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any FIRE renters here?
Old 09-11-2015, 08:50 AM   #1
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any FIRE renters here?

Hi folks.

Planning on moving in 3 years, when son is done w/ high school. Wife and I should both be retired at that point. We own our home, with no mortgage.

I always figured we'd buy a house in our new location, but I'm having second thoughts. Here are some potential advantages of renting:
  1. no property taxes
  2. no maintenance costs
  3. no insurance
  4. money that would be invested in house could be working for us in the market
  5. freedom to move quickly & easily
I've got a feeling in most cases, it's still more cost effective to own than rent, but the difference may not be that great.

Just looking for other views/thoughts on the subject, especially if you are renting and FIREd.

Thanks.
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Old 09-11-2015, 09:22 AM   #2
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We owned our house in a suburb of Dallas for 20 years. We retired in Jan this year, sold the house and moved near relatives in S. Florida. We are renting a nice house and at this point we dont really have plans to buy ever again. That could change as we get older of course. We have 2 yrs until our son graduates HS and at that point depending on what he does as far as college or possibly joining the military, we plan to seriously downsize and start moving around the country and the world in furnished apts. The current plan is to spend a few months in different places for a year or so and then come back to S. Florida for a year or so and then repeat.
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Old 09-11-2015, 09:30 AM   #3
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I owned a house for 4 years in the 80s. The rest of my life I was a renter. No family so I couldn't see spending on extra room for extra junk. I was in the military so I needed to stay flexible and mobile.

After I retired (19 years ago) I considered buying for a while but I just didn't like the idea of having that huge overhang. I was quite OK in apartments. About 10 yrs ago I moved into a mobile home park. (A nice one) Costs are way low and I get some space between me and neighbors. Plus I get to play my guitar without the neighbors hearing me.

You won't get any arguments against renting from me.

As far as your list of reasons goes: If you are renting a single house from somebody you're paying the owner's property tax and maintenance tax in your rent. Same with insurance. You will still need renter's insurance to cover your own stuff just not the building.

If you rent an apartment in a big building all those things are sort of spread across a large number units but it amounts to the same thing. I did like the fact all that mishighass was handled in one check every month and the details were somebody else's problem.
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Old 09-11-2015, 12:04 PM   #4
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Five years ago, I was a firm believer in homeownership. Now, I'd be happy never owning a home again. As razztazz mentions, you do pay for property taxes, maintenance costs and insurance indirectly via your rent. But I like having only one, predictable bill to pay every month. I like that there are no unforeseen costs popping up every once in a while - like a roof that suddenly starts leaking, a sewer line that gets clogged, or an appliance that stops working. The only thing to watch out for is the yearly rent increase. But even then, I have the option to decline it and move out. I like the freedom to move quickly, easily, and frequently if I so choose - as a renter I like to keep my possessions in check and stay nimble. What I like best? Not having to deal with repairs and maintenance. I make a phone call and the owner takes care of it. I also like the fact that next time we have a big earthquake on the west coast, I can just move out and let the owner deal with the damaged property and financial losses.

The only thing that would make me reconsider is rent inflation. But if I ever buy again, it will be a relatively maintenance-free condo. I am done with owning houses, especially multistory houses over 1,000 sqft with big lawns.
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Old 09-11-2015, 12:37 PM   #5
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Rent inflation. Had been raising rent on apartment turns, just scooching the rent up $10-15/turn. Had some tenants who hadn't had a rent increase in over 5 years. A few months ago bounced everybody up to the same price for a one bedroom, which, for some tenants, ended up being an 18% bump. Had a few complaints, no moveouts that weren't expected, and then empties filled faster than normal. Will be trying to be more regular and just bump everyone 3%/year or so going forward. Point is, I think rents are shooting up and as more and more people choose to avoid the ownership hassle it will cost more and more to do so.
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Old 09-11-2015, 12:58 PM   #6
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Originally Posted by calmloki View Post
Rent inflation. Had been raising rent on apartment turns, just scooching the rent up $10-15/turn. Had some tenants who hadn't had a rent increase in over 5 years. A few months ago bounced everybody up to the same price for a one bedroom, which, for some tenants, ended up being an 18% bump. Had a few complaints, no moveouts that weren't expected, and then empties filled faster than normal. Will be trying to be more regular and just bump everyone 3%/year or so going forward. Point is, I think rents are shooting up and as more and more people choose to avoid the ownership hassle it will cost more and more to do so.
One thing I left out of my previous post was that renting is not good during times of high inflation. In the early 80's I lived for 2 whole years in an apartment. Starting rent was $350.00 per month. Ending rent was $ 420.00 per month. Currently the same unit is going for $790.00.

$350.00 1982-dollars would be $865.00 today. So, you can get highly burned if you're there for the "intermediate/long" haul. Being military I knew I would be in and out really quick and moving on.
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any FIRE renters here?
Old 09-11-2015, 02:14 PM   #7
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any FIRE renters here?

No property tax? Really! Unless you are in a market where the owner can not pass this expense on, you are paying the property tax! Just like you pay sales tax, corporate income tax and all other taxes and expenses incurred by the landlord. Otherwise, he operates at a loss, and if houses are not going up in value he better have deep pockets or you will soon be mocking again when he sells.


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Old 09-11-2015, 02:15 PM   #8
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Yes, obviously the renter is paying the property tax, indirectly. I'm not going to list that as an expense though, because it's already included in the cost of rent.

It is a separate and distinct cost for a property owner.
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Old 09-11-2015, 02:18 PM   #9
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I see four and five as a possible advantage, the others, IMHO, are not.


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Old 09-11-2015, 02:42 PM   #10
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it goes back to if your plan to be someplace for 15-30 years, its likely cheaper to buy. However, what you buy and what you rent are two very different things.. so it really comes down to lifestyle.

For us renting was really about,
1) Easy to lock and leave as we travel 2-3 months a year
2) more time for us vs. cleaning/fixing/updating the house
3) Closer to the activities we like
4) ability to move often so we can really experience different regions of the country, a year on the beach, a year in the mountains.. the less we have the more mobile we are.
5) amenities.. we really enjoy the resort style of the new apartments and would have to buy significantly more house to get similar experience
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Old 09-11-2015, 03:45 PM   #11
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You forgot the costs of buying and selling a home.

It's a complicated equation for sure.
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Old 09-11-2015, 03:56 PM   #12
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It depends very much on where you're planning on living and specifically on what rents are as a percentage of property values. Mr. Money Mustache has an excellent post on this topic, and embedded within it is the bookmark-worthy New York Times rent vs. own calculator:

Rent vs. Buy: If You Have to Ask, You Should Probably Rent

Cheaper still is what we do: we own a very comfortable, super energy-efficient late model mobile home that's easy to lock and leave for travel. 16K tied up in the place, less than $100 a year in taxes (they're treated as vehicles), and $245 a month in space rent (which includes water, sewer and trash). Tighly sealed (far more so than a stick-built house) - gas and electric average under $100 a year and we're in Colorado with warm-to-hot summers and fairly cold winters.
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Old 09-11-2015, 04:08 PM   #13
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As others have pointed out, I am very wary of going naked vis a vis housing costs. I would only consider it if I was in a place like NYC with some form of rent control protection given the tremendous uncertainty created by central bank monetary policy, which still has the potential to unleash significant inflation down the road.


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Old 09-11-2015, 04:29 PM   #14
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We rented after selling one house and before buying another.
There is an advantage to having a good idea of what your costs are going to be and not having responsibility for repairs.

Some of the potential disadvantages (beyond the issue of whether you would gain financially from buying):

1. Read the lease carefully. The lease that was originally given to me, would have made me as tenant responsible for most repair costs (I think there was a limit to this, but still...). I rejected that. But, I realize some people never read the lease. Look at it very carefully to make sure about who is responsible for what.

2. One landlord always had a relative of hers come in to do repairs. The negative there was that I would have to wait for him to get off work from his day job and come when he could. The other problem was that while he was OK for some things he wasn't professional in other things and there would be delays while waiting for him to come and fail to repair and then get someone in who actually was knowledgeable.

3. Again, look carefully at the lease. Can the landlord come in any time or must notice be given? If the landlord wants to sell the property or wants to find a new tenant before the end of your lease term what kind of notice do they have to give you of any showings? And so on. There are lots of provisions.

4. Pets. If you have pets, renting may be difficult or be extremely expensive. My son is in an apartment at college. For his cat, he had to pay a $200 fee (non-refundable) plus a $200 deposit plus $20 a month more on his lease.
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Old 09-11-2015, 05:22 PM   #15
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Someone else shared this calculator which helps factor in opportunity loss.

http://www.nytimes.com/interactive/2...alculator.html
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Old 09-11-2015, 05:26 PM   #16
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Long-time renter and occasional owner. Renting's better, at least for this single guy.

I would have FIREd sooner had I never owned real estate.
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Old 09-11-2015, 05:48 PM   #17
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Originally Posted by mrfeh View Post
Hi folks.

Here are some potential advantages of renting:
  1. no property taxes
  2. no maintenance costs
  3. no insurance
Thanks.
I'm pretty sure that in most cases, taxes, maintenance and insurance are baked into the cost of your rent.

Your point about the freedom to quickly move around without the hassles and expenses of selling a house, IMO, is the one huge obvious advantage.
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Old 09-12-2015, 12:07 AM   #18
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We owned our own homes for 35 years. A few years ago we downsized, put our things in storage, and travelled for six months. Came back and rented.

I like renting a condo! Lock the door and leave. Spouse like it because it is easy to maintain although she would like to buy again...nesting syndrome.

When we looked at the financials of buying or renting a condo in our area buying simply made no economic sense. Our landlord would make 2.5-3 percent re turn on our condo rental assuming it is rented 12 months per year. BUT, there have been two assessments that essentially eliminated 4/5 years of that return. And there has been no capital appreciation.

I really like the liberating feeling of not owning. It is a new experience and we ar enjoying it.
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Old 09-12-2015, 08:09 AM   #19
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We are not quite retired yet but hope to be in a couple of years. My wife took a new position in central florida so we have to move there from NY. We went on a "house hunting" trip last week with the plan to find a place to rent.

Our criteria was the new place had to be no more than 15 minutes from her job, garage, least 2 bedrooms, minimal maintenance (didn't really want single family home). We found a apt that worked that was a little over $1,700 per month. Then we found a brand new townhouse that was larger (more space and 2 car garage) for about $190K. With 5% down our payment (HOA, insurance, etc.) is about $250 cheaper per month. So we opted to buy.

So my learning is that the decision will boil down to the options you have where you are looking to live.
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Old 09-12-2015, 10:03 AM   #20
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Rented for 18 years and counting. 2000 sq.ft. penthouse with 1300 sq.ft. of patio space and rent control. We evaluated moving this month and could not find anything comparable (which is the same conclusion we reached in 1997). It has been fully updated twice.
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