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Old 10-18-2019, 02:18 PM   #21
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Your rent is priced to include those costs.

The yearly upkeep on a house whether it be yard work, new roof, new windows, new driveway, new boiler, AC, etc is substantially more than what yearly increases might be on a rent stabilized 1BR apartment.



Taxes and insurance alone make renting a better tradeoff.For my situation, anyway. Houses suck money out of you continually, that can't be denied.
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Old 10-18-2019, 02:25 PM   #22
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The yearly upkeep on a house whether it be yard work, new roof, new windows, new driveway, new boiler, AC, etc is substantially more than what yearly increases might be on a rent stabilized 1BR apartment.



Taxes and insurance alone make renting a better tradeoff.For my situation, anyway. Houses suck money out of you continually, that can't be denied.
My yearly maintenance is under $1000 averaged over the last 20 years. That includes new doors, new windows, a new kitchen, and a new furnace. Utilities, taxes, insurance etc are about $500 a month.
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Old 10-18-2019, 02:31 PM   #23
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Can this possibly be a purely economic decision? I have trouble imagining such a scenario....
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Old 10-18-2019, 02:38 PM   #24
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My yearly maintenance is under $1000 averaged over the last 20 years. That includes new doors, new windows, a new kitchen, and a new furnace. Utilities, taxes, insurance etc are about $500 a month.

ok.....That's still ~$7,000 per year .....$7,000 put into the S and P 500 20 years ago is worth ~$400,000 adjusted for inflation.....that's pretty sizable....


Everyones situation is different, but for me choosing renting allowed me to have my money invested and ultimately allowed me to ER.
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Old 10-18-2019, 02:39 PM   #25
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Taxes and insurance alone make renting a better tradeoff.For my situation, anyway. Houses suck money out of you continually, that can't be denied.
And if the landlord takes a loan to cover those costs, you're paying the interest on the loan as well. Generally landlords do not operate as charities, and any money-losing properties eventually see a decline in maintenance.
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Old 10-18-2019, 02:40 PM   #26
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Can this possibly be a purely economic decision? I have trouble imagining such a scenario....

true...house ownership allows for possibly great memories, bonding with neighbors, pride of owning a house, etc
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Old 10-18-2019, 02:44 PM   #27
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And if the landlord takes a loan to cover those costs, you're paying the interest on the loan as well. Generally landlords do not operate as charities, and any money-losing properties eventually see a decline in maintenance.

The only thing I'm paying is what the NYC rent guidelines board allows landlords to increase the rent by...usually in the range of 1-3%...some years nothing.....I also get new appliances every time they are needed as well as apartment painted every 3 years.....


Been here 25 years and the service has been excellent....toilet breaks? I fill out a work order and it's fixed usually within 2 hours....I like it like that!
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Old 10-18-2019, 02:50 PM   #28
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Housing has never been a significant factor in our assets or costs, so this doesn't matter.
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Old 10-18-2019, 03:12 PM   #29
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true...house ownership allows for possibly great memories, bonding with neighbors, pride of owning a house, etc
I've experienced all these in apartments and lived in houses in small towns and city row homes and nobody knew each from the time they moved in till the time they moved out. Nothing more than an occasional wave and a Hi, howya doin'"


The dwellings and buildings don't know from anybody
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Old 10-18-2019, 03:12 PM   #30
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I rented an apartment in Maui for $700 per month. At the time, condo prices were dirt cheap, and it made sense. Still, they were so cheap, that I bought, and my costs went up to $900, including association and taxes. Five years later, I sold, and cleared $100K profit, tax-free. All for a $20K down payment, and a place to live, that I could remodel, and make my own. It was a bit of work, but well worth it.

There are so many variables. Taxes, maintenance, upkeep, etc. There are trade-offs everywhere. For me, owning, means I can never be evicted, can remodel to my taste, and can customize my home to my tastes. It is MY home. Eventually, it will be paid off (15, 30 years). A renter will rent forever. Rents go up, and one has no control over those increases. But, in some areas, where real estate and property taxes are expensive, or one is to live there short term, it makes sense to rent. I rented in Monterey, and I should have bought a place. But I didn't know I could have made another $150K in just 16 months!

A good argument for real estate is leverage. Put down 20%, get appreciation (or loss), on the purchase price. Anyway, there's no right answer for everyone, and everywhere. But both sides do seem to 'game' the costs/profits associated with either decision, IMHO.
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Old 10-18-2019, 03:36 PM   #31
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I've experienced all these in apartments and lived in houses in small towns and city row homes and nobody knew each from the time they moved in till the time they moved out. Nothing more than an occasional wave and a Hi, howya doin'"


The dwellings and buildings don't know from anybody
Kinda sad. We’ve made great friends in every neighborhood we lived in. We participated in wine clubs and dinner clubs. Someone needs to take the first step.
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Old 10-18-2019, 03:39 PM   #32
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ok.....That's still ~$7,000 per year .....$7,000 put into the S and P 500 20 years ago is worth ~$400,000 adjusted for inflation.....that's pretty sizable....


Everyones situation is different, but for me choosing renting allowed me to have my money invested and ultimately allowed me to ER.
But you have to live somewhere and rent for a suitable place was $500 a month 20 years ago ($1100 now) so I never would have had $7000 "extra" to invest.
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Old 10-18-2019, 04:22 PM   #33
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And if the landlord takes a loan to cover those costs, you're paying the interest on the loan as well. Generally landlords do not operate as charities, and any money-losing properties eventually see a decline in maintenance.
A Landlord can only charge market rates. Regardless of what types of loans are on the property.

If being a landlord was so easy to profitable, everyone would do it. Unfortunately, there is such a thing as a landlord horror story. And landlords do indeed lose money. All the time. And please do not say that Landlords do not operate as a charity, many posters here chastised me because I evicted a single parent stage-4 cancer victim with juvenile kids. They are indeed running a charity and wanted me to.

And if you think all you have to do is screen tenants, many cities have passed paws against rejecting applicants and even against evicting them until they are at least two months behind in rent.

If Cities were as tough on homeowners as they are n landlords, no one would buy a home.
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Old 10-18-2019, 04:25 PM   #34
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I just made the choice to buy instead of rent. Why?

The location is perfect, I can update the place to my liking, and I don't have to worry about somebody else dictating the terms of my occupancy.

In my case, the numbers showed that buying is probably a better deal, but it might not work out that way. One thing I realized is that it doesn't take much difference in investment return vs home growth rate to drastically alter which is a better deal. To the point where I think it's somewhat meaningless.

But regarding the original article, yeah, there's a lot of funky math out there regarding rent vs own. My opinion: run the numbers in your case, figure out what your goals are, and then do what makes the most sense.
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Old 10-18-2019, 04:36 PM   #35
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I just made the choice to buy instead of rent. Why?

The location is perfect, I can update the place to my liking, and I don't have to worry about somebody else dictating the terms of my occupancy.

In my case, the numbers showed that buying is probably a better deal, but it might not work out that way. One thing I realized is that it doesn't take much difference in investment return vs home growth rate to drastically alter which is a better deal. To the point where I think it's somewhat meaningless.

But regarding the original article, yeah, there's a lot of funky math out there regarding rent vs own. My opinion: run the numbers in your case, figure out what your goals are, and then do what makes the most sense.
The main way buying works out is if you are able to take the 'happy path'. Property appreciates. You do not move. Your direct neighbors behave. Your maintenance doesn't get out of control. You put in a lot of effort to keep the yard mowed and clean.

Factor in a new number that is the result of paying for every fix and mowing the lawn.
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Old 10-18-2019, 04:38 PM   #36
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My yearly maintenance is under $1000 averaged over the last 20 years. That includes new doors, new windows, a new kitchen, and a new furnace. Utilities, taxes, insurance etc are about $500 a month.
Who put in the doors and windows? An installed window is typically $1,000+. A door even higher. A furnace is $4K+. A kitchen $15K+.

Anyone can make the numbers work towards owning, if you get free labor. A renter doesn't pay for those things.
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Old 10-18-2019, 04:42 PM   #37
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Honestly, I wouldn't even know where to begin, to do a break even analysis on whether I'd be better renting or buying. About the only calculations I can think of is that it cost me about $175,000 up front to get into my place, and it probably costs about $3,000/mo, plus utilities. So, if my place could rent for about $3000 per month, those up-front costs would have covered about 58 months.
the article points out that your $175k up front leverages 5 times that much in total value that is increasing at over 3% per year. That’s initially over 15% declining as the principal is paid off. In addition to the direct comparison of rental cost vs mortgage/tax/maintenance cost you need to take into account those leveraged returns.
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Old 10-18-2019, 04:45 PM   #38
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The main way buying works out is if you are able to take the 'happy path'. Property appreciates. You do not move. Your direct neighbors behave. Your maintenance doesn't get out of control. You put in a lot of effort to keep the yard mowed and clean.

Factor in a new number that is the result of paying for every fix and mowing the lawn.
I guess we took the "happy path". First house $50k with a $33k mortgage (at 11.74%, 1981). Second house, rolled in the proceeds, $50k mortgage. third house, new construction, paid cash for the property ($30k), new mortgage $60k. sold last house for $375k, bought condo for $160k, pocketed the difference.

In fairness, this was over the course of 35 years.

Basically, we were lucky, but we did choose locations that were in demand, so not all luck.
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Old 10-18-2019, 04:49 PM   #39
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The main way buying works out is if you are able to take the 'happy path'. Property appreciates. You do not move. Your direct neighbors behave. Your maintenance doesn't get out of control. You put in a lot of effort to keep the yard mowed and clean.

Factor in a new number that is the result of paying for every fix and mowing the lawn.
People with modest incomes who want to own homes should know how and not mind doing regular maintenance. Every part of your home has a life span and eventually almost everything will eventually have to be replaced or repaired.

It's a lifestyle choice and I decided when I was young that the hassles and expenses that come with owning a maintaining a home was worth it for me. At the time buying was about the same or just slightly more than renting but that wasn't a factor...owning my own home was the goal.
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Old 10-18-2019, 04:57 PM   #40
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Who put in the doors and windows? An installed window is typically $1,000+. A door even higher. A furnace is $4K+. A kitchen $15K+.

Anyone can make the numbers work towards owning, if you get free labor. A renter doesn't pay for those things.
I installed the windows and doors myself and helped a contractor friend install the furnace. I paid his wholesale cost for the furnace plus for some ducting as I moved it to a better location...probably $1200 all in.

Windows and doors are easy to install, half hour or so each. I did pay a concrete cutting company $800 to cut holes in the foundation when I wanted extra basement windows. I followed right behind him and installed the windows.

I paid $6000 for kitchen cabinets and installed them myself in addition to doing the plumbing, electrical, drywall, mudding, and painting. The total cost was $7000.
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