[BBMW]

I didn't know you were renting properties. How much leeway to you have in setting rents? The rental market doesn't care what money YOU need to put into a property, just what it's worth relative to others.

Originally Posted by ScoopLV

I'm not missing risk at all.

If the roof scenario plays out, the landlord still sticks the tenant will the bill. He or she just amortizes it over the life of lease. I know I do. The tenants pay for all of the improvements, they pay property taxes, they pay HOA fees. (They don't pay a mortgage because I pay cash for houses. But if I did, they'd pay that, too.) They pay for trash a sewer and landscaping. AND they pay a couple hundred dollars extra on top of that -- every month -- which I keep.

The BEST tenants are the people who could afford to buy a house of their own, but for some reason they don't. (People who can't afford to buy are more likely to be the ones who will trash a rental house. They're the ones with six kids and four dogs.) I think these "lifetime-renters" are financially foolish. But their checks never bounce. So if they want to contribute to my little housing empire, great!

The only reasons I would recommend renting over buying (especially in Las Vegas) are if someone doesn't know where he or she is going to live five years from now, if the job situation is shaky, or if someone doesn't have any savings/credit whatsoever. (And in the last case, getting one's financial house in order would be priority #1.)

[ScoopLV]

Originally Posted by BBMW

I didn't know you were renting properties. How much leeway to you have in setting rents? The rental market doesn't care what money YOU need to put into a property, just what it's worth relative to others.

There is a little leeway. Proximity to schools helps a bit.

But none of that really matters. Some people act as if when they buy a house, the property value will plummet to zero. Couldn't be further from the truth. The properties are holding their own these days -- even growing a little.

So on top of the monthly income, there will be the capital gain when it comes time to sell. When you get down to it, it's all about monthly cash flow and how that translates to net worth. Renters think they have the cash-flow angle beaten, but they neglect how that translates to net worth (because renting DOESN'T translate at all).

Even with the strengthening market, it is still possible to buy a house -- AND finance it -- and rent it out and have tenants pay the mortgage, taxes, maintenance, and a little extra on top of that. Cash buyers have it even better -- no monthly nut to make, so a few months without a tenant is no big deal. Thus, they can be more selective about tenants.

Out-of-town landlords who have a 30-year mortgage and an inept property manager have a tough time, though.

[von949]

How often does a roof need replacing in Vegas? Most homes on the east coast were built back during the 13 colonies era, so I can understand the "replacing roof" theory for those.

But locally?


Posted from Nokia 8210

[BBMW]

^
Just an example of a high-buck home repair. There are others. The Vegas equivalent would be your central AC compressor/condenser going belly up on August 1.

[von949]

Originally Posted by BBMW

^
Just an example of a high-buck home repair. There are others. The Vegas equivalent would be your central AC compressor/condenser going belly up on August 1.

Now that, I can understand. But still, east coast home repair bills can't compared to what we have out here. The lower southern states is where I would tread with caution before buying.

Termites
asbestos
dry rot
mildew
lead
mold
old electrical hazards

I heard that these things are uncommon out here.

[ScoopLV]

I get the feeling that much of this "I'm renting. I'm always going to rent. I'm never going to buy" sentiment is the result of people trying to justify a decision they have already made.

For nearly everyone I know, the numbers work out better owning than renting. I have one friend in particular who really needs to get with the program. Every time he has two nickles to rub together, he gets a wild hair and moves someplace new. I don't think he's lived any one place for more than a few years.

He enjoys his gypsy lifestyle. But the hard reality that retirement is approaching FAST and he has nothing to show for decades of work is starting to take hold. He could have purchased SEVERAL houses with what he's spent on rent.

[tony soprano]

Originally Posted by ScoopLV

I get the feeling that much of this "I'm renting. I'm always going to rent. I'm never going to buy" sentiment is the result of people trying to justify a decision they have already made.

For nearly everyone I know, the numbers work out better owning than renting. I have one friend in particular who really needs to get with the program. Every time he has two nickles to rub together, he gets a wild hair and moves someplace new. I don't think he's lived any one place for more than a few years.

He enjoys his gypsy lifestyle. But the hard reality that retirement is approaching FAST and he has nothing to show for decades of work is starting to take hold. He could have purchased SEVERAL houses with what he's spent on rent.

Similarly, I think there are a people who believe they must own a home, even when you can show them the math of why it might not be their best choice. After the Lehman bankruptcy in 2008, and the resulting market meltdown, I realized I had too much exposure to equities. I really needed some portfolio diversification. So, in 2009 I pulled some cash out of the market to pay cash for a condo in Vegas.

I ultimately sold the condo last year, but for the three years I rented that property out my cap rate vacillated between 7%-9%. Certainly a reasonable return but nothing that couldn't be duplicated in the stock market. As someone previously noted in this thread, over the long run housing prices have just marginally outpaced inflation. As well, over the long run, equities have substantially outperformed real estate as an investment. There's an enormous opportunity cost to tie up several $100K in a house.

I'm not implying the stock market is for everyone - actually, I lean towards the contrary. However, the notion that renting is throwing money away doesn't always hold water. If I were residing in Vegas again, I'd be a buyer at this particular time. Although, this time around I'd finance as apposed to paying cash. The cost of money is just that cheap right now. That said, there are a good number of situations and locales where it just doesn't pencil out to own a home.

[8bravo]

So much for the future of deductible mortgage interest...
Why Now's the Time to Kill the Mortgage Interest Deduction (BZH, KKR, LEN, PHM, TOL)

[Californiapch]

Originally Posted by 8bravo

So much for the future of deductible mortgage interest...
Why Now's the Time to Kill the Mortgage Interest Deduction (BZH, KKR, LEN, PHM, TOL)

You guys are blessed to have this.

Us in Canada do not get this bonus tax deduction. We are heavily taxed on our income and not able to deduct any interest we pay on our Mortgages.




To all those who are 25 years old and staying in Las Vegas for a long time..... buy a smaller condo for under $100,000 and pay it off by the time you are in your mid 40's ..... live rent free for 20-40 years after. It is a great situation to be in.


Brian


What the deduction means
In simple terms, the mortgage-interest deduction allows taxpayers to write off the mortgage interest they pay as an itemized deduction. Interest on up to $1 million in mortgage debt is generally deductible, with the deduction available either for a principal residence or a second home.


second home too..... wow... we don't even get this on our first home.




but we get free health care....haha.

[logline]

Originally Posted by Californiapch

but we get free health care....haha.

I'd gladly trade ya. :-)

I think it's true that sometimes renting works out better for someone who tends to move often, but those situations are far outnumbered by the situations where buying makes more sense financially.

Las Vegas has some of the lowest prices (and best values) in the entire country and one thing that is rarely mentioned in this thread is the cost of money itself. Locking in a 30-year loan at 3.5% will feel like free money when inflation and higher interest rates become a reality. The mantra shouldn't be "Buy Vegas real estate or get priced out forever." It should be "Lock in RATES now or be priced out forever." Once rates rise, I don't expect to see them this low for the rest of my life.