Here's why renting is better than buying in LA. (Los Angeles: best neighborhood, real estate market)

[Kaphawoman]

Originally Posted by vincenze

The numbers are heavily skewed by the government and politicians.

My neighbor rents a 3-bedroom apartment for $800 thanks to rent control.
Good luck selling your $600,000 condo to the next sucker if the government gets out of the 30-year-mortgage business.

In what city and decade?

[jacktravern]

Originally Posted by SoCal_Native

You really think a majority of MBAs, CPAs, Economists, Financial planners, engineers, and others who are good with math and statistics and probabilities DON'T buy homes for themselves to live in?

In all fairness, many in those professions aren't what you would RICH or even WELL OFF. I say that to say there's many upper class/rich people that rent for a myriad of reasons. (Grant Cardone, Beyonce & J-Zay, Justin Bieber). Also, I think the thread is more relevant to Southern Cal. In many areas of the country, mortgages are relatively low (but then again, the pay tends to be lower too)

For me, renting is a better option b/c it allows me to 1)live in the area that I actually want to live in. Most people I work with that are property owners at work had to settle for a neighborhood that's either farther from work than they would like, in a suspect/iffy neighborhood, or its expensive enough that it eats a good chunk of their middle class salaries. Usually some combination of 2 out of 3. And then, even if the area is not to good, their mortgages tend to be high which is bizarre.

That brings me to number 2) A Lot of the middle class property owners I know don't have much in the way of savings or investments, especially if they have kids. If you look almost any 20 year graph of even 100 years, the market tends to out perform housing by a good number, but yet co-workers often rather get a home than invest. I think it's a good conditioning and lack of knowledge and bad rental experiences. If anything is, the problem is a lot of long time renters don't invest.

Don't get me wrong, home owning is a better option for those that have pets, or feel the need to paint, remodel, and don't mind paying for repairs or are fairly handy ect...But for me and others, those things aren't really important, as long as I live in a nice neighborhood with a property that is ran well and carefully vets the other tenants. And if I find out it's not, I can leave with no hassle.

[vincenze]

Originally Posted by Kaphawoman

In what city and decade?

The city of LA.
She's been living in her apartment for 30 years. I guess the rent was $50 then.

[JJonesIII]

Originally Posted by jacktravern

In all fairness, many in those professions aren't what you would RICH or even WELL OFF. I say that to say there's many upper class/rich people that rent for a myriad of reasons. (Grant Cardone, Beyonce & J-Zay, Justin Bieber). Also, I think the thread is more relevant to Southern Cal. In many areas of the country, mortgages are relatively low (but then again, the pay tends to be lower too)

For me, renting is a better option b/c it allows me to 1)live in the area that I actually want to live in. Most people I work with that are property owners at work had to settle for a neighborhood that's either farther from work than they would like, in a suspect/iffy neighborhood, or its expensive enough that it eats a good chunk of their middle class salaries. Usually some combination of 2 out of 3. And then, even if the area is not to good, their mortgages tend to be high which is bizarre.

That brings me to number 2) A Lot of the middle class property owners I know don't have much in the way of savings or investments, especially if they have kids. If you look almost any 20 year graph of even 100 years, the market tends to out perform housing by a good number, but yet co-workers often rather get a home than invest. I think it's a good conditioning and lack of knowledge and bad rental experiences. If anything is, the problem is a lot of long time renters don't invest.

Don't get me wrong, home owning is a better option for those that have pets, or feel the need to paint, remodel, and don't mind paying for repairs or are fairly handy ect...But for me and others, those things aren't really important, as long as I live in a nice neighborhood with a property that is ran well and carefully vets the other tenants. And if I find out it's not, I can leave with no hassle.

It depends, it depends, it depends. It didn't outperform our house or many in our neighborhood (in fact, the Dow lost pretty badly when you factor in rent costs). But again, we were in San Francisco (location, location, location). You also have to run all the numbers over a very long period of time to really be fair and factor in the opportunity cost of having a home with a significantly lower mortgage than the current rent (and investing that additional money).

https://dqydj.com/dow-jones-return-calculator/

As for the rest of your reasons, I think they are very good reasons to rent if that is important to you. Personally, I've never had any desire whatsoever to live in the heart of any city, so I never thought of it as settling. I like a relaxed environment vs the hustle and bustle of the city and I think most people with families feel the same way.

[aslowdodge]

Originally Posted by TexasBound19

next time you're thinking "oh, i dont want to throw money away renting" remember:

living in a nice brand new apartment with washer & dryer inside in a reasonable area, you're going to spend about $2000-2500/mo in rent (for a studio or 1 bedroom).

the same level of quality, if you were to buy, you'd be spending easily around 3,500-4,500/mo (a condo around 650k -- and im taking into account all costs related to buying in these amounts).

if you buy a condo that is worth 650k, you are throwing away the following (roughly):

6500/yr in taxes
6000/yr in HOA fees
900/yr in insurance
X/yr in maintenance, let's throw a number out there and say, maybe 3,000.
also add a few thousand for closing costs, etc. but let's skip that.

that's a total of $16,400.

renting a place for 2,000/mo is equivalent to 24,000/mo.

24,000 - 16,000 = $8,000 that's the difference between buying vs renting in terms of "throwing money away"

now the big difference is:

if you're renting and spending $2,000/mo, AND not paying 3,500-4,500/mo on a mortgage, HOA, insurance, and maintenance, you're going to have a lot more money in the bank.

You could use this money to live better or invest.

"oh but equity" ... at the end of the day, when you put all the numbers down, you're more likely to be better off financially renting, than buying.

buying is a scam.

Some things to consider
You are forgetting rental insurance
Is hoa really 500? Seem s you can find less.
Maintanence is lower probably because you are responsible for inside the walls, not the outside.
Some condos have garages, do apartments?

[thelopez2]

Originally Posted by HB2HSV

Total rent = $24000 + $25,680 + $27,480 + $29400 = $160,560

Damm, I hate the new math.

[SoCal_Native]

Originally Posted by thelopez2

Damm, I hate the new math.

I think his answer is in octal.

[PamelaIamela]

SALT limit @$10k was just the beginning.
Wait till the mortgage interest deduction goes bye-bye... like Canada.
I believe it will eventually be phased out at the Federal level.
And fewer and fewer taxpayers are itemizing any more.

In the end you gotta do what you think is best for you and your family financially, emotionally, and for your quality of life.
And that is not the same for everyone.

[NJ Brazen_3133]

Originally Posted by HB2HSV

For someone who has "insight" in Finance, you are not very good in math.

A $650K condo with 20% down payment, assuming a 30 yr loan at 3.875% interest, you'll be paying

$2,445/mo on mortgage & interest
$557.92/mo on real estate tax
$125/mo on HO insurance

not including HOA (which can vary), you're looking at $3,128 per month payment

BUT WAIT.....

With tax deduction benefit, assuming 1/3, You will be looking at $2,085 per month AFTER TAX payment, a very competitive rate compare your rent at $2,000 a month.

BUT THAT'S NOT ALL ….

Rent appreciates on average 7% a year (per rent control), so your rent will be

First year = $2,000 a month
Second year = $2,140 a month
Third year = $2,290 a month
Fourth year = $2,450 a month

Total rent = $24000 + $25,680 + $27,480 + $29400 = $160,560
Mortgage payment = $2,085/mo * 12 months * 4 years = $100,080
A GRAND TOTAL SAVING OF $60,480 IN JUST 4 YEARS!

CAPITAL APPRECIATION
Now my townhouse in OC appreciated 40% in 10 years, so let's assume the same appreciation rate. 10 years later,

If buy ---> Your condo appreciation from $650K to $910K. A gain of equity of $260K

If rent ---> A gain of equity of nada, zilch, zero


Is this clear enough for you?

Are you saying that buyers only pay $85 in taxes.

Originally Posted by SoCal_Native

You really think a majority of MBAs, CPAs, Economists, Financial planners, engineers, and others who are good with math and statistics and probabilities DON'T buy homes for themselves to live in?

Nah, just giving a possibility

[HB2HSV]

Originally Posted by vincenze

The numbers are heavily skewed by the government and politicians.

My neighbor rents a 3-bedroom apartment for $800 thanks to rent control.
Good luck selling your $600,000 condo to the next sucker if the government gets out of the 30-year-mortgage business.

This is common in the Santa Monica area. But good luck trying to get into a rent-controlled apartment. You'll need to wait for one of tenants die, then somehow bribe the landlord to let you in.

There's nothing wrong with buying a $600K condo next to the rent-controlled apartment. Again, look at Santa Monica.