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Old 04-19-2011, 08:57 PM   #61
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Or maybe just OMG Silicon Valley is expensive!
That is the understatment of the year!
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Old 04-19-2011, 09:03 PM   #62
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Originally Posted by Retch The Grate View Post
Yup, I rent

Taxes on the property alone are interesting:
Year Taxes paid % Change Tax assessment % Change
2010 $16,482 -- $1,348,295 -0.2%
2009 $16,482 5.3% $1,351,500 2.0%
2008 $15,653 609% $1,325,000 919%
2007 $2,206 0% $129,988 2%
2006 $2,206 2.2% $127,440 2%


I just have yet to see the financials work out such that it makes sense.
Based on those taxes, if the owner bought 30 years prior then he paid about $75,000 for the property in 1978 and sold for almost 17 times his purchase price walking away with $1,250,000. His principal and interest payment would have been about $350 a month. If he was renting both units I would think rents would be a minimum of $60,000 a year. The state of CA was discounting his taxes by about $13,000 yearly.
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Renting a House
Old 04-19-2011, 09:33 PM   #63
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Renting a House

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Yes, I understand. Still, I couldn't hold myself back from adding my particular case, another extreme anomaly - - $873/year for property tax, no HOA, median priced home. You couldn't rent anything at all here for $146/month, much less a house.
I agree it is location specific. Some places you can't find a good place to rent anyhow, so you have to buy.
Also, it's a different ball game when renting a house. You may be dealing with a home owner that decides to sell or rent it to family or friend and you are on the street. It happened to us twice, while we were building our house. What a pain to move, again!
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Old 04-19-2011, 09:42 PM   #64
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Our neighborhood is rent controlled meaning landlords can only raise rents 3% per year (about the same as property tax increase cap in CA). So I'm not too sure we'll come ahead by buying a house.
A rent controlled place is such an overwhelming benefit that you shoud think very long and hard about leaving it.

Ha
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Old 04-19-2011, 09:47 PM   #65
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Yup, I rent the smaller side of a duplex (shared wall is the kitchen and garage) in Cupertino. 2 bedrooms, 2 baths kitchen, living room, 1 car garage on a nice quiet dead end street with a park opposite the entrance to our street. $1900 a month.<snip>

Moral being, local market conditions vary widely. Or maybe just OMG Silicon Valley is expensive!
But that rent is not bad at all, for a 2 bedroom place in a location where you can make so much money. For someone with the skills to take advanage of the situation, it would beat paying $500/mo in Cincinnati or Baltimore.

Ha
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Old 04-20-2011, 01:07 AM   #66
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Just yesterday we were listening to an hour-long radio show on NPR Talk about renting vs. buying. After blabbing about the obvious pros and cons, the professor claimed that renting vs. mortgage should be roughly the same cost wise, but the landlord makes the capital appreciation of course.

The callers provided more context, such as rents always go up but a fixed 30-year mortgage gives you peace of mind (and with inflation in 10 or 20 years it will should even less while rents continue to rise). I was shocked that no one mentioned that you can't compare the price of renting vs. mortgage forever because eventually you will own the house free and clear - but you will always be paying rent.

Personally, I have never really rented, except for a couple of years. I bought my first condo with no money down when I was 24 and clueless, but no regrets. Our last house in CA tripled in value and we cashed out. Try doing that with a rental!

Anyway, a rental would never be a "home". I love being able to fix up the interior and exterior any way we like. Plus, no one will ever be able to say we have to move because they're selling up etc.
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Old 04-20-2011, 02:42 AM   #67
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To the OP: You are in the worst place, bar none, in the entire country to own a home. If you ever leave the area, you can be certain the rent vs. buy will swing more towards buy, regardless. Rent control on top of that makes it even more of an easy decision.

That said, there are more areas in the country where it is better to buy than rent, if you are staying there for awhile, I've read dozens of studies that state this, the math is pretty clear-cut.

For me, I am guaranteed to be in an unstable job situation in high COL areas while working, so I will never have to worry about buying while working. Then, when I retire, I want to stay in one place, in a low COL area, and never really expect to move again, so I will have no choice but to buy, so I don't have to do all the complicated calculations that you run into if you want the best deal in some sort of in-between situation .
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Old 04-20-2011, 09:06 AM   #68
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Our rule of thumb: Buying a house is the same "pain in the neck" factor whether you buy it at 25, 35, 45, ... , or 65 years old. The benefits are far better the younger you are when you buy it. I bought our house in SoCal in June of 1982 when I was 24 years old less than 1 year after starting my engineering job. I assumed a mortgage (13%) that was 56% of my gross monthly income. No credit check required. Also, couldn't afford to live in the house for the first full year. I rented it out to a family and took a $500/month negative cash flow. I moved in the house after 1 year but had to have roommates for another 3 years until I could afford this house on my own. Never regretted it ever. Fantastic investment for both having something that gradually reduced my housing costs and also went up in value (paid $96K, worth $375K now, even after the down turn.) Also, the biggie for me, never had to worry about a landlord raising rents on us or kicking us out.
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Old 04-22-2011, 11:25 AM   #69
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I know one thing- realtors can thank their lucky stars for women, because women are a very strong, relatively price insensitive home buying force.

Ha
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Old 04-22-2011, 01:41 PM   #70
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... Also, the biggie for me, never had to worry about a landlord raising rents on us or kicking us out.
But those who bought a condo or are in a HOA can't say the same. You can't predict exactly how much those dues and fees will be raised. Some of those fees/dues, combined with property taxes and insurance--which you also cannot predict how much they too will rise--equal or exceed what some pay for rent.
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Old 04-22-2011, 02:46 PM   #71
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But those who bought a condo or are in a HOA can't say the same. You can't predict exactly how much those dues and fees will be raised. Some of those fees/dues, combined with property taxes and insurance--which you also cannot predict how much they too will rise--equal or exceed what some pay for rent.
Absolutely correct, but flies under the radar of many, perhaps most people. It's like car expenses. Who knows most about what it actualy takes to operate a car? Runzheimer, or Jane & Joe Sixpack? Runzheimer gets my vote.

Back to condos- the condo association has all the same expenses of an apartment owner, except maintenance of the apartment interiors, so that condo fee will have to reflect all those expenses over time. In fact, whenever it does not the owners are setting themselves up for assessments, and acutally giving short tenancy owners a break relative to long holders. Taxes too, except that in ordinary times large apartment assessments will tend not to reflect bubble markets that infect owned real estate, and thus will move less violently upward.

People oftenignore that these same factors aply to SFH owners too. The loan against property to do large maintenance and necessary capital improvements is the counterpart of assessments in a poorly managed condo.

From what I have seen, it is the tendency of condo associations to under reserve, rather than over reserve. Thus SFH owners only escape these espenses by virute of poor bookkeeping and DIY efforts.

Ha
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Old 04-22-2011, 04:36 PM   #72
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But that rent is not bad at all, for a 2 bedroom place in a location where you can make so much money. For someone with the skills to take advanage of the situation, it would beat paying $500/mo in Cincinnati or Baltimore.

Ha
Oh I agree, the rent is fine, especially shared with my housemate. That's the issue, renting is very affordable in Silicon Valley, at least compared to purchasing a place. So my financial sense says "DO NOT BUY!" which wars with my desire to own my own home.
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Old 04-22-2011, 04:48 PM   #73
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If you rent a condo or a home in an HOA, you can depend on the landlord to pass on those increases in assessments and taxes and maintenance costs right to you, so you'll be paying them whether you're renting or owning.
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Old 04-23-2011, 07:25 AM   #74
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Oh I agree, the rent is fine, especially shared with my housemate. That's the issue, renting is very affordable in Silicon Valley, at least compared to purchasing a place. So my financial sense says "DO NOT BUY!" which wars with my desire to own my own home.
Follow your intellect, not your heart in this case.

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If you rent a condo or a home in an HOA, you can depend on the landlord to pass on those increases in assessments and taxes and maintenance costs right to you, so you'll be paying them whether you're renting or owning.
But, if there is a sudden big assessment the landlord can't just pass it on to you. You can say no with your feet.
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Old 04-23-2011, 08:27 AM   #75
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And after you say no with your feet, you will pay the cost, both financial and non financial, to move. When one is young and your total possessions will almost fit in the smallest U-Haul trailer moving is not so bad. When you have 11,000 pounds of stuff, moving is a real pain in the @%$!
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Old 04-23-2011, 09:41 AM   #76
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And after you say no with your feet, you will pay the cost, both financial and non financial, to move. When one is young and your total possessions will almost fit in the smallest U-Haul trailer moving is not so bad. When you have 11,000 pounds of stuff, moving is a real pain in the @%$!
The trick is to keep purging and make sure you don't accumulate stuff you don't need. My last move was good for making me get rid of 27 legal boxes of books. I regret a few things I've purged over the years, but the net benefit has been huge. I definitely am never getting back to being able to pack into a single car again, however. Still the financial consideration is there, when my rent went up $100 at the beginning of the year, it was clear that the bother of moving/value of the house to me was such that we didn't even bother searching for a new place to rent.

It did increases the Zillow searching and continued marveling at how completely unaffordable bay are houses are to purchase.

Side note, using the Zillow app while on my lunchtime walk is fascinating. It is a pretty interesting augmented reality to be aware of the individual values of all the houses around you as you get your exercise.
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Old 04-23-2011, 10:29 AM   #77
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Home Owning Thoughts:

If you feel you need to buy a home because of peer pressure, you are not ready.
If you need someone on an internet forum to guide you in this regard, you are not ready.

I have rented when I knew I wouldn't be staying in an area. I don't know how anyone can own a home during retirement in the NYC / NJ area with taxes the way they are. Many can and do not. Why do you think there are so many people in FL?

I can't stand to rent. You are living in someone else's property. You are subjected to their whims. If they want you to move out so that their friends or family can move in, you do (happened to me). Landlords have the right to dictate how you live and I don't like it. Homeowners associations are the worst in this regard (this could be its own thread). I worked with a fellow who could not get dish TV because the landlord would not let him put a little dish out on his porch.
Having a home paid for can provide peace of mind. If you can't pay the rent, you are homeless. If you own, all you really have to worry about are food and taxes.

With working, you are working for the Man. With renting, you are renting from the Man.

Don't tread on me?
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Old 04-23-2011, 10:35 AM   #78
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Home Owning Thoughts:

If you feel you need to buy a home because of peer pressure, you are not ready.
If you need someone on an internet forum to guide you in this regard, you are not ready.

I have rented when I knew I wouldn't be staying in an area. I don't know how anyone can own a home during retirement in the NYC / NJ area with taxes the way they are. Many can and do not. Why do you think there are so many people in FL?

I can't stand to rent. You are living in someone else's property. You are subjected to their whims. If they want you to move out so that their friends or family can move in, you do (happened to me). Landlords have the right to dictate how you live and I don't like it. Homeowners associations are the worst in this regard (this could be its own thread). I worked with a fellow who could not get dish TV because the landlord would not let him put a little dish out on his porch.
Having a home paid for can provide peace of mind. If you can't pay the rent, you are homeless. If you own, all you really have to worry about are food and taxes.

With working, you are working for the Man. With renting, you are renting from the Man.

Don't tread on me?
You convinced me! I wil buy today!

Ha
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Old 04-23-2011, 10:52 AM   #79
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You convinced me! I wil buy today!

Ha
I doubt it - you seem like a "free spirit" to me, not willing to put down "roots" in a singular type of abode.

Not saying that you're wrong. IMHO (based upon your posts) renting seems to suit your lifestyle, I believe.

While it is not my/DW’s preferences, different folks - different strokes, as they say....
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Old 04-23-2011, 11:46 AM   #80
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...But, if there is a sudden big assessment the landlord can't just pass it on to you. You can say no with your feet.
You'll see an increase in the rent in the next lease, though. And if you say no with your feet, the landlord at the next place you go to will pass on his/her increases the same way and you'll have to say no with your feet again.

I'm just pointing out that a homeowner has to cover increases in taxes, HOA assessments, maintenance, etc., but a renter is almost always also going to pay for those things in rent increases. So imo that shouldn't be a factor in a rent vs. buy decision.
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