Domicile-Rent vs. Buy

[haha]

I hope people will chip in freely with thoughts about renting vs. buying.

Here is my situation. I am single, would never want to marry again even if she looked like Michelle Pfeiffer and had $50mm bucks. I guess there is a small outside chance that I might go live in one of Michelle's houses with her, strictly in sin.

I like apartment living. Like marriage, I view homeownership as a "been there done that" event that would at present seem unattractive to this old bull.

A condo might be nice, but I think a condo anywhere near the city center or the Capitol Hill neighborhood where I live either would be old, or if new, expensive. I like old buildings to live in but I think ownership in one might be a mistake due to high repair and maintenance costs.

Seattle prices have certainly come down but not dramatically. Neither did the predicted surge in rents happen, maybe because people who want to pay $1200 to $1800 for small old apartments need jobs too. And jobs are disappearing, including many downtown HQ type jobs.

Anyway, when my 1 year lease lapsed last June, I got a < 10% rent increase and have continued month to month, the idea being that I might see some real condo bargains that I might buy. I guess I have been waiting for them to hit me in the head, because I have hardly looked. Residential realtors tend to give me heartburn.

My landlord who is a guy in early middle age who owns this and several other older urban buildings is willing to extend my lease for a year at my same rent. It is possible that I could have this same outcome without signing the lease, as I imagine that if demand were very strong he would not be making the offer. However, in the 20 months or so that I have been in this 30 unit building there has not been a vacancy that lasted more than a few weeks.

As you can likely tell, I like it here and this would protect my housing costs for another 12 months, with the risk that if the bottom fell out of the RE market I would have to contend with breaking a lease to take advantage of that.

Comments?

Ha

 

[youbet]

Rent. Extend your lease for 12 months. You like it there and aren't really interested in owning except for the possibility of buying "if the bottom fell out of the RE market." If the bottom does fall out, a few grand to break the lease won't be a deal breaker in regards to purchasing a highly discounted condo.

Please give my regards to Michelle.

 

[Bestwifeever]

Do you think the bottom might fall out of the market but recover in a year's time? Sounds like you would still be ahead of the game by waiting a year (or more), especially with no rent increase.

Also would you finance a condo/townhouse/home? Then you get into the have a mortgage/pay cash discussion.

Meanwhile, someone's very sad that you don't want to marry her:

 

[haha]

Looking at Michelle, I think I may have misspoken.

But back to reality- thanks to both of you for the help, I feel a lot better. No need to burden myself now, I'll go ahead and extend my lease.

Ha

 

[tryan]

Tell your landlord the month to month thing (tenant at will) works for you ... sounds like you want the flexibility. He really has no recourse (posession is 9/10's of the law).

 

[ziggy29]

Here is my situation. I am single, would never want to marry again even if she looked like Michelle Pfeiffer and had $50mm bucks.

Not even if she promised to model that Catwoman suit?

Here, kitty kitty kitty....

 

[FIREd]

I think it depends on your personality. To be sure, renting has some very attractive benefits. But for me, as I get older, I would prefer owning a condo outright. I think that house ownership is getting old, so a condo would be my preference. And since I am already adverse to changes (which will only get worse as I age), I wouldn't want to face the prospect of being kicked or squeezed out of a rental when I am in my 70's or 80's. Ideally, I would like to retire in an older condo, near the center of a very large city, where I wouldn't need a car and could walk or use public transportation to anywhere I want/need to go.

 

[OAG]

Why not ask him if you signed for another year at the current rental amount, would he, at the end of that period, give you an option to go another year (or two) with no rental increase or with a CPI increase or whatever percentage you would entertain (maybe 5% the first option year and then another 5% in the second option year). That would give you a lock for another 3 years but retain your ability to leave after 1 year, if you did not want to exercise the options. It would also give you a known house expense for a good period. You know your rental market so you may want to adjust the factors. Good luck.

 

[W2R]

From what you say, I think you are making the right decision at this time, Ha.

I can really see the attraction of apartment living, especially if your neighbors behave reasonably and if you can walk everywhere, as you do. To me, the biggest advantage of living in an apartment is the freedom to move any time you want to, without having the hassle of selling. You wouldn't have that with a condo.

In my present location, owning my own home has been the LBYM solution and has cost much less than rent would have cost over my 7 years of home ownership. I also like knowing that nobody has access unless I allow it.

 

[ziggy29]

My fear of condos and apartments has always stemmed from having too many noisy neighbors sharing walls with me. Other than that, I'd probably prefer that lifestyle. But the shared walls and noise are a dealbreaker for me, at least for now.

 

[CuppaJoe]

.... Ideally, I would like to retire in an older condo, near the center of a very large city, where I wouldn't need a car and could walk or use public transportation to anywhere I want/need to go.

Public transit can be really hard on an aging body.

 

[Zoocat]

ha, I remember you raised a similar discussion on buying a condo last year. My views haven't changed. Owning a condo comes with a HOA and that can be a sketchy proposition. You can do your due diligence but the wild card will always be the possibility of off the wall owners who take over the board. In my situation, a coalition of home owners pressured the board not to raise fees when it was clearly in the community's interest and now two years later most of those owners have sold their units, taken their profits and left. Now the board must make 30% fee hikes to cover necessary expenses when the fees could have been raised in increments that would have been less painful to many in the community.

That's just one unhappy example among many offered on my thread about whether to sell my townhome. http://www.early-retirement.org/forums/f27/my-hoa-situation-41000.html

I'm still thinking seriously about selling and forget about being a homeowner but having control over my living environment is a hard one to give up.

 

[shiny]

Hi there. I think your decision to sign the lease is a good one. There are so many condos downtown now - some not even finished yet, so I think a year from now will only have lower prices, not higher. As for your decision not to marry a beautiful woman with 50 million dollars, now that is just bollocks!

I'm on Seattle craigslist from time to time looking at domiciles. I always feel happier looking at what to rent v. what to buy. I guess, for now, its just that feeling of freedom I'd like to keep. I know others feel differently.

 

[Moemg]

You sound so happy in your present environment . Why would you mess with that ?

 

[BunsGettingFirm]

Would a neighborhood like this do for you?

Buy Now While They're Cheap: Seattle - BusinessWeek

Yeah, I am a condo, apartment, townhouse guy myself. I never enjoyed yard work even though I had own business for 10 years doing exactly that.

 

[2B]

DW and I have our money pit up for sale. We may be getting an offer this weekend but it may stink. Our plan is to rent a smaller place but not go all the way down to condo / apartment size.

I've roughly estimated our "ownership cost" at $24,000 annually. That includes mortgage payment, Texas real estate taxes, homeowner association, insurance and small repairs/service calls. It does not include the big repairs or replacements that I should escrow 2% of my property's value which would be another $5,000 annually. The carpet's getting a bit thin in places, the outside will need painting soon, the A/C unit has issues, the kitchen tile is getting loose.... You get the picture. More big spending to come

The tax deduction at my marginal 25% bracket is worth approximately $3,000. My $65,000 in equity should be able to generate about $2,000.

This tells me I could rent and afford to pay close to $2,000 and breakeven without considering the longterm repairs that will come down the road. There are plenty of houses on the west side of Houston for rent under that.

The other benefit is that when I finally get to retire we won't be tied down to a house that may not be easy to sell. We've also learned that owning a home isn't necessarily a good investment.

If you don't think you're going to be somewhere "forever" it doesn't make sense to me to own a house or condo.

 

[Walt34]

My fear of condos and apartments has always stemmed from having too many noisy neighbors sharing walls with me. Other than that, I'd probably prefer that lifestyle. But the shared walls and noise are a dealbreaker for me, at least for now.

That's my thoughts on it too. Of the four apartments I've lived in only one was mostly quiet enough. Of course, the hot water didn't work all the time in that one....

So I'd opt for a small "two bedrooms on a slab" house before going to an apartment or condo.

 

[freebird5825]

Your ace in the hole is you are a good tenant who pays his rent on time.

Plus you don't have keg parties or deal drugs or run a cathouse or punch out your neighbors or...RIGHT?

 

[W2R]

That's my thoughts on it too. Of the four apartments I've lived in only one was mostly quiet enough. Of course, the hot water didn't work all the time in that one....

So I'd opt for a small "two bedrooms on a slab" house before going to an apartment or condo.

I'm going for a very cheap "two or three bedrooms on a slab" house, which will allow me enough extra to pay for someone to cut the grass in the summer and shovel snow in the winter, and also to pay for a handyman when needed.

I don't want to spend my ER time doing these things when I could be having fun. If I could be guaranteed considerate, quiet neighbors and no HOA, a condo would be fine. I think it would be easier to find a house, though.

 

[ERD50]

would never want to marry again even if she looked like Michelle Pfeiffer and had $50mm bucks.

Wow, you must have really gone through something... my advice would be to not make *any* important financial decision while you are still in such an emotionally distraught state.






Hmmmm, a Michelle & Money sandwich - what's not to like? Come back to your senses man, and then let's talk!

-ERD50

 

[bubba]

Aren't there condos/townhouses with garages that separate the units? If so, I would look into those in a NY minute. But, since you like your current setup, why mess with it? Just stay where you are, and if you run into the perfect setup, you could probably negotiate something.

 

[Amethyst]

Dear Mr. Ha, (How delightfully incongruous to see an African-American avatar with a Chinese nom de Web)

In your place, I'd rent. Other than being able to make my own choice about when to move, I no longer see any advantage to home ownership. It's an expensive pain in the neck, and I get angry, thinking about how we fell for the conventional wisdom that home ownership is something worth sacrificing for.

Bitterness alert: Try to get an absentee landlord who is far away--overseas, if possible, so they can't come around and bother you--and has a property manager. They never inspect the property; so, if you don't like paying rent, invite 4 or 6 of your pals to sub-let from you; your landlord will never know the difference.

I am not sure I see the connection with remarriage, though That's a matter of emotional and intellectual connections (OK, physical too), not of dollars and cents, or am I missing something?

Amethyst

 

[haha]

I am not sure I see the connection with remarriage, though That's a matter of emotional and intellectual connections (OK, physical too), not of dollars and cents, or am I missing something?

Amethyst

I think I am just a bit crazy on this topic lately. The connection in my mind, which is really loose as I look at it, is that marriage and home ownership both can be great, but can also be expensive roach motels if you want a change.

I know, I should seek professional help.

Ha

 

[brewer12345]

I am not sure I see the connection with remarriage, though That's a matter of emotional and intellectual connections (OK, physical too), not of dollars and cents, or am I missing something?

Amethyst

I think Ha is on to something. Let's face it: if I did not have a wife and kids, I would not own a house. In fact, more than likely I would be at least semi-retired and amusing myself soemwhere warm.

 

[Amethyst]

Let's face it: if I did not have a wife and kids, I would not own a house

What, wife and kids can't live in a nice rented home? I would love to live in our house for only $2500.00 per month (tenant paid utilities), which is what we were able to rent it for while overseas. And not have to lift a finger!
My husband's parents never owned a home, nor did my grandparents. They all lived good lives and raised good kids who did well.

Or, did you mean you would not live in a typical "house," but a smaller dwelling? Micro Homes Tiny Houses
I love these, they make me think of the refrigerator and washing machine boxes I had fun making "houses" out of when I was little