renters for life a question

[brucethebroker]

Moved to large city, Midwest, LCOL in 1983. Rented for 6 mo., $475 a month (3/2 apt.), then bought a 3/2 ranch (needing redecorating), $63k, $700 mo. (+/-), fixed 30 yr. @ 12%. Near identical home in same school dist./nearby neighborhood is $267k today. Same apartment type rent is $1300-$1500 month today.

Have lived in the same general area during these last 40 years. Different homes. But, had I stayed in original home:
1. Would have re-financed mort. several times and most like have paid off home in 20 yrs or less.
2. At the least, the home would have been paid off by 2013. (We have never borrowed out equity).

During the mortgage years, our payment would have most likely stayed in the $500-600 mo. or less range (if refinanced), even with bumps in property taxes and insurance.

So, rents increased nearly 3x. Equity in home increased over 4x. Home could be sold today (income tax free), and at current 5% interest rate on CD's, generate about $1100 mo. interest, without tapping principle. Plus, we would have had no payments on the home for the last 10 years.
To me, renting in most situations is a sucker play. Before you know it, you have rented for dozens of years, and spent the difference on toys, not investing in other assets. But, YMMV.

BTW, my story is very modest-LCOL area. Others here have much, much more interesting home ownership experiences in HCOL areas.

 

[Birdie Num Nums]

[snip]

Have lived in the same general area during these last 40 years. Different homes. But, had I stayed in original home:
1. Would have re-financed mort. several times and most like have paid off home in 20 yrs or less.
2. At the least, the home would have been paid off by 2013. (We have never borrowed out equity).

During the mortgage years, our payment would have most likely stayed in the $500-600 mo. or less range (if refinanced), even with bumps in property taxes and insurance. [snip]

BTW, my story is very modest-LCOL area. Others here have much, much more interesting home ownership experiences in HCOL areas.

Huh?
Had I bought $10k of Microsoft the day it went public, and if I had bought another $10k the day after the Oct. 1987 market crash, and then bought another $10k during the 2000 Internet stock crash, and had I not sold any of it, I would most likely be sitting on a nice chunk of change today. Hindsight is 20/20.

 

[brucethebroker]

Huh?
Had I bought $10k of Microsoft the day it went public, and if I had bought another $10k the day after the Oct. 1987 market crash, and then bought another $10k during the 2000 Internet stock crash, and had I not sold any of it, I would most likely be sitting on a nice chunk of change today. Hindsight is 20/20.

Sorry for the confusion. I have lived in the same area for 40 years, and have moved (upgraded) our home 7 times. I could have chosen any of the homes for an example, but the first was the best example for long term ownership vs. rent during that time. It is a real example, not hypothetical. I have friends that have lived in this area for 30+ years with similar experiences in home ownership. None have ever said they wished they remained renters.

I DID (& do) own during the last 40 years in that same area. I DID refinance a couple of times. The much lower home payment long term than rising rent is still true. The equity growth is still true (and income tax free). The years of mortgage interest deductions (not mentioned before) are true. Just not in that particular home.

I hope that helps.

 

[GhostofTomJoad]

I am the LEAST handy person in the universe. Anything needs to be fixed at an owned home, I'd have to pay a professional to do the work. Utility payments. Home insurance. Cable tv bill. Mow the lawn, if any. Trim the shrubs. Property taxes, quarterly. Snow removal. COLD weather. (No more!)

It all makes my head hurt. Wife and I DID live in the old family home for just a few years after I retired, and now we moved far from there, and we rent. I've never bought Real Estate. Lived in dorms for a million years, rented off and on. Never a mortgage.

The peace of mind is worth the expense of renting. Home prices here are insane, anyhow. Zip code 96822.... $159k for a studio with one bath. 488 square feet. Jayzuz.

 

[ESRwannabe]

Has anyone here rented for life and never bought?

I am 47 and so far I have always rented. In hindsight I wish I had bought a house 20 years ago, but I don't think I lost out financially because I put all of my excess money into the stock market.

This has helped me to get to around $2M in investments, which is an extreme amount of money for me since I live on around $36k a year excluding taxes.

I could buy a house now, but I refuse to do so because they are overpriced.

 

[FREE866]

I am the LEAST handy person in the universe. Anything needs to be fixed at an owned home, I'd have to pay a professional to do the work. Utility payments. Home insurance. Cable tv bill. Mow the lawn, if any. Trim the shrubs. Property taxes, quarterly. Snow removal. COLD weather. (No more!)

It all makes my head hurt. Wife and I DID live in the old family home for just a few years after I retired, and now we moved far from there, and we rent. I've never bought Real Estate. Lived in dorms for a million years, rented off and on. Never a mortgage.

The peace of mind is worth the expense of renting. Home prices here are insane, anyhow. Zip code 96822.... $159k for a studio with one bath. 488 square feet. Jayzuz.

Yep. If you're not handy the bills add up quickly and the aggravation of home repairs would mess with my serenity for sure.

 

[ShokWaveRider]

We would rent if we could find an area and home that we liked for a reasonable amount, and not have to worry about being thrown out at the end of the lease. To rent a modest home ~2,200sq ft in an area that we would want to live (Gated with good HOA) would cost in excess of $4-5k a month +Utilities. We may as well stay where we are and pay the maintenance and insurance costs, it works out a lot more economical and we enjoy the equity.

 

[Texit]

Bought 40 acres w/ 3b 2b home + barn for 67K in 1998
Paid cash
During this time this property would have leased out for at least 3k/month.
Would have paid 720k + 2023 Eq up to now. Have a home base for family, friends and livestock. Rented for a 6 month period when on assignment out of town. Could not get used to having people sharing walls and halls with me.

 

[Fermion]

We are finally closing in on occupying the house we are building ourselves (started when COVID hit LOL!) and I am still not convinced that it was better than just renting. Houses are EXPENSIVE to build and I don't see how people get their money out of them if they are built well. Just the arc-fault breakers and panel alone was over $1400 in materials. Wire for the 1700 sq-ft house was over $2000. These are amounts that would pay the rent in this area for several months. I didn't mention concrete, lumber, shingles, plumbing, fasteners, siding, the list goes on and on.

 

[LateToFIRE]

...I am still not convinced that it was better than just renting. Houses are EXPENSIVE to build and I don't see how people get their money out of them if they are built well...

I mostly agree with that. A well-built custom home is eye blisteringly EXPENSIVE in my VHCOL resort region. Typical in my area is about $2M for 4000sf. Plus the land will be $500K minimum lot. And prop taxes will be double that of an existing home, same size and quality. It is truly a luxury product. You could argue who needs a house that large, but the costs don't go down by much for size - still needs all the same infrastructure (well, septic, etc.).

 

[ncbill]

Well, you can do both.

Most of the residents in my townhouse development are older people downsizing from a traditional SFR after the kids have left.

Raised my kids here though, with a major city recreation center literally across the street...basketball, tennis, soccer, outdoor Olympic-size pool.

Routine things are take care of by the monthly HOA fee.

Major repairs are paid via special assessments...e.g. roof replacement was an extra $100/month for 5 years, no interest...I'll likely be dead or gone before the next one.

Bought here because it was much more space than for a SFR at the same price.

 

[pc95]

I am 47 and so far I have always rented. In hindsight I wish I had bought a house 20 years ago, but I don't think I lost out financially because I put all of my excess money into the stock market.

This has helped me to get to around $2M in investments, which is an extreme amount of money for me since I live on around $36k a year excluding taxes.

I could buy a house now, but I refuse to do so because they are overpriced.

We are in a similar boat, here in San Diego; the effects of the pandemic completely squelched my earlier plans to purchase overpriced real estate. It was bad pre-pandemic, but now absurd post-pandemic. Much worse, due to dying landlord, we'd got booted out of our earlier excellent rental arrangement and now have seen our rent double the past year.....going into 1 year now, and lost the 1st additional $12,000 to the new landlord. Housing Sale Prices have hardly moderated in a year. I dont think they will unless there's a big fallout in employment. No choice but bleed out another year. Essentially we now have a higher drag on savings. Silver lining is we had an awful neighbor situation with noise that got remedied on the move. I had never wanted to take on large mortgage, but now we do not want to enrich someone else on absurdly overprices. Our wages have gone up maybe 13% in 3 years, but housing price 60-70% on the mid-to-upper end. So the best we can do is a slow bleed on the rent. Poor younger coworkers are disillusioned as none can afford the ridiculous pricing....ex. 1300sqft $850,000 condos with $500+ HOAs. All are forced to have roommates We are anchored down by our jobs unfortunately. Anyway, prior years, if I had known about a fu$ktastic pandemic, I would have taken the plunge with overpriced real estate. Problem is the rents have followed streaking up Just more waiting. No clairvoyance.

 

[wrigley]

Most new development in my area requires an HOA. It's because the county doesn't want to handle the cost of roads, sidewalks, snow removal, and in some cases trash removal. So, all those things that were originally bundled into your property taxes, and could be written off in some cases, are now rolled into an HOA or condo fee. And instead of being taken care of, or subcontracted out, by the county, they're now subcontracted out by the HOA.

County employees can be pretty bad because they're like the Pope and the Mailman...in there for life. But sometimes the board of directors of an HOA will make those county employees look like Mother Theresa!

I'm sure it's different state by state or even county by county in some places. My HOA dues are around $66 a month. Because our "community" is not gated the city is still responsible for upkeep to the roads, sewers, light poles, etc.

Mike

 

[silvor]

I'm sure it's different state by state or even county by county in some places. My HOA dues are around $66 a month. Because our "community" is not gated the city is still responsible for upkeep to the roads, sewers, light poles, etc.

Mike

I moved from my townhome 20 years ago, and the HOA was $83 a month. I looked recently, and they went up to… $110. I couldn’t believe it was still that low.

I was looking to move to Florida and the $500-700 fees were not uncommon.

 

[bobandsherry]

Instead of renting or buying when retired, this couple just chooses to cruise.

https://www.upworthy.com/couple-in-...ship-because-it-s-cheaper-than-a-mortgage-rp4

 

[livingalmostlarge]

We are in a similar boat, here in San Diego; the effects of the pandemic completely squelched my earlier plans to purchase overpriced real estate. It was bad pre-pandemic, but now absurd post-pandemic. Much worse, due to dying landlord, we'd got booted out of our earlier excellent rental arrangement and now have seen our rent double the past year.....going into 1 year now, and lost the 1st additional $12,000 to the new landlord. Housing Sale Prices have hardly moderated in a year. I dont think they will unless there's a big fallout in employment. No choice but bleed out another year. Essentially we now have a higher drag on savings. Silver lining is we had an awful neighbor situation with noise that got remedied on the move. I had never wanted to take on large mortgage, but now we do not want to enrich someone else on absurdly overprices. Our wages have gone up maybe 13% in 3 years, but housing price 60-70% on the mid-to-upper end. So the best we can do is a slow bleed on the rent. Poor younger coworkers are disillusioned as none can afford the ridiculous pricing....ex. 1300sqft $850,000 condos with $500+ HOAs. All are forced to have roommates We are anchored down by our jobs unfortunately. Anyway, prior years, if I had known about a fu$ktastic pandemic, I would have taken the plunge with overpriced real estate. Problem is the rents have followed streaking up Just more waiting. No clairvoyance.

So what happens now in San Diego? My first place we bought in san diego in 2002. We flipped it and sold in 2005. That 1 bd condo funded 2 graduate students lifetime home equity. We've never saved again for a house down payment. So $15k in savings equals well 7 figures now in 20 years just by living.

No way did we pay that much in maintenance. We did have about 2 years of renting in there too.

Our friends in San Diego who bought at the peak of the bubble in 2006/2007 rode it out and kept their condos instead of walking away. They now own their condos and bought houses in San Diego and are smiling. They are all Xers and we graduated in 1999/2000 when the bubble popped and they had their job offers pulled and more than a few cobbled together jobs because the economy/jobs was in the toilet when we finished college. Bought at peak in great recession. Yet sticking with it they are all sitting pretty on home equity. Some did walk away but bought again in 2012 and now have home equity.

I still think if you sit in an area like 20+ years and you rent the entire time, you won't be ahead. Mostly because people don't save the difference between rent and a mortgage. Then when rent surpasses the mortgage you are in a tough bind.

 

[F.I.R.E User]

Renter for life here.

Will be 57 next month.

Been in the same rent stabilized apartment in NYC since 1994. Rent then was $1100. Today it's $2300. It enabled me to invest money in the stock market which allowed me to retire at 50 back in 2017. Extremely grateful.

I am renters for life. 45 now. My rent is now $613.

 

[HI Bill]

Of course, it all depends on where you live (and how much you make, and how much you can save).

My biggest real estate regrets:

1) Not buying a condo I could barely afford in Mission Bay, San Diego, back in '91. Huge missed appreciation.

2) Not buying an apartment when I first moved to Oahu in '93. Huge missed appreciation; paid rent for 5 years.

3) Not buying more than one condo on Maui when real estate was dirt cheap. Bought my first condo there, and made my first $100K in real estate, not including rent savings.

4) Not buying an overpriced condo in Monterey. Could have made another $100K in just 1.5 years.

For the purchases I did make, I made $100K (Maui), $20K (Maui), $10K (Oahu), $0K (Oahu), and $500K+ (Hawaii, unrealilzed). For those periods where I made little to no $, I basically broke even on sales prices, meaning I lived essentially rent-free for two of my Oahu condos.

Besides cost, the great benefits of owning include stability in pricing, you can't ever be forced to move (except in cases of imminent domain), and you can make home improvements to match your tastes.

To each his/her own! Now, I see REITs and commercial investors buying up cheap homes, condos and apartments, which will only lead to rent increases in most areas.

 

[jazz4cash]

DD brought home brochures for newish apts in DC area. 2k for a small 2+2. I told her that was more than our rent and the message sunk in. She started looking at condos and after being outbid many times finally had offer accepted but its near Baltimore. Her PITI will be in the same ballpark as the rental she had considered. In this area buying is cheaper in the long run. I hate these blanket “analyses” that conclude its cheaper to rent without consideration of location.

 

[teej1985]

Instead of renting or buying when retired, this couple just chooses to cruise.

https://www.upworthy.com/couple-in-...ship-because-it-s-cheaper-than-a-mortgage-rp4

Seems to be a product of deeply discounted cruises right after covid. I haven't been able to find annual cruising that cheap.

 

[Sunset]

Seems to be a product of deeply discounted cruises right after covid. I haven't been able to find annual cruising that cheap.

They are picking inside cabins, which are pretty cheap.

They don't mention too much is they have extra costs of flying between ports at times as get off a ship and then have to fly to the departing port Country (plus taxi).

Lastly, they stay at friends/family homes in between some cruises. AKA freeloading.

 

[teej1985]

They are picking inside cabins, which are pretty cheap.

They don't mention too much is they have extra costs of flying between ports at times as get off a ship and then have to fly to the departing port Country (plus taxi).

Lastly, they stay at friends/family homes in between some cruises. AKA freeloading.

Inside cabins are not cheap enough to spend $35k for two people for a year's worth of cruising.

 

[bobandsherry]

Inside cabins are not cheap enough to spend $35k for two people for a year's worth of cruising.

That's my take as well. Basic gratuities alone would be $200+ a week. So at $35k/yr that's roughly $675/wk, after including gratuities that's only $475/wk for cabin. That leaves no money for anything else, would seem to be pretty boring... and I love cruising - 10 cruises booked over the next 15 months and may book another or two. No specialty dining, no drinks, no excursions and not even a little to wager in the casino.

While they build up loyalty points, that still wouldn't amount to enough to remotely consider them getting an inside room year round.

They did mention spending time with friends, would have to be about 50% of the time, and I bet their friends wouldn't love them freeloading that much. Lol