Renting for life?

[rescueme]

I can't think of any urban area, or even suburb, where this might be found. It would likely take living in the country, would it not?

Ha

Not at all. Eastern PA (mid-Atlantic) about 90 miles West of NYC, 50 miles North of Phila.

If you want to call it country? It depends on your reference (I was stationed in west Texas, where your next door neighbor was in the next county).

Let's just say that's in excess of an acre, the closest bus stop is about a mile away, and the local shopping district in the same vicinity.

If you consider that country, so be it…

 

[haha]

Not at all. Eastern PA (mid-Atlantic) about 90 miles West of NYC, 50 miles North of Phila.

If you want to call it country? It depends on your reference (I was stationed in west Texas, where your next door neighbor was in the next county).

Let's just say that's in excess of an acre, the closest bus stop is about a mile away, and the local shopping district in the same vicinity.

If you consider that country, so be it…

I am not criticizng it, just asking. If you were smack dab in thé middle of a typical 2.5 acre plot, 330' by 330' you could guarantee the required separation without any similar strategies from the presumably equally neighbor-averse nearby houses. Slightly smaller might do, unless of course soil conditions, esthetics or other considerations did not allow you to build in the very center of the plot. Anyway, if you are happy, I am happy.

Ha

 

[growing_older]

For some of the same reasons that I aspire to FI and not being dependent on continued employment, I prefer to own and not be dependent on my landlord or their issues in order to continue to live in my "own" place. YMMV.

 

[Ed_The_Gypsy]

I do NOT recommend being an absentee landlord, especially from overseas. If you want to invest in real estate from a distance, I recommend an REIT index fund such as Vanguard's. It is also more liquid than actual property.

Renting gives you a lot of mobility. You can do some exploring in retirement. You may change your mind about where you want to be between now and then.

 

[tmm99]

Certainly it depends on where you live but there are such good deals out there now and interest rates are so low you would be hard pressed to find a better time to buy a house then now. You can get a nice 3BR house in the Phoenix area for $125k, that would have gone for $300k a few years ago. Many other hard pressed areas have similar deals. You could lock yourself in to a $650/month mortgage for 30 years and gain some equity or pay rent money for the rest of your life. You would be hard pressed to find a place to rent for that today, one can only imagine what you'll be paying in rent 30 years from now.

How do you know if the prices are not going down even more?

 

[ItDontMeanAThing]

they have both suggested renting instead of owning, and that the stock market (index funds) is a much better place to put your money.
...
...
How did you guys make the decision to rent or buy?

I retired at 54 never having owned a house. Still don't.

There were several times in Southern California when my assets, income, and house prices meant that I could afford a house where I wanted to live but chose not to, because:

1) I couldn't get past putting most of my eggs in one basket.

2) I'm was a software developer who changed jobs about every 3 years. I HATE commuting so that meant I moved a lot.

3) I saw my friends donig too much of their time on house maintenance.

So, I rented, chose a life style that meant there was money left over at the end of the month and invested it right through the biggest bull market in US history. Yes, I'm enjoying my stay in Southern Thailand.

 

[zinger1457]

How do you know if the prices are not going down even more?

I don't know anyone who can accurately predict what the bottom will be but the prices (in Phoenix) are already well below what it would cost to build/replace a house and with interest rates as low as they are there are a lot of good deals out there.

 

[tmm99]

I don't know anyone who can accurately predict what the bottom will be but the prices (in Phoenix) are already well below what it would cost to build/replace a house and with interest rates as low as they are there are a lot of good deals out there.

Thank you zinger. The reason I asked was because many think another wave has already started...

http://shortsaleteaching.com/blog/wp-content/uploads/2010/01/mortgage_reset_image.jpg

 

[cjking]

An advantage of owning is the matching of liabilities to assets. If you put the money in the stock-market, it's unlikely stock market monthly returns will match the rent you need to pay.

Edit: how much this matters depends on the cost of housing as a proportion of overall expenses. For me, about two thirds of the minimum income I could live on is the cost of housing. So having a paid for house, I reduce by two thirds the proportion of my "income" that is susceptible to a bad sequence of returns.

The matching isn't perfect, since a home should outlast the owner by a lot. So I guess a transition to renting (with the capital going into an annuity to fund the rent) when life expectancy is short might make sense, from a strictly financial point of view. The annuity/rent combination might make sense over 5-15 years, ownership makes more sense when life expectancy is 50 years. The stock-market/rent combo probably only makes financial sense if housing costs are relatively insignificant proportion of total costs. (In that case it's not necessarily better, it's just that it probably doesn't matter what you do.)

To achieve similar matching effects, I sometimes have a fantasy that the electricity generator will raise capital for a nuclear power station that pays dividends in kilowatt-hours for 50 years, or the water company for a dam with payments in water. But water and electricity are relatively insignificant expenses, so buying a life-time supply doesn't make sense.

 

[haha]

An advantage of owning is the matching of liabilities to assets. If you put the money in the stock-market, it's unlikely stock market monthly returns will match the rent you need to pay.

From my POV this is the strongest financial argument for owning.

Ha

 

[IndependentlyPoor]

Agreed.
I believe the rule of thumb is to not pay more than 15 or 16 times annual rent for an equivalent house or condo. That works out to a 6.7% return. I don't know about you guys, but my portfolio isn't returning that much.

 

[kcowan]

Let's face it. Owning is an emotional decision. There are lots of spreadsheets around to justify it (or not). But in the final analysis, it is emotional. That is how realtors make their money year in and year out.