renters for life a question

[armor99]

Just something to consider. This happens in California all the time, but can easily happen anywhere.

Lifelong renting can sound appealing. You are very mobile, and can always look for a better deal. However, later in life you are putting yourself at a lot of risk. There are literally hundreds of articles about people that have rented in one area, and then “gentrification” happened. As a result, at 70+ years old they are priced out of what has been their home for decades. Had you owned in the same area, you would welcome the upgrades to your neighborhood, and not have to go anywhere.

I would never want someone or random chance to have that much power over me, especially when it is avoidable. I just turned 50. My home has now been paid off for two years. Amazing how fast my bank account has climbed.

 

[swakyaby]

Owning requires constant costs.and large ones.

While the issue of home maintenance may involve some potential large costs, I don’t think that is the case for a lot of homeowners. And the assertion that homeownership requires constant large costs is simply an exaggeration.

I bought my current home 14 years ago when it was 4 years old. I have not had to replace the roof, or the HVAC, or the water heater. I’ve had 2 built-in appliance repairs for under $400. And I’ve had 2 completely elective expenses—replacing the carpet and repainting the exterior—which were not required, but made me feel better. This home hardly required “constant costs and large ones”.

 

[F.I.R.E User]

I had an aunt and uncle that rented the same apartment for 42 years. Third floor of 3 story flat on the south side of Chicago. They had no kids and loved to travel. They both actually passed away in that apartment well into their 90's.

Mike

They invested heavily in the stock market?

 

[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 on the same path as well. Would your NW be higher had you bought?

 

[aja8888]

Covered parking for what?

What about Conroe? Sugar Land? Richmond? Katy?

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.

 

[F.I.R.E User]

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.

Never had covered. No need for it.

 

[latexman]

All else being equal, doesn’t the landlord’s profit prove owning a home is the most economical?

 

[F.I.R.E User]

The funny thing is one of only cases that renting works is in rent controlled situations. Isn’t that what a mortgage does as well?

No it doesn’t. You also owe money to bank, interest, maintenance, repairs, tax, closing cost, HOA, plus labor work. Soul sucking job.
,

 

[jazz4cash]

Rent vs own, from a strictly financial POV comes down to the market in your area.

This is so true. My experience is that higher COL areas and housing markets favor buying over renting. The harder it is to buy, the better the long range return. I see many comparisons that usually favor renting financially but comparing SFH to a structure built to be a rental unit is apples and oranges. It ends up being a lifestyle choice even for folks that can afford to buy

 

[FREE866]

I am on the same path as well. Would your NW be higher had you bought?

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/

 

[LateToFIRE]

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/

Since you brought it up again, in that example I gave you, the numbers would work just fine if you eliminated the part about being a landlord. You'd still be sitting on a multi-million dollar property even if you used the whole thing for yourself. And you coulda done it in multiple different parts of NYC (since you'd never step foot in Bklyn).

But, I would split the difference on this debate. Probably the best approach for most people is to take a balanced approach, since none of us know how stock markets vs r.e. markets will perform over the next 30 years.

It's worked well for me to have irons in multiple fires - home ownership, income resi, commercial r.e., private equity, small business ownership, etc. It's not all done well, there have been some dogs and there have been some windfalls. No way to know in advance which asset classes were gonna pay off the best.

P.S. I do think that article was pretty lame - only mentioned the tax advantages of home ownership at the end - clearly skewed. In my case, the tax advantages have been huge, and still are despite the recent changes.

 

[Aerides]

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.

 

[ut2sua]

One nice "feature" of owning our home to us has been this: it feels like we have lived rent free for all of our lives. If I add all payments we have made across all properties we have used as our primary residence over the years, those will add up to about half of our home value today. Sure, all amounts are in nominal $ (not inflation adjusted), and cost of opportunity and other things not considered, but it feels like we never have to pay rent. I know in some part of the country, RE did not appreciate for some long stretch of time, and I am sure the feeling would be different there.

 

[bobandsherry]

And you're also not including the rent you paid over that period of time.

EDIT: Sorry, meant for FREE866

And he then also ignored the real estate taxes, insurance and maintenance fees he would have paid over that period of time. But then you also ignored the monthly payments that would have been paid, probably a million in interest. So many variables, no real answer.

 

[FREE866]

And he then also ignored the real estate taxes, insurance and maintenance fees he would have paid over that period of time. But then you also ignored the monthly payments that would have been paid, probably a million in interest. So many variables, no real answer.

I’m confused. As a renter I pay zero real estate taxes , insurance or maintenance fees.

 

[bobandsherry]

I’m confused. As a renter I pay zero real estate taxes , insurance or maintenance fees.

He quoted cheesehead and that's who I was referring to. [emoji2369]

 

[jazz4cash]

Here is an article that breaks it down pretty well:




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

I couldn’t get past this statement in the article:
“Yes, homes are wonderful, but the reason to buy them is identical to owning boats, race cars or exotic pets:”

What substantial need does a boat, race car, or exotic pet fulfill? I typically find similar nonsense in most similar articles. I say nonsense meaning it doesn’t make sense where I live.

I don’t think investing any savings in the stock market has anything to do with it. My house is an investment but only in a tertiary way. Thats just me.

 

[captain3d]

Just something to consider. This happens in California all the time, but can easily happen anywhere.

Lifelong renting can sound appealing. You are very mobile, and can always look for a better deal. However, later in life you are putting yourself at a lot of risk. There are literally hundreds of articles about people that have rented in one area, and then “gentrification” happened. As a result, at 70+ years old they are priced out of what has been their home for decades. Had you owned in the same area, you would welcome the upgrades to your neighborhood, and not have to go anywhere.

I would never want someone or random chance to have that much power over me, especially when it is avoidable. I just turned 50. My home has now been paid off for two years. Amazing how fast my bank account has climbed.

What if the area goes down hill eg Detroit?

 

[FREE866]

What if the area goes down hill eg Detroit?

Good point. And the area doesn't even have to go downhill for it not to work out investment wise. A family member of mine bought a house in Madison , CT in 2008 for $373,000. Was just sold for $470,000. Thats not awful , but the same 373K in the S and P in 2008 is 1.4 million today!


Thats a much more common scenario than buying a piece of property at the exact right time in an area and that areas real estate values skyrocket!

 

[Philliefan33]

Good point. And the area doesn't even have to go downhill for it not to work out investment wise. A family member of mine bought a house in Madison , CT in 2008 for $373,000. Was just sold for $470,000. Thats not awful , but the same 373K in the S and P in 2008 is 1.4 million today!


Thats a much more common scenario than buying a piece of property at the exact right time in an area and that areas real estate values skyrocket!

It’s already been mentioned in this thread, but unless your family member paid cash for the house in 2008, this is an invalid comparison.

 

[FREE866]

It’s already been mentioned in this thread, but unless your family member paid cash for the house in 2008, this is an invalid comparison.

Think he put down ~50%

 

[captain3d]

It’s already been mentioned in this thread, but unless your family member paid cash for the house in 2008, this is an invalid comparison.

Do we allow leveraged stock investing in this comparison?

I accept that people are much more likely to borrow to buy a house than they are to buy stocks but there are other factors like having the spare money to allow getting the company match in a 401k etc that may not be possible with a large mortgage payment.

It is clear to me that leveraged property investing via a mortgage works out well for most people who would not otherwise make an effort to actively invest in other options.

Also people who do not move often/ever do better with home ownership where renting and alternative investing is likely better for people who move often to jump up a career ladder.

I personally tripled my income moving often and renting. If I had a ‘permanent’ home I may have been less inclined to look for those possibilities.

 

[nobody]

couldn't wait to get out of an apartment, the money didn't matter vs my own space.

 

[Fermion]

I’ve owned 9 homes over a 35 year period. If you move, you leave your worries behind and you equity increases with every move,

You must have the best home inspectors and live in a state that doesn't charge fees on each house sale (like Washington does) and also have lived through a housing boom.

 

[LateToFIRE]

I’m confused. As a renter I pay zero real estate taxes , insurance or maintenance fees.

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