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i dont remember if i posted this here or not as i had said it in another thread once before but it always bears repeating: i want to point out also that you cant compare renting to buying as if the costs are absorbed by the renter.
what i mean by that is homeowners like to assume everything goes up proportionatly for everyone.l if my real estate taxes doubled the renter will get his rent raised double.
sorry folks but while having common parents the rental market and the cost to buy dont track each other very well in most areas.
in alot of areas the cost to buy a home is based on certain criteria .
the rental market has different criteria , the biggest which is the supply and demand of rentals.
as an example if i bought my house 10 years ago what i need to cover my taxes and mortgage is very different then someone who bought at the peak or someone who even buys today.
the rental market basically marches to its own drum, it dosnt care that your expenses of buying at the peak may be double your neighbors who bought 10 years ago. the rental market seeks its own level just like water .. oh you can try to get double the going rent in the area because your expenses are higher and more power to you if you can.
alot of areas have rent stabilization laws too. maybe your real estate taxes or expenses doubled.. sorry guys 3% is the maximum increase you can get your told by the city.
here in nyc it took me a solid decade on my first investment property to reach the break even point..
case in point, 2 weeks after we bought the stock market crashed in 1987 , i saw the value of my investment co-op i just bought fall from 77,000 to 59,000 over the next few years.... the rental market didnt care what i paid, i had trouble getting tenants every time i tried to raise the rent above a certain point and so it took me ten years to go from the 900.00 rent to 1200.00 which is what it cost me.
the people here in long island saw their real estate taxes go fro 2-3,000 to an average of 12-15,000 today.. the rental market isnt even close to reflecting a fraction of the jump in taxes and mortgages .....
never assume a blanket statement like renters pay and get nothing for their money... alot of times its what renters arent spending for the privilage of ownership that is their gain.
every area is different, if your area right out of the box has rentals even steven except for the down payment , then its a no brainer buy but for alot of america its not so easy..
like i said my tenents had they invested the down payment money and the 300 bucks a month for a decade they saved compared to what i was paying and merely threw it in an index fund they could kick my butt with their pile of money vs my pile from the sale of that property and that would be figuring in all the rent they paid all those years.
in our central park apartments we have tenents who are rent stabilized, they pay 2500-3,000 a month for apartments worth 1-2 million.... we had 9 apartments when we started and payed 7 out of the 9 as much 50,000 to 100,000 bucks to give up their leases so we could sell the apartments. we got 2 left who so far arent going anywhere yet.. they got the best deal in the city.. for the rent they pay they are on the same block as lincoln center over looking central park.
Last edited by mathjak107; 11-04-2009 at 03:49 AM..
That's not true. I'm not sure where you get the idea that a renter would have nothing over the long haul. This is absolutely false in my own case.
We've saved over 6 figures in the last 3 years. This is hardly nothing. Had we purchased 3 years back, we would have nothing to show for. Instead we have a hefty savings.
You are making a blanket statement that is just as false as the ones who say you are dumb to buy in today's market.
See, Here lies the very point that renters keep avoiding to address when com fronted. You all talk about how renting is cheaper, allowing you to save what would normally be part of a mortgage payment, if you owned. So explain, please, how it is that you are renting for cheaper? Is it not because you are not in a home, or at least a home you would ultimately want to buy, and that is why your monthly housing cost is less? It absolutely astonishes me, the denial that is, how renters insist they can't buy, or rather have the same mortgage payment as their rent, anywhere in the US. Comparing apples to oranges is NOT an accurate indicator, no matter what. I know, for a FACT, we could not RENT the home we are living in, for even close to what our monthly Mtg, taxes, ins are! We have a considerable down payment, are well below what we could pay, and STILL packing that same extra money away, you renters claim we owners are not able to do. For cripes sake, find another argument, this one is getting old. I bet, in the last 3 years, Sheenie, my wife and I have saved just as much if not more (well over 6 figures, and we're paying for our oldest in college now, so using some), and imagine that......We've OWNED for nearly 20 years! How is that possible, since we didn't rent?
Some areas are lucky, right out of the box renting can be comparable to buying with not much more of a cost. right in lancaster pa my friend is buying homes and renting them out and covering monthly nuts right from day 1 .
but for most of us thats not typical area behavior... the areas im familiar with require a healthy down payment and monthly costs run 20-30% higher right out of the box for someone buying today.. we had a house but sold it a few years ago and now rent an apartment . our own apartment would sell for 330,000 and is a small 2 bedroom unit.. it would run another 1000.00 a month maintaince fees as it is co-op.. rent is 1800.00 a month... it would cost us almost 1,000 a month more to buy then rent. most of the areas im familiar with see about a 3% average rent increase a year long term and it can take a decade of ownership before its cheaper to buy then rent.
its a very local thing and is area dependent how it works out. blanket statements can not apply for anyone here.......
in our case we owned a home for decades and invested as well . we did very well too and im looking forward next near to a nice early retirement. but truth be known if we rented instead and invested that money we used to buy we would have done not very well but extremely awesome by now actually having close to 2x at this point as a net worth even after subtracting out decades of rent for the same house. .. how you did is all relative to what could have been..... good or bad
l loved my house and would have done it the same away again, but strictly from a numbers standpoint buying wasnt the best option for us... i repeat for us.... i liked our house though for other reasons and bought another in pa recently. for us its not just about dying with the biggest pile of money. its quality of life too along the way
Last edited by mathjak107; 11-04-2009 at 06:33 AM..
See, Here lies the very point that renters keep avoiding to address when com fronted. You all talk about how renting is cheaper, allowing you to save what would normally be part of a mortgage payment, if you owned. So explain, please, how it is that you are renting for cheaper?
The rental market doesn't support higher prices, probably. Rental prices are driven by supply and demand, and are being hurt by the oversupply in housing just like the rest of the real estate market.
Quote:
I know, for a FACT, we could not RENT the home we are living in, for even close to what our monthly Mtg, taxes, ins are!
Don't forget to include this cost :
Quote:
We have a considerable down payment
If I paid half of my rent up front when I signed a lease, it wouldn't be fair to say my monthly payments were way less than owning so buying is a bad financial choice. Paying for half your house up front and then telling people that renting is a bad choice because your monthly payments are lower is the same mistake.
Most homeowners dont really know their true cost of ownership for many decades... there is so much that gets spent for the privledge of ownership over long periods of time ...
also if you sell and move and buy another house the clock keeps ticking.....
report back in 30 years then you have things accurate for youre housing costs.. same thing for renters... keep adding up 30 years of rent ... if you arent doing that stop trying to compare, it wont work, we all need a place to live and our housing costs go on a lifetime.
most will find their total costs including those renovations, taxes , the gardner, repairs, new roof , insurance , un-reimbursed mortgage interest , etc , the list is never ending will eclipse the value of the house at the end anyway.. did you know typically you pay 2 to 3x the price of the house in unreimbursed mortgage interest alone over the life of a 30 year mortgage, even more if you flip homes and sell one home and buy another. ....... it really may turn out to be who lost the least in housing costs , the renter or the owner.
Last edited by mathjak107; 11-04-2009 at 07:51 AM..
See, Here lies the very point that renters keep avoiding to address when com fronted. You all talk about how renting is cheaper, allowing you to save what would normally be part of a mortgage payment, if you owned. So explain, please, how it is that you are renting for cheaper? Is it not because you are not in a home, or at least a home you would ultimately want to buy, and that is why your monthly housing cost is less? It absolutely astonishes me, the denial that is, how renters insist they can't buy, or rather have the same mortgage payment as their rent, anywhere in the US. Comparing apples to oranges is NOT an accurate indicator, no matter what. I know, for a FACT, we could not RENT the home we are living in, for even close to what our monthly Mtg, taxes, ins are! We have a considerable down payment, are well below what we could pay, and STILL packing that same extra money away, you renters claim we owners are not able to do. For cripes sake, find another argument, this one is getting old. I bet, in the last 3 years, Sheenie, my wife and I have saved just as much if not more (well over 6 figures, and we're paying for our oldest in college now, so using some), and imagine that......We've OWNED for nearly 20 years! How is that possible, since we didn't rent?
I wasn't arguing what you are stating in your post. I was arguing against Brandon who specifically stated that renters will end up with nothing at the end of 30 years. It just depends on how one decides to spend and save their money.
wouldnt it be great if the only costs we had as homeowners was our mortgage and taxes?
i think everytime i get paid my house has its hand out for something.....
we arent even living at the pa house full time yet and the expenses never end.... last time we had the bug guy for a yearly preventative spray,
the septic guy since we bought a 4 year old house and wanted to start fresh , the gutter and leader guy will be back to clean the forest out in april....
the snow plow guy now gets his cut as we enter winter....
it never ends and these are just the extras, i have the future renovation list of things my wife wants to change (because we own it we can change it)
i have to have the deck re-sprayed to in the spring
my hair hurts already just thinking of things i have to do and we havent moved in yet full time.
Also our rent includes heat, water and garbage collection....
just pre-bought fuel for the house 1500.00 bucks, water is 220.00 a year , garbage collection 270.00 a year.... i wont list all this stuff but these are all the things most homeowners fail to include over a lifetime of calculations of what their true costs of housing are
l loved my house and would have done it the same away again, but strictly from a numbers standpoint buying wasnt the best option for us... i repeat for us.... i liked our house though for other reasons and bought another in pa recently. for us its not just about dying with the biggest pile of money. its quality of life too along the way
Yeah, this is the way I think about it too. I am sure I could find a rental that would be cheaper than our expenses for our house in the school district we want, but our owning a house isn't purely numbers. It is doubtful I would have a combo of the following: security I could stay there as long as I want, a relatively stable neighbor base, a "look" that reflects our personality, the freedom to change what we want, the room we want in a home, a private yard for our kids, the sense of safey I get in our neighborhood, and the general sense of community we get in the neighborhoods we have chosen. There are others pluses of homeownership for us, but these are all non-financial aspects of homeownership that we personally like. With that said, when our kids are grown up (in many years) we talk about either renting or buying a condo, as our priorities & life will likely change...although i bet we buy a condo, as some of the above will still be important.
One of my neighbors bought at peak and was subsequently transferred out of the U.S. He does not want to take a loss so he's renting the place out for $4000 a month ( $48,000 a year), not including heat, water, landscape care. This is not a Mc Mansion- just an ordinary middle class home, in this area.
He managed to snag an inbound relo family who is unable to sell their prior residence and they too are renting out their former place. No idea how far this relo cascade extends. No idea when it will end.
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