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If you own a home for 10 years and sell and break even - a complete financial net gain of $0 dollars and a net loss of $0 dollars, isn't that a victory? What would your rent have been over that same decade? $50,000? $100,000?
So yeah, buying a house is like playing in the stock market, except that you're forced to play one way or another. Even long-term holders of real estate can find selling to be a financially-beneficial idea. But by missing out on an opportunity doesn't mean that all of a sudden, taking pride in long-term rentalship is now the best answer instead.
We're way off topic - the OP clarified her post and I think we're talking about quite a bit different things than what they intended, because they're right too - there are certainly many instances where renting short-term is superior to purchasing.
Break even? As in, not just what you paid (plus any amount down), add what you sold for and come up with zero?
Or do you mean TOTALLY break even, as in no losses for repair bills, exterminator bills, upgrades/improvements to the home, etc?
If it's the latter, yeah... I agree that buying is fun in that sense.
Parti, concede what points. I'm sorry I still disagree with you and that should be ok, right? I respect your point of view though and don't think you are being irrational. Wish others could be at your level when communicating a point.
Your comment:
What I'm interested in is knowing what houses in what cities you're able to rent $1,200 for and where you live that you're having to give away 2-months worth of rent for free and you're still having trouble getting your place rented? (I'm a property manager in Alameda, Contra Costa, and Solano, BTW). Is it a 1/1 condo? Where are you located?
My response
I think this is where we are having some misunderstanding. I proudly rent in the bay area. My rent is for $1200/month. I own rental property in other states. Am unable to rent my place in NV. Initially wasn't able to rent one of my places in GA either, but am now fine in GA. Love the landlord laws in that state. NV still having issues. Won't be able to sell it any time soon either.
I live in WC BTW. Rentals are not $1900/month in Concord and home prices are VERY low too. Again, just last year homes there were selling under $100K. I know because I was thinking of buying something there to rent it out. Many places in the bay are declining. Some are just fine and will continue to be. But in the Bay medium incomes do not support the housing prices. More and more people are becoming unemployed and the prices will fall here. Everyone knows this in the bay. Our unemployment keeps going up not down. In terms of shadow inventory there is plenty of it in the bay.
Also, to add. The realestate company that I sold my last property with in CA they closed down 5 of their 7 offices.
Last edited by bayarea-girl; 05-18-2011 at 09:18 PM..
Parti, concede what points. I'm sorry I still disagree with you and that should be ok, right? I respect your point of view though and don't think you are being irrational. Wish others could be at your level when communicating a point.
Your comment:
What I'm interested in is knowing what houses in what cities you're able to rent $1,200 for and where you live that you're having to give away 2-months worth of rent for free and you're still having trouble getting your place rented? (I'm a property manager in Alameda, Contra Costa, and Solano, BTW). Is it a 1/1 condo? Where are you located?
My response
I think this is where we are having some misunderstanding. I proudly rent in the bay area. My rent is for $1200/month. I own rental property in other states. Am unable to rent my place in NV. Initially wasn't able to rent one of my places in GA either, but am now fine in GA. Love the landlord laws in that state. NV still having issues. Won't be able to sell it any time soon either.
I live in WC BTW. Rentals are not $1900/month in Concord and home prices are VERY low too. Again, just last year homes there were selling under $100K. I know because I was thinking of buying something there to rent it out. Many places in the bay are declining. Some are just fine and will continue to be. But in the Bay medium incomes do not support the housing prices. More and more people are becoming unemployed and the prices will fall here. Everyone knows this in the bay. Our unemployment keeps going up not down. In terms of shadow inventory there is plenty of it in the bay.
Also, to add. The realestate company that I sold my last property with in CA they closed down 5 of their 7 offices.
See, here's our problem.
I like going back and forth with you also - I'm sure we've talked in the SF forum before, but multiple times you tell me what's not possible or what's not happening and they are. LoL
I'm the property manager of the property I just told you about and you just told me that rentals can't be $1,900 in Concord. So, forgive me for laughing, but these aren't 'agree to disagree' points - they're pretty easy to prove.
It's a 4/2, 1244 sq. ft in Holbrook Heights, and yes, it is renting for $1900/mo. There's also a 3/2, 1100 (and some odd foot) sq. ft. in neighboring Sun Terrace (a step down from HH) that's renting for $1950 (landlord allows 3 dogs).
The LOWEST price I know of ANY homeowners renting for in those two neighborhoods is $1,600/mo. And we're talking about a group of neighborhoods that aren't anywhere near Concord's nicest areas (as you know if you're familiar with either of those two areas).
Both of the homes I talked about sold for just over $200k. That's what I mean by the idea that when market rents are out-pacing PITIs in the area, where will prices go? Down? Then you'll just have even more demand from investors. Regardless of the job market having not bounced back, there's still so much demand in some areas.
If landlording was your idea before and the numbers weren't working, PM me and I'll be happy to send you and your realtor a short list of the hottest income property pockets. But, I think we've brought a bit too much local stuff into this national thread (my apologies to OP), so I'm going to bow out.
Parti, don't remember communicating on any other thread but am glad to be re-introduced to you here. But think we are on two totally different pages. Never said something was impossible. Think you are reading more into what I am writing. If your rentals in Concord are going for that much, well good for you. But you have to admit that the majority of rentals are not $1900/month in Concord. I'm sure people could get $1900/month for rentals in Pittsburgh but that is not the norm.
$200K and under for Concord sounds about right. Concord is like Richmond. They both have their nice areas but no one is jumping up and down to rent there. When unemployment rises in those areas rents will go down and they have. This data I follow pretty closely. At one point mediocore homes in those areas were selling over $700k. Glad to see them go down to the local income levels. The people that can't afford the rents there are moving to Sacramento and or Antioch and or are moving out of state.
The job market has a lot to do with rents and even more to do with people purchasing. Also, follow and get your point about demand. People that buy BA realestate #1 have a lot of money and usually come from other places. Not sure this will continue though. Think the ones with lots of money to burn and or those that are from the foreign pull find SF/Marin more appealing.
Have the hot area lists (get this info also, but wouldn't hurt to communicate with you to see if the raw data #'s make sense). Haven't completely decided on buying a house in CA yet for myself. Was looking at the Sacramento/Inland Empire/Fresno areas for investment even Merced (around the campus). Flip back and forth with So.CA as well but I think the bay area's economy is in far better shape than Southern, CA and will be for some time to come. If and it is a big if, I buy something here it would be 2 years from now. Think that is when things will start to stabilize.
IMO, it is still best to be a renter in CA.
Last edited by bayarea-girl; 05-18-2011 at 11:12 PM..
In addition, when you rent, you're also paying part or all of the landowner's property taxes and insurance - you just don't think of it that way. Just as market rents dictate the landowner's asking price, so to are his asking prices affected by his expenses.
I'm not sure the owner's expenses have much to do with market rents, kind of like how much a seller owes makes no difference in the market price. Hopefully the landlord was smart up front and did the math correctly, but if they didn't I doubt they'll find many renters willing to overpay just because the landlord has expenses to cover.
Quote:
In a previous post, I mentioned how without fail, every single income property that was purchased with me this year has cash flowed by no less than $200 per month every single month (I live in the Bay Area, I know that's not entirely possible everywhere).
How much did the buyers put down? If they can make more than $200 a month off investing that down payment elsewhere then the $200 a month (before taxes) doesn't sound so hot.
Quote:
If you own a home for 10 years and sell and break even - a complete financial net gain of $0 dollars and a net loss of $0 dollars, isn't that a victory?
Depends on what you mean by break even. Does it include everything you spent on the house, or just selling price minus buying price? If it's the latter, you spent some amount of money to live that you'll never see again - interest, taxes, insurance, upkeep, etc - just like a renter.
I'm not sure the owner's expenses have much to do with market rents, kind of like how much a seller owes makes no difference in the market price. Hopefully the landlord was smart up front and did the math correctly, but if they didn't I doubt they'll find many renters willing to overpay just because the landlord has expenses to cover.
One owners expense doesn't dictate market rents, but a whole slough of owner's expenses will very much has dictated market rents.
Quote:
Originally Posted by KCfromNC
How much did the buyers put down? If they can make more than $200 a month off investing that down payment elsewhere then the $200 a month (before taxes) doesn't sound so hot.
You don't get into investment properties to make $200 per month. That's not why an investor puts down 20% and takes on those responsibilities. The whole idea of building long term wealth through landlording is about combining equity build and appreciation - and that DP essentially cuts into a 5% interest rate (If you can guarantee yourself 5% on your earnings elsewhere while having immediate access to it and the ability to have another person build on that equity every single month, then you're right, you should be doing that.
Quote:
Originally Posted by KCfromNC
Depends on what you mean by break even. Does it include everything you spent on the house, or just selling price minus buying price? If it's the latter, you spent some amount of money to live that you'll never see again - interest, taxes, insurance, upkeep, etc - just like a renter.
It can mean anything you want it to mean. Selling price + fees incurred in sale - down payment - PITI (principle, interest, taxes, and insurance) but if it makes you feel better, add it in your upkeep fees too.
Last edited by llowllevellowll; 05-19-2011 at 09:27 AM..
Parti, concede what points. I'm sorry I still disagree with you and that should be ok, right? I respect your point of view though and don't think you are being irrational. Wish others could be at your level when communicating a point.
You can disagree on opinions but not facts. You can't argue facts.
Dr. Jake Oil, Don't like realtor.com when it comes to GA. But it gives you an idea (I've listed properties in GA but can also list other cities/states such AZ and NV. NV I wouldn't recommend buying there at all even though there are really good deals out there unless you visit it often):
The Westview area of Atlanta has plenty of homes at $50k and lower. It is an up and coming area of Atlanta. Purchased 2 properties there last year both under $50K. Homes then were on fire. There was a guy there that committed this really big realestate scam which left a lot of homes vacant. But a lot of people also foreclosed there as well. In Atlanta the city itself you have to really know the areas. Some of the places below are ok but does have some issues with crime and the schools aren't that good.
There are fire sales still in Decatur but you have to really know the areas. But you'd be amazed at the homes. There are plenty of brand new developments that you can really nice places for $50k, 5BD/2Bath home with a nice sized lot.
glad to have found this thread. over the last couple of years...i've been going back and forth between renting and owning. i did my sums and this is what i've come up with based on extensive research of home ownership costs around my area:
Renting
$1,500/month (3bed/2ba, 1300sqft, includes water/sewer, cabletv/telephone/internet, yard maintenance, fall/spring cleanups....oh, did I mention that it's a waterfront property?!!!)
So, in a year, my rent is $18,000
Owning
With my budget (=<$500K), I can afford a decent 3-4bed/2-3bath house in a decent neighborhood (but definitely not waterfront!)
Costs of ownership (on average):
Insurance - $2000 (possibly higher if i'm in the flood zone or on the cape)
Property tax - $5000 (could be lower or higher than this, i'm going for the average based on the home values/local tax rate of the areas that i'm looking at)
Water/sewer - $1000
CableTV/telephone/internet - $1400
Yard maintenance - $1500
Opportunity cost of cash - $6250 (the interest earned if not used)
Total cost of home ownership is $17,150
The difference between renting and homeownership is so marginal! And there are other longer term costs involved in home ownership (i.e. septic replacement, roof replacement etc) that i've yet to take into consideration. And with renting, I can get to live in houses that I can never afford on my own. I don't have to worry about being tied to a home and not being mobile. I have the comfort of knowing i've cash stashed away for emergencies. i don't have to worry about fixing things in the house or take care of the yard 'cos my landlord is a phonecall away. i don't have to worry about hurricane damages, flood issues, leaky roof.
so can someone tell me again why home ownership is better than renting??
the only thing is the potential of making some money with capital appreciation.....but really, i'm not that optimistic in the short/medium term.
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