Is Anyone Else Looking Forward to Eventually Selling Their Place and Getting an Apartment? (landlord, property tax)
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the problem is we have different amounts to invest at different times of our lives .
early on for us and our kids , not having a lump sum to invest and renting makes the equation rent or have nearly no money left to invest in a better area or buy a co-op in a cheaper area and build equity .
so that is what we did and our kids did .
after a while we sold the co-op for a huge profit based on what we paid and bought a house .
lived in the house for 25 years .
sold the house and invested in a real estate business with the money and rented .
it made us multiple 7 figures in profits .....
that money not only provides our rent invested in markets and bonds and gold but it pays all our living expenses
today we sold everything off and are renting in retirement .. but we are leaving queens in nyc and buying a nice condo in a luxurary high rise so once again we turn back to owning ...
there is no such thing as a definitive answer .....
even our worst real estate investment which was a co-op in 1987 which cost 77k back then and 450 in maintenance , rents for 1800 today or sells for 245k . my ex wife lives in it for 650 maintenance . so it is worth more to her than the selling value because she has little money invested anywhere else .
one thing you see in high cost areas is many relatively wealthy transplants ..
these homes in high cost of living areas act as GREATER forced savings .
we have retirees here in the tristate area selling 600-900k tiny homes they paid off decades ago ... well a home in long island that is 800k and appreciated a mere 3% a year is a whole lot more dollars than locals in cheapsville see when their 200k home was appreciating the same 3% ...
so transplants who relocate to cheaper areas tend to come with far greater wealth if they are selling a paid off home .
all things being equal we made more money renting and investing elsewhere but i can see for many buying is the best option .
Great post. Like most things in life.....the answer is it depends.
Me, I finally bought because I don't want to worry about rent when I'm 70 years old. Where I live, average rent is around 3500, that money goes straight down the drain or to someone else's mortgage. It only buys you time.
Great post. Like most things in life.....the answer is it depends.
Me, I finally bought because I don't want to worry about rent when I'm 70 years old. Where I live, average rent is around 3500, that money goes straight down the drain or to someone else's mortgage. It only buys you time.
Nearly every asset can be viewed in terms of the complementary numbers of (1) price/earnings ratio, and (2) projected growth rate. This is obvious for stocks, but also holds for real-estate. A low PE ratio merits buying the asset, because simply put, it will be cheaper to buy than to rent. A high one implies the opposite... it's better to buy, and to actually become a landlord. But if the real-estate market appreciates well, then it's cheaper long-term to buy than to rent, even if monthly costs of ownership are higher than those of renting. Likewise, if houses outright depreciate, then it's cheaper to rent than to buy, even if rental costs are higher per month.
There are websites with "heat maps" nationwide, showing contour-plots of where it is cheaper to buy, and where to rent. These of course violate the maxim of "it depends", but they're a useful starting point.
In my current locale, "average" rent is inscrutable, since selection and type vary so much. But from what I've seen, a place that rents for $3500/month will cost $1000/month in property tax, and who knows how much for insurance, maintenance and so forth. Would the mortgage only be $2500/month? Probably not - not even at current interest rates. So on point (2), it's better to rent. The aforementioned heat-map affirms this. But what about point (1)? Well, there I actually think that further appreciation-prospects remain good. So it may still be cheaper to buy than to rent, long-term.
My prior locale was the reverse. Carrying-costs for buying, were lower than for renting, even at the interest rates of 20 years ago. But appreciation since then has been... muted.
Nearly every asset can be viewed in terms of the complementary numbers of (1) price/earnings ratio, and (2) projected growth rate. This is obvious for stocks, but also holds for real-estate. A low PE ratio merits buying the asset, because simply put, it will be cheaper to buy than to rent. A high one implies the opposite... it's better to buy, and to actually become a landlord. But if the real-estate market appreciates well, then it's cheaper long-term to buy than to rent, even if monthly costs of ownership are higher than those of renting. Likewise, if houses outright depreciate, then it's cheaper to rent than to buy, even if rental costs are higher per month.
There are websites with "heat maps" nationwide, showing contour-plots of where it is cheaper to buy, and where to rent. These of course violate the maxim of "it depends", but they're a useful starting point.
In my current locale, "average" rent is inscrutable, since selection and type vary so much. But from what I've seen, a place that rents for $3500/month will cost $1000/month in property tax, and who knows how much for insurance, maintenance and so forth. Would the mortgage only be $2500/month? Probably not - not even at current interest rates. So on point (2), it's better to rent. The aforementioned heat-map affirms this. But what about point (1)? Well, there I actually think that further appreciation-prospects remain good. So it may still be cheaper to buy than to rent, long-term.
My prior locale was the reverse. Carrying-costs for buying, were lower than for renting, even at the interest rates of 20 years ago. But appreciation since then has been... muted.
many low cost areas are low cost for a reason . they are and stay financially depressed
Last three apartments and condos I've lived in have been very quiet.
Do agree with the grocery challenges. We lived on the 4th and 8th floor of a couple of units and it was definitely hard carrying all the groceries.
Our condo provides about a dozen, wheeled, heavy-duty carts by the elevators, for the past several years. No problem with getting groceries, etc. from underground parking spots to one's unit!
Another thing I forgot with earlier post (upscale construction, sound-proofing, etc), is to avoid condos that allow short-term rentals (less than 6-months). like the plague. (In our current, 70-unit condo, we've probably only got about 10-rentals. Another 30 are occupied by full-time residents and the balance are part-time folks who use them as 2nd/3rd homes.
I am dreaming of an efficiency apt or a studio in the city,or a loft which overlooks a local diner,bakery and grocery store ,so I can get a sandwich or hot meal .
But one problem with apt living is washer and dryer,I dont want to go back and use those coin ones,I want my own in my own apt.
Are you able to downsize that much? Gotta be some stuff you want to keep.
I think a small storage unit and a safe deposit box should work.
It's a slight exaggeration, but not by much. It's just stuff; I don't get attached to stuff. Everything I currently own fits into a small cargo van when I move I'll get rid of some of it. My heaviest, bulkiest belonging is a recliner which probably weighs about 35 pounds. I'm not attached to it and might donate it when I move depending how far away it is.
I still have a small apartment mindset. Even though my current place is about 750 sq', all my belongings would fit into a 400 sq' space. I'm the antithesis of a pack-rat; I do whatever I can to avoid accumulating stuff.
The utilities for a 3700 sq' luxury home would be almost has much as rent for a nice small apartment, so even if it appreciates that much, you still have much higher overall expenses than you would on apt.
Our gas and electric bills run from a total of $250 to $400 depending on time of year and need for air conditioning and heat. We are on a private well, and septic system so no utility fees. There is no way you can even rent one room in our area for that. And who wants to live in a small apartment. We have not lived in apartments since 1954, and are not going to start now. Especially in a cheap one like you suggest, where you hear people walking around, children crying, etc., etc., a so many complain about on these threads. If we ever move into an apartment, it will be expensive and high quality, with lots of sound proofing.
As knowing what expenses we have for everything from very, very low taxes, maintenance, etc., I know where we stand, as I spent from 1972 until retirement as an investment real estate broker, with many homes bought and sold as rentals for my clients. I managed some of them. I was president of a 200 member county wide rental owners and managers association for 3 years where we taught members how to understand their investments, and how to manage them, so I am sure I understand the situation a lot better than you do.
This is something that often isn't considered when people boast of how much their house has appreciated.
I think I understand the situation better than you do, from my past experiences.
It's also important to note real estate appreciation varies considerably by location. Some areas it does appreciate considerably, but in the central part of the country, especially rural areas, appreciation is negligible.
One reason we live where we do, as I did the research, to find a rural area with clean air for our health problems, a good strong economy, low unemployment rate, and where they were not overbuilding and a slow growth with good appreciation for real estate.
As we can afford with no effort our lifestyle and home which is appreciating more than our expenses to own it, why would we want to move into an apartment and hate our living conditions? Why should we want to give up our peace and quit living, and move into a crowded neighborhood or apartment and suffer, as so many on these threads talk about.
We like lots of room in the home, peace and quiet, good scenery when you look out the window. Watching wild live using our property to live and feed themselves. Only a mile to the heart of the town. A mile and a half to a nearly new medical center with hospital one end, and doctors the other end. One of the best medical systems in the nation or so they are rated, partnered with the Mayo Clinic ( only 7 have been selected for this ). Friendly people who will give you help if needed. A housekeeper who has been with us for nearly 7 years to keep the house clean working 15 hours a week. A maintenance man who can do it all. We have done numerous modifications to make the home elderly friendly, which they would not want us to do to an apartment.
Question: Why would we give up all the advantages we have, and move into a small cheap crowded apartment like you suggest?
That is for low income people, and not the lifestyle we want to live.
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