Author Topic: The rent is too damn high! But we are not complainypants, no!  (Read 4843 times)

Britan

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The rent is too damn high! But we are not complainypants, no!
« on: December 21, 2015, 03:28:47 PM »
I took a look back at the MMM blog post about his family's 2014 expenditures - about $25,000. They own their home and don't pay mortgage or rent, which is pretty badass.

Looking at my household spending for the year, if I didn't pay rent, I'd be at about the same. Sweet! The problem? I pay just over $18,000/year in rent!

Now the whole world could complain that the rent is too high. Even so, in some places, it makes more sense to rent forever (even at high prices) than buy, from a financial perspective.

Sadly, we can't all own homes in Longmont. ;_; But there are plenty of people on this board from different cities, with different incomes, family sizes, and so on. So what do *you* do to get the most out of your living situation? Own? Rent? Sublet? Just make more income to make up for the cost? Spend even less in other categories? And why? I'd be interested to hear how people in different parts of the country (or world even!) optimize it.

I'll start, even though we aren't even close to ideal:
We rent a studio apartment because we really don't need much more space. It's $1,520/month, which is high but includes ALL utilities and parking in a fairly high COL area, where our jobs are. I don't think we could optimize much further for the next year or so. We could get a cheaper place - but that would require getting a second car for the longer commute. We could buy a place, but have no savings for that right now. We could move in with parents, but then lose our jobs and have no income. Once we know a bit more about how long we're staying here, we'll probably reconfigure for an improvement. If we stay, we might buy and then rent a room out. If we leave for a super HCOL area (which may be in the cards), we may move in with parents and get different jobs - buying there is not a great move. =/

Ok, your turn. Rather than complaining about rent/house prices, how do you optimize?

matchewed

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #1 on: December 21, 2015, 04:04:49 PM »
A) I don't compare my expenses to others to find out if I'm spending the right amount of money. I compare what I spend to what I value. If I'm spending on things I don't value it's probably wasteful.

B) I use a calculator. http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

Zikoris

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #2 on: December 21, 2015, 04:10:00 PM »
I joined a housing co-op. The rent is half what the "regular" places across the street are, because a) the co-operative in totally non-profit so the rent charged only needs to cover expenses, and b) a lot of the stuff that "normal" apartment building would be paying for is done by volunteers and committees.

The other great option in Vancouver is non-traditional housing. There are tons of old heritage houses that have been converted into five or six separate apartments, for example, that rent well below what normal apartment building charge, and have way more character. There are also very affordable micro-suites popping up all over the downtown core, which were previously old hotels and have been renovated into little private units. Then of course you have the roommate option, or getting a bigger place than you need and renting out the extra space on AirBnB.

okits

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #3 on: December 21, 2015, 04:48:13 PM »
We rent around the minimum we need (or would accept - old is okay but well-maintained and clean are necessary.)  We could afford more and the social expectation (if our income was disclosed) is that we'd get something bigger and nicer, but we are getting a relatively good deal now, and are content.  I would guess we spend 14% of our gross income on rent. In better earning years it's been as low as 10%.

Altons Bobs

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #4 on: December 21, 2015, 11:11:13 PM »
We started out with what we could afford, we built a small house, lived there for almost 20 years. After selling it, we calculated with the proceeds of the sale and annual property taxes, repairs/maintenance, our yearly house expense was only $2,000, so that was like less than $170/month to live there, plus utilities. Cheap cheap! So with the money we saved over the years with no mortgage, we moved into a more comfortable house that we were able to pay cash for that we will retire in.

Exflyboy

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #5 on: December 22, 2015, 12:38:31 AM »
Similar to Alton Bobs.. I bought a 650 sq ft house (a 1953 era shack really) with two rental properties on it and 5.4 acres. This is in Western Oregon and paid $200k.

Nice piece of land but nobody wanted it cus most "normal people" would tear the house down and pay a builder to construct a 2500 sq ft monstrosity on it. Whats more one of the rentals is a single wide trailer, even though it was only a year old it made the property even less desirable, even though it is in a pretty highly sought after area

So I bought it and used the rent to make double mortgage payments. I also accommodated a rental horse to get a RE tax farm deferral and made $100 rent from that "farm business".

This was back in '97. I paid off the house in around 6.3 years, got married in 2000, then we doubled the sized of the house (actually to almost 1400 sq ft) using our own bare hands and more importantly.. cash!

In the last 19 years the combination of the rent and the 23 years of mortgage interest saved was almost $500k.

We now make about $17k in rent and the RE taxes are about $2100 a year. Oh, and the property has been re-zoned so we could divide and sell it as two housing plots. I would guess its total value is about $400k now, not much profit when you take the $40k it cost us to remodel and $25k of selling costs, but that's small beans compared to what it has given us in terms of cash flow.

The downside?.. Well we now know one day there will be a massive Earthquake and its likely everything will be destroyed.. The scientists give us a 37% chance of the big one in the next 50 years.

mozar

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #6 on: December 22, 2015, 05:52:19 PM »
I live in a "super" hcol area. Wash DC.
« Last Edit: May 10, 2018, 01:29:03 PM by mozar »

serpentstooth

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #7 on: December 22, 2015, 05:59:35 PM »
I joined a housing co-op. The rent is half what the "regular" places across the street are, because a) the co-operative in totally non-profit so the rent charged only needs to cover expenses, and b) a lot of the stuff that "normal" apartment building would be paying for is done by volunteers and committees.

Aren't most housing coops government subsidized? I thought that was where most of the cost savings come from. I mean, it's a great situation if you can get it, but it's kind of like having a rent-controlled apartment in Manhattan: not an option for most people.

Zikoris

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #8 on: December 22, 2015, 06:27:54 PM »
I joined a housing co-op. The rent is half what the "regular" places across the street are, because a) the co-operative in totally non-profit so the rent charged only needs to cover expenses, and b) a lot of the stuff that "normal" apartment building would be paying for is done by volunteers and committees.

Aren't most housing coops government subsidized? I thought that was where most of the cost savings come from. I mean, it's a great situation if you can get it, but it's kind of like having a rent-controlled apartment in Manhattan: not an option for most people.

Co-ops in Vancouver have a mix of market and subsidy units - the subsidized units are REALLY cheap ($300/month or whatever), but you have to be very low income to qualify. The market rents are cheaper, but nowhere near that cheap. It's not tough to get in to a co-op here - there are a gazillion.

arebelspy

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #9 on: December 25, 2015, 07:41:17 AM »
I took a look back at the MMM blog post about his family's 2014 expenditures - about $25,000. They own their home and don't pay mortgage or rent, which is pretty badass.

Looking at my household spending for the year, if I didn't pay rent, I'd be at about the same. Sweet! The problem? I pay just over $18,000/year in rent!

Have you tried their strategy--own a home without rent or mortgage?  Then you can spend the same as them.

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Cassie

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #10 on: December 25, 2015, 03:34:55 PM »
If your parents are agreeable what about moving in with them for a year or so and saving a bunch of $.  That way you could consider buying in the future if you decide you want to or move to a lcol.

cawiau

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #11 on: December 25, 2015, 04:17:42 PM »
Our mortgage is ~$2,300 in a fairly HCOLA. To achieve that we moved to the suburbs instead of staying in the city and commute in.

Commute does suck at times so we are both looking at options closer to home. We are not complaining because we both LOVE our house, we built it so it is exactly what we wanted.

We considered paying it off early but so far had held off.... Maybe we will/maybe we won't!

The reason: we are trying to have kids and we might move back closer to the city (less time commuting / more time with kids) and a 3 bedroom / 2 bath town home is 450k-600k in the different areas we looked.

While we can afford it, we are not sure we want to pull that trigger. Seems better option would be to find jobs closer to our current house!


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use2betrix

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Re: The rent is too damn high! But we are not complainypants, no!
« Reply #12 on: December 25, 2015, 08:46:53 PM »
Complaining is a poor way to go about anything finance related. Most every financial decision in our lives are, in some way, a direct result of our own personal choices. Some things you can't help, but they are few and far between.

The best choice is to make the best decision possible with the information you're given and then live with it. If you find better options down the road then reevaluate.