I rent at the age of 36 and it’s highly unlikely I’ll ever be able to buy. My flat, to buy, would cost £500,000. Fortunately I have a housing association tenancy (govt tenancy), meaning cheaper rent and better security, so there’s less pressure on me to buy.
My sort-of plan is to buy a barge and live on that. Even with mooring fees and maintenance it works out far, far cheaper than buying a flat in this area.
No one is saying renting is an “investment”. It isn’t.
Most people buy a home because they need a place to live first, and as an investment second.
You’re missing that not everyone lives in the same place for 15 or 30 years. You’re missing that not everyone wants to deal with maintenance. You’re missing that not everyone is able to maintain their home due to physical issues, so they would wind up spending money to have someone else do that work. You’re missing that there are housing markets so overpriced the average person really can’t afford to buy in those areas.
When you first sign a mortgage there are no guarantees that after 15 or 30 years you’ll actually have that asset. All sorts of things can happen along the way, from job loss that leads to foreclosure to fire, flood, and other natural disasters. On top of that, if real estate experiences a crash you’re asset may be worth less than when you bought it. All too many people have discovered in recent years that real estate isn’t a sure bet.
This is not to say buying is bad - it, too, can be a good thing - but it’s not the answer for everyone.
I’m on my third home and I’ve finally realized that owning is a wash compared to renting, unless you are fortunate enough to live through a real estate boom. I spend so much on maintenance, furnishing, remodeling, landscaping, mortgage interest, that there’s just no financial advantage.
However, if I had an opportunity to re-buy my house at today’s prices and today’s interest rates, I’d get all over that. I did turn a tidy profit on a rehab home about 10 years ago just out of dumb luck and good timing. Everything is artificially low right now, and it’s hard to overstate the money that can be made when the tide rises.
Ditto. I just don’t see the point of buying, and calling me a retard isn’t exactly going to make me go OH NOES! I rent a house, and as part of that, I have some of the responsibilities of home ownership, like I have a yard to maintain, and have to do some of the repairs myself. I’m finding that I don’t really like it that much! There are about 1 million leaves to rake every week - the landlord comes around with a giant sucking machine and sucks them all up. If I owned I’d have to do it myself. I have a huge driveway to shovel - not fun (though we finally bought a snowblower).
I don’t have to repair! Recently when we had some toilet problems we called the landlord and he repaired the whole thing. City of Colonie had to rip up the ground to get to some pipes that were leaking - landlord’s responsibility, not mine.
I don’t really get home ownership, and it’s just not worth it to me. That’s not to say it’s not good for other people, but I just don’t care about all that other stuff. Oh, and I don’t have kids, which is probably one reason to buy. I can pick up and move anytime I want and never have to worry about selling.
Everyone crowing abouts not having to make repairs as a renter seem to.be missing a couple of points: (1) a homeowner does not necessarily have to make repairs themselves either, they can hire someone, and (2) the rent includes an amount for expected repairs. So, whenit comes to repairs, owning andrenting are more alike than you are letting on.
For example, here in the Boston, MA metropolitan area, rents are insane. Because of local zoning laws (it is almost impossible to build hi rise housing), property (even old and delapidated housing) sells for big money-a 1930’s single family home in North Cambridge sold for $850,000-and it was a dump).
We bought a fixer-upper (we had to put a new kitchen, upstairs bedroom and bath). We did most of the work ourselves, and now we do have considerable equity. WE are far ahead of the game, compatred to renting.
I do believe that the rise in energy prices will make a lot of suburban housing fall in value-who can affordt to commute when gasoline hits $6.00/gallon!
? That makes no sense at all. I pay for the convenience of not having to look for quotes, or hire out contractors. And it would still cost more. That plumber for example cost a couple of hundred dollars that I would have had to pay on top of my mortgage. I didn’t mean that the homeowner would be replacing the toilet themselves. Hiring still costs money though.
And I pay an insanely good price for a two bedroom apartment in a very nice neighborhood. The mortgage would be quite a bit higher.
Over the long run, on average, etc etc, the amount of rent you pay will exceed the costs to own the property. One of those costs is repairs. So, there’s no monetary advantage to renting when it comes to repairs. You are rjghtrhat there may be an advantage when it comes to the hassle and cash flow issues in dealing with repairs, but a homeowner can managethose as well.
The bottom line is that you are acting like you get a free ride every time something breaks, that the landlord has to fix it and youget off scottfree. But that’s not teue–you have fully paid thecost of that repair in your rent.
I think the crowing about repairs is weird too. But that’s because of all the threads about how people’s landlords won’t make repairs they need. I remember the poster pbbth lived in some sort of bug-and-water-infested hellhole until she broke her lease or some shit. If I have repair issues, I call The Man of my choosing and it gets fixed for real by my standards, not the standards of someone trying to make a profit off my home.
And not every rental situation is maintenance-free. Anaamika just said she has to take care of her driveway.
Not to say that either renting or owning is superior. Just pointing out how one aspect of renting that people boast about seems like a burden to me, as a homeowner.
Here’s another way to think about it. As a homeowner, I mayhavetospend a large sum of moneyon a moment’s notice for a repair. As a renter, you pay a smaller sum of moneyebry month for that same repair. Over the long run and onaverageetc etc, yojwill pay more than me, but youwont havering deal withhassles of doingthe repair or being ready to paythe large sum on a momentary notice.
Thats another good point zipperjj.
Lifetime renter here. Lifetime living-paycheck-to-paycheck here, too.
I expect my first house to be purchased with cash from my lottery winnings. Failing that, I expect my first mortgage to be on a $40K property in the Southern California suburbs. It was good enough for my parents; it’s good enough for me.
I’m 40, and have always rented.
It used to be so I’d have the flexibility to relocate if/when needed, but over the past year or so I’ve come to the realization that if someone gave me $5M and said “go buy a place wherever you want to live” I’d probably choose Washington DC (I currently live in a Northern Virginia suburb). So the idea of buying makes some sense for the first time ever, and I do sometimes wish that I could do things like make changes to my home without getting permission, invest in a really nice living room set without wondering whether it will fit in the next place I live, etc. Plus a good friend of mine is a mortgage lender, and I know he’d hook me up. But I have no savings to speak of (ergo, no down payment or money for upgrades/furniture/repairs), so it’s a moot point – and, really, renting doesn’t bother me.
However, for me the key to being a happy renter has been townhouses: in 2003 I stopped living in apartments, and I’ve never looked back. I get the benefits of living in a house (fewer neighbors, thicker walls, more space, a yard for my dog), and I have some of the maintenance responsibilities (shoveling the driveway, mowing the grass, etc.; stuff I don’t mind doing) but none of the big headaches. And when it’s time to move, I only have to deal with having a lockbox on my place for a while and coming up with $5,000-6,000 in moving costs ($1,000-2,000 of which gets recouped when I get my current security deposit back): I don’t have to actually sell the place/hire a realtor, make any upgrades, find a new tenant, etc.
Where I live, rent is actually quite a bit cheaper than the real cost of owning the property (an apartment - there are homes near where I live but even a 1 BR rowhouse is a multi-million purchase.) The reason is that the apartments are either
a) rent stabilized
b) one-offs for rent by an owner that has owned the property for a really long time on a co-op basis. ie, they bought in the building when the property was much less valuable, and have probably paid off their original mortgage by now.
For the rent I pay, I could get a 30 yr mortgage that might possibly purchase the apartment I live in in today’s market (2 BR/2 ba, near all shopping, transportation, parks, and schools). But I would still have to do my own repairs inside the apartment, deal with the trouble of that AND pay building maintenance which is rarely less than $600/mo itself and never goes away. Essentially I would have the equivalent of a mortgage AND rent. (side note, I really don’t get co-ops for this reason).
So I could rent and pay X
or I could own and pay X+apartment repairs+ building maintenence+dealing with all that bullshit.
I was brought up with the mantra of investing in bricks and mortar. You’ll never go wrong owning property was my father’s guiding principle, luckily he died before anyone had ever heard of sub prime mortgages and global economic meltdown.
I’m in my mid fifties and I’ve rented, owned, rented and currently own again. I understand the flexibility that renting brings and the lack of responsibility for fixing stuff. However, the times when I’ve rented I’ve had all sorts of trouble getting the landlord or agent to fix things and usually when they do it’s done on the cheapest quote they can get. As was said upthread, if you own and you pay someone to fix a problem you get a few quotes and make sure they do a good job. Sure it takes a bit of time but you end up getting what you want.
The big problem I have with renting is how to keep up the rent payments if my health declines and I can’t work. If I was renting now I could probably make the rent for maybe 2 years out of savings then I’d be flat broke. As an owner with a chunk of equity built up over the years I could survive for 10 years or more if I only have to pay local taxes and utilities.
So owning does it for me.
I’ve become convinced that the best way to prepare for your future via smart housing choices is to live modestly and below your means, and take the money you’re not spending on a home and do something smart with it. And that’s more important than if you rent or own. I have friends who have property tax bills that alone could almost cover rent on a very simple apartment in the town they live in. And that’s just their property tax, that does not go into equity and that will go up with time.
Now I know what they say, a house is “forced savings” and many people don’t have the discipline to save otherwise, etc. But if you do have that discipline then renting and living reasonably may very well put you ahead of those couples who buy 4-bedroom houses in good school disctricts for kids who aren’t even born yet.
This is absolutely the position my husband and I are in. Our apartment’s rent was far below our means, we were saving a ton of money, and then we got a house where the property taxes alone were 2/3 of our rent. However, we were living in a tiny place in a crappy neighborhood. Of course, we chose a house we knew we could afford, but it is a far more expensive housing option and leaves us with less disposable income than we had. On the upside, the kid we don’t have yet (in our defense, she’s due any time now) will actually be able to attend public schools here, I can walk the dogs at night without worrying about getting mugged, we have a yard, and our commutes are no more difficult than they were. Yeah, we’re banking less money now, but we decided the quality of life increase was worth it, even with the increased costs and paying for our own repairs.
Living in a shoe box in a shitty neighborhood does have its merits in terms of saving money, but so does eating cheap food, buying all your clothes from the Goodwill, refusing to spend money on hobbies, and not having cable. Everybody picks what they pay for, but I do think people get the weird idea that nicer housing is exempt from counting as an extra expenditure just because of the equity, which isn’t really true in today’s market.
I think the reason that renters bring up repairs and taxes is that people arguing in favor of homeownership often conveniently leave them out.
So many times I have seen a mortgage payment compared to rent, as though it were the only figure that mattered. But of course there’s property taxes, and PMI, and ongoing maintenance, and (some) utilities. So many times I’ve seen someone claim to have made a profit on owning a house by subtracting their purchase price from their sale price and… just ignoring all the other costs that they incurred over the years.
It’s not that I think I’m somehow getting a free ride by renting. I know that the property tax still has to get paid and the roof still has to be replaced. I know that my water bill isn’t “free”. But if we’re going to start comparing costs, you better add yours in, because while mine’s already included in my rent, I bet your mortgage doesn’t cover yours.
Aside from the above, while it’s true that over the long term, the cost of renting must exceed the cost of ownership in aggregate, that’s (1) not necessarily true for any given property, (2), not necessarily true over a particular bounded timespan and (3) only true for the owner of the property (but not necessarily true for some other hypothetical owner of that same property).
I think the first two are fairly self-evident. Rental property is a business, and some businesses lose money. A savvy renter can sometimes do quite well by finding good deals, even if the average renter does not. Based on my experience over the last few years, it has not been hard to do significantly better than average in the rental market with relatively little work.
On the third, there are a few effects to consider. First, there’s economy of scale. Someone who owns a lot of properties has less overhead per property than a bunch of people who own just one. Second, at least in CA, there’s Prop 13. If someone’s owned a house for 30 years here, they may be paying significantly less tax than I would have to, were I to buy right now. There’s plenty of room for them to make a profit over their costs and for me to save money by renting, simply because their costs of ownership are much lower than my costs of ownership would be, even for the same property.
In the past month or so, I’ve been going through the motions to get all the information I need to buy a house. I was approved for an FHA loan and have been looking. I won’t be buying yet, however, due to three factors:
[ol]
[li]The houses in the area I want are butt-ugly. I don’t need the Taj Mahal as my first home, but I’d at least like something that doesn’t feature weeds growing through the cement and rusted siding. My loan officer who used to be a realtor told me, “You can have curb appeal. You can have a nice interior. But in your price range, you can’t have both.” My price range ain’t chump change, either. :mad:[/li][li]I’m in school and plan to move away after graduation. I don’t want to be tied down by a house and not be able to get away when that employer in Europe sends me a job offer.[/li][li]I don’t really want it that badly. A person should only buy if he or she is completely invested in the idea of home ownership. Never should one buy a home “because he/she can.”[/li][/ol]
Another difference between townhouses and apartments: I pay for all of my utilities separately, including the water.