Author Topic: Anyone rent when buying is cheaper?  (Read 3245 times)

Kroaler

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Anyone rent when buying is cheaper?
« on: July 21, 2016, 11:47:56 AM »
Just like the title says.    Is anyone renting an apartment when buying is cheaper?  Also if yes, what are your reasons?

I used to live in an apartment, but purchased a house.  I was really happy at the apartment.   The house comes out cheaper in every calculation I do though.

Just want to see if I'm crazy for considering selling the house,  investing the money and renting when the house is cheaper.

norabird

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Re: Anyone rent when buying is cheaper?
« Reply #1 on: July 21, 2016, 11:51:12 AM »
I wouldn't sell in your shoes just because you'd lose money on the transaction costs, but there is no reason you have to buy if you prefer flexibility, not doing repairs, etc.

SeaEhm

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Re: Anyone rent when buying is cheaper?
« Reply #2 on: July 21, 2016, 11:59:09 AM »
My dad said that he will never own again.

He likes the flexibility that renting offers. Though he is also very handy and can fix any problems himself, he likes that he can just call someone to take care of any issues.  He has no children at home, so he and his girlfriend move every couple of years.

He lived in a beach city for two years and loved it but wanted to be on the water, so he moved to a marina with water off his backyard patio.  After living there for a year, he decided to move to downtown LA.  He has enjoyed living there for a couple of years and will now move back to a beach city now that they have a solid public trans system that goes to LA.

Funny thing is that each time he moves, he goes to a smaller and smaller apartment with less and less stuff. 

Seems like he has it all mapped out and is doing really well with no regrets. 

I am at a different stage in my life though where I want consistency, so my wife and I bought a house.  Plus, I don't want to rent a three bedroom apartment for the same that I am paying for my house.  My wife and I are at the point in our lives where we enjoy working in the yard and have found that it alleviates a lot of stress while allowing us to bond without our phones interrupting.   (yes, I do understand that I had to put a down on my house)

Kroaler

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Re: Anyone rent when buying is cheaper?
« Reply #3 on: July 21, 2016, 04:52:11 PM »
Glad to see some replies!

matchewed

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Re: Anyone rent when buying is cheaper?
« Reply #4 on: July 21, 2016, 04:54:37 PM »
I mean I guess if you have a preference go for it, but if it is actually cheaper to buy and you're looking to invest optimally then keep the house.

bridget

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Re: Anyone rent when buying is cheaper?
« Reply #5 on: July 21, 2016, 05:45:47 PM »
In jlcollins' excellent post on the rent v. buy subject, he notes that if buying ends up being more expensive than renting, you can still buy. Just realize you are purchasing a luxury good called Home Ownership. Which is fine; lots of people here spend money on luxury goods we enjoy.

The same thing applies in reverse. If you can afford the luxury purchase of a rental, and it's important to you, do it. If it were me, I might decide to rent instead of buy. I like to move around based on my whims. Loud obnoxious neighbors move in? Find something better when your lease is up. Hear of a cool job, but it's in Palau? might as well apply, nothing's tying you down! That's a lot harder if you own your residence. If you were to buy/sell houses frequently, a lot of the savings you're seeing in your calculation would get eaten up by transaction costs.

Another thing is that it's easier to rent a place that's exactly big enough and no more - I'm in a studio now. If I were to buy a place, I'd probably be thinking more long-term and buy a house that will work in the future, but that is too big for me now (2-3 beds? 2 baths?). With an apartment, you can get (and pay for) a larger place exactly when you need it and not a minute sooner.

etselec

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Re: Anyone rent when buying is cheaper?
« Reply #6 on: July 21, 2016, 05:58:09 PM »
Yes. The buy/rent calculations in my area are waaaay in favor of buying (college town, so there's very high demand for rentals). But I'm not even thinking about buying right now, for a number of reasons:
  • I like my apartment and don't want to move
  • I have no desire to deal with repairs and maintenance
  • I have no desire to be a landlord, ever
  • What I have and want right now (downtown apartment) is not what I'm likely to want in 5 or 10 years
  • I am a millenial and it's against my nature to commit to anything for more than a year or two

Kroaler

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Re: Anyone rent when buying is cheaper?
« Reply #7 on: July 21, 2016, 06:21:43 PM »
Yes. The buy/rent calculations in my area are waaaay in favor of buying (college town, so there's very high demand for rentals). But I'm not even thinking about buying right now, for a number of reasons:
  • I like my apartment and don't want to move
  • I have no desire to deal with repairs and maintenance
  • I have no desire to be a landlord, ever
  • What I have and want right now (downtown apartment) is not what I'm likely to want in 5 or 10 years
  • I am a millenial and it's against my nature to commit to anything for more than a year or two

Like response.  Glad to see someone else likes renting at this time in their life.   At most I would probably rent till 30.
« Last Edit: July 21, 2016, 06:51:52 PM by Kroaler »

Metric Mouse

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Re: Anyone rent when buying is cheaper?
« Reply #8 on: July 21, 2016, 11:53:27 PM »
Yes. The buy/rent calculations in my area are waaaay in favor of buying (college town, so there's very high demand for rentals). But I'm not even thinking about buying right now, for a number of reasons:
  • I like my apartment and don't want to move
  • I have no desire to deal with repairs and maintenance
  • I have no desire to be a landlord, ever
  • What I have and want right now (downtown apartment) is not what I'm likely to want in 5 or 10 years
  • I am a millenial and it's against my nature to commit to anything for more than a year or two

Great list. I've been there in my life, when I first retired. Buying property can certainly be about more than just the money. The freedom of renting, and living in a place you might not be not wish to live for long enough to make buying a net positive is great.

norabird

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Re: Anyone rent when buying is cheaper?
« Reply #9 on: July 22, 2016, 05:20:36 AM »
However great renting is its a little different when you already own however. Can you stay put as long as you're in the area and sell if an opportunity to relocate comes up? I have trouble walking my head around incurring losses on the transaction in order to pay more when there is nothing wrong with your situation.


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Kroaler

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Re: Anyone rent when buying is cheaper?
« Reply #10 on: July 22, 2016, 06:24:26 AM »
However great renting is its a little different when you already own however. Can you stay put as long as you're in the area and sell if an opportunity to relocate comes up? I have trouble walking my head around incurring losses on the transaction in order to pay more when there is nothing wrong with your situation.


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I have trouble wrapping my head around it too!

MrsDinero

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Re: Anyone rent when buying is cheaper?
« Reply #11 on: July 22, 2016, 07:25:14 AM »
My dad said that he will never own again.

He likes the flexibility that renting offers. Though he is also very handy and can fix any problems himself, he likes that he can just call someone to take care of any issues.  He has no children at home, so he and his girlfriend move every couple of years.

He lived in a beach city for two years and loved it but wanted to be on the water, so he moved to a marina with water off his backyard patio.  After living there for a year, he decided to move to downtown LA.  He has enjoyed living there for a couple of years and will now move back to a beach city now that they have a solid public trans system that goes to LA.

Funny thing is that each time he moves, he goes to a smaller and smaller apartment with less and less stuff. 

Seems like he has it all mapped out and is doing really well with no regrets. 

I have a friend who does the exact same thing.  He is currently living in Huntington Beach, CA.  When he gets tired of the beach he moves toward the mountains and when he gets tired of the mountains he moves back towards the beach. He also doesn't own a lot of stuff.  Even though he will occasionally talk about buying a home, I don't think he ever will because he likes to be able to just pick up and go.  I don't know his financial situation. He does work and is able to find jobs easily whenever he moves.  He never complains about money problems but doesn't live a flashy lifestyle either.  Maybe he is MMM?

Helvegen

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Re: Anyone rent when buying is cheaper?
« Reply #12 on: July 22, 2016, 07:56:00 AM »
The only real disadvantages to renting to me are:

*Pet restrictions
*Subject to whims of the landlord - we are on m-t-m.
*I can't change out the oven or dishwasher because I have nowhere to store the landlord's (which really belong at a recycler, but yeah)

I rent a house, so have to do the yard work as part of the deal. But conversely, I have a yard and lots of space to container garden. I have a garage we can work on our cars in and do projects with. No real problems with neighbors or noise. So there are some of the biggest complaints people have about renting out the window. Your choices aren't rent some shitty apartment or buy some huge house. There are plenty of homes to rent of all sizes.

In fact, I highly suggest renting a house before buying one. Seeing all the problems, expense, and time wasted on just maintenance was very eye opening. For example, when we went to see our first rental house, our landlords told us carpenter ants had gotten into the wood siding and completely destroyed it on one side of the house. That was not cheap by any stretch of the imagination to fix.

Another thing is that though your mortgage payment may be fixed, your property taxes sure aren't. Real estate is going bananas in this area. My landlord had to raise the rent starting Sept because of property taxes $100. At the same time, my co-worker owns something similar to what I rent and her's just went up $300 a month.

In my case, it is in no way cheaper to buy than rent. But I see both sides of it. Some days I am sure I never want to buy. Others I do. I think besides money, my biggest fear is being anchored to one geographical area because of the house. I mean, what happens if we lose our jobs and we can only get ones that are way further away? What would happen if the housing market tanked and we were underwater and couldn't sell? Do I and my husband really have the time and desire to spend all of our free time working on the house?

Kroaler

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Re: Anyone rent when buying is cheaper?
« Reply #13 on: July 22, 2016, 08:44:07 AM »
So everyone here put in time to make good answers, so I thought I would provide more information not previously disclosed.

1.) I bought my house in foreclosure for 68K.  I put no more than 5K into it and a market appraisal I ordered this week came back at 110k for a fairly fast sell.

2.) My brother is the maintenance guy at the apartments I am thinking about moving to.    Also some of mine and my wifes friends live there. Lots more social interaction.

3.) I really dont like my house that much, I don't like the location, and I HATE that it doesn't have a garage.   The price is great though!

4.) I plan to actively invest the cash on hand in the real estate market.  I am doing some reading now to better prepare myself.

5.) At some point, probably 2-5 years I plan to buy a modest house(at wholesale) that I like (probably 3 years so I dont miss the solar tax credits....).  Simple, efficient, 3 Bedroom, 2 bath, 2 car garage house that I can throw solar panels on.   

norabird

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Re: Anyone rent when buying is cheaper?
« Reply #14 on: July 22, 2016, 08:55:55 AM »
Ok, if you can earn money by selling and know where you want to live, go for it. And I would warn against buying a 3br/2ba in 2-5 years if it's just you! Lots more upkeep costs and sounds like a ton of space for just you.

Zikoris

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Re: Anyone rent when buying is cheaper?
« Reply #15 on: July 22, 2016, 09:14:51 AM »
It would depend how close it was. I would have to save a pretty substantial amount to be willing to deal with the headaches of home ownership. It would also depend how close I was to ER, because my long term plans involve not having a permanent address.

Luckily, renting is vastly cheaper than buying where I live.

patchyfacialhair

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Re: Anyone rent when buying is cheaper?
« Reply #16 on: July 22, 2016, 09:36:07 AM »
We're in a weird situation. We'd eventually like to buy, as we'll probably put down roots where we currently are. But, we're dual income, no kids, so we don't need much space at all. Plus, we don't have many material belongings.

We rent a 1br/1ba apartment. I'll use rounded numbers to show my point and dilemma:

$1000: Rent for 1br apartment in decent area.
$1300: PITI for 3x2 in decent area
$1600: Rent for same 3x2 in decent area.

So yeah, for the most common type of home in our city, a 3x2 detached home, it makes sense to buy versus rent. But, we don't need that much space at the moment. Would I like to start putting down roots here, sure, but once we realize that we'd have to buy more furniture, do maintenance, and take care of repairs ourselves, we figure it's easier to rent for the time being.

That's the problem, the type of property that we'd buy is different than the property that we'd rent, so we have additional considerations. I wouldn't ever consider purchasing a 1br condo in our city, they are crappy, HOA fees are high, and the values stay pretty depressed, so it's not necessarily an apples to apples for us.