Own vs. rent?

[renferme]

Martha,
hope you're right about rents going up and house prices going down.
Here in the Pittsburgh area, we did not participate in the housing boom,
so homes are reasonably priced. I don't see them going down here, so maybe the rest of the country will "catch up" by having their prices go down, if you know what I mean.
Maybe a blessing in disguise that home price increases are moderate here beause we have so many badly managed school districts. By that, I mean that school boards have a license to steal; all they want to do is build new schools and raise taxes sky high here in Allegheny County. Had home prices skyrocketed, our assessments would have skyrocketed and taxes the same.

 

[AltaRed]

It's a townhouse-type.  It's a two-story duplex, connected to only one neighbor, and that's along the garage.  I have a great neighbor now, but who's to say how long that would last, as she is also having thoughts about down-sizing.  Thanks for your input.

That is almost like a stand alone house without the exterior maintenance. Think I'd consider downsizing to a denser condo development (but not a high rise which tend to attract high condo fees for interior hall and elevator maintenance).  Would provide peace of mind while you are away.  But it might be worth your while to stay where you are for the first year of retirement and see how it feels.  Nothing says you can't decide to downsize any time you want to thereafter.

P.S. DW and I just retired a few months ago. In the space of 10 years, we have downsized from a large executive 2 storey with all the costs and maintenance (Canada) to a patio home (half the size and a bungalow in Texas) to our retirement 'villa' in Canada which is really a fancy name for a side-by-side duplex - not dissimilar to what you have now. That works for now as we are not big into long term travelling, but if we go that way, we would likely go to a condo townhouse, e.g. 4 units or so to a building (several of those developments around).

 

[sparkee]

"Anybody know any more details about the Kaderlis' home in the US?  Are there similar properties in other parts of the country?  What type of housing accomodation is it?  I've seen it described as "adult resort community" - but what?  a condo in one of these places?  A "condotel"?  Can anyone provide links to similar places for sale now?  Curious about the costs and typical amenities provided."

The Kaderli's have a 5th wheel trailer in a park near Phoenix. I believe they rent the space on a year-round basis, so it's available to them whenever they use it and they can leave it whenever they want. I seem to remember from pricing a few years ago that fees of $400 a month or so were possible on longer-term leases, but I could be far off on that.

I believe most of the big places near Phoenix cater to retirees (permanent residents and snowbirds) and have pools, recreation areas, craft rooms, libraries, etc.

You might check with them to ask. I believe they're back in the US now.

Richard

 

[vic]

no closets could be a mold thing in a lot of places

 

[unclemick]

Sam (AF double dipper) used to keep a small light bulb on in closets in Florida to combat humidity - I'm asuming old style closets.

We kept the closet doors removed. Had open mesh wicker for the bathroom towels. LA swamp - fish camp over water.

heh heh heh

 

[ShokWaveRider]

As a landlord I am always making sure I don't end up with people that plan for the shortest time possible. Tenants sometimes forget that a landlord can kick them out without any reason with a 30 day notice on a month-to-month contract. My month-to-month tenant got on my nerves and I served her the 30 day notice. Oops a little unexpected for her since she had all her fun trips planned during that time.

You may want to check they types of leases customary in your area. The standard realtor's contract that I use makes my tenants liable for yard maintenance, frozen pipes, pest control (except WDI), plugged drains etc.. As an apartment renter you never know what crazy transient lives next to/above/below you. I would consider rentiing an apartment it if the finances were right though.

Vicky

Vicky, with all due respect I would not rent from you. My wife and I are excellent renters. We owned our own home for 20 years and sold it for close to $1m 2 years ago. We keep the rental home in top notch condition. So much so, our landlady agreed to a 90 day temination clause both ways. I think if you are a savvy renter and a excellent risk, and the landlord/lady is reasonable, it works well. We also get preferred rent when I compare in the area. She does not use a broker and the home is in better condition than when she rented it to us. We are not liable for anything except phone in our rental. Now if the toilets break, I fix them, if the washer breaks, I fix it, I change the AC Filters, have the carpets cleaned regularly, do not smoke, I make sure the painters do not miss spots and manage any home related issues for her etc., all at no cost to her.

If a tennant gets on your nerves, you simply chose the wrong tennant. We also pay 3 months in advance in cash and are never late, in fact I pride myself on being 2 weeks early evey quarter. We started Quarter to Quarter and now have been here over a year. We did not even have to pay a security deposit.

I believe in having a good relationship with our landlord/lady. If I did not like renting I would buy. I certainly could NOT buy the property I am in for what I rent it for. No Taxes, No Utilities, No Condo Fees, No Internet fees, No Cable Fees, No Worries. I will keep the deal until she sells the place.

If I rent another place, I will do the same thing. Offer to pay multiple months in advance. I actually prefer paying a lot in advance then I don't have to deal with the monthly bill. The money it cost me in interest is worth every penny. I do NOT use brokers at any cost. They are all crooks in my opinion. I tried it. In my experience they would rather get a crappy tennant for $50 more a month than a reputable one. They are also ignorant and a pain to deal with from a renters perspective. They treat everyone like Trailor trash. In my experience at least. I do NOT like being treated like nothing by anyone, I simply take my business to a place I like to deal.

SWR

 

[shiny]

Amen brother SWR!

We rent too, it works out much better for us financially and logistically (we like the freedom of being able to move) We are responsible people who expect the landlords to be responsible as well. They respect us and we respect their property.

We are in an apartment building, so its a little different maintenance wise. We do leave for up to a month at a time, but have a neighbor keep tabs to make sure nothing is amiss.

 

[linkerbink]

Thanks, everyone, for your kind responses. It's given me a lot to think about. Since I have a year to decide (and also see where the real estate market goes), I have time to think this out. Also, I guess it would be wise to hold off on selling until after I've traveled a bit, just to see how things work out. I would LOVE the RV lifestyle (my husband & I did a lot of that while he was alive), but I don't think that's a wise thing for a woman to try alone.

 

[Billy]

Justin:

Anybody know any more details about the Kaderlis' home in the US? Are there similar properties in other parts of the country? What type of housing accomodation is it? I've seen it described as "adult resort community" - but what? a condo in one of these places? A "condotel"? Can anyone provide links to similar places for sale now? Curious about the costs and typical amenities provided.

Hi Justin,
We have been getting lots of email on this subject lately, and Billy saw your post the other day. I looked up the following links due to all the mail we were getting. Check them out. Some places you lease the land, some places offer you the option to buy the land. It is a personal preference. Many of the same amenities are offered whether you buy or lease the land.

Swimming pool and spa, tennis courts, computer room, work out room, free Wi-Fi, manicured gardens, social activities, transportation offered to shopping, etc.
Palm Harbor homes, Florida communities
http://www.palmharbor.com/phhcom/
http://www.manufacturedhousing.org/default.asp
modular homes http://homebuying.about.com/cs/modulareducation/a/modularhomes.htm communities
[url]http://www.mhchomes.com/DBMHC/MHCMain.nsf/vwPages/HomePageMainWDSRIR-4PLPAM [/url]
Florida
[url]http://www.mhchomes.com/dbmhc/MHCCmnty.nsf/vwPages/Property-CommunityCommunityWDPZAA-4ZET2Q?OpenDocument [/url]
select a state
http://www.mhchomes.com/DBMHC/MHCMain.nsf/vwPages/MHCLifestyleMainWDJMIA-4PZN2P
Cal Am Homes
[url]http://www.cal-am.com/home.html [/url]
Greenfield Village: http://www.greenfieldvillage.com/ Park Model listings include the ground, unless otherwise indicated.

Linkerbink:

I would LOVE the RV lifestyle (my husband & I did a lot of that while he was alive), but I don't think that's a wise thing for a woman to try alone.

Hi Linkerbink,

We RV for a couple of years when we returned from Nevis and South America. It is a fabulous lifestyle, one we cover in our book in Chapter 16 (Table of Contents http://www.retireearlylifestyle.com/table_of_contents.htm)

That being said, we have a friend who is 66. She recently sold her home and all her stuff, bought an RV and is currently touring the US alone and loves it. We spoke with her last week. She said she would  never own a home again, and that: “If it were not for you, I probably would not have the courage to do this, so I thank you much."
Gin (Traveling the US in an RV)
See our Testimonial page: http://retireearlylifestyle.com/testimonials.htm

She stays mostly in State Parks where she feels secure or other parks which offer security. Sooo…..  I understand and respect the fear you have, and I suppose it is simply personal timing for someone who wants to travel alone.

Best,
Akaisha
Author, The Adventurer’s Guide to Early Retirement

 

[justin]

Akaisha,

Thanks, now I see the type of communities you're talking about. I guess they are all over in one form or another. Thinking back, I used to own a condo in Chapel Hill, NC in a place that some might consider similar to these all inclusive communities - pool, clubhouse, tennis court, basketball court, laundry, on a free bus route, etc. Very spacious and under $100k in a nice little college town not too far from a major international airport.

 

[Billy]

Yes, .. 
We find the ease, simplicity, affordability and high quality living style here in these communities to support our tastes very well. We are able to 'turn the key' and leave without much worry at all. Most of these communities have some sort of security patrol plus the neighbors are so nosey concerned for their neighbor's welfare, that if anything unusual goes on, it hits the local 'coconut telegraph' very quickly!

I must tell you this quick story:
This last April, we were due home from Asia and some friends of ours were coming in from Mexico on their way to Canada to meet up with us (and others they know in the community) on their way home. Well... we got caught up in Phuket and Bangkok, and didn't make it back in time to see them.

No problem, they had the party without us and at 'our' place! They sent us an invitation via email and said they were going to auction off a certain make and style of vehicle, and they would like us to RSVP as soon as possible so they knew how many cocktails to make, and food to prepare, etc..!

Even though our place was buttoned up tight (no problem), they utilized our outside area for their happy hour. They decorated our place with balloons and crepe paper,  took photos and sent them to us via email. Our other neighbors who drove by the party said to themselves... 'Heeeeyyyyy.... I didn't think Billy and Akaisha were due home yet -- they told me they would be back in May..." and promply emailed us a note so we knew what was going on!

Everyone had a good laugh, and the photos were outstanding... so much fun!  BTW, the vehicle they were going to auction off was ours! heh heh... So... within a matter of minutes, thanks to the internet, we knew what was going on, we had local 'surveillance' notify us, and we had photos to 'prove' they had fun without us! imagine that!!    8)    

All in good taste, and in good fun...

Best,
Akaisha
Author, The Adventurer's Guide to Early Retirement

 

[kcowan]

We downsized from an estate in 1997 - acreage, pool, 5000 sq.ft. and invested the money. We rent a penthouse (3300 sq.ft.) and do home swaps. We have enhanced the place by installing a pergola, garden boxes, a fountain, four trees, and the landlord loves us.

We spend four months travelling and if our "swappers" have any needs, they just call the super. We have been able to have an asset-balanced portfolio with some real estate assets but we can shift our equity on short notice when a particular segment gets superheated while there are still plenty of buyers around.

It costs us a little in tax advantage but the actual maintenance costs are much lower than a condo so there is a tradeoff. Plus we could not replace the current property for under $2 million.

It does go against the grain and many people feel sorry for "us renters" until they actually see the place...

 

[Billy]

It does go against the grain and many people feel sorry for "us renters" until they actually see the place...

I know what you mean, about the attitude of 'feeling sorry' for those who choose other housing alternatives . We are very programmed in the States to be owners of property.

There are lots of other choices, like living aboard a sailboat for instance. Some people do this so there are no property taxes and it keeps their 'stuff' to a minimum. Some simply want to travel and this affords them that luxury.

We know people who are choosing the 'rolling condo' option of having a sumptuous RV with 3 side outs, leather furniture, marble countertops, etc. as a way to have a 'second home'. They can put that second home anywhere for much cheaper than purchasing a whole other property with its intrinsic expenses. With all the digital options for communication now, there are less problems with things like email, phone calls to the grandkids, newsletters, financial info, news, etc.

Others, like you, do the house swapping -- which is another great idea.

Then there is the Active Adult Communities in which you can purchase the land or not. And you can have any home size from teeny to huge-O ($5,000 to $1Million+) depending on your wants and still have all the amenities, entertainment selections and manicured gardens.

IMO, those who look down on renters simply haven't looked at other ways of living. It's great to own a home. We've done it. It's great to be free of it. We've done that too. It's fabulous to have the flexibility to choose. 

Best,
Akaisha
Author, The Adventurer's Guide to Early Retirement

 

[ShokWaveRider]

We rent because it is convenient at this moment in time for US to do so. The fact we have a great landlord adds to the mix. Le me make it perfectly clear, we rent for OUR benefit NOT the landlord's, we (as most FIRED folk) can purchase a home outright, but simply choose not to do so. When that changes we will buy. Until then NO MAINTENACE, No Taxes, No lawn, no worries. (No Capital appreciation, but as long as that is less than 6% for the next year....) No worries.

SWR

 

[kcowan]

We also made the choice to rent after owning for 30 years. What surprised us was the burden that was removed. Now some of this is from downsizing from an estate to an apartment. But we know people who also downsized to a condo and they often encounter problems with their condo council. In fact, they are often amazed at what we can do that their condo council prohibits.

For more on the increasing desirability of renting, have a look at this article: Outlook for rentals improving

For the fun of it ... Keith

 

[jeff2006]

But we know people who also downsized to a condo and they often encounter problems with their condo council. In fact, they are often amazed at what we can do that their condo council prohibits.

Keith -- this is very interesting. Would you elaborate some based on your experiences? thanks very much . . .

 

[mathjak107]

here in new york city renting is far the better deal right now..rents vs cost of ownership are way out of proportion

 

[kcowan]

Keith -- this is very interesting.  Would you elaborate some based on your experiences?  thanks very much . . .

The landlord allows sublets and home swaps without pre-approving the new tenant. For a vintage collector vehicle, they have a special lockup away from the daily drivers. Also boat storage. They are flexible on allocating their common storage lockers to those that have the need. They provide separate locked bicycle storage. They lend ladders and tools for personal projects.

Some of these might be common to certain condos, but they are not universal. They even fed our cats once when we were unexpectedly detained out-of-town.

 

[jeff2006]

The landlord allows sublets and home swaps without pre-approving the new tenant. For a vintage collector vehicle, they have a special lockup away from the daily drivers. Also boat storage. They are flexible on allocating their common storage lockers to those that have the need. They provide separate locked bicycle storage. They lend ladders and tools for personal projects.

Some of these might be common to certain condos, but they are not universal. They even fed our cats once when we were unexpectedly detained out-of-town.

Thanks for your reply. Sounds like a good situation.

 

[lazygood4nothinbum]

I would LOVE the RV lifestyle (my husband & I did a lot of that while he was alive), but I don't think that's a wise thing for a woman to try alone.

not too long ago, while clicking through and landing i think on pbs, i watched part of a program on rving. if memory serves correctly it was about, or featured in part, older single women rv'ers. there was one much old gal who was particularly inspiring. the film showed her sliding down from the rv driver's seat, which was kind of funny. not sure how she got back up there.

apparently these lady road warriors either drive together in a caravan or they break off and meet up with each other here & there. looked like they were having a great time.

i just tried to find it on a web search but apparently pbs has a bunch of listings featuring rving. if you want to search i believe i saw the program within the past 6 months. or you might search women rv single etc. for more info. good luck in whatever you decide.

 

[haha]

Here are some links to RV singles groups, and RV women's groups. I am sure that there would be lots of challenges, but it sounds like loneliness would not be one of them!

Ha

http://www.skally.net/solo-net/rv-clubs.html

 

[ERD50]

I have a question on rent versus buy. Some posters here have commented that in certain markets/times, rents are a bargain compared with home purchase. I've also read that elsewhere.

So, can someone explain that? I would think that if home prices went up, rents would also be driven up, as they are in many ways, in competition with each other. Landlords own the property, and need to make a suitable return, or they would sell (putting pressure on home prices and bringing things in balance), and put their money elsewhere. Likewise, if rents get very high compared to purchase, some of those renters will decide to buy, and some investors will buy up housing to rent it out (driving up home prices and bringing things in balance).

And with dropping property values, landlords are able to drop rents and still make a good return - so competition will tend to lower rents.

It seems to me normal market forces would keep rents and property values at some sort of parity.

Am I missing something? Or are they really different markets with their own supply/demand, since many rental units are just not in the same market as, say, single family homes?

TIA - ERD50

 

[mathjak107]

well heres an example...a co-op i own as a rental sells for about 160,000 here in nyc...i can get about 1000-1100 a month rent...the maintaince is 600 a month which includes taxes and the buildings share of the mortgage...if the building didnt have its own mortgage then the apartment would sell for that much more....anyway anyone buying that apartment today would have costs way over 1,000 a month.........my tenents are way ahead investing the difference and paying rent

 

[ERD50]

...anyway anyone buying that apartment today would have costs way over 1,000 a month...

OK, so the only reason anyone would buy the building is if they were expecting significant appreciation of the property. Otherwise, why sink $160,000 into something with no/negative return.

The renters, in this case, may be paying less for housing, but are giving up a chance (and risk) of capital appreciation (depreciation).

Another way to look at is the renters are funding the landlords 'gamble' in real estate? So each gets something out of the deal.

-ERD50

 

[Andre1969]

I had thought about renting my condo out back in 2002. At the time, it might have sold for $100-105K, but I could've probably rented it for $1200. I sold it in late 2004 for $185K, and I think an equivalent unit like that would go for around $240-250K today. However, it would probably still rent for about $1200 per month.

One thing that might keep rents down is people who hang onto property for a long time. For instance, if I had rented out my condo, I would have made a small profit, as $1200 per month would easily cover the mortgage and condo fee. But then, I only paid $84K for it back in 1994. However, someone who bought an equivalent unit for $240-250K would lose money renting it for $1200 per month. However, since that's what many equivalent units go for, he has no choice but to rent at a loss. Otherwise the place will just sit, vacant.

I'm sure a lot of people are renting now because they sold a house, bagged the profit, and are sitting on the sidelines. However, there are other people who simply can't afford to buy a house, and their income will only go so far. So even if the value of the real estate is shooting up, you're not going to be able to get significantly more from the renters, because that's like trying to bleed a turnip or whatever the cliche is.

I'm guessing that a lot of rental property ends up getting sold and taken out of the rental cycle when values really skyrocket. With fewer rental properties available, that might drive up prices. Or it might just drive out the renters, who move to a more affordable neighborhood.