Forever renters?

[spartana]

Anyone planning on renting forever rather than buying at some point? Are you choosing to rent forever because it's your preferred lifestyle or due to the high cost of housing? Do you worry that the increases in rents over the years will outstrip your WR and put you in a bad situation financially? Do you worry about being a very old person who gets evicted and doesn't have the ability or help to move elsewhere? (There was a topic about that on the real estate forum here not long ago...scary for the elderly tenants). https://forum.mrmoneymustache.com/real-estate-and-landlording/moral-issue-with-evicting-lt-elderly-renters-to-sell-property/

I recently sold my place, as did SO/BF his place, and are currently renting together. We care talking over various scenarios from buying a place together, one buying a place and the other one living there as a "renter", to renting long term with split costs 50/50. I personally like renting over owning but am a worrier type who is concerned about some of the things I listed above. Especially as a single person (no plans to marry) and childless with no family but one sister. SO is younger Also childless but he has lots of younger family so is less concernered about long term renting. So forever renters how do you plan for those things?

ETA: We'd be renting or buying a small SF house together but if In was single I'd just rent a small apt or buy a small condo - although I don't like apt life or condo life myself.

[NotJen]

Could be.

Are you choosing to rent forever because it's your preferred lifestyle or due to the high cost of housing?

Both.  I don't know if my current location will be long term and want to stay more mobile.  I like having a smaller space.  Houses are very expensive now since my brain hasn't adjusted to inflation yet.

Do you worry that the increases in rents over the years will outstrip your WR and put you in a bad situation financially?

Not really.  I've left myself room to downgrade from where I am now.

Do you worry about being a very old person who gets evicted and doesn't have the ability or help to move elsewhere?

Nope.  Maybe I should (childless, currently live thousands of miles away from my nearest relatives), but I assume I'll just figure it out.  Figuring out how to move a likely small apartment if I need to seems about equivalent to figuring out maintenance and upkeep and such on a larger home/land.

I'm not opposed to owning a house in the future, but as a single person it doesn't seem to make much sense.

[FIRE@50]

I recently sold my house and moved into an apartment last weekend. I'm pretty excited about downsizing expenses, maintenance, and responsibility. I'm not sure if I'll ever buy again, but as far as the fear of future rent increases goes, the fear of buying a new roof, HVAC, windows, appliances, etc. far outweighs that.

I may buy something small in a lower cost of living area in the future but as of right now, I'm staying put until my daughter finishes HS. That gives me plenty of time to think about the pros and cons.

[Catbert]

Becoming elderly and owning a house isn't a picnic either.  There are big things as FIRE@50 said.  There is also worrying about and arranging for all the small stuff...water heater, appliances, garbage disposal, malfunctioning irrigation system and on and on.  Being elderly doesn't make anything easier.  Ask me how I know. 

[Log]

I think looking back at the past 50 years is about the worst case scenario ever for being a forever renter, because supply-restrictive housing policies became the norm in the 70s in a way they had literally never been before in the history of human civilization. Now that the YIMBY movement is changing the conversation, and population growth is slowing, I think the housing shortage will not continue to be as big of a problem in the time horizons of a long retirement. We’re not going to solve it in 10 years, and maybe not even in 20. But I think in 30 years, we’ll be in a completely different housing economy. I can’t predict what exactly that will look like, but I feel relatively confident it’s not going to be 30 more years of rents rising faster than inflation.

[Zikoris]

We will very likely be forever renters, because the numbers are so strongly in favour of renting for people in our situation. Our preferred housing is naturally at the low end of the rental spectrum because we like very small spaces and don't care about amenities at all. This lets us amass wealth like crazy, despite being solidly average income. Rent increases are less of an issue when you don't care where you live and have a location-independent lifestyle.

Renting is also our preferred lifestyle because we take a VERY hardass no-bullshit approach to life overall. We automate or eliminate as much annoying crap as possible, to free up as much time as possible for fun and meaningful things. Home maintenance, lawn maintenance, etc. definitely fall into the Annoying Crap category.

Being elderly and unable to handle a move is more a problem for brokies versus Mustachains, who are generally millionaires at that point.

[ixtap]

We will very likely be forever renters, because the numbers are so strongly in favour of renting for people in our situation. Our preferred housing is naturally at the low end of the rental spectrum because we like very small spaces and don't care about amenities at all. This lets us amass wealth like crazy, despite being solidly average income. Rent increases are less of an issue when you don't care where you live and have a location-independent lifestyle.

Renting is also our preferred lifestyle because we take a VERY hardass no-bullshit approach to life overall. We automate or eliminate as much annoying crap as possible, to free up as much time as possible for fun and meaningful things. Home maintenance, lawn maintenance, etc. definitely fall into the Annoying Crap category.

Being elderly and unable to handle a move is more a problem for brokies versus Mustachains, who are generally millionaires at that point.

Ditto.

We love boat life, despite the chores and maintenance, but can't quite see buying a land based home, even when we are done living on the water.

This can be a double edged sword: there are a number of elderly boat owners who stay either because they don't have an option (and the boat is likely degrading fast due to delayed maintenance) or the boat is their home and are unwilling to leave. We have had one neighbor pass away recently, and have another who seems to be having more and more cognitive issues.

[trollwithamustache]

Well, that was the old plan when we lived in a HCOL area. If we had bought, all our money would be tied up in the house. When we looked at property taxes and assements, they would have been like half or 2/3rds what we were paying for rent at a decent sized rental.  For other reasons we moved to a LCOL area and did end up buying.

Another aspect to consider is can you move to an area with rent control?  Politically I'm not a huge fan, but that would give you a set rent rate/ certainty on the increases and the landlord basically cannot kick you out.  In my 30s, passing on a rent controlled apartment in San Francisco was my only real regret. The SF crime situation is a great reason to rent too... it's a lot easier to move as a renter if your town goes off the rails.

 

[Dollar Slice]

Also single/childless. It's looking very likely that I will inherit a good amount, so buying a small condo isn't totally out of the question eventually. But I'm not super interested in the responsibility of owning, either. Depending on my health (which isn't great and keeps threatening to deteriorate) I may end up renting until I need/want something like a 55+ community or age-in-place situation earlier than most folks would.

I do have a lot of friends in a variety of financial situations, so who knows, maybe I'll end up doing some kind of Golden Girls situation with a group of roommates ;-)

[spartana]

Thanks for all the advise guys. I've been a home owner for a long time and my short stint as a renter was probmatic for a few reasons (house I rented sold and owner evicted me to live there. My FIRE income was too low to qualify for most landlord's income requirement of 3 times the rent amount. Landlords not counting my investment income as income and only wanted job income or traditional retirement incomes that I was too young to tap, etc).

So I thought I'd have those same problems when dealing with  long term or forever rentals as well as the dealing with financial issues like continuous rent increases over the decades and my stash not keeping up with those increases. Like being priced out of even a tiny studio rental due to large rent hikes over 2 or 3 decades, or not having the physical or mental capacity to go find a new place if needed, etc.  I've seen rent increases just in the last few years that were over 10% annually and some much much higher, so it kind of makes me wonder what prices will be over the years. I wish I held @Log belief that they'll stabilize or even go down but I kind of doubtful.  So while renting a small place would be ideal for me, and cost at this time is much better than buying and all those expenses, it's the long term future that I worry about.  Owning seems safe in those regards. Of course I just sold my place last month (before a huge wildfire came close to burning everything down) and was worried about being a home owner in a high risk fire and flood zone. I think I worry too much ;-).

ETA: This is the current price for a studio apt in the HCOL town I use to own in (bought cheap fixer foreclosure 8n 2012 and sold during the pandemic). I don't know what the median rents for a studio were in 2012 but much less Im sure.

"The average rent for a studio apartment in Huntington Beach, California is between $2,189 and $2,247 per month"
 

[jim555]

I'm glad not to be a renter.  I bought for cash a 1br condo before I retired 10 years ago.  Rents were around $1,250 now they are $2,100 - $2,200.  I bought for around $180,000, now I see a unit on sale for $400,000.  So my place doubled, and I got protection from rent increases.  Taxes and maintenance have gone up, but nothing like the rent increases.  Added benefit is having control of where I live not subject to the arbitrary will of a landlord.  I can turn it into a rental at any time.

By tying up my money in a place it lowered my income and I got free health coverage due to low income.

[Kris]

I'm glad not to be a renter.  I bought for cash a 1br condo before I retired 10 years ago.  Rents were around $1,250 now they are $2,100 - $2,200.  I bought for around $180,000, now I see a unit on sale for $400,000.  So my place doubled, and I got protection from rent increases.  Taxes and maintenance have gone up, but nothing like the rent increases.  Added benefit is having control of where I live not subject to the arbitrary will of a landlord.  I can turn it into a rental at any time.

By tying up my money in a place it lowered my income and I got free health coverage due to low income.

This is my situation, too. When I purchased my 2br condo, my mortgage was about $1100/month. These days, I’d be hard-pressed to find a studio apartment to rent for that price in my city that wasn’t shitty or in a neighborhood I couldn’t live in.

[LaineyAZ]

One aspect I haven't seen mentioned yet:  Noise. 

As an apartment renter many years ago, I was subjected to noise of other residents like
- neighbor who woke me every morning because they liked taking showers at 4:30 a.m.
- loud music, day or night
- arguing family members, day or night
- landscapers starting at 6am in summers (permitted by code, but out of my control)
- barking dogs, 24/7
- smokers with loud, hacking coughs
- tennis court amenity had no set hours so was subjected to the loud thwack of tennis balls late into the nights

(and don't get me started on the assigned parking issues, bad enough for another post)

I bought my own SFH home 25+ years ago in a quiet neighborhood and it's been basically noise-free.   Bliss.

And has been said in other posts, even newly constructed apartments rarely have interior insulation, so all of those who've changed to working from home have been unpleasantly surprised that even wearing headphones there's an unbelievable amount of noise.

[bacchi]

Noise and watching limited income people get pushed out due to higher rents is why we'll stick with owning. I'd consider a condo/townhome but, as LaineyAZ mentioned, the insulation probably isn't sufficient between the units.

We may build so that we get exactly what we want: small, functional, and super insulated.

[Dollar Slice]

And has been said in other posts, even newly constructed apartments rarely have interior insulation, so all of those who've changed to working from home have been unpleasantly surprised that even wearing headphones there's an unbelievable amount of noise.

Newly constructed apartments are the ones to avoid, around here. Pre-war buildings are built out of heavy materials that don't transmit noise between apartments - I can't hear what the neighbors to my left and right are doing, ever, in a building from 100+ years ago. You get noise from the hallway but that's pretty mild/rare. What you have to worry about is street noise in my building.

I'm in NYC so owning and renting are all going to be apartments, not SFH. It's not like buying is automatically a different kind of home. You can rent a SFH, you can buy an apartment. My parents live in the suburbs and there is constant noise from gas-powered mowers and leaf-blowers for much of the year. Everywhere has its pluses and minuses but that is not because you own or rent necessarily.

[Log]

This article captures in the first two charts what I mean about our current perspective on housing being warped. It's easy to hear anecdotes of "I bought for $Y, X years ago, and now the rents have gone up and up and up!" It's in fact the only anecdote you will hear, because it is a true story for any homeowner who is alive today. But that's a consequence of living in a historical anomaly. No number of anecdotes of what has happened in the past lifetime ensures those things will be true over the next lifetime.

I suppose ownership is the best guarantee you can get if you're already living somewhere LCOL. But if you're in M-HCOL, the worst case scenario of increasing housing costs is getting priced out. If there are cheaper places you like, that's just another safety margin. And that's a safety margin on top of 4% withdrawal rate being derived from a historical worst-case scenario, social security, any coming inheritance, any bits and pieces of side income you may earn... as Zikoris said, Mustachians aren't going broke. The much more likely case over a long retirement is becoming much more rich than you intended or expected.

(Also, required pushback: Nice apartment buildings are very quiet. Single-family rentals are a thing. There is no rational relationship between homeownership and quiet.)

[Telecaster]

I think renting forever is fine--as long as you are willing to move occasionally.   There are still swaths of the country where it is cheaper to rent than buy.  And overall, rents can't increase much faster than wages otherwise everyone would be homeless.   I wouldn't move to Seattle for the affordable housing, but renting here is definitely cheaper than buying.   

[NotJen]

I'm glad not to be a renter.  I bought for cash a 1br condo before I retired 10 years ago.  Rents were around $1,250 now they are $2,100 - $2,200.  I bought for around $180,000, now I see a unit on sale for $400,000.  So my place doubled, and I got protection from rent increases.  Taxes and maintenance have gone up, but nothing like the rent increases.  Added benefit is having control of where I live not subject to the arbitrary will of a landlord.  I can turn it into a rental at any time.

By tying up my money in a place it lowered my income and I got free health coverage due to low income.

Yes, I had a paid-off super-cheap house before I retired and it was certainly optimal in terms of spending.  Could I have stayed there forever?  Probably, but it's not what I wanted out of life, and I am enjoying the lifestyle I have now, even if not financially optimal.  If you are settled, buying probably makes the most sense.

I did a calculation when I sold my home to figure out what I spent monthly on the house over my ownership, an equivalent "rent" (including purchase price, interest paid, insurance, property tax, maintenance) - and figured out that I MADE $49/mo by buying the house.  It was a new build, and I sold before I had to do major maintenance, which helped.  Yes, it was a little painful to sell such a great financial situation, but no regrets at all.

And even with (ridiculously high to my brain but actually affordable by me) rent expenses, I still get free health insurance.  There are circumstances where it's possible.

(Also, required pushback: Nice apartment buildings are very quiet. Single-family rentals are a thing. There is no rational relationship between homeownership and quiet.)

Agree.  I suppose I've been lucky, but I've never had noise issues in my apartments, old or new.  Sure, there are occasional noises - like my upstairs neighbors dropping something heavy on the floor and making me jump, but that's the exception, not the rule.  I kind of like it - weird noise in my house alone WTF IS THAT reaction, time to freak out!  Weird noise in the apartment, it's just the neighbors, not a serial killer.  Lol.

Nuisance noises are about the same as when I was a homeowner, where I had occasional construction noise, lawnmowers/blowers, kids acting like fools, backyard parties, fireworks for holidays.  My current neighborhood has none of that so far (small 2 bldg complex set back from a retail area with desert landscaping).

Thanks for all the advise guys. I've been a home owner for a long time and my short stint as a renter was probmatic for a few reasons (house I rented sold and owner evicted me to live there. My FIRE income was too low to qualify for most landlord's income requirement of 3 times the rent amount. Landlords not counting my investment income as income and only wanted job income or traditional retirement incomes that I was too young to tap, etc).

That sounds like bad luck getting evicted so soon.  I've always rented at complexes, which I feel are more stable (one family owned, two corporate, so far).  I was also worried about income requirements when I applied for my current place, but after a slight misstep in what info to give on the application, I was approved using my investment balances (didn't have to show everything, just my taxable account).

[spartana]

I'm glad not to be a renter.  I bought for cash a 1br condo before I retired 10 years ago.  Rents were around $1,250 now they are $2,100 - $2,200.  I bought for around $180,000, now I see a unit on sale for $400,000.  So my place doubled, and I got protection from rent increases.  Taxes and maintenance have gone up, but nothing like the rent increases.  Added benefit is having control of where I live not subject to the arbitrary will of a landlord.  I can turn it into a rental at any time.

By tying up my money in a place it lowered my income and I got free health coverage due to low income.

Yes, I had a paid-off super-cheap house before I retired and it was certainly optimal in terms of spending.  Could I have stayed there forever?  Probably, but it's not what I wanted out of life, and I am enjoying the lifestyle I have now, even if not financially optimal.  If you are settled, buying probably makes the most sense.

I did a calculation when I sold my home to figure out what I spent monthly on the house over my ownership, an equivalent "rent" (including purchase price, interest paid, insurance, property tax, maintenance) - and figured out that I MADE $49/mo by buying the house.  It was a new build, and I sold before I had to do major maintenance, which helped.  Yes, it was a little painful to sell such a great financial situation, but no regrets at all.

And even with (ridiculously high to my brain but actually affordable by me) rent expenses, I still get free health insurance.  There are circumstances where it's possible.

(Also, required pushback: Nice apartment buildings are very quiet. Single-family rentals are a thing. There is no rational relationship between homeownership and quiet.)

Agree.  I suppose I've been lucky, but I've never had noise issues in my apartments, old or new.  Sure, there are occasional noises - like my upstairs neighbors dropping something heavy on the floor and making me jump, but that's the exception, not the rule.  I kind of like it - weird noise in my house alone WTF IS THAT reaction, time to freak out!  Weird noise in the apartment, it's just the neighbors, not a serial killer.  Lol.

Nuisance noises are about the same as when I was a homeowner, where I had occasional construction noise, lawnmowers/blowers, kids acting like fools, backyard parties, fireworks for holidays.  My current neighborhood has none of that so far (small 2 bldg complex set back from a retail area with desert landscaping).

Thanks for all the advise guys. I've been a home owner for a long time and my short stint as a renter was probmatic for a few reasons (house I rented sold and owner evicted me to live there. My FIRE income was too low to qualify for most landlord's income requirement of 3 times the rent amount. Landlords not counting my investment income as income and only wanted job income or traditional retirement incomes that I was too young to tap, etc).

That sounds like bad luck getting evicted so soon.  I've always rented at complexes, which I feel are more stable (one family owned, two corporate, so far).  I was also worried about income requirements when I applied for my current place, but after a slight misstep in what info to give on the application, I was approved using my investment balances (didn't have to show everything, just my taxable account).

The bolded is me too! Not that I can hear much (mostly deaf) but once the dogs had passed on it seemed like every sound was that of crazy mass murdering rapists coming to get me lol.  Not really but yeah you notice those weird noises when living alone in a SFH.

Like you I paid off my house before I FIREd and it was very hard to give up my very low cost fixed housing expenses (including fixed low property taxes) in a HCOL area to rent even if Renting offered me a better lifestyle at a higher cost (owning was better financially for me). Not really the area I wanted to live in.  Having those low fixed expenses meant I could ride out most financial downturns no matter how big because my housing expenses were so small. I liked the security of owning and knowing that even if SHTF and I couldn't afford to fix something at least I'd always have a (maybe leaky ;-)) roof over my head no one could kick me out of.

But...I'm liking this rental thing.  A lot. I like the flexibility. The less maintenance and repair. The fewer costs beyond the rent. But lack of housing security is nil for me. I'd hate to be an 80 year old person getting the boot so the landlord could sell, or dealing with high annual rent increases for 20, 30 maybe 40 or more years, and my income not keeping up. Plus perhaps not having a partners income along with my own to qualify for for rentals. So it's good to hear others who are planning for that stuff as renters and what they're doing. Nice to hear from those who are less worried about this kind of thing too. 

[spartana]

Becoming elderly and owning a house isn't a picnic either.  There are big things as FIRE@50 said.  There is also worrying about and arranging for all the small stuff...water heater, appliances, garbage disposal, malfunctioning irrigation system and on and on.  Being elderly doesn't make anything easier.  Ask me how I know.

lol I imagine it's tough no matter what. My Mom had sold her paid off house when she was around 70 and bought an apt in a "Active 55 plus" community (Leisure World in Seal Beach, CA) and that worked out great for her. She owned, paid cash (was very inexpensive then) and assn. dues where around $300/month which included most utilities and maintenance as well as many many other amenities. So didn't have to worry about  her finances at all or keeping up with rising rents so able to do all the fun stuff like extensive worldwide travel for long periods of time. So I can see the appeal of owning a condo at any age for those reasons. Im not big on condo or apt living much any more (and SO not at all) a small easy to maintain house would probably be ok to age into. I've never lived in anything bigger than 1000 SF and would  prefer to go smaller myself on a small lot - whether renting or buying - so that what were looking for now. Very pricey in coastal Calif though!

[spartana]

I'm glad not to be a renter.  I bought for cash a 1br condo before I retired 10 years ago.  Rents were around $1,250 now they are $2,100 - $2,200.  I bought for around $180,000, now I see a unit on sale for $400,000.  So my place doubled, and I got protection from rent increases.  Taxes and maintenance have gone up, but nothing like the rent increases.  Added benefit is having control of where I live not subject to the arbitrary will of a landlord.  I can turn it into a rental at any time.

By tying up my money in a place it lowered my income and I got free health coverage due to low income.

This is my situation, too. When I purchased my 2br condo, my mortgage was about $1100/month. These days, I’d be hard-pressed to find a studio apartment to rent for that price in my city that wasn’t shitty or in a neighborhood I couldn’t live in.

Same here - bought an old fixer 1000 SF SFH 3/2 on a fairly large lot (I had many dogs and cats then) in 2012 at the bottom of the housing market. I paid cash but the morgage would have likely been low compared to renting a studio apt now let alone a SFH. . Even counting in opportunity costs I don't know if I had stashed all that cash instead of bought a house if it would have kept up. Doubtful as SFH rentals are on average over $5k/month. While we'd likely live in a less expensive area it would still be a HCOL area so renting might be a better choice. Guess I should crunch some numbers.

[spartana]

I think renting forever is fine--as long as you are willing to move occasionally.   There are still swaths of the country where it is cheaper to rent than buy.  And overall, rents can't increase much faster than wages otherwise everyone would be homeless.   I wouldn't move to Seattle for the affordable housing, but renting here is definitely cheaper than buying.

The moving occasionally to find lower cost rentals thing is one concern I would have. Easy now when everyone here is younger and healthier but may not be so easy to do once elderly and perhaps no younger family or friends to help. Or having roots and community that you have to leave because you're priced out of the rental market. But as others have said maybe, as a mustashian type, we will all be richer then we ever planned to be even if we retired in our 30s after renting for 50 years! That's the dream. Well except for the DWZ (die with zero) crowd who, hopefully have good timing skills.

[the lorax]

Seconding whoever noted that home ownership does not guarantee quiet neighbours! we had to sell a house and move due to noisy neighbours - it would have been much easier to move if we had still been renting. After a natural disaster hit a while back I also wished we had been renting then so we could have gotten away from the area. That said, I value home ownership because gardening is a major hobby for me and the rental environment where I live is bad for renters (poor housing stock, frequent evictions etc). I personally wouldn't want to rent into old age as I think that would feel too ricky for me. Home maintenance can absolutely be an issue for the edlery but it can be outsourced if you have the funds to do so

[spartana]

Seconding whoever noted that home ownership does not guarantee quiet neighbours! we had to sell a house and move due to noisy neighbours - it would have been much easier to move if we had still been renting. After a natural disaster hit a while back I also wished we had been renting then so we could have gotten away from the area. That said, I value home ownership because gardening is a major hobby for me and the rental environment where I live is bad for renters (poor housing stock, frequent evictions etc). I personally wouldn't want to rent into old age as I think that would feel too ricky for me. Home maintenance can absolutely be an issue for the edlery but it can be outsourced if you have the funds to do so

This is so true. One big reason I decided to sell was due to 2 quaint little cabins right across from me being enlarged to 2 story multi-unit Airbnbs.  It was crazy with swarms of people constantly coming and going at both places all hours day and night. Noisy, very bad traffic on the tiny little street and just well crazy. The place directly across from me allowed a max of 15 people in the main house, 8 in the smaller back house, and 4 in the converted studio garage. The house next to it was pretty much the same and both were often filled to capacity on weekends. Loud music, outdoor TVs, big parties UGH. Next to that the raging wildfires weren't so bad lol.

 I was very sad because I really liked my little place and thought of keeping it even if we moved elsewhere (was in a 4 seasons resort) but once the Airbnbs were up and running it became intolerable. Like you said, if I was renting it would have been much simple to move.

[WootWoot]

DH and I were long-term renters for more than 30 years. A few times, we looked for a house to buy, but never saw anything we liked. We were also paying $400 a month for a three-bedroom house with a very small yard. We didn't really want to buy a home and have that responsibility.

Several years after we moved in, the lady behind us sold her house and moved into a senior apartment. Thus, dear reader, our troubles began. A local slumlord bought the place and let a real jackhole move in with his family. He was a sociopath. He began putting up barriers so we couldn't park our car in our spot. Over the next ten years, it escalated until it turned into assault (he hit my husband with a bat) and a false accusation that landed my husband in court. We tried everything but got no help from our landlord, his landlord or the law. Finally, we bought a house to get away from him. Also, our landlord let the house we live in deteriorate, and stopped paying taxes so that one day we came home to find the place was up for auction with the county.

All that said, I do feel now that we should have bought a house a long time ago. Now we're looking at a mortgage until we're in our 80s, and I realize we put up with way too much sh*t from that guy. We didn't want to move because we had been living there first. In the end, that just didn't matter as much as our personal safety.

[therethere]

I'm nearing 40 and have never owned. We had a boatload of student debt and prioritized that instead of saving for a house under the guise that you're not ready if you don't have 20% down. It always was slightly cheaper to rent than a mortgage. So I justified it and it was incredibly nice to not have to worry about the time and money of unexpected repairs when we were young and jobs unsecure. We were able to save a bunch of money and invest it. But we're now facing two problems. 1. We've been in the same rental for 12 years. We have literally paid more in rent than the owner bought it for (and he only bought it 3 months before we moved in). The rent is 80% more than when we initially moved in, but there has been only cheap fixes and no updates this entire time so it has slowly turned into a craphole. Okay it's really not that horrible but knowing if we owned we would have fixed issues really grades on your mental health when stuff goes wrong. For example, I would really like to have heat in my bathroom instead of relying on a space heater. Or a new carpet. Or be in charge of repairs. Because we haven't moved we are still undermarket, so to move we'd have to either pay another 20%+ more or move out of our neighborhood. 2. Prices have gone insane in our city/state. So despite saving a boatload of money, it doesn't really make up for the increased housing cost. To afford a house now, it would be a large increase in cost, risk, and a downgrade in lifestyle (still a house needing updates/maintenance, not in a walkable area, adding in a commute, etc). We were originally hoping to Coast FI or work on/off every few years. But if we wanted to buy here we would both need to stay in FT career jobs for quite a bit longer. Or we have to move out of the state to afford anything and drain all our cash and need to rely on working anyway.

I can't flat out say we made the wrong choice. But this market and the thought of having to move out of the area or work longer really has ramped up my regret level.

Graduating in 2006 and hearing about lots of people losing their equity and homes I could easily ignore the people who touted you should buy right away because "houses always go up in value." But I wish I had better understood some of the longer term benefits of owning. Like an inflation proofed mortgage. Or hedging a low downpayment and tax-free earnings upon selling. I think I would have made some different strategic decisions rather than relying on long-term renting. It's great for some situations and length of time and it did let us save a significant amount. But to me it's really the thought of feeling pushed to move somewhere else just to be cheaper that creates the most regret.

[MoseyingAlong]

DH and I were long-term renters for more than 30 years. A few times, we looked for a house to buy, but never saw anything we liked. We were also paying $400 a month for a three-bedroom house with a very small yard. We didn't really want to buy a home and have that responsibility.

Several years after we moved in, the lady behind us sold her house and moved into a senior apartment. Thus, dear reader, our troubles began. A local slumlord bought the place and let a real jackhole move in with his family. He was a sociopath. He began putting up barriers so we couldn't park our car in our spot. Over the next ten years, it escalated until it turned into assault (he hit my husband with a bat) and a false accusation that landed my husband in court. We tried everything but got no help from our landlord, his landlord or the law. Finally, we bought a house to get away from him. Also, our landlord let the house we live in deteriorate, and stopped paying taxes so that one day we came home to find the place was up for auction with the county.

All that said, I do feel now that we should have bought a house a long time ago. Now we're looking at a mortgage until we're in our 80s, and I realize we put up with way too much sh*t from that guy. We didn't want to move because we had been living there first. In the end, that just didn't matter as much as our personal safety.

To me, this scenario is a strong argument to rent.
You were anchored because "we had been living there first." How much firmer would that anchor have been planted if you owned the house?
As a renter, you could find another place, give 30 days notice, move and leave the situation.
As an owner, you would have had to find another place, move and then kept dealing with the situation until your house sold.

Owning a place doesn't prevent a sociopath from moving in next door. It may just make it harder to move away.

[spartana]

DH and I were long-term renters for more than 30 years. A few times, we looked for a house to buy, but never saw anything we liked. We were also paying $400 a month for a three-bedroom house with a very small yard. We didn't really want to buy a home and have that responsibility.

Several years after we moved in, the lady behind us sold her house and moved into a senior apartment. Thus, dear reader, our troubles began. A local slumlord bought the place and let a real jackhole move in with his family. He was a sociopath. He began putting up barriers so we couldn't park our car in our spot. Over the next ten years, it escalated until it turned into assault (he hit my husband with a bat) and a false accusation that landed my husband in court. We tried everything but got no help from our landlord, his landlord or the law. Finally, we bought a house to get away from him. Also, our landlord let the house we live in deteriorate, and stopped paying taxes so that one day we came home to find the place was up for auction with the county.

All that said, I do feel now that we should have bought a house a long time ago. Now we're looking at a mortgage until we're in our 80s, and I realize we put up with way too much sh*t from that guy. We didn't want to move because we had been living there first. In the end, that just didn't matter as much as our personal safety.

To me, this scenario is a strong argument to rent.
You were anchored because "we had been living there first." How much firmer would that anchor have been planted if you owned the house?
As a renter, you could find another place, give 30 days notice, move and leave the situation.
As an owner, you would have had to find another place, move and then kept dealing with the situation until your house sold.

Owning a place doesn't prevent a sociopath from moving in next door. It may just make it harder to move away.

I agree. While it was a bad situation for @WootWoot  it could have been much worse as an owner who couldn't find a buyer due to crazy neighbors. You're really trapped unless willing to take a super low ball offer. I've seen stash houses, hoarder houses, wild party houses, houses with dozens of people living there, houses with a million pit bulls being breed for fighting, vacant deteriorated  houses, gang houses, frat houses, bordellos, homeless encampments,  and plain old crazy people houses and the neighbor homeowners had terrible times trying to sell. Or removed. Or cleaned up.  While that's not the norm (hopefully) you do hear about that kind of thing fairly often in some places. Ok now I'm scaring myself lol!  The official house hunting (buy or rent? buy or rent?) starts this weekend but currently have a seasonal rental so no  real rush.

[314159]

I've never owned, but I'm young. My wife and I expect to decide whether to rent or buy based on the costs of each as shown by a calculator. For the markets we're considering and the length of time we expect to be in our next home, it's almost certain that we'll rent. For the next home after that, we'll run the numbers again.

This article captures in the first two charts what I mean about our current perspective on housing being warped. It's easy to hear anecdotes of "I bought for $Y, X years ago, and now the rents have gone up and up and up!" It's in fact the only anecdote you will hear, because it is a true story for any homeowner who is alive today. But that's a consequence of living in a historical anomaly. No number of anecdotes of what has happened in the past lifetime ensures those things will be true over the next lifetime.

Thanks for sharing that article, @Log! I admit I have not thought about the trends described over time spans of more than 5-10 years in the future. Promising stuff!

[spartana]

I've never owned, but I'm young. My wife and I expect to decide whether to rent or buy based on the costs of each as shown by a calculator. For the markets we're considering and the length of time we expect to be in our next home, it's almost certain that we'll rent. For the next home after that, we'll run the numbers again.

This article captures in the first two charts what I mean about our current perspective on housing being warped. It's easy to hear anecdotes of "I bought for $Y, X years ago, and now the rents have gone up and up and up!" It's in fact the only anecdote you will hear, because it is a true story for any homeowner who is alive today. But that's a consequence of living in a historical anomaly. No number of anecdotes of what has happened in the past lifetime ensures those things will be true over the next lifetime.

Thanks for sharing that article, @Log! I admit I have not thought about the trends described over time spans of more than 5-10 years in the future. Promising stuff!

I couldn't open that calculator without creating an account (stupid NYT) but in our case, if we bought,  we'd be paying cash with each paying 50% of the total costs. Unmarried and separate finances so would have to calculate rent vs own slightly differently. Or not since I guess we'd just calculate on 50% of costs individually rather than 100%.

In any case it's less about the cost of rent vs buy (although I would like to do the calculations since we live in VHCOL coastal Calif ad housing costs are crazy - as are rental costs) and more about long term costs into the future. At this time renting seems to have a much greater financial advantage - as well as lifestyle advantage - compared to buying.  Plus we have some complexities about owning together but wanting to leave our share of a joint house purchase to our individual family members. We worked out how we'd do that a couple of years ago (with the help of the good people on this forum) but renting makes that easier. But.... renting long term is still scary for me so still on the fence since SO wants to buy again asap and I'm hesitant.

[314159]

Whoops, didn't realize you needed an account to open the link. I've replaced it with a gift link in my post post. Here it is if you don't feel like scrolling up.

I realize it's not really about the calculator for you though!

[spartana]

Whoops, didn't realize you needed an account to open the link. I've replaced it with a gift link in my post post. Here it is if you don't feel like scrolling up.

I realize it's not really about the calculator for you though!

Thanks. Took a look at it and did some calculations and renting, even in a VHCOL area like Calif would financially be better then buying over a 10 year period.  That's with splitting costs (buy or rent) 50/50.

[spartana]

This article captures in the first two charts what I mean about our current perspective on housing being warped. It's easy to hear anecdotes of "I bought for $Y, X years ago, and now the rents have gone up and up and up!" It's in fact the only anecdote you will hear, because it is a true story for any homeowner who is alive today. But that's a consequence of living in a historical anomaly. No number of anecdotes of what has happened in the past lifetime ensures those things will be true over the next lifetime.

I suppose ownership is the best guarantee you can get if you're already living somewhere LCOL. But if you're in M-HCOL, the worst case scenario of increasing housing costs is getting priced out. If there are cheaper places you like, that's just another safety margin. And that's a safety margin on top of 4% withdrawal rate being derived from a historical worst-case scenario, social security, any coming inheritance, any bits and pieces of side income you may earn... as Zikoris said, Mustachians aren't going broke. The much more likely case over a long retirement is becoming much more rich than you intended or expected.

(Also, required pushback: Nice apartment buildings are very quiet. Single-family rentals are a thing. There is no rational relationship between homeownership and quiet.)

Thanks for posting that link @Log I missed it the first time. I looked back to the mid-1960s when my parents bought their first home (SoCal) for something like $20k and while housing prices went up every year it seemed to average about 3% before the early 2000s when 30%/year increases seemed the norm. Of course it all crashed and burned for awhile but afterwards the increase in prices have been pretty huge again. I think before houses were seen as just a place to live - maybe forever -  but over the last 20 year's have become more if an investment with a higher expected rate of return. In my case, if I buy again, I'd plan on living there until I died or was carted off to the old folks home. So it wouldnt really matter if the house increased in value or not to me personally.

Anyways anyone know of a calculator that would show a comparision of what buying (with cash) a $500k house verses paying $2000/month rent with annual 10% increases would cost over a 20 to 30 year time frame? I think prop taxes would be approx $5k/year and insurance another $1k. Maybe $4k/year for maintence, repairs and all utilities, etc. So $10k total cost per year on a paid for house (but loss of investment money with $500k being out of the market) verses $24k/year for a rental. Don't ask me do my own math!!

[tj]

My concern of being a FIREd forever renter is not having the traditional income stream to get approved for the lease. Do you really want to send your landlord a statement for a six or seven figure brokerage account?

[spartana]

My concern of being a FIREd forever renter is not having the traditional income stream to get approved for the lease. Do you really want to send your landlord a statement for a six or seven figure brokerage account?

And they don't always accept that as "income" - especially as the "must have income 3 times the amount of rent". Ask me how I know :-(

[NotJen]

My concern of being a FIREd forever renter is not having the traditional income stream to get approved for the lease. Do you really want to send your landlord a statement for a six or seven figure brokerage account?

I don't know why it's that different from giving them a paystub?  I didn't have to show them all of my account balances.  Just the taxable account that was "big enough", but not my total net worth.  If you tell them you don't work, they are going to assume you have some level of assets.

And I only had to show them the account balance because I'm not getting recurring deposits from dividends/sales - otherwise I would have had to show them a bank statement with the deposits instead of any balances.

[tj]

My concern of being a FIREd forever renter is not having the traditional income stream to get approved for the lease. Do you really want to send your landlord a statement for a six or seven figure brokerage account?

I don't know why it's that different from giving them a paystub?  I didn't have to show them all of my account balances.  Just the taxable account that was "big enough", but not my total net worth.  If you tell them you don't work, they are going to assume you have some level of assets.

And I only had to show them the account balance because I'm not getting recurring deposits from dividends/sales - otherwise I would have had to show them a bank statement with the deposits instead of any balances.

Out here, you see a lot of rental ads that say you must show 3x rent in income. There is a housing shortage.


Sending a paystub maintains a lot more privacy about your wealth.

[mistymoney]

Anyone planning on renting forever rather than buying at some point? Are you choosing to rent forever because it's your preferred lifestyle or due to the high cost of housing? Do you worry that the increases in rents over the years will outstrip your WR and put you in a bad situation financially? Do you worry about being a very old person who gets evicted and doesn't have the ability or help to move elsewhere? (There was a topic about that on the real estate forum here not long ago...scary for the elderly tenants). https://forum.mrmoneymustache.com/real-estate-and-landlording/moral-issue-with-evicting-lt-elderly-renters-to-sell-property/

I recently sold my place, as did SO/BF his place, and are currently renting together. We care talking over various scenarios from buying a place together, one buying a place and the other one living there as a "renter", to renting long term with split costs 50/50. I personally like renting over owning but am a worrier type who is concerned about some of the things I listed above. Especially as a single person (no plans to marry) and childless with no family but one sister. SO is younger Also childless but he has lots of younger family so is less concernered about long term renting. So forever renters how do you plan for those things?

ETA: We'd be renting or buying a small SF house together but if In was single I'd just rent a small apt or buy a small condo - although I don't like apt life or condo life myself.

My only concern on forever renting is if the crazy property inflation of the past decades continues and if it is possible that your stach can't keep up. You've mentioned being relatively lean, but I don't know what that means for you in terms of numbers and how much cushion you have to absorb some mismatched inflationary numbers.

That said - owning property can also be a huge expense - when the new roof or other larger ticket items crop up. But without a real difference in accomodation level (SFH vs apt situation) those costs are passed on in the rent in one way or another.

I think I might go back to renting at some point, but unsure right now. I've owned a home for about 30 years now (2 different ones) and I am getting tired of the mental load, I must say! Worring about things, etc. Both homes were over 100 yo and never had gut rehabs. There things you see, and things you read, and like - what the hell is going on with the wires under those walls??? And you just don't know, lol. That kind of thing.

[lefty]

My concern of being a FIREd forever renter is not having the traditional income stream to get approved for the lease. Do you really want to send your landlord a statement for a six or seven figure brokerage account?

And they don't always accept that as "income" - especially as the "must have income 3 times the amount of rent". Ask me how I know :-(

Ask the landlord what is the minimum requirement for someone who is retired to qualify for a lease. From what I have read, a retired renter carries a much lower risk.
Its usually 6 months  - 1 yr of $$ in a bank account. Transfer the required amount to your bank, show the landlord the bank statement and you should be good.
If the landlord requires you to pay the entire lease amount up front, I would look for some place else to rent. That just signals red flags to me.

I'm in CA too, and its difficult to evict someone from what I hear.

I plan to rent forever, home maintenance and the thought of not being able to go when I want to is not ideal for me. I'm sure those who have decided not to be renters have very good reasons and it fits their lifestyle. I'm just the opposite, home maintenance is a huge anchor around my neck and it ties up alot of my capital which could be working.

[NotJen]

My concern of being a FIREd forever renter is not having the traditional income stream to get approved for the lease. Do you really want to send your landlord a statement for a six or seven figure brokerage account?

I don't know why it's that different from giving them a paystub?  I didn't have to show them all of my account balances.  Just the taxable account that was "big enough", but not my total net worth.  If you tell them you don't work, they are going to assume you have some level of assets.

And I only had to show them the account balance because I'm not getting recurring deposits from dividends/sales - otherwise I would have had to show them a bank statement with the deposits instead of any balances.

Out here, you see a lot of rental ads that say you must show 3x rent in income. There is a housing shortage.


Sending a paystub maintains a lot more privacy about your wealth.

All the place here also require you to show 3x the rent as income as well, very boldly stated everywhere.  Still got a place with showing only partial account balance that was large enough.

Ask the landlord what is the minimum requirement for someone who is retired to qualify for a lease. From what I have read, a retired renter carries a much lower risk.
Its usually 6 months  - 1 yr of $$ in a bank account. Transfer the required amount to your bank, show the landlord the bank statement and you should be good.

Exactly this.

[spartana]

My concern of being a FIREd forever renter is not having the traditional income stream to get approved for the lease. Do you really want to send your landlord a statement for a six or seven figure brokerage account?

I don't know why it's that different from giving them a paystub?  I didn't have to show them all of my account balances.  Just the taxable account that was "big enough", but not my total net worth.  If you tell them you don't work, they are going to assume you have some level of assets.

And I only had to show them the account balance because I'm not getting recurring deposits from dividends/sales - otherwise I would have had to show them a bank statement with the deposits instead of any balances.

Out here, you see a lot of rental ads that say you must show 3x rent in income. There is a housing shortage.


Sending a paystub maintains a lot more privacy about your wealth.

All the place here also require you to show 3x the rent as income as well, very boldly stated everywhere.  Still got a place with showing only partial account balance that was large enough.

Ask the landlord what is the minimum requirement for someone who is retired to qualify for a lease. From what I have read, a retired renter carries a much lower risk.
Its usually 6 months  - 1 yr of $$ in a bank account. Transfer the required amount to your bank, show the landlord the bank statement and you should be good.

Exactly this.

Being "early retired" can actually make it more difficult if you are a young retiree compared to traditional age retiree who is old enough to tap into the traditional retirement accounts, SS or a pension.

Landlords, at least from my experience when trying to rent not too long after I FIREd, were EXTREMELY hesitant to rent to a 30 or 40 something single person who did not have a job or a job-related income and just had money stashed. Especially if the majority were stashed in retirement accounts they couldn't tap for a few decades.. Even if some might have  accepted a large account instead of traditional job-related income, they are likely rare and I personally never ran across any landlord who did. So I wouldn't count on that option myself.

 I tried very hard to rent at various times and I always ran into that same wall even though I had lots of money from selling my paid off house in a VHCOL area (on top of my investments), zero debt, and never any financial issues. I don't understand it myself but that seems to be the case for both renting and trying to get a mortgage or other loans. @MrGreen was just taking about that in another thread.

FWIW I had close to a million bucks from selling my house sitting in a bank account (not counting current investments and future income sources once older) that I could show a LL and it didn't matter. I eventually invested half and just bought a place with the other half. Seemed easier ;-). Now Im back in that same financial position having sold but with an SO now who can combine his income stream with mine and makes it easier to qualify for a rental.

[spartana]

Anyone planning on renting forever rather than buying at some point? Are you choosing to rent forever because it's your preferred lifestyle or due to the high cost of housing? Do you worry that the increases in rents over the years will outstrip your WR and put you in a bad situation financially? Do you worry about being a very old person who gets evicted and doesn't have the ability or help to move elsewhere? (There was a topic about that on the real estate forum here not long ago...scary for the elderly tenants). https://forum.mrmoneymustache.com/real-estate-and-landlording/moral-issue-with-evicting-lt-elderly-renters-to-sell-property/

I recently sold my place, as did SO/BF his place, and are currently renting together. We care talking over various scenarios from buying a place together, one buying a place and the other one living there as a "renter", to renting long term with split costs 50/50. I personally like renting over owning but am a worrier type who is concerned about some of the things I listed above. Especially as a single person (no plans to marry) and childless with no family but one sister. SO is younger Also childless but he has lots of younger family so is less concernered about long term renting. So forever renters how do you plan for those things?

ETA: We'd be renting or buying a small SF house together but if In was single I'd just rent a small apt or buy a small condo - although I don't like apt life or condo life myself.

My only concern on forever renting is if the crazy property inflation of the past decades continues and if it is possible that your stach can't keep up. You've mentioned being relatively lean, but I don't know what that means for you in terms of numbers and how much cushion you have to absorb some mismatched inflationary numbers.

That said - owning property can also be a huge expense - when the new roof or other larger ticket items crop up. But without a real difference in accomodation level (SFH vs apt situation) those costs are passed on in the rent in one way or another.

I think I might go back to renting at some point, but unsure right now. I've owned a home for about 30 years now (2 different ones) and I am getting tired of the mental load, I must say! Worring about things, etc. Both homes were over 100 yo and never had gut rehabs. There things you see, and things you read, and like - what the hell is going on with the wires under those walls??? And you just don't know, lol. That kind of thing.

I'm fairly chubby FIRE in terms of assets but I don't spend much - maybe a 1% or 2% WR when I had a paid off house. Although I use a bucket method rather than the 4% rule so don't really calculate it.  So while I could spend more for housing NOW (and am already because of renting and don't like it haha) inflation could eat into that. Just seeing rental prices rise these last few years is pretty shocking.

[314159]

Anyways anyone know of a calculator that would show a comparision of what buying (with cash) a $500k house verses paying $2000/month rent with annual 10% increases would cost over a 20 to 30 year time frame? I think prop taxes would be approx $5k/year and insurance another $1k. Maybe $4k/year for maintence, repairs and all utilities, etc. So $10k total cost per year on a paid for house (but loss of investment money with $500k being out of the market) verses $24k/year for a rental. Don't ask me do my own math!!

I believe the NYT calculator with these settings does what you want. I set the down payment to 100% and then fiddled with the various costs so they come out to the annual totals you want.

If you think rents are going to increase 10% a year forever (to $21,669 per month after 25 years!), then the math heavily favors buying, even if your cash investment return rate (the opportunity cost of the money spent on a house) is, say, 10% while the house appreciates at a much lower 3%. (Which kinda shows how strong of an assumption a 10% rental increase every year forever is.) You can play with the sliders to see how they change things.

[NotJen]

Landlords, at least from my experience when trying to rent not too long after I FIREd, were EXTREMELY hesitant to rent to a 30 or 40 something single person who did not have a job or a job-related income and just had money stashed. Especially if the majority were stashed in retirement accounts they couldn't tap for a few decades.. Even if some might have  accepted a large account instead of traditional job-related income, they are likely rare and I personally never ran across any landlord who did. So I wouldn't count on that option myself.

This is exactly me.  40 something single person with no job-related income (technically I have my seasonal work, but the pay is so paltry I didn't include it on my application because it wouldn't cover rent) - living off money sitting in an account from selling my home - though it was just $250k.  I got approved for the first apartment I applied for by showing only my taxable account, not the retirement stash.  I'm not naive enough to think that all landlords will approve me, but it was easier than expected my first go-round, and gives me confidence for the future.

[spartana]

Anyways anyone know of a calculator that would show a comparision of what buying (with cash) a $500k house verses paying $2000/month rent with annual 10% increases would cost over a 20 to 30 year time frame? I think prop taxes would be approx $5k/year and insurance another $1k. Maybe $4k/year for maintence, repairs and all utilities, etc. So $10k total cost per year on a paid for house (but loss of investment money with $500k being out of the market) verses $24k/year for a rental. Don't ask me do my own math!!

I believe the NYT calculator with these settings does what you want. I set the down payment to 100% and then fiddled with the various costs so they come out to the annual totals you want.

If you think rents are going to increase 10% a year forever (to $21,669 per month after 25 years!), then the math heavily favors buying, even if your cash investment return rate (the opportunity cost of the money spent on a house) is, say, 10% while the house appreciates at a much lower 3%. (Which kinda shows how strong of an assumption a 10% rental increase every year forever is.) You can play with the sliders to see how they change things.

Well that was fun! I like the idea that buying will save me over $1mm in 25 years. Hookers (well gigalos) and blow when I'm 80-something!!

But yeah I did some basic calculations of owning a $500k house over 25 years vs. investing that $500k @ 5%/year (likely higher) and getting a $2k rental that increases by 5%/year (although I think it'd be closer to 10%) and on the surface it's a wash. Any increases in rent would likely be me matched by increased costs of ownership. So that portion of the stash (the housing bucket?) would likely remain intact and likely outlast me whether I rented or bought.

So I guess the real decsion is going to be based on how safe/unsafe I would feel being at the whims of the rental market. Like @NotJen  said maybe my past experience in trying to find a rental would be easier now. I just know that once I got evicted from my last rental when the ownerscsold (a ADU owned by 2 FIREd at 50 Gov employees who "got" the RE thing) I tried and tried to find another rental and was denied. Hate to be in that position once elderly.

ETA: I use the amount of $500k because that's the max amount I would be willing to spend for housing ( to purchase house outright or a stash bucket to fund a rental). SO/BF has done the same. If I were single I'd likely have to move out of state or to a lower COL part of the state. Or take more from my regular stash. I'm not willing to do that and would chose an apt of inexpensive condo. Just googled Zillow to see average prices in my old county and UGH! Seems like that everywhere. @tj time to go to AZ! I hate AZ myself and most desert hot places but I know you like it as do many Californians.  I gotta stay near a coast myself .

"The average Orange County, CA home value is $1,139,100, up 10.9% over the past year

"Rental prices in Orange County jumped 22% in 2021 before leveling out a year later and increasing modestly in 2023. Prices have been on the rise again this year, according to data from Apartment List.Aug 9, 2024"

Not that I plan to live there again permanently but still shocking how fast things can go up. Will wait for the bubble to burst I think.

[mistymoney]

I wonder if the account balances are more easily faked? Usually you show your pay stubs, but then they also verify employment?


anyone could make a nice but phony statement nowadays.

[spartana]

I wonder if the account balances are more easily faked? Usually you show your pay stubs, but then they also verify employment?


anyone could make a nice but phony statement nowadays.

Do they normally check with the bank to make sure that amount is in there as well as the it belong to the potential renter? IDK but I guess I always assume a LL or leasing company would check via a credit check or directly. I guess someone could find a way around that but not sure how.

[tj]

Anyways anyone know of a calculator that would show a comparision of what buying (with cash) a $500k house verses paying $2000/month rent with annual 10% increases would cost over a 20 to 30 year time frame? I think prop taxes would be approx $5k/year and insurance another $1k. Maybe $4k/year for maintence, repairs and all utilities, etc. So $10k total cost per year on a paid for house (but loss of investment money with $500k being out of the market) verses $24k/year for a rental. Don't ask me do my own math!!

I believe the NYT calculator with these settings does what you want. I set the down payment to 100% and then fiddled with the various costs so they come out to the annual totals you want.

If you think rents are going to increase 10% a year forever (to $21,669 per month after 25 years!), then the math heavily favors buying, even if your cash investment return rate (the opportunity cost of the money spent on a house) is, say, 10% while the house appreciates at a much lower 3%. (Which kinda shows how strong of an assumption a 10% rental increase every year forever is.) You can play with the sliders to see how they change things.

Well that was fun! I like the idea that buying will save me over $1mm in 25 years. Hookers (well gigalos) and blow when I'm 80-something!!

But yeah I did some basic calculations of owning a $500k house over 25 years vs. investing that $500k @ 5%/year (likely higher) and getting a $2k rental that increases by 5%/year (although I think it'd be closer to 10%) and on the surface it's a wash. Any increases in rent would likely be me matched by increased costs of ownership. So that portion of the stash (the housing bucket?) would likely remain intact and likely outlast me whether I rented or bought.

So I guess the real decsion is going to be based on how safe/unsafe I would feel being at the whims of the rental market. Like @NotJen  said maybe my past experience in trying to find a rental would be easier now. I just know that once I got evicted from my last rental when the ownerscsold (a ADU owned by 2 FIREd at 50 Gov employees who "got" the RE thing) I tried and tried to find another rental and was denied. Hate to be in that position once elderly.

ETA: I use the amount of $500k because that's the max amount I would be willing to spend for housing ( to purchase house outright or a stash bucket to fund a rental). SO/BF has done the same. If I were single I'd likely have to move out of state or to a lower COL part of the state. Or take more from my regular stash. I'm not willing to do that and would chose an apt of inexpensive condo. Just googled Zillow to see average prices in my old county and UGH! Seems like that everywhere. @tj time to go to AZ! I hate AZ myself and most desert hot places but I know you like it as do many Californians.  I gotta stay near a coast myself .

"The average Orange County, CA home value is $1,139,100, up 10.9% over the past year

"Rental prices in Orange County jumped 22% in 2021 before leveling out a year later and increasing modestly in 2023. Prices have been on the rise again this year, according to data from Apartment List.Aug 9, 2024"

Not that I plan to live there again permanently but still shocking how fast things can go up. Will wait for the bubble to burst I think.

The max that I would be willing to spend is more like $250k and even that is more than I want to dump into real estate.

You can see why I'm discouraged about staying in California.

I don't mind the heat, but Arizona summer definitely does suck. I think if I lived in Arizona, I could probably do a summer beach rental (which is when I love the coastal weather the best, less marine layer) - but that would wipe out so much, if not all, of my travel budget.

I COULD get a tiny condo in Long Beach for not much more than that, but they are very tiny and very old. I'm in 500 sq ft right now and maybe it's just the way the floorplan is designed, but I feel pretty cramped. I think 700-800 sq ft feels right for me.

I think, to me, Phoenix is more appealing than the California desert because it has all the amenities of a larger metropolis (large international airport, variety of restaurants, social opportunities)  vs being a more of a retiree/tourism destination.  Tucson also feels like more of a city than the CA desert. There's some serious cost savings to base there and a bit cooler than PHX due to elevation, but I've only spent a week there.

[Catbert]

In an attempt to be even more renter friendly, California may have just inadvertently made it more difficult for some people to get approved for rentals.  California now only allows security deposits of one months rent.  While that seems reasonable (and was generally the norm anyway), it means landlords may be less likely to rent to someone without "adequate" income or credit score.  For example, I once rented to a group of international students...no social security numbers, no credit scores and no parents with excellent credit scores. A two month deposit and monthly rent a bit above what I would have otherwise charged made me take the chance.  Not allowable any more. 

I could see a FIREd person offering a larger security deposit or paying several months rent up front to ease a landlord's apprehension.   

[spartana]

In an attempt to be even more renter friendly, California may have just inadvertently made it more difficult for some people to get approved for rentals.  California now only allows security deposits of one months rent.  While that seems reasonable (and was generally the norm anyway), it means landlords may be less likely to rent to someone without "adequate" income or credit score.  For example, I once rented to a group of international students...no social security numbers, no credit scores and no parents with excellent credit scores. A two month deposit and monthly rent a bit above what I would have otherwise charged made me take the chance.  Not allowable any more. 

I could see a FIREd person offering a larger security deposit or paying several months rent up front to ease a landlord's apprehension.

I read that too. One of the new 2024 renter laws.l I also thought that offering several months rent up front was a great idea but when I tried it in the past several landlords (at large complexes not single owner landlords) told me they couldn't legally do that. Max amount they could as for was one months rent and security deposit. I can't remember the reason but something about protecting tenants from bad landlords or taxes etc. I bet a single unit private landlord would likely do that though.