Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I didn't have time to read thru all the posts, but I've owned for years and rented for years. I'm going back to renting for many of the reasons listed in the article and some additional ones..
1) Mortgage compared to rent is apples to oranges. What you should compare is mortgage + insurance + taxes +down payment + maintenance (1--3% of the value of the house, adj for inflation and unpredictable) + HOA fees to rent.
2) A personal-use house is NOT an investment and shouldn't be considered one. If you can't own AND save and invest, you shouldn't own.
3) Housing costs always rise, even if you own. I guarantee insurance + taxes will go up. Our locality has "special assessments" for homeowners.
4) You'll never truly own your house. You will always pay taxes and insurance and maintenance costs.
5) Lack of flexibility is huge. Missed job opportunities. Horrible neighbors buying next door. Worsened traffic issues, etc. Worse, if your income changes, you can quickly adapt by renting (to cheaper or more expensive place). Obviously, in a house, you're stuck.
6) Selling a house is difficult and time consuming and expensive (commission fees, inspection repair requests, transfer fees, etc).
7) Amortization. Before anyone buys a house, they should be required to read the amortization tables. Principal isn't reduced for years. Essentially, you've given the bank a big chunk of money for the down payment +paid other fees, and then renting for years.
8) If houses were such a great idea, the bank would own the house and not the loan.
Amortization is why, unless one buys with 100% cash, they are not home owners. The lender owns the house and the buyer pays “rent” on the money that was loaned. The only saving grace may be appreciation and tax deductions but as the last recession showed, that is appreciation is not something one can always depend on. Tax deductions exist because of legislative grace and can be undone anytime.
Appreciation is a real thing and happens more than it doesn't. Just because there are exceptions, doesn't mean it's not a very real investment.
No investment is 100% guaranteed. Without risk, there is no chance of reward. If you can't stomach any risk, stick to a savings account and CDs.
No one said you have to take a 30-year mortgage. On a shorter mortgage, you can start building equity very quickly that goes back to you when you sell.
No one said you have to pay less than 20% down, which is equity right out of the gate.
I agree 100%, if people don't buy the right way, they will get screwed. But that's an argument against buying the wrong way, not against buying in general.
I didn't have time to read thru all the posts, but I've owned for years and rented for years. I'm going back to renting for many of the reasons listed in the article and some additional ones..
1) Mortgage compared to rent is apples to oranges. What you should compare is mortgage + insurance + taxes +down payment + maintenance (1--3% of the value of the house, adj for inflation and unpredictable) + HOA fees to rent.
2) A personal-use house is NOT an investment and shouldn't be considered one. If you can't own AND save and invest, you shouldn't own.
3) Housing costs always rise, even if you own. I guarantee insurance + taxes will go up. Our locality has "special assessments" for homeowners.
4) You'll never truly own your house. You will always pay taxes and insurance and maintenance costs.
5) Lack of flexibility is huge. Missed job opportunities. Horrible neighbors buying next door. Worsened traffic issues, etc. Worse, if your income changes, you can quickly adapt by renting (to cheaper or more expensive place). Obviously, in a house, you're stuck.
6) Selling a house is difficult and time consuming and expensive (commission fees, inspection repair requests, transfer fees, etc).
7) Amortization. Before anyone buys a house, they should be required to read the amortization tables. Principal isn't reduced for years. Essentially, you've given the bank a big chunk of money for the down payment +paid other fees, and then renting for years.
8) If houses were such a great idea, the bank would own the house and not the loan.
In California you will quickly learn that you are wrong. Full disclosure, i am licensed real estate broker.
1) Rent and Mortgage is the same. Both is payment for housing. I do not have HOA fees and insurance is generally stabled and can be shopped around. Also unlike rent which generally always go up here, mortgage monthly payment is stable if you get fixed apr. Property tax goes up on predictable amount as well.
2) Yes it's an investment as it almost always goes up. Obviously if you purchased it when market was hot and then decided to sell when it's is cold like when it's in recession or depression the price could be below what you paid for. However if you wait 10 years, it will always be up.
3) Rental here always go way up over what you pay for housing. Like i mentioned, insurance can be controlled by shopping around. Special assessment are rare and do not cost much per house.
4) True but how is that different from you having to pay rent for rest of your life?
5) You can sell it in 2 weeks and move if you need it that badly but generally many people just rent the house out and buy another one. Use that income/equity to your advantage.
6)No it's not difficult at all and not time consuming. Yes you pay commission fee if you hire someone which this days can be done without hiring a pro or hiring a pro and only paying as little as 2% commission. Google it and you will see many options.
7) True but that is like with any loan. Put more down and you will have lower loan.
8) Bank is not in real estate business, they are in money business. Rich people make much of their money by lending our their money being you pay much lower taxes.
i have reasons.....no home owners tax, no lawn cutting/ snow plowing
You pay the taxes as part of your rent. Just because it's not a separate bill, doesn't mean you aren't paying it.
You can buy a condo or a townhouse where the landscaping is part of the HOA. You can't compare renting an apartment to buying a home, you have to compare renting vs. buying the same places. You do have to mow the lawn and plow snow if you rent a single-family home, so that's not a renting vs. buying issue.
Many high cost of living areas have a paying your dues requirement , meaning without a large down payment it is hard to get the rent to be positive for a few years without depreciation as part of the calculation ....so renting may not cover all the costs of ownership in many cities. Especially when cities have apartment house living where the economies of scale are different from single family homes
Amortization is why, unless one buys with 100% cash, they are not home owners. The lender owns the house and the buyer pays “rent” on the money that was loaned. The only saving grace may be appreciation and tax deductions but as the last recession showed, that is appreciation is not something one can always depend on. Tax deductions exist because of legislative grace and can be undone anytime.
This is probably one of the lamest arguments I see on here.
The house is simply collateral for the money you borrowed and the bank charges interest on the money borrowed. That’s it. The bank doesn’t send you a rent raise every year, they don’t fix anything for you, they don’t pay the taxes or sign a lease. When you buy a house in fact you own it. You can modify it, change it, borrow against it, sell it, rent it, pay the taxes, deduct the interest, etc. Therefore you are not renting.
As far as what’s better.....thats very personal. I know owning properties has made us well off and increased our net worth. And has added income.
Sure house prices may and can/will drop. People like to bring up the last housing bubble. Ok yes housing market was brutally savaged. But so was the stock market. I’m sure lots of people lost houses and net worth.
Regardless you need a roof over your head. Buying gives you a huge advantage over renting. Your housing costs are fixed for xx years. Nobody can take that away. You can beat the interest paid by rounding off your payment to the nearest hundred bucks and making additional payment once a year. Refinance from a high to a low interest if you have the chance. When you are renting you have no protection other than a 12 month no rent raise or hope you have a benevolent landlord. That’s it.
Another thing....my last house...if I was renting it my rent would currently be 66% higher than my mortgage. Because the rent eventually surpassed my mortgage. When i had a mortgage.
Last edited by Electrician4you; 09-19-2019 at 11:45 AM..
This is probably one of the lamest arguments I see on here.
The house is simply collateral for the money you borrowed and the bank charges interest on the money borrowed. That’s it. The bank doesn’t send you a rent raise every year, they don’t fix anything for you, they don’t pay the taxes or sign a lease. When you buy a house in fact you own it. You can modify it, change it, borrow against it, sell it, rent it, pay the taxes, deduct the interest, etc. Therefore you are not renting.
As far as what’s better.....thats very personal. I know owning properties has made us well off and increased our net worth. And has added income.
Sure house prices may and can/will drop. People like to bring up the last housing bubble. Ok yes housing market was brutally savaged. But so was the stock market. I’m sure lots of people lost houses and net worth.
Regardless you need a roof over your head. Buying gives you a huge advantage over renting. Your housing costs are fixed for xx years. Nobody can take that away. You can beat the interest paid by rounding off your payment to the nearest hundred bucks and making additional payment once a year. Refinance from a high to a low interest if you have the chance. When you are renting you have no protection other than a 12 month no rent raise or hope you have a benevolent landlord. That’s it.
Another thing....my last house...if I was renting it my rent would currently be 66% higher than my mortgage. Because the rent eventually surpassed my mortgage. When i had a mortgage.
The math works out differently depending on situation and location...as you know the money we did not spend buying over the years generates a load of income for us today ..it not only pays our rent but all our living expenses plus appreciation..
The math works out differently depending on situation and location...as you know the money we did not spend buying over the years generates a load of income for us today ..it not only pays our rent but all our living expenses plus appreciation..
Yes. I actually read your advice and posts on here quite a bit. There are always exceptions to the rule. You’re one of those exceptions Mathjak. And you had a lot going for you to do so which where those situations and locations you mentioned come into play. Just like my situation. Maybe it’s luck maybe it’s some skill maybe it’s just not spending every penny I make. . Maybe all three.
Most renters (and I deal with more renters than the typical person and I see the financials of a lot of people) I come across simply do not have the investments that people claim can be had by renting. They simply..... just don’t. Just like homeowners can be in financial straights. But a larger majority of homeowners simply have the financial means to weather a bigger storm than a person renting. As far as I can tell for the past 25 years I’ve been a LL I have never once reduced rents. I may not raise them as much but I never reduced them.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
