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Old 03-30-2010, 02:30 PM
 
1,500 posts, read 2,916,247 times
Reputation: 1228

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Quote:
Originally Posted by chi_tino View Post
That calculator is not eye-opening. It's terrible.

I moved into a house a year ago and none of these expenses were included in that "calculator".

- transaction closing costs
- wind/fire insurance
- flood insurance
- landscaping maintenance/irrigation repairs
- painting
- hundreds of dollars in tools for ordinary maintenance
- a couple of replacement appliances
- new lighting fixtures (nobody likes the lighting in a rental)
- massive amounts of capital improvements (because you have the freedom to change whatever you want)

Plus, in case you've lived under a rock, rents are not "going up with inflation". They are dropping considerably. The investment condos I dumped a couple years ago are now getting about 25% less per month in rent (while the value of the condos themselves have fallen about 75% since then). The depressed real estate market is offering huge rental bargains. You can get rentals for a LOT less than the 12.4 own/rent ratio you quoted, even waterfront.

Your housing expenses (please, stop calling it an investment. It's an expense) is more expensive in the same way that your travel expenses are higher if you own a car instead of taking the bus. More freedom = more money.
Other than antiques, cars generally depreciate. Outside of crashes, houses generally appreciate.

No idea where you are going with your version of rent to price ratio as that is a determining factor of prices, not of rents. It is silly to say you can rent for less than the price to rent ratio as that only means that the price is out of wack, not the rents. The price to rent ratio is used to determine price based upon rents, not the other way around. The number given is the median so obviously the number will vary on either end of a scale.

Aside from that, did you even bother to read what I wrote before you decided to criticize?

I specified that my calculations were done in consideration of how rents have already dropped. To think inflation will not be hitting rents hard into our future, might be living under that rock of yours, you rude person you.

I mentioned that you can add other costs to the tax aspect of the calculator just like I added insurance costs there, as I noted, but that you did not bother reading before running off at your mouth. I did not bother to add maintenance costs, as those usually more than wash away with the sale of the property given typical cap gains which accrue over typical time (not during crashes, duh!).

That you are fretting over the irrigation repair of a shovel and some glue? Ya, maybe you should not be owning.

And that I am collecting 5% after all expenses certainly does make my money placed an investment. I don't know what you are thinking to say otherwise and with your attitude, I don't care. You are just another combative person like that algae person. Buh bye.

Last edited by housingcrashsurvivor; 03-30-2010 at 02:58 PM..
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Old 03-30-2010, 02:50 PM
 
3,283 posts, read 4,795,421 times
Reputation: 753
Quote:
Originally Posted by AlaskaKash View Post
Before you start... yes, I know buying is cheaper than renting in the long run. But looking at home prices in the Tampa area, figuring in property taxes and insurance it looks like it is a heck of a lot cheaper per month out of pocket to buy right now than it is to rent. When I owned a home in Austin it was sort of the opposite. Renting was less expensive at the time than buying but you knew eventually the rent would go up while your payment stayed the same and you developed equity (didn't work so well here in Florida...the equity part). So let me ask you guys..... or is it just me.... does it look like you can save HUNDREDS per month by buying?

i think it is cheaper to buy especially with the tax credit. the problem is that you are tied down to place because it's a little difficult to sell these days(especially in certain price ranges). i'd argue that home prices still have a long way to fall and i'm positive that the tax credit they'll introduce in 6months will be double the credit today.
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Old 03-30-2010, 02:55 PM
 
Location: Where ever you're at, that's where you are!
371 posts, read 1,079,310 times
Reputation: 223
When we bought our house in Houston during the 'bubble' it was cheaper to buy rather than rent (considering rentals in the area were hard to come by). However, we ended up moving right when the bubble burst (job transfer, didnt have a choice) and we, along with many, many others, were unable to sell our house. After being on the market for a year we ended up renting it out for a couple of years before FINALLY being able to unload it. In the long run, considering all that we had put into the house, paying the morgtage on it while it sat empty, all of the expenses of upkeep on it while it was a rental, it would have been Sooooo much cheaper for us to have rented while we were in Houston and been able to move without any ties or financial obligations.
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Old 03-30-2010, 03:05 PM
 
1,106 posts, read 2,040,677 times
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sorry, housingcrashsurvivor, I didn't know your goal was to sell your home at a profit and go and live under a highway overpass with your trash bag full of cash.

In that case, your analysis is correct.

For the other 99% of us that will continue to consume housing, it is an expense.
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Old 03-30-2010, 03:16 PM
 
3,283 posts, read 4,795,421 times
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Quote:
Originally Posted by housingcrashsurvivor View Post
And let's assume normal 3% inflation rate on rents (even though that's lower than normal but just to give a number).


i think this number is a little optimistic. with all the vacant inventory about, sooner or later this will end up on the rental market. as that market becomes more competitive for ever decreasing quality tenants, i think rents will drop a little.

i do agree with you that i can't think of a better investment.
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Old 03-30-2010, 03:16 PM
 
770 posts, read 1,632,240 times
Reputation: 757
It depends on length of time you will remain in the home and annual appreciation. I think homes values will be slow in appreciation as unemployment and housing recovery are still in a precarious state bec the amount of foreclosures is considerable, which keeps home values down.

On the other hand, unless you are a cash buyer and can manage or are lucky to snatch a good deal, then buying would be the way to go, otherwise, I'd say renting would be cheaper. But, beware of those good deals as well, many of those great bargain properties are in distress and can cost a fortune to repair.
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Old 03-30-2010, 03:16 PM
 
1,106 posts, read 2,040,677 times
Reputation: 954
Quote:
Originally Posted by housingcrashsurvivor View Post
Outside of crashes, houses generally appreciate.
No, outside of once-in-a-century bubbles, houses do not appreciate more than the carrying cost of owning them.

I purchased my house in a short sale from a realtor who made that flawed assumption and lost her home.

---
Let's say you buy a bond that yields 3% a year. But you don't have the money to buy the bond, so you go and borrow money at 6% to buy that bond. Also, there's about a 4% annual service fee in your account to maintain that bond.
---

Are you making money? Most realtors would answer yes to this question, and that is why most of them are eating dog food today.
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Old 03-30-2010, 03:37 PM
 
Location: Myrtle Beach
3,380 posts, read 8,210,254 times
Reputation: 2930
OKay, you can buy MORE house for the same amount per month when comaring RENT VS Mortgage + Taxes + Insurance
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Old 03-30-2010, 03:43 PM
 
770 posts, read 1,632,240 times
Reputation: 757
It's a simple math calculation, add initial cost and operating costs for X amount of years for renting vs owning, will yield the answer.
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Old 03-30-2010, 03:46 PM
 
Location: Myrtle Beach
3,380 posts, read 8,210,254 times
Reputation: 2930
I'm going to rent when I first get down there anyhow to get to know the area. They predict the houses in Tampa are going to fall another 14%. I'll sit on the sideline and wiat to jump in around January. Thanks!
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