Barbara.
In regards to the original question- no I would not be willing to move to a great city if it meant having to work two jobs. And I wouldn't live in a rathole even it were free, unless I were so broke and desperate that I had no choice. I think I'd sooner turn to stealing (of course, it depends on how ratty the rathole is, but anyway...) I think there's a happy medium somewhere. I don't see "work yourself to death or live in a crumbling waste treatment plant until you die of typhoid" to be a valid set of choices. Sure, that's not what OP said, but... when you don't say just HOW bad... I can make up anything I want.
Oh, wait, OP did specify. My bad. I guess I was getting carried away.
That gives me an idea- would you guys rather get a roommate in order to afford living in a city you love, or not have one and still be able to afford a place in a so-so city?
$750 would be pretty "low" around here so I guess that's why I called $1,000 "not that bad". Most rents are pretty much above $600 now in most places.
Redwingsfan, that's a good scenario, but it sort of kills the point of the thread. If we could all buy a house where we wanted, renting wouldn't be an issue.
$750 would be pretty "low" around here so I guess that's why I called $1,000 "not that bad". Most rents are pretty much above $600 now in most places.
Redwingsfan, that's a good scenario, but it sort of kills the point of the thread. If we could all buy a house where we wanted, renting wouldn't be an issue.
You've given some sound advice in past quotes. I for one have always had a rule of thumb. When I move, I immediately rent a place, close to what I want. I always plan on one year of rent. This gives me time to check area's of town, good, bad, taxes, schools, shopping, traffice patterns, and finally growth. Then by the end of the year I've found the exact place I want to be, I know the ins and outs, and I know the prices I can afford. Then I move. Be it into another rental, or a purchase. But I've always given myself that one year.
Where I live now, I bought it. But I was in this town for 13 months when I put down the money.
Where I was renting, I could have stayed forever renting. Beautiful 6 bedroom, 3 bath house. Office with separate door on one side. 4 car garage out back. All on 1/2 acre. I was paying $550 a month for rent.
....there are any number of financial guru's who will tell you to NEVER own a home... to rent one instead... I'm sure if we google this issue that we'll find those advisors who think home ownership is NOT a wise choice.
Let's look at a $350,000 mortgage, for 30 years at 6% interest. P&I is about $2100/month, insurance about $100/month and taxes about $300/month. Total payment: $2500/month. Total interest paid in the first year is over $20,000. Insurance and taxes vary widely, these are ballpark numbers to reflect some degree of reality, not everywhere…
If your choice is rent at $1250/month or buy at $2500/month, but you can only afford $1250 per month, you have NO choice but to rent... in which case you go where you'd LOVE to live... assuming a job is there for you... If you can afford the $2500/month, then the choice gets tricky for some folks…
The mortgage deduction on income tax is NOT a dollar for dollar reduction in your tax bill. If you’re in the 18% tax bracket, and you paid $20,000 of mortgage interest in 2006, then you get back 18% of that on your taxes, or $3600. The OTHER $16,400 in interest is a TOTAL LOSS to you...so we all need to be careful when we throw around that old term "you can write it off on your taxes." True, but you only get back 18% or 25% or 32% or whatever your bracket is.
What can you do with $16,400 more dollars...this year, next year, year after year... The mortgage contrarians will tell you to invest that in good investments and you'll come out ahead... There are plusses and minuses to each option.
When renting, the landlord pays to replace the roof, heat, a/c, water heater and other main systems. You only need renters insurance for possessions, which is very inexpensive. You don't have to paint or paper either, unless you want to. True, you don't get the benefit of appreciation, but your money isn't tied up in the house either...your money should be growing nicely in good investments...same as a house appreciating. You can generally walk away from a rental at the end of the contract, just call a mover... If your job moves, you can generally move a lot easier from a rental home...and it's a lot cheaper for the employer if they are paying for the move...
When buying, you do get the tax deduction for interest and real estate tax, you get appreciation in the value of the house when you sell, which though not constant year to year, it does tend to appreciate after several/many years and may be substantial. It may go down some years, as may some investments. As the owner, you have to pay when the main systems need replacing or break, you have to paint and paper, landscape, etc, and you can get stuck really bad if you're in a flood or hurricane or tornado or earthquake zone... You can't walk away from your home if the neighborhood goes high-crime or deteriorates. You normally can't walk away from the home you own without the complications of a real estate transaction and all the stuff that goes with it.
Lots of factors to consider in this choice....but if you're in a rent situation to start with due to income levels, they by all means go where you love... life's too short to live anywhere but where you want... If you are fortunate to afford a mortgage, you still need to consider your wishes, long term investment / retirement options, and your level of happiness relative to location.
s/Mike
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? On the other hand I could live in a great city that I love even if I have to work 2 (or 3) jobs to pay the bills. I'd rather have the latter than the former.
Then again....
