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Old 02-26-2018, 08:58 AM   #61
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Ya know what, nevermind, believe what you wish. You're welcome to think that everyone in the world moves every year and that landlords are all losing money because renting is cheaper than owning in your opinion. That's not going to impact the truth at all.
Remember this is a retirement forum.

Being tied to a mortgage while in retirement can severely limit your options.

Right now I'm trying to help an older relative of whose income 40% goes to mortgage/HELOC (property tax/insurance only about 10%)

Their financial situation would not be so dire had they chosen to limit the size/price of the home in which they "invested."

They also would have had more funds to deploy to investments with a much higher real rate of return than the residential real estate market, i.e. equities.
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Old 02-26-2018, 11:06 AM   #62
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In an area that you're not totally familiar with or have zero friends/family, I would rent. See how you like it and get familiar with the housing market in the process. Buys time in finding deals too. If a deal never materializes....keep renting.
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Old 02-26-2018, 11:42 AM   #63
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Remember this is a retirement forum.

Being tied to a mortgage while in retirement can severely limit your options.
Actually it's an Early retirement forum. ER implies having enough money to retire. Carrying (or not) a mortgage during ER is a matter of choice for most of us. Having one greatly improves my options by not tying money up in equity in a house, allowing me to decide how to invest it better.
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Old 02-26-2018, 05:33 PM   #64
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So you are saying if a landlord is "unsuccessful", they will invest elsewhere, leaving only "successful" landlords - which is exactly the condition you say you know.

So perhaps survivor bias is at work in your circle of dozens?

I personally only know a few landlords. Several of them are now ex-landlords (they were "unsuccessful").
Sure, and I know lots of former stock investors, too....

Successful landlords prove the point. They would not buy properties (some multiple properties over a 20 year period, or longer), unless there was profit to be made. Landlords have all the regular costs of owner occupants, plus they make a profit. (Or, some move on). But those with 20, 30 years or longer as landlords show how profitable it can be.
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Old 02-26-2018, 05:42 PM   #65
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Remember this is a retirement forum.

Being tied to a mortgage while in retirement can severely limit your options.

Right now I'm trying to help an older relative of whose income 40% goes to mortgage/HELOC (property tax/insurance only about 10%)

Their financial situation would not be so dire had they chosen to limit the size/price of the home in which they "invested."

They also would have had more funds to deploy to investments with a much higher real rate of return than the residential real estate market, i.e. equities.
My guess is that the problem of that family you are helping is financially deeper than just the mortgage. A HELOC? Where did that money go? Do they have car payments, also? I had an elderly relative in a similar situation, but becoming a renter would not have solved the problem. The problem started about 40 years ago and did not improve with age.

I will bet many successful retirees carry mortgages into retirement. Obviously, a 40% of income payment(s) on mortgage/HELOC is extreme and limits options. But not 10%, 15% or 20%. Those payments are usually not more than rent.
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Old 02-27-2018, 08:37 AM   #66
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My guess is that the problem of that family you are helping is financially deeper than just the mortgage. A HELOC? Where did that money go? Do they have car payments, also? I had an elderly relative in a similar situation, but becoming a renter would not have solved the problem. The problem started about 40 years ago and did not improve with age.

I will bet many successful retirees carry mortgages into retirement. Obviously, a 40% of income payment(s) on mortgage/HELOC is extreme and limits options. But not 10%, 15% or 20%. Those payments are usually not more than rent.
IMHO a lot of people that age are still "fighting the last war."

Where they grew up with relatively high inflation (i.e. late 1960s through the early 80s) so saw a home as the primary way to keep up.

In their particular case, picking a home in their old neighborhood (one of the most expensive in town) didn't help - they really had to stretch for a modest home. One the same size in a less tony neighborhood could have cost half what they paid.

HELOC is mostly used for "income smoothing" of the quarterly dividend. To supplement their (taken at age 62) SS they're relying on dividends from the stock portfolio they inherited since their parent bought dividend stocks.

No car payments on their 15-year-old Toyota, no expensive hobbies.

I even took their pets to be put down (all old & sick, it was time)

Thanks to everyone who posted about Medigap policies, though they're leaning towards $0 premium Advantage plans right now.
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Old 02-27-2018, 10:54 AM   #67
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In an area that you're not totally familiar with or have zero friends/family, I would rent. See how you like it and get familiar with the housing market in the process. Buys time in finding deals too. If a deal never materializes....keep renting.
I wholeheartedly agree.
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Old 02-27-2018, 01:51 PM   #68
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I wholeheartedly agree.
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Old 02-28-2018, 04:20 PM   #69
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Agree!
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Old 02-28-2018, 06:01 PM   #70
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Here's what I've always thought was interesting about the 'rent vs. own' arguments. Basically, if you're in one camp, it's in your interest for everyone else to be in the other camp. Like to own? Do you want everyone else to want to own and reduce demand for rentals? Or would you rather everyone else to want to rent, and increase demand for your rentals?

I personally believe renting is marginally better, when all factors are considered. But any time this comes up in real life, I tell everyone that owning is the way to go...
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Old 02-28-2018, 06:23 PM   #71
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Renter here, but that's just due to not wishing to tie up too much money for a down payment in an area we just newly moved to.
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