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Not an accurate statement in the big picture. Your property tax bumps alone will be proportionate to the rental increases... not to mention insurance increases. Additionally, the upkeep and maintenance are exponential costs over time as mechanicals and other stuff (i.e. roof) reach their usable life.
no way have long island rents kept pace with long island taxes.
Agreed - financially, it tends to be a money sink. Yes, you build equity, but at the expense of paying huge upfront interest costs even accounting for tax deductible interest and taxes.
Toss in necessary home maintenance and associated expenses with furnishing a place.
One other thing to consider - even if you have substanital equity in a home, it may be prohibitive to gain access to it due to lack of credit provided by "any" bank (we saw this with revocation of HELOC lines or reductions in availability during 2008/2009). You can not take a piece of aluminum siding or brick to the car dealership to purchase a car or pay for your kids college education.
It is however, a place of permanence if you are able to stay in the home by either owning outright or ability to pay monthly carry cost.
You don't want to pull equity out of your home. That's how we got into the mess we're in.
I bought a home for 230,000 in 1988. (By the way, there are plenty of homes for 230,000 today.) I paid my mortgage off in 15 years and have been living mortgage free since. When I sell, it's all mine. Had I rented I wouldn't have that extra 400,000 (by my estimate of my home's value now) when I sell. It was like a deferred savings account.
Also, another one of the posters said that the real estate values over the past 30-50 years have been proverbial roller coasters which is very true.....yes they went up in value during the "boom" years of 2002-2007 but now look at what happened.....just like all bubbles.....they crashed! And a lot of people are now underwater on their mortgages and the values of their homes....
It will take years to recover the 50-100K some people lost on the values of their homes the last 2-3 years.
And even now, after the crash, housing values on LI are still exhorbitantly overpriced and overtaxed.
If you took that money for the down payment you put on the house (100K) and invested it wisely in stocks or mutual funds (like Google stock or something) then you would be a millionaire now.
The stock market has snapped back a lot faster than the housing market for some reason....
Yeah, if you made the right investments. If not, you could have half that.
i bought my home in 1987. i sold it a few years ago, i believe we paid around 169k at that time and sold for the mid 300 thousands. the same money in a mix of nothing special fidelity funds are worth over just shy of 2 million. thats enough to buy 2 homes today even after subtracting out all the rent you would have paid .
...
Assuming you DID invest it. Most renters I know are too busy paying their rent and spending what's left to invest.
+100 - Ain't that the truth. Not only does the town municipality/school board feel it's just to raise your taxes 4%+ compounded annually, the insurance company just raised my home insurance 30% the last go round - leading me to have a very vocal conversation with the local agent who tried to smooth it over until I gave her a lesson in finance and investing, apparently, I wasn't the only one who gave her a piece of my mind. Add in the "talented" contractors (some are, some aren't, just sayin) who feel justified in charging their rate, plus marking up the job 100% to provide a buffer if they are unable to land another job - fastest way to lose a potential customer.
Bottom line - everyone wants to stick their hand in your pocket. Do what you can on your own unless you have excessive cashflow you don't mind throwing out the door. If you do, let me know when, I'll be there to catch it.
You don't think the landlord factors those costs into your rent increases? They do. I know because I also have a couple of investment properties.
Assuming you DID invest it. Most renters I know are too busy paying their rent and spending what's left to invest.
yep thats the problem. even though a renter can come out way ahead of a home buyer by investing elsewhere most dont have the discipline to do it.
they will drive a better car,live in a more expensive area or just blow the dough they are supposed to be saving. at least the homeowner gets a consolation prize at the end.
You contradict yourself. In terms of an investment, buying a house on LI is a pretty bad one. If you have 100K, from a purely financial perspective, putting it down on a house is not the right move. However, buying a house isn't just about investing. It's about putting down roots, having a family, and having a HOME. That's where the argument lies for buying a house.
Purely from a $$ perspective, it's a losing argument.
Would have to disagree. Even with a 20%+ loss in the last 2 years, my house still appreciated a total of 79% over 9 years. Hardly a bad investment. It's the taxes that are the killer but that is for many other threads.
Would have to disagree. Even with a 20%+ loss in the last 2 years, my house still appreciated a total of 79% over 9 years. Hardly a bad investment. It's the taxes that are the killer but that is for many other threads.
What would you say to the person who bought their home 4,5 or 6 years ago? Sorry...sucka
Consider it luck, not a winning investment. You may think you appreciated 79% but take into account interest spent after tax on mortgage payments, still up 79%? Only up 79% if you bought the house outright for cash - no debt incurred.
We bought our first for $108K. It was valued at $130K. We put another $30K in upgrades and rebuildingthe interior from the studs out. Taxes started out at $1900 a year. When we left the house taxes were $4000 a year and it was valued at $60K. We lived there 6 years. We will probably never own another house.
The taxes seem to always to eat away at the appreciation. If the house were to actually appreciate 5% the taxes paid would greatly reduce the profit margin...every year we paid taxes, we were just out that much more. In ten years time we would have paid $40K in taxes and the house (all things being equal) might have appreciated $45K? where is the rationale in owning real estate? It is not like when my parents bought a house for $20K and 30 year later it is worth $125K--but then again they paid nearly $5k annual taxes for more than 15 of those years...
It is different if you bought your house in 1987 or 1988 and it is paid off now......I am really talking about buying a house TODAY in the present time if you are a young person in your late 20's or early 30's struggling to make 50K a year trying to save 100K for a house down payment....
Plus, NOT ALL rents go up every year. If you have a good repoire (did i spell it right? lol) with your landlord, you can convince him to keep the rent the same or risk losing a good, quiet tenant. There are certain bargaining chips you can use if you are smart.
And as someone else said, a small rent increase of say 25 bucks a year (maybe from 1100 to 1125 say) is not the same as the compounded increases of property, school, and insurance taxes every year if you own a house...
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- financially, it tends to be a money sink. Yes, you build equity, but at the expense of paying huge upfront interest costs even accounting for tax deductible interest and taxes.
Not only does the town municipality/school board feel it's just to raise your taxes 4%+ compounded annually, the insurance company just raised my home insurance 30% the last go round - leading me to have a very vocal conversation with the local agent who tried to smooth it over until I gave her a lesson in finance and investing, apparently, I wasn't the only one who gave her a piece of my mind.
Add in the "talented" contractors
) who feel justified in charging their rate, plus marking up the job 100% to provide a buffer if they are unable to land another job - fastest way to lose a potential customer.
