# Stop trying to convince me to buy a house! **URL:** \ **Category:** The BBQ Pit\ **Created:** [August 19, 2010, 12:54am UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686 "2010-08-19T00:54:06Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![Misnomer](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/misnomer/32/14897_2.png) [@Misnomer](https://boards.straightdope.com/u/Misnomer)\ **Post date:** [August 19, 2010, 7:59pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/41 "2010-08-19T19:59:05Z")
I’m 38 and have never owned, and am likewise tired of getting this pitch from well-meaning friends and acquaintances. My standard response these days is, “Give me the down payment and I’ll buy a house.” (But I still wouldn’t.) I have a mortgage-lender friend who ran some numbers for me a few months ago: down payment aside, it would cost $600/month more for me to buy the townhouse I’m currently renting – plus, I would then have to cover any maintenance/repair costs. No, thanks! ---
**Author:** ![Peremensoe](https://avatars.discourse-cdn.com/v4/letter/p/ce7236/32.png) [@Peremensoe](https://boards.straightdope.com/u/Peremensoe)\ **Post date:** [August 19, 2010, 8:04pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/42 "2010-08-19T20:04:13Z")
> [@The\_Lurker\_Above](#): > > > [@spark240](#): > > > > As I say, landlords add up all those known and anticipated costs, add a profit margin on top, and charge rent to cover it. They’re not in it to make your life easier, they’re in to make money from you. > > It doesn’t work like that, the market rent for a particular location/quality unit is the market rent. You don’t get to tote up your expenses, slap on a 10% profit and have renters pay that price with a smile. > > Ideally the market rent does cover your expenses + profit, and potential landlords should run the numbers ahead of time. > > I ran the numbers for the city I’m in; and quite frankly, I can’t make the case that owning is better than renting without assuming some very, very _optimistic_ appreciation. Where do you think “market” rents come from? They start out as the collective product of many owners making exactly this kind of calculation, though the profit margins are generally better than 10%. Then they go up from there if the market will bear it. Do you think landlords _lose money_ by letting out properties? They don’t stay landlords for long if they do. > [@Evil\_Economist](#): > > My city is full of “accidental landlords”, who decided to invest in the housing market during the bubble and now can’t get out. Good point. But this is a temporary condition. Those properties will be sold or foreclosed. ---
**Author:** ![tdn](https://avatars.discourse-cdn.com/v4/letter/t/94ad74/32.png) [@tdn](https://boards.straightdope.com/u/tdn)\ **Post date:** [August 19, 2010, 8:09pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/43 "2010-08-19T20:09:08Z")
> [@niblet\_head](#): > > I never ever get grief about not wanting kids. I get grief about not wanting to buy a house! I got grief about both, as well as not being married. It took a long time to convince my family that their way of life was not the only way to live. I’d actually be pretty miserable living their lives. I used to know a childless unmarried couple who lived in sin in an inner city apartment, and they were pretty happy. But their families would not let them be until they did things the “right” way. Eventually they succumbed to the pressure. They got married, bought a house in the country, and had a couple of kids. And they HATED it. They eventually tried on a few different lifestyles to see if they could be happier. At one point they moved to South Carolina and became Republican Baptists. (They are liberal atheists at heart.) That lasted about a week. ---
**Author:** ![Evil\_Economist](https://avatars.discourse-cdn.com/v4/letter/e/c89c15/32.png) [@Evil\_Economist](https://boards.straightdope.com/u/Evil_Economist)\ **Post date:** [August 19, 2010, 8:16pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/44 "2010-08-19T20:16:41Z")
> [@spark240](#): > > > [@The\_Lurker\_Above](#): > > > > It doesn’t work like that, the market rent for a particular location/quality unit is the market rent. You don’t get to tote up your expenses, slap on a 10% profit and have renters pay that price with a smile. > > > > Ideally the market rent does cover your expenses + profit, and potential landlords should run the numbers ahead of time. > > > > I ran the numbers for the city I’m in; and quite frankly, I can’t make the case that owning is better than renting without assuming some very, very _optimistic_ appreciation. > > Where do you think “market” rents come from? They start out as the collective product of many owners making exactly this kind of calculation, though the profit margins are generally better than 10%. Then they go up from there if the market will bear it. > > Do you think landlords _lose money_ by letting out properties? They don’t stay landlords for long if they do. 10% return to capital seems absurdly high, considering the low barriers to entry into the landlording business. I don’t know the market that well, but would guess it’s closer to 1 or 2%. I’d be interested if you had a reputable cite showing otherwise. > [@](#): > > > [@Evil\_Economist](#): > > > > My city is full of “accidental landlords”, who decided to invest in the housing market during the bubble and now can’t get out. > > Good point. But this is a temporary condition. Those properties will be sold or foreclosed. Eventually, sure. ---
**Author:** ![Carol\_the\_Impaler](https://avatars.discourse-cdn.com/v4/letter/c/6a8cbe/32.png) [@Carol\_the\_Impaler](https://boards.straightdope.com/u/Carol_the_Impaler)\ **Post date:** [August 19, 2010, 8:26pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/45 "2010-08-19T20:26:31Z")
> [@tdn](#): > > > [@niblet\_head](#): > > > > I never ever get grief about not wanting kids. I get grief about not wanting to buy a house! > > I got grief about both, as well as not being married. It took a long time to convince my family that their way of life was not the only way to live. I’d actually be pretty miserable living their lives. > > I used to know a childless unmarried couple who lived in sin in an inner city apartment, and they were pretty happy. But their families would not let them be until they did things the “right” way. Eventually they succumbed to the pressure. They got married, bought a house in the country, and had a couple of kids. And they HATED it. They eventually tried on a few different lifestyles to see if they could be happier. At one point they moved to South Carolina and became Republican Baptists. (They are liberal atheists at heart.) That lasted about a week. It’s weird. I never pressure people to sell their house, divorce their wife, and put their kids up for adoption. I mean, think of how much money they could save! 😃 ---
**Author:** ![The\_Lurker\_Above](https://avatars.discourse-cdn.com/v4/letter/t/dc4da7/32.png) [@The\_Lurker\_Above](https://boards.straightdope.com/u/The_Lurker_Above)\ **Post date:** [August 19, 2010, 8:34pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/46 "2010-08-19T20:34:24Z")
> [@spark240](#): > > Where do you think “market” rents come from? They start out as the collective product of many owners making exactly this kind of calculation, though the profit margins are generally better than 10%. Then they go up from there if the market will bear it. > > Do you think landlords _lose money_ by letting out properties? They don’t stay landlords for long if they do. Markets have buyers and sellers, if there are enough tenants bidding up rents then sure, prices will increase, if there are too few tenants are landlords going to keep their expenses +10% prices and let units sit empty? No, rents will fall. And yes, that means that landlords **do** from time to time lose money. Real estate would be a very, very strange place if every small business (ie landlord with 1 or 2 units) made money and never went out of business. And don’t forget that real estate prices and rents do not change in a 1:1 ratio. It’s entirely possible to have a market where current landlords (who bought units years ago before prices went up) are making money; but new would-be landlords would be idiots to buy at the current price:rent ratio. ---
**Author:** ![tdn](https://avatars.discourse-cdn.com/v4/letter/t/94ad74/32.png) [@tdn](https://boards.straightdope.com/u/tdn)\ **Post date:** [August 19, 2010, 8:37pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/47 "2010-08-19T20:37:05Z")
> [@niblet\_head](#): > > It’s weird. I never pressure people to sell their house, divorce their wife, and put their kids up for adoption. I mean, think of how much money they could save! 😃 And it’s a seller’s market for kids these days! ---
**Author:** ![Trom](https://avatars.discourse-cdn.com/v4/letter/t/958977/32.png) [@Trom](https://boards.straightdope.com/u/Trom)\ **Post date:** [August 19, 2010, 8:39pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/48 "2010-08-19T20:39:24Z")
I really don’t understand the argument that this is a buyer’s market. When you look at inflation adjusted prices, housing prices are still on the [high end.](http://mysite.verizon.net/vzeqrguz/housingbubble/). ---
**Author:** ![Labrador\_Deceiver](https://avatars.discourse-cdn.com/v4/letter/l/7c8e57/32.png) [@Labrador\_Deceiver](https://boards.straightdope.com/u/Labrador_Deceiver)\ **Post date:** [August 19, 2010, 8:40pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/49 "2010-08-19T20:40:25Z")
> [@spark240](#): > > Where do you think “market” rents come from? They start out as the collective product of many owners making exactly this kind of calculation, though the profit margins are generally better than 10%. Then they go up from there if the market will bear it. The vast majority of the owners making these decisions are renting multi-family properties, which are much easier to cash flow. > [@](#): > > Do you think landlords _lose money_ by letting out properties? They don’t stay landlords for long if they do. Yes, many do. Although, your profit depends on how you do your accounting. Under normal conditions, the only reliable way to rent out a house for more than mortgage+taxes+maintenance costs is to buy the property at significantly below market value. A whole bunch of single-family houses are rented for an amount that is below the monthly mortgage payment. > [@](#): > > Good point. But this is a temporary condition. Those properties will be sold or foreclosed. Not true. Many will continue to rent the properties out because they view them as long-term investments that will increase in value enough to justify the expense. ---
**Author:** ![Labrador\_Deceiver](https://avatars.discourse-cdn.com/v4/letter/l/7c8e57/32.png) [@Labrador\_Deceiver](https://boards.straightdope.com/u/Labrador_Deceiver)\ **Post date:** [August 19, 2010, 8:42pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/50 "2010-08-19T20:42:17Z")
> [@Trom](#): > > I really don’t understand the argument that this is a buyer’s market. When you look at inflation adjusted prices, housing prices are still on the [high end.](http://mysite.verizon.net/vzeqrguz/housingbubble/). Barely, but rates are at historic lows. That means the real cost for the buyer is probably on the low end. ---
**Author:** ![RadicalPi](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/radicalpi/32/9806_2.png) [@RadicalPi](https://boards.straightdope.com/u/RadicalPi)\ **Post date:** [August 19, 2010, 8:54pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/51 "2010-08-19T20:54:36Z")
> [@gravitycrash](#): > > It really isn’t that difficult if you have a calculator and a pen and a piece of paper. I don’t have a heck of a lot of sympathy for people who don’t know how to add, subtract, multiply, and divide. > > Let’s see: Figure out how much down payment you need \>agree to fixed rate and term of mortgage you can afford to pay per month (around 30% of income) \>sign papers. While I’m pretty sure that calculating whether buying or renting doesn’t require much more than +, –, ×, or ÷ (although it may require some exponentiation), the calculations are not particularly simple, since you need to inclde your marginal tax rate, return on investments, and myriad other things. This site > **[Renting vs. Buying a Home: Which is better?](https://michaelbluejay.com/house/rentvsbuy.html)** has a nice little calculator that seems to include most of the things that can affect the decision to buy or rent, on a solely financial level, but calling it basic math, I don’t think is true. ---
**Author:** ![Tom\_Scud](https://avatars.discourse-cdn.com/v4/letter/t/f08c70/32.png) [@Tom\_Scud](https://boards.straightdope.com/u/Tom_Scud)\ **Post date:** [August 19, 2010, 9:07pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/52 "2010-08-19T21:07:40Z")
> [@Evil\_Economist](#): > > > [@Tom\_Scud](#): > > > > Buying =/= single-family house. Though your point about being able to move if needed is a big deal. > > The only alternative to renting, if you want to live in the city, is buying a condo (no co-ops here, not that I would live in one anyway). No way would I ever buy a condo, which combines all the disadvatages of renting and buying into one crappy package. That’s just my opinion, though. Condos do kind of suck (says the guy who had a months-long fight with the condo association within the first year of buying), but have the signal advantage over single-family homes that they actually exist in urban areas. ---
**Author:** ![Peremensoe](https://avatars.discourse-cdn.com/v4/letter/p/ce7236/32.png) [@Peremensoe](https://boards.straightdope.com/u/Peremensoe)\ **Post date:** [August 19, 2010, 9:19pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/53 "2010-08-19T21:19:35Z")
> [@Evil\_Economist](#): > > 10% return to capital seems absurdly high, considering the low barriers to entry into the landlording business. I don’t know the market that well, but would guess it’s closer to 1 or 2%. Sorry, I meant profit above month-to-month expenses (including periodic repairs), not return on total investment. I have very little formal economics knowledge and tend to think of things in concrete commonsensical terms. I _have_ spoken at some length about it with a few people who are (successful) landlords of single-family rental houses, because I’ve done work on such properties and was considering doing something like what they were doing. And my comments have all been strictly with single-family houses in mind. A glance back at the OP and some other comments shows that many people are actually comparing the owning of houses with the renting of small apartments, so obviously that’s a different kind of proposition. > [@Labrador\_Deceiver](#): > > > [@spark240](#): > > > > Those properties will be sold or foreclosed. > > Not true. Many will continue to rent the properties out because they view them as long-term investments that will increase in value enough to justify the expense. That used to work, I guess. Personally I wouldn’t bet on it any more, and the people I’ve spoken with don’t. They make their (modest) money every single month. ---
**Author:** ![Peremensoe](https://avatars.discourse-cdn.com/v4/letter/p/ce7236/32.png) [@Peremensoe](https://boards.straightdope.com/u/Peremensoe)\ **Post date:** [August 19, 2010, 9:23pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/54 "2010-08-19T21:23:47Z")
And what cities are these that don’t have single-family houses? Not in downtown centers, of course, but every place I’ve been has had them within pretty easy public-transit range of downtown. ---
**Author:** ![Eva\_Luna](https://avatars.discourse-cdn.com/v4/letter/e/e495f1/32.png) [@Eva\_Luna](https://boards.straightdope.com/u/Eva_Luna)\ **Post date:** [August 19, 2010, 9:43pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/55 "2010-08-19T21:43:20Z")
> [@Tom\_Scud](#): > > > [@Evil\_Economist](#): > > > > The only alternative to renting, if you want to live in the city, is buying a condo (no co-ops here, not that I would live in one anyway). No way would I ever buy a condo, which combines all the disadvatages of renting and buying into one crappy package. That’s just my opinion, though. > > Condos do kind of suck (says the guy who had a months-long fight with the condo association within the first year of buying), but have the signal advantage over single-family homes that they actually exist in urban areas. There are tons of single-family houses in Chicago, it’s just that all the ones in our price range within walking distance of the train line we needed sucked and/or were in crappy neighborhoods. I don’t agree about the disadvantages of condos outweighing the advantages, though - **Tom Scud** and I were just a tad unlucky in the very beginning. But we would have been stuck in a too-small semi-crappy rental for much longer if we’d held out until we had a big enough down payment to afford a decent single-family house that met our criteria. And I’d vowed that we weren’t going to move again unless we were buying a place. I joked when we moved into the condo that we don’t have to move again until one of us is too decrepit to get up half a flight of stairs, but one never knows - of course, much depends on what happens in the real estate market over the coming years. It’s nice not to be the only ones responsible for, say, shoveling the walk, but the ability to make one’s own decisions unilaterally may win out over than once we have some more equity and/or cash in the bank. ---
**Author:** ![Anne\_Neville](https://avatars.discourse-cdn.com/v4/letter/a/b9e5f3/32.png) [@Anne\_Neville](https://boards.straightdope.com/u/Anne_Neville)\ **Post date:** [August 19, 2010, 9:57pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/56 "2010-08-19T21:57:47Z")
> [@Meyer6](#): > > I’ve been told more than once that I should think about buying a house because ‘it’s what adults do’. That’s a terrible reason to make a major life decision, which buying a house certainly is. It’s also a terrible (but not uncommon) reason to get married or have a child. Making major life decisions “because that’s what adults do” or “because that’s what I’m supposed to be doing” is a good way to make yourself miserable. “Because that’s what adults do” is, however, an excellent reason to only give advice on personal finance to people who have asked for advice. ---
**Author:** ![Evil\_Economist](https://avatars.discourse-cdn.com/v4/letter/e/c89c15/32.png) [@Evil\_Economist](https://boards.straightdope.com/u/Evil_Economist)\ **Post date:** [August 19, 2010, 10:10pm UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/57 "2010-08-19T22:10:40Z")
> [@spark240](#): > > > [@Evil\_Economist](#): > > > > 10% return to capital seems absurdly high, considering the low barriers to entry into the landlording business. I don’t know the market that well, but would guess it’s closer to 1 or 2%. > > Sorry, I meant profit above month-to-month expenses (including periodic repairs), not return on total investment. I have very little formal economics knowledge and tend to think of things in concrete commonsensical terms. I _have_ spoken at some length about it with a few people who are (successful) landlords of single-family rental houses, because I’ve done work on such properties and was considering doing something like what they were doing. I’d still like to see cites showing the average monthly profit margin, then. 10% still seems awfully high. My guess is that passive landlords (e.g., own the property but don’t do the work themselves) are probably extremely lucky to break even. Active landlords probably do better, but active landlording is a full-time occupation that I doubt pays better than a nice white-collar job. From reading, it seems as though most of the outrageous claims about owning property and letting the money roll in come from people selling books about landlording. [This guy](http://www.johntreed.com/Aboutauthor.html) basically says that’s a pipe-dream, that landlording can pay off but that it’s hard work, and he seems fairly credible to me. He also said that he lost money on two of twelve apartment complex investments, which should worry amateur investors, because he’s a professional real estate investor. He also seems to think that there’s not much money in single-family home landlording, and the only way to reliable make money is to buy homes that are selling 20% below market. This implies to me that there’s probably not much difference in cost between owning and renting a single-family home. > [@spark240](#): > > And what cities are these that don’t have single-family houses? Not in downtown centers, of course, but every place I’ve been has had them within pretty easy public-transit range of downtown. I enjoy living in my downtown center, walking distance from everything. Although there are single family homes on the city outskirts, there are two problems: 1) public transportation sucks, 2) city outskirts here are not a nice place to live. ---
**Author:** ![Containing\_Iron](https://avatars.discourse-cdn.com/v4/letter/c/57b2e6/32.png) [@Containing\_Iron](https://boards.straightdope.com/u/Containing_Iron)\ **Post date:** [August 20, 2010, 5:01am UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/58 "2010-08-20T05:01:39Z")
> [@BigT](#): > > ^ I take it the S stands for species, right? I knew I should have gone with a slippery slope joke! ---
**Author:** ![Meyer6](https://avatars.discourse-cdn.com/v4/letter/m/cc9497/32.png) [@Meyer6](https://boards.straightdope.com/u/Meyer6)\ **Post date:** [August 20, 2010, 5:29am UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/59 "2010-08-20T05:29:59Z")
> [@Anne\_Neville](#): > > > [@Meyer6](#): > > > > I’ve been told more than once that I should think about buying a house because ‘it’s what adults do’. > > That’s a terrible reason to make a major life decision, which buying a house certainly is. It’s also a terrible (but not uncommon) reason to get married or have a child. Making major life decisions “because that’s what adults do” or “because that’s what I’m supposed to be doing” is a good way to make yourself miserable. > > “Because that’s what adults do” is, however, an excellent reason to only give advice on personal finance to people who have asked for advice. It is an extremely awful reason to buy a house. I dislike the insinuation that you cannot be a real adult simply by supporting yourself, doing something you enjoy, and living the way you want to live. No - you have to have the 2.5 kids and the car and the house in the suburbs. Just because I have made different choices with my life, and those choices are not solely financially motivated, does not make me a child. I agree with you about the financial advice too. Sometimes I think that people who repeatedly give you unsolicited life advice are just unhappy and stuck in their own life and want you to join them. Misery loves company. ---
**Author:** ![Meyer6](https://avatars.discourse-cdn.com/v4/letter/m/cc9497/32.png) [@Meyer6](https://boards.straightdope.com/u/Meyer6)\ **Post date:** [August 20, 2010, 5:33am UTC](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686/60 "2010-08-20T05:33:25Z")
> [@Shodan](#): > > > [@Meyer6](#): > > > > I have a roommate, which is practically a crime if you listen to some people > > I didn’t know you were gay! > > Regards, > Shodan > 🙂 Well, my roommate is a guy (and I’m not), but we’re also Canadian so interestingly enough it would be cool either way if we were a couple. It’s just considered weird and against the moral order if we want to split housing expenses (and hang out and amuse each other) \*without \*screwing each other. [Previous page](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686.md?page=2) [Next page](https://boards.straightdope.com/t/stop-trying-to-convince-me-to-buy-a-house/550686.md?page=4)