Wow, what a strawman. The person you quote clearly says “over any 15 year period”, and your complaint is that a house might lose value from one year to the next?
The person who quote ME changed it from “always” to “Over any 15 year period”!
“Double your money” doesn’t mean “double the value of the house.” If you buy the house for 10% down, spend an equal amount on improvements, then sell it for 20% more than you bought it for (plus enough for realtor fees), you’ve doubled your money.
You’re right. That’s certainly possible, with a lot of hard work. We (my company) do all of our real estate purchases in cash, so I jumped the gun on that a bit. Apologies.
Owning and having to mow are overlapping sets, not the same set. Likewise with renting and not having to mow. You can rent a domicile (e.g. a house) where you are required to do the mowing. You can own a domicile (e.g. a condo) where you do not need to do any mowing. If you don’t want to mow, your decision is between having to mow and not having to mow, not between owning and renting.
You need to subtract the money they would have paid for renting a similar place from the monthly payments to get a fair comparison. Since we have tons of equity and a small mortgage our mortgage and property taxes together cost far less than renting an equivalent house. Plus we got lucky and bought at the bottom, so the price has more than doubled in 17 years, and in terms of the money we put in we did even better than that. That doesn’t count tax benefits.
The reason they are standing around in Apartment Depot is because they are waiting for the landlord to fix stuff. I’ve been through that - I’m just as happy to do it now, not when he is available.
Being able to hammer nails into walls for pictures without worrying is reason enough for owning. Plus the first thing we did when we bought our house was to go through a wall to make two dinky rooms into one big one.
The bubble of the past 20 years in housing causes a recency bias that makes many people believe housing is always a good investment. Nobel prize winning housing expert Robert Shiller doesn’tthink it is. I agree with him. Are there certain properties that are good investments? Absolutely. Is every property a good investment? Absolutely not.
I rent my primary residence and invest in real estate through REITs and other people that know the market better than I do.
Where on earth did you rent a home that didn’t allow nails for picture hanging. That’s absurd and not indicative of a typical rent agreement.
He is saying, at least in the article you link to, that real estate is often not a great investment, as compared to other places to invest capital. That’s likely true, but it says nothing about housing that you’re living in. The $10,000+/yr that my apartment costs to rent is not available to “invest” in anything; it goes towards my (and my housemate’s) residence. If that money gives any kind of return, it’s surely better than taking a total loss on that $10k a year, right?
Same here, plus they are responsible for snow removal. Also, the houses are professionally managed. I don’t get phone calls for problems, the property managers do. My job is finding ways to finance more rentals (and manage the property managers), not manage rentals.
Generally speaking, owning is better than renting (though everyone’s situation varies), but owning has become much harder. While prices are starting to rebound, the banks have only cracked the doors to their vaults with regards to mortgages. There is some indication that some banks are once again looking for sub-prime borrowers (ugh, but I guess when the government assumes the risk instead of the lender, but the lender gets all the return, it’s inevitable).
Renting and lease-to-own/lease-to-purchase are good ways to begin to build or rebuild credit. If you are thinking of buying, but down have the down payment or good to excellent credit, look for lease-to-own.
Although its not quite what the OP is talking about…HELL YES to this! Leasing cars makes little sense to me.
Renters may be happier than owners.
Everyone is different. I rent a house now and couldn’t be happier. I get the fun of having my own yard (where my kitties can romp and my flowers can grow). I have a front porch to deck out. But I don’t have to worry about the house breaking down on me. A couple of months ago my water heater died, and I didn’t have to stress out over it. I just called a number and someone else took care of it.
I’m not a sentimental person, though. I’m not strongly attached to my job or my present location. I like knowing that if an opportunity should come my way, I’d be able to pick up and move without a second thought. I also like knowing that if the bottom show fall out under me, I’m not completely screwed. I have a secure job and I don’t think anything will happen, but it could.
It’s not a clear cut decision. If you are looking to minimize your costs owning is a better option as a renter you are normally paying the costs of ownership+whatever profit the owner is trying to make.
I think our culture is very miss leading when it comes to pushing people towards ownership. There are ownership costs beyond the price of buying a property. It is in no way guaranteed that reselling a property will recoup the cost of the original purchase plus the cost of ownership.
You often are not going to get your money’s worth in the property maintenance or upgrades. If I buy a house for 200 today. Re-roof it at a cost Of 10k chances are if I try to sell it a day later I won’t get 215k. On the other hand if you don’t do the roof and it leaks you’re definitely going to get less than your 200k.
Not all property investments have any meaningfully return because not all buyers take them into account. I am in the well water industry. A buyer comes in looks at a house and never even considers the costs associated with getting water. They make all their plans to invest in landscaping and redoing the lawns. Then when they go to start watering their 10k landscaping project they find they don’t have enough water to actually maintain it. The 20k needed for a new well was something no one ever considered when shopping for their dream home. You’d hope the home inspector would have caught this for the 700 bucks you’d payed him but in my experience if the water passes a water quality test no one every thinks further into it. If that buyer then turns around d to sell the property to an equally uninformed buyer they won’t see any profit on their 20k well project, but they’ll likely get a good return on the 10k landscaping project.
There are tables showing how much return you can expect to get on various improvements. I’d guess roofs get done when needed, not as an enhancement, I know swimming pools are big losers.
I had to deal with a dying septic tank as a renter. Not fun. Even less fun because fixing it was done on the schedule of someone without sewage in their dishwasher. The city was putting in sewers, and luckily we moved to our own house before getting hit with the rent increase to help pay for them.
But your point shows that not all houses are equal. Dealing with repairs on a new house is a lot different from dealing with them on houses 100 years old.
One of the house halves we rented was that old, and if we wanted to replace blinds they had to be custom cut. No window matched a current standard. My wife grew up in a house like that, and you don’t see light switches like the ones they had any more.
Except (maybe) for closing costs this is all included in your rent in any case. Where do you think the money for real estate taxes your landlord pays comes from. Time spent for repairs and maintenance is spent instead nagging your landlord (or giving up and doing it yourself anyway).
But the real difference is that the whole system is rigged to favor ownership instead of rental. And I am not talking only about deductability of mortgage interest (which doesn’t happen in Canada) but also about the fact that your investment in your house is paying a real dividend (the equivalent of your rent) on which you pay no taxes. To illustrate this, friend of mine who lives in Mass went on sabbatical maybe 20 years ago, exchanging his house with someone in Colorado who was spending a year in Mass. They just exchange homes, no money changed hands. He never gave it a thought and neither did the other guy presumably. But under the tax law they should both have declared the fair rental value of their homes as income and paid taxes on it. And no the rent they theoretically paid is not deductible.
If you rent and invest then the payoff on the investment is certainly going to be taxed. The system is rigged to favor middle and upper class people to the detriment of the lower class.
The landlord’s pocket. It may or may not be covered 100% by rent payments. If it’s a single-family home purchased for anything close to fair market value, rent almost certainly doesn’t cover mortgage+tax+maintenance.
There are three families in this building. Six in my last one. I’d rather pay 1/3 or 1/6 of those taxes and disasters, and do it predictably and monthly instead of having the furnace and the hot water heater go in the same month and be all my problem. (Besides, a residential furnace installation costs almost 4 months of what I pay in rent. I have no idea how much more a furnace to heat a multi-unit building must cost. Not my problem!)
If I *choose *to do it myself, I take the expense off my rent. “Time?” Hell no. They’re here snaking the drain with real professional tools before I could drive to Home Depot and back with a rental. Granted, not all landlords are as good with repairs as mine; if they’re not responsive, Tenant’s Rights laws give me the right to hire a professional and take the expense off my rent, too.
I’ve rented for 15 years from a variety of landlords. I’ve never had to nag anyone to fix anything. Maybe I’m just lucky?
I had one, for one year of renting in more than 15 years of renting. She also preferred to drink the rent money, rather than pay the mortgage with it. That was rather nerve-wracking, but it all worked out and the guy that bought the place in foreclosure manages it through an excellent management company and still hasn’t raised our rent to market value. Worst thing he did was take out all the trees (:() but they were putting the plumbing at risk, so that was probably for the best.
Best thing about the crazy drunk landlord was that she literally didn’t care what the hell we did to the place, as long as we didn’t take more than, say, a couple of fifths of Scotch worth of rent money off at once. I was able to paint in colors I like and take off the paint, rollers, paint trays, brushes and masking tape. 