Scot Burns and the rent versus buy

[mathjak107]

although my equity investments outperformed real estate here in new york by almost 2-1/2 times we just 2 weeks ago bought our planned retirement home in lake wallenpaupack pa. we close in 2 weeks and its an all cash deal. theres something to be said for owning a great home in a great area that you just cant put a price on.

 

[teejayevans]

First, in most good areas rents increase a bit faster than CPI inflation, most of the time. So you really need to look at your real, after tax return on your CD. Which may be close to nil.

I disagree, depends on the availability of housing, number of
rentals on the market, etc. My rental history in Raleigh, NC, a
great area and growing, same area and size:
1990 $450
2007 $550
Pretty sure that is not increasing higher than the inflation rate.

I think unless you willing to stay put at least 5 years, a house is a bad
option. And obviously paying rent vs owning in the long run, its better
to own, but I know a lot of people who have lost money on housing,
myself included, on property they've own for less than 10 years.

Speaking of real returns, housing unlike CDs, require insurance,
property taxes, maintenance, improvements, interest payments.
And a nil return on your CD after taxes, what tax bracket are
you in?
TJ

 

[tryan]

Where are all these upscale rentals? I routinely scan the Homes for Rent section of the newspaper (need to track rates and competition) even call and/or drive-by some. Have yet to see anything near what we have (or would meet DW expectaions ).

FWIW we're in a 4 bedroom on an acre of land in one of the best school districts in the state.

Seems to me - at least in the northeast - any decision to sell and rent would come with a decision to downsize. So it becomes more of a lifestyle issue vice financial decision.

 

[Joss]

I think unless you willing to stay put at least 5 years, a house is a bad option. And obviously paying rent vs owning in the long run, its better to own, but I know a lot of people who have lost money on housing, myself included, on property they've own for less than 10 years.

Yeah. Purchased real estate usually has some very significant turn-over costs that rentals avoid. Frequently relocating could be expensive indeed. Then you've also got the (oops, the AC just died and the roof needs replacing) maintenance costs as well. I always thought the big offset was the tax deductible mortgage interest and long term value growth. Our own plan to pay cash for the "new place" now eliminates the tax deduction, though, and our largely reduced retirement incomes make it less important anyway.

I can see the point of renting. It's just that we haven't rented in 30 years and are used to being "owners". Emotional.

 

[Moemg]

I haven't rented in forty years but since I'm thinking of selling my house the idea of renting a house on or within walking distance of the beach is real appealing .

 

[haha]

I disagree, depends on the availability of housing, number of
rentals on the market, etc. My rental history in Raleigh, NC, a
great area and growing, same area and size:
1990 $450
2007 $550
Pretty sure that is not increasing higher than the inflation rate.
TJ

It is hard to discuss with people who point to their personal experience and then generalize that to "the way things are".

My personal experience is that rents increase much faster than inflation, in supply constrained areas. That is why Sam Zell doesn't invest in the South, Texas or the Southwest. Urban Northeast, big West Coast markets, etc.

My experience getting an apartment is limited to Boston, Manhatten, Venice CA, Berkeley, San Francisco and Seattle. All supply constrained markets with strong employment and sustained rental demand. I am sure that there are many markets without these characteristics. Wichita KS should be good.

My assertion that rents natianwide have over time increased faster than CPI inflation is based on official US gvernment data, and should be easy enough for you to check to your personal satisfaction.

As to youir other question about real after tax return, if you are happy, then I am happy for you.

Ha

 

[whitestick]

It is hard to discuss with people who point to their [-]personal experience[/-] "facts"
My [-]experience[/-] "facts" getting an apartment is limited to Boston, Manhatten, Venice CA, Berkeley, San Francisco and Seattle.

Ha

My facts in Dallas area are as I have previously stated, the rental rates are below the costs of taxes, upkeep, HOAs, insurance, etc. not counting the cost of a mortgage.

Guess the facts are different in different parts of the country as HA stated.

 

[teejayevans]

It is hard to discuss with people who point to their personal experience and then generalize that to "the way things are".

My experience getting an apartment is limited to Boston, Manhatten, Venice CA, Berkeley, San Francisco and Seattle.

What I'm saying is I don't think you can make generalize statements like
they're fact from your sampling of the most expensive places in the US.
I've rented and owned RE, when I ER, I will do neither
TJ

 

[cute fuzzy bunny]

I've rented and owned RE, when I ER, I will do neither

Big cardboard box under the overpass?

 

[honobob]

Big cardboard box under the overpass?

Think small cardboard box. Why ruin a good plan with high maintenance costs?

 

[W2R]

Big cardboard box under the overpass?

ROFL!!! As long as I don't end up living like that, and scavenging trash cans for dinner, I know I will enjoy my retirement!

 

[cute fuzzy bunny]

Think small cardboard box. Why ruin a good plan with high maintenance costs?

Obviously you're an inexperienced box owner. If your box isnt roomy, you'll kick one side open by accident and there goes another 6' of duct tape out the window...

 

[cute fuzzy bunny]

As long as I don't end up living like that, and scavenging trash cans for dinner

Ah yes, the "john galt" method. At least thats where it goes once you lose the income producing spouse...

Oh my...these claws are a little sharp tonight. May be a good idea for me to go scratch on the side fence for a while...

 

[unclemick]

Over the years knew a couple retiree's lived in their RV's and traveled until the bug died off.

One we knew lived on their boat - worked temp(jobshopper engineers) and headed for the Carribean whenever the stash got fat enough to go for a half year or more.

heh heh heh - more than one way to skin a cat. And then there were/are squatters - houseboats tied up - some formal and some er informal.

 

[bright eyed]

My personal experience is that rents increase much faster than inflation, in supply constrained areas. That is why Sam Zell doesn't invest in the South, Texas or the Southwest. Urban Northeast, big West Coast markets, etc.

My experience getting an apartment is limited to Boston, Manhatten, Venice CA, Berkeley, San Francisco and Seattle. All supply constrained markets with strong employment and sustained rental demand. I am sure that there are many markets without these characteristics. Wichita KS should be good.
Ha

Rental rates in my area are just below or on par with what a mortgage these days would cost - not including other costs or taxes. Not sure why you would rent here except for the excellent schools - for the rates i saw listed.

when we rented in great neighborhoods/schools - we rented from old fellers who had long ago paid off the house - so whatever they got for it was profit, aside from minor costs or taxes - and was well below what we would have paid for a mortgage - win win for both parties.

i'm starting to see some lease signs pop up in my moms neighborhood (next to the dozen or so for sale signs) where it is unlikely most of the houses are paid off (the neighborhood is about 10-12 years old) so i'm thinking folks are desperate and will end up breaking even or losing.