renters for life a question

[captain3d]

My parents have moved five times in the UK for work and retirement. They have been perfectly unlucky in that where they left increased faster that where they went next.

 

[latexman]

As a landlord, I'd say actually you're paying my "real estate taxes, insurance, and maintenance fees". Thanks!

That's why I said, "All else being equal, doesn’t the landlord’s profit prove owning a home is the most economical?"

 

[FREE866]

As a landlord, I'd say actually you're paying my "real estate taxes, insurance, and maintenance fees". Thanks!

Well, going back to my situation , my rent has gone from $1100 a month to $2300 a month in 30 years in a doorman building in midtown Manhattan. That equates to a 2.5% annual increase---I'm OK with that!


Having such a low housing cost allowed me to have my money invested in the stock market which enabled me to retire 6 1/2 years ago at 50 years of age. I'm very very pleased with the way everything has worked out!

 

[captain3d]

Rent control is effectively subsidized housing. I would ride that also.

 

[F.I.R.E User]

I guess that would depend on what I paid and what it would be worth today. This could branch off into many different sub topics, but for me I'm extremely pleased with the way things have worked out.


As I mentioned before, real estate for someone who just needs a place to live and not become a landlord and rent apartments/homes out the numbers pale compared to stock market returns.


Here is an article that breaks it down pretty well:




https://www.usatoday.com/story/mone...nvestment-when-you-think-its-great/340516002/

That does break it down well. It’s all about that big picture at the end.

If one made decisions about what home to inhabit purely based on finances, we might all rent. Or buy small condos, or row/townhouses.

But the decision is much bigger than that. And sure there are single family rentals as well as apartments, but we're talking an entire produce section of differences when trying to boil it down to rent vs. buy.

I like to buy because I like a big garden I can make my own. I am glad I added a pool, and put in a new fence. I like to redesign, remodel as needed. New paint, fixtures. I like having a paid of mortgage and somewhat controlled costs. I like being able to list/sell/move if I want to vs. being tied to a lease (in healthy market conditions). I like having cats, and not having someone say how many.

If I lived in Manhattan, I would be a different person, and rent an apartment. But that's what 21 year old me dreamt of. There are some gorgeous new apartment complexes near me starting at $3500 per month. If I were a young upcoming single professional, I'd jump at one of them, assuming I could afford it.

I am a minimalist. Things don’t make me happy. Experiences do, financial independence do, family/friends and time. I am not into labor work at all. I am very happy with a small, clean and safe place to live.

 

[LateToFIRE]

Rent control is effectively subsidized housing. I would ride that also.

You took the words right out of my mouth. It's like saying if you want to get rich, first start with a million dollars. Of course their scenario works nicely for them - they won the apartment lotto.

But, I can't complain - as the owner of market rate rental property in the same town as theirs, rent control distorts the market, creates scarcity, and drives up market rate rents.

 

[FREE866]

Look. I never said “ everyone should rent”. I noted early on in this thread that I had and still have a very unique situation. And I totally got lucky. I’m immensely grateful. But you guys tried to come back with some example that I still should have owned because I could have bought an apartment in a bad area and made money, or used a lot of leverage, blah blah blah.

And as that article pointed out there is this illusion that owning your home is some great investment. That’s def not the case for everyone and as I said homes require constant cash needs. They are like kids in that respect, lol.

 

[dknighd]

The problem with renting is you never know what it will cost next year, or the year after.

 

[Andre1969]

The problem with renting is you never know what it will cost next year, or the year after.

I haven't chatted with him in awhile to see what his current situation is, but I know someone who rented, but would move every year. Apparently he would get some teaser rate of around $1500/mo for a 1br/1ba, but in the second year they'd jack it to around $1800. So, he'd find some other place with a teaser rate, and repeat the process.

I think I'd get tired of moving every year, but I guess some people don't mind it.

Now that I think about it, one of my former house mates moved out, and into an apartment back in 2015, and it was a similar situation. He was paying $1500/mo, but the next year they were going to jack it to $1800, so he moved.

So, I guess those teaser rates are a fairly common thing? Just out of curiosity, I checked the rates for that apartment community he had moved to. They start at $1780/mo now. While not cheap, I guess once you factor in inflation, that's not really any worse than it was 8 years ago.

 

[Music Lover]

I can't really quite grasp the argument that home repairs aren't more than $1500 either. I think my water heater was around that, and the flooring I replaced when the cheap builder carpet had to go was certainly a lot more. Plus I need a roof and HVAC soon. My "new" roof is essentially a huge rip off in my estimation because they reuse the tiles I already have so I just have to pay for new "paper" and such and the labor associated with laying it.

It depends on the house and also your DIY skills. I've been in the same house for 27 years and my annual maintenance costs rarely exceed $1000.

- I reshingled the house and garage myself in 2021 for about $2500
- new HW tank in 2019 for $500, did it myself
- new furnace 2005, I know a guy, $1500

The only large expense was a new septic tank, that cost $10,000. But amortized over 27 years it's still far less expensive than the average water bill.

 

[Music Lover]

I am a minimalist. Things don’t make me happy. Experiences do, financial independence do, family/friends and time. I am not into labor work at all. I am very happy with a small, clean and safe place to live.

Some experiences are better or require a house. It's a lifestyle choice.

- You can't sit beside a fire pit with a group of friends if you live in an apartment.
- In many (probably most) areas you can't operate a smoker on the balcony...f you have a balcony.
- My house has a private yard, a sunroom, 3 decks, a gazebo, a fire pit, and a fire table.

 

[LateToFIRE]

Some experiences are better or require a house. It's a lifestyle choice.

- You can't sit beside a fire pit with a group of friends if you live in an apartment.
- In many (probably most) areas you can't operate a smoker on the balcony...f you have a balcony.
- My house has a private yard, a sunroom, 3 decks, a gazebo, a fire pit, and a fire table.

It depends, much as I am a proponent of owning, in certain areas your can rent just about anything your little heart desires if [BIG IF] you're willing to pay the price. I've got rental property that would give you 4BR's, backyard, deck, grill, etc., so long as you're willing to pay me $15,000 a month (excluding utilities) for it.

 

[Andre1969]

Some experiences are better or require a house. It's a lifestyle choice.

- You can't sit beside a fire pit with a group of friends if you live in an apartment.
- In many (probably most) areas you can't operate a smoker on the balcony...f you have a balcony.
- My house has a private yard, a sunroom, 3 decks, a gazebo, a fire pit, and a fire table.

Some apartments might have public areas with bbq grilles, fire pits, and other amenities like that. But those places might be a bit more on the pricey side.

Still, it's not the same, doing it in a common area, as it is in your own back yard. I'd imagine most apartment complexes also have a swimming pool. But again, it's not quite the same as having your own private pool.

 

[F.I.R.E User]

Some experiences are better or require a house. It's a lifestyle choice.

- You can't sit beside a fire pit with a group of friends if you live in an apartment.
- In many (probably most) areas you can't operate a smoker on the balcony...f you have a balcony.
- My house has a private yard, a sunroom, 3 decks, a gazebo, a fire pit, and a fire table.

I do have a balcony. We are allowed to BBQ on a grill. Like I said earlier I am not into material things like private yard, a sunroom, decks…other things you mentioned. However, my brother does have a big house with a lake about 15 minutes away so I can go there.

 

[mystang52]

I started multi-quoting, but gave up after #1000 or so. This rent vs home ownership is a classic YMMV topic. I grew up in rented apartments, and rented for 4+ years after moving out, buying in December 1977. Moved to a different house in '85, and still live here.
A couple of distant friends from college have to this day only been renters, and I believe they are happy. I despised being a tenant. And that "free maintenance and repairs" benefit to renting? Sure, as long as you're willing to wait for your landlord to agree to do so, and in fact repair/replace/maintain to your satisfaction. etc etc. Some people are happy with that arrangement, and more power to them. But it's not for me.
As an aside, I paid off my mortgage about 20 years ago. At least since then, my property taxes and maintenance costs have always been less than renting a comparable residence.

 

[razztazz]

It depends on the age of the house and how well people maintain their systems. I never replaced a roof, A/C, etc. Don’t fall for rumors.

Now who's the unusual one? This is like "driving defensively." It only works when it works. Then you get T-boned and killed. You can maintain the hell out of things and eventually you will need a new one. You, if you are indeed telling the truth and not engaging in some impish chain yanking here, have been preternaturally lucky in the area of home repairs and timing the entire buying and owner process.

 

[FREE866]

I started multi-quoting, but gave up after #1000 or so. This rent vs home ownership is a classic YMMV topic. I grew up in rented apartments, and rented for 4+ years after moving out, buying in December 1977. Moved to a different house in '85, and still live here.
A couple of distant friends from college have to this day only been renters, and I believe they are happy. I despised being a tenant. And that "free maintenance and repairs" benefit to renting? Sure, as long as you're willing to wait for your landlord to agree to do so, and in fact repair/replace/maintain to your satisfaction. etc etc. Some people are happy with that arrangement, and more power to them. But it's not for me.
As an aside, I paid off my mortgage about 20 years ago. At least since then, my property taxes and maintenance costs have always been less than renting a comparable residence.

You’re right that YMMV. I will say in terms of maintenance whenever anything goes wrong I fill out a form online on the building portal and I kid you not one of the very friendly maintenance guys are here in 30 minutes to fix. It’s fantastic!

 

[F.I.R.E User]

I started multi-quoting, but gave up after #1000 or so. This rent vs home ownership is a classic YMMV topic. I grew up in rented apartments, and rented for 4+ years after moving out, buying in December 1977. Moved to a different house in '85, and still live here.
A couple of distant friends from college have to this day only been renters, and I believe they are happy. I despised being a tenant. And that "free maintenance and repairs" benefit to renting? Sure, as long as you're willing to wait for your landlord to agree to do so, and in fact repair/replace/maintain to your satisfaction. etc etc. Some people are happy with that arrangement, and more power to them. But it's not for me.
As an aside, I paid off my mortgage about 20 years ago. At least since then, my property taxes and maintenance costs have always been less than renting a comparable residence.

We have 24/7 service here. In the Texas summer heat my air was not blowing cold air. It took then 30 minutes to get here on after hours to fix it. Love the timely maintenance. They will fix anything and fast.

You’re right that YMMV. I will say in terms of maintenance whenever anything goes wrong I fill out a form online on the building portal and I kid you not one of the very friendly maintenance guys are here in 30 minutes to fix. It’s fantastic!

Same here. Even after hours.

 

[Birdie Num Nums]

Some experiences are better or require a house. It's a lifestyle choice.

- You can't sit beside a fire pit with a group of friends if you live in an apartment. [snip]

Yes I can, and I do. I live in an apartment, but go visit friends at a friend's house with a fire pit and we play guitars and have fun.

 

[tryan]

Over those 10 years, you paid more than $32,000 in principal and more than $172,000 in interest. Subtract them, and your return falls to 468%, or 16.7% annualized

The article above is a bit misleading .... first the resulting 10.8% annual return of home ownership is FANTASTIC! Compared to the average investor portfolio. Secondly he DEDUCTS ALL interest and mortgage payments (and STILL gets 10.8%!!). He neglects that ya gotta live SOMEPLACE .... the renter can't invest his rent.

 

[FREE866]

The article above is a bit misleading .... first the resulting 10.8% annual return of home ownership is FANTASTIC! Compared to the average investor portfolio. Secondly he DEDUCTS ALL interest and mortgage payments (and STILL gets 10.8%!!). He neglects that ya gotta live SOMEPLACE .... the renter can't invest his rent.

His example is from
Silicon Valley. A region that has done extremely well. I think that’s his point , the the best area still did about what stocks did. Most regions he goes on to say did much worse.

 

[badatmath]

Covered parking for your car. Actually, I checked Conroe apartments (similar places) and they all run about the same. The reason I referenced this area is this is where I want to live!

I just bought a house (new): 4 bedroom (1,459 sq. ft.), new area in CONROE for $247,000 all in.

Congrats on the new house!

 

[F.I.R.E User]

When it to comes to NW you will be ahead in that category while renting since you have to subtract expenses and debt column owed to bank. So financially and flexibility wise in renter is the best option right?

 

[LateToFIRE]

When it to comes to NW you will be ahead in that category while renting since you have to subtract expenses and debt column owed to bank. So financially and flexibility wise in renter is the best option right?

I think the key takeaway on this topic is a big IT DEPENDS. I'm fairly confident that owning has added substantially to my NW, even if you put aside investment r.e. Just owning a series of homes for my personal use over past 30 years has been hugely beneficial to NW.

Reasons for that:

1) Right place, right time, location, location, I picked well, good (i.e. lucky) timing, typically hitting doubles and triples on value, resulting in earning multiples on the cash proceeds from selling, and rolling those proceeds into bigger, better housing.

2) Tax benefits such as interest deduction, very meaningful for a high earner in in a high-tax city-state. And cap gains exclusion for married couple - huge.

3) Cheap borrowing. Past 15 years its been crazy cheap. Allowing me to leverage dollars to buy more house. But, also providing a source of capital to tap value from r.e. for purpose of other investment (buy more r.e., fund a business venture, etc.).

4) Savings on rent. Basically, gotta live somewhere, right? Today, for the same home, my mortgage/taxes/etc are a fraction of what market rate rent would be.

5) Which also means I locked in my housing costs over a long period of time in a VHCOL market. Only other way to do that is find a rent regulated apartment - difficult but not impossible, but also not likely not going to be of the same size/quality as what I have, wouldn't come close.

Of course, I have also invested in the stock market during past 30 years as well and glad I did. There is no way to know the future - best to have a hand in various asset classes as you're building wealth.

This is clearly a YMMV topic, circumstances will vary widely between people. To each their own priorities and risk tolerance.

 

[NgineER]

When it to comes to NW you will be ahead in that category while renting since you have to subtract expenses and debt column owed to bank. So financially and flexibility wise in renter is the best option right?

No-you won’t necessarily be ahead. It seems like you haven’t thought through the economics of owning completely. You do have to subtract the debt owed, but you also have the value of the whole house, not just the value of the down payment, so it nets out to be the amount of the down payment (minus whatever fees) the day of closing.

Purchasing rental properties in the last five years have gotten us to FI much faster than traditional investing.