Author Topic: I want to go back to being a renter....  (Read 11920 times)

Doaner19

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I want to go back to being a renter....
« on: September 30, 2014, 04:14:23 PM »
Is that weird of me.  I'm tired of all the extra costs of ownership w/ a house.  I'd be able to put away so much more money that way.

And I know where I live now is not my "forever" home.  So what's the point really?

Anyone else have/had this feeling?  Feedback appreciated.

Spartana

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Re: I want to go back to being a renter....
« Reply #1 on: September 30, 2014, 04:21:40 PM »
Big YES from me. I have wanted to rent - just a tiny one bedroom apt or even a studio or even a room - for a long time but have had multiple pets so can't. Now that I only have one small dog left I plan to sell my house later this year and will rent (well, plan to mix up travelling and renting since I'm already FIRE'd and not tied to one area). I absolutely hate all the work and expense of owning a home. It just seems endless. I also hate the fact that I can't just lock up and go for long periods of time without having to worry about the place (I am a worrywart) and having to make arrangements with someone to check on it. Can't wait to rent again someday. However, from a financial standpoint, I do think owning a very modest house is probably a much better deal then renting long term.  But I'm willing to make the trade off for a better quality of life I know I would have as a renter than as a homeowner.

Beric01

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Re: I want to go back to being a renter....
« Reply #2 on: September 30, 2014, 05:18:48 PM »
I'm not interested in the additional work, let alone the extra costs over renting.

I might own someday, but it would have to be substantially cheaper than renting, and I would need to be staying in the area for some time.

Raay

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Re: I want to go back to being a renter....
« Reply #3 on: September 30, 2014, 07:54:58 PM »
Yes, what's the big point of home ownership indeed.

There is a popular notion that owning your home is better than renting (a very American idea, also perpetrated by MMM's blog). However, if you look at the statistical data, as for example one Mr. Gerd Kommer did in his book, it turns out that decades long time series for (US) real estate prices show that real estate prices only more or less hold up with inflation. Far from being the perfect savings or investment vehicle they are made out to be.

So where does this all home ownership mania come from? If you think about it, a big part of it is a social status game and also selling dreams to uninformed people. For many people home ownership is desirable for non-financial reasons, it's driven by the "nesting" instinct, much related to the instinct for creating a family. And when there are instincts at play, it is no wonder that some other (more clever?) people will find a way to make a buck off them by selling something to suckers.

So in the end, home ownership in many cases really is veiled consumption and if you are not really a family-loving handyman it may even be indulgent consumption to your own detriment. A single person certainly doesn't require an entire house to live in - perhaps a small apartment, but owning an apartment in a multiplex comes with extra special problems (such as other owners not paying their dues or abusing the common parts of the property).

Of course whether renting or owning is more beneficial also strongly depends on your location. It's just a myth that you are somehow always "better off" or respectable by owning because otherwise "your hard-earned money goes right into your landlord's pocket". On the contrary, it can also be the case that you're dealing with a fairly non-financial-savvy landlord who bought their property based on some emotional or traditional reasons (perhaps with great input from some slick salesmen) and is now at your (renter's) mercy, worried about vacancy etc. Given the whole hype created around home ownership, I wouldn't be surprised if most arrangements worked like that rather than MMM's care-free profitable landlord nirvana (based on my own calculations, I do believe I'm dealing with such a landlord).

So yeah, it's quite legit to ask yourself, is it worth it not to rent? The same question may be asked about ownership of anything - as such ownership cannot be assumed as beneficial, it is only beneficial to the extent that non-ownership is detrimental. The variables that typically need to be considered are the risks attached to the owned asset, the expected returns, and of course also the cost of obtaining it.

windypig

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Re: I want to go back to being a renter....
« Reply #4 on: September 30, 2014, 08:21:27 PM »
Situations vary so much and real estate markets vary as well so there is obviously not a right or wrong answer, it always depends.

I, for one, would never in a million years rent again, or if I did it would only be because I had just relocated to a new area and needed some time to find the right home, or If I /knew/ from the get go I wouldnt be in the area for > 5 yrs.

In my calculation, in my area, in my situation, the #s work towards ownership. I also have the piece of mind that I have "locked in" my "rent" for the rest of my life.

innkeeper77

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Re: I want to go back to being a renter....
« Reply #5 on: September 30, 2014, 08:50:11 PM »
We just bought a "small""cheap" house. (As cheap and as small as the area allowed.. which was not very) It will cost barely more than renting + expenses, but it will probably be more expensive than renting. We are okay with that- our apartment was too tiny, and we are getting absolutely sick of landlords and dealing with them. However, we know we have to do every single piece of maintenance ourselves if possible... and we will be improving the insulation, etc.

Hotstreak

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Re: I want to go back to being a renter....
« Reply #6 on: September 30, 2014, 09:08:39 PM »
Is that weird of me.  I'm tired of all the extra costs of ownership w/ a house.  I'd be able to put away so much more money that way.

And I know where I live now is not my "forever" home.  So what's the point really?

Anyone else have/had this feeling?  Feedback appreciated.

I know what you mean about the forever home.  In my town it would make sense to buy if I was going to stay here for about 5 year, according to the NYT Rent vs Buy calculator, but I won't be here that long! 

Yes, what's the big point of home ownership indeed.

There is a popular notion that owning your home is better than renting (a very American idea, also perpetrated by MMM's blog). However, if you look at the statistical data, as for example one Mr. Gerd Kommer did in his book, it turns out that decades long time series for (US) real estate prices show that real estate prices only more or less hold up with inflation. Far from being the perfect savings or investment vehicle they are made out to be.  . . .

One of the biggest benefits of buying a house is that you lock in a fixed cost.  That $1500 mtg payment isn't going up for 30 years, whereas your rent might start at $1000, but go up by many multiples, due to inflation.  I see the variable costs to home ownership are your taxes, insurance, and the cost of repairs.  As long as you factor those in and it still makes sense, you can take advantage of "pre-paying your rent" by buying the house.

I like how you mention appreciation.  Occasionally a person around here will talk about holding on to a house until it goes up in value.  I think you're right though - unless they really know their local market and they're playing it short term, likely that price won't go way up (in real dollars).

Astatine

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Re: I want to go back to being a renter....
« Reply #7 on: October 01, 2014, 03:59:44 AM »
I think it really depends on the tenancy laws where you live, and what you personally value.

I personally value being able to have pets, and garden and plant vegetables, and to be able to get urgent repairs done to where I'm living by competent tradies, and to not have to move with a month's notice (and not have someone inspect how clean I'm keeping the place like I'm an untrustworthy kid or something). For me, where I live and the current tenancy laws, I loathe and detest renting and will be so happy if I never have to rent ever again in my lifetime. My mortgage repayments are well below market rates for rents where I live.

However, if you don't value those things and the tenancy laws are more in a tenant's favour, then yeah, I can see renting could be an option.

Eric

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Re: I want to go back to being a renter....
« Reply #8 on: October 01, 2014, 11:19:59 AM »
I think blogger Jim Collins made the same decision:

http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/


Personally, I've always rented so I have no basis of comparison.  It's never bothered me, but I've never had to deal with any of the issues like Astatine lists above.

LordSquidworth

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Re: I want to go back to being a renter....
« Reply #9 on: October 01, 2014, 01:19:11 PM »
One of the biggest benefits of buying a house is that you lock in a fixed cost.  That $1500 mtg payment isn't going up for 30 years, whereas your rent might start at $1000, but go up by many multiples, due to inflation.  I see the variable costs to home ownership are your taxes, insurance, and the cost of repairs.  As long as you factor those in and it still makes sense, you can take advantage of "pre-paying your rent" by buying the house.

I like how you mention appreciation.  Occasionally a person around here will talk about holding on to a house until it goes up in value.  I think you're right though - unless they really know their local market and they're playing it short term, likely that price won't go way up (in real dollars).

Bought a place 3 years ago. Since then I've raised the rent $1250/month. Overall my costs have remained stagnant. Property taxes are probably the biggest increase but that's been several hundred for the year.

3% interest rate was reason enough to buy.

Astatine

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Re: I want to go back to being a renter....
« Reply #10 on: October 01, 2014, 02:46:14 PM »

Personally, I've always rented so I have no basis of comparison.  It's never bothered me, but I've never had to deal with any of the issues like Astatine lists above.

The number of Americans who rave about renting makes me think tenancy laws in the US must be more pleasant for renters than they are in my city. If you rent here, you *cannot* make any changes to the property (I once had a tenancy lease list the location of every single picture hook in the flat, and expressly forbade any of the temporary hooks, for example).

My friends recently bought a house because they'd been forced to move 4 times in 3 years, despite always paying the rent on time and being otherwise excellent tenants. Having a vegie patch in a garden when you're renting can often be seen as a Big Deal. 6 monthly inspections by the real estate agent are pretty revolting and you can get pinged for not having everything completely spotless. (everyone I know who rents or has rented through a real estate agent gets super stressed by these inspections and sometimes people take a day off work the day before to do a deep clean and tidy, even if day to day their houses are kept pretty clean by most people's standards)

While urgent repairs are supposed to be dealt with in a prompt manner, I had to wait 24 hours before the real estate agent even bothered to phone a plumber about a blocked toilet (luckily I had friends I could stay with for 2 days). The tradesmen who get sent out to repair leaking roofs, for example, are rarely competent and do half-arsed repairs (this happened to another of friend mine last month). This same friend is hugely envious that I can do whatever I want to my garden whereas she's stuck with gardening in pots despite having a huge yard.

Buying a house was a quality of life issue for me, regardless of any marginal cost savings I might make by renting.
« Last Edit: October 01, 2014, 02:52:07 PM by Astatine »

Raay

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Re: I want to go back to being a renter....
« Reply #11 on: October 01, 2014, 03:30:35 PM »
3% interest rate was reason enough to buy.

Such a popular mistake. Low interest rates on financing are never "reason enough to buy". When interest rates are low, you can be sure it's already taken into account in the (higher than otherwise) asset prices. There's no free lunch and the guys brokering real estate to you at these "fantastic" rates know it well enough (remember those are the same guys pitch their service to the sellers mentioning "fantastic selling opportunities" due to a hot low-interest market).

If it was any different, it would be damn easy to get rich real quick - just open a margin stock trading account and arbitrage using the current all-time-low interest rate (e.g. borrow at 1.5%, invest in 6% yielding bonds or REITs). Why doesn't it work? Because (1) interest rates can and will eventually change and (2) high-yielding assets likely already cost x% more than they would at a higher interest rate. So you can call it a reason to speculate, but not a reason to buy. The reason to buy is if you have an "edge" of some sort - interest rate, a common piece of information available to everyone, is not an edge.

mulescent

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Re: I want to go back to being a renter....
« Reply #12 on: October 01, 2014, 04:41:57 PM »
I feel the same way!  Financially the house was a good decision (easily affordable, has appreciated lots, etc).  However, I find that maintaining the house creates a LOT of stress.  This is especially true as someone trying to stash cash.

The more I think about MMM's success, the more I realize that having skill in construction was key.  I do what I can around my house, but have learned some EXPENSIVE lessons in trying to DIY stuff that is outside what I can do.  I'm still learning, but things like electrical, plumbing and other major work are outsourced. 

The upshot is that I spend a lot of money on my house, way more than I thought I would.

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« Reply #13 on: October 01, 2014, 06:17:54 PM »
For me, where I live and the current tenancy laws, I loathe and detest renting and will be so happy if I never have to rent ever again in my lifetime. My mortgage repayments are well below market rates for rents where I live.

I also live in australia, but I am in ACT. 

I am considering becoming a renter. 

What is bad about the current tenancy laws?

Do you have further details/information that discuss australian tenancy laws in more detail?

cheers

thepokercab

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Re: I want to go back to being a renter....
« Reply #14 on: October 01, 2014, 06:39:19 PM »
My wife and I have two kids, and while our apartment can seem kind of small sometimes, we really aren't in any rush to own a home.  Don't like the idea laying down a 20% down payment (which at this stage of our accumulation would be a huge chunk of our net worth) and the hassle of maintenance is kind of a turn off. 

During the summer, our AC stopped working one day (which in Phoenix is basically an emergency).  We had to stay at a hotel for a night, the apartment reimbursed us for the cost of the night, and even our meals, and the AC was fixed the next day.  No stress or real hassle on our part.  For us, not having to worry about that stuff is a huge plus.   

escolegrove

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Re: I want to go back to being a renter....
« Reply #15 on: October 03, 2014, 08:54:54 PM »
Honestly the cost is of owning versus buying is very area dependent. In the areas we buy our rentals even with little down we are doing very well in both cash flow and equity building. On the other hand age of property is very important. We have been able to buy newer property that needs little work. We have also been able to prevent ourselves from updating the property just for the sake of updating or our personal taste. This has also saves us a lot of money.

Emilyngh

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Re: I want to go back to being a renter....
« Reply #16 on: October 03, 2014, 09:10:03 PM »
I totally get where you're coming from and have started to feel this way myself sometimes.

The thing is, for me in my area, I'm pretty sure that running the numbers, even with maintenance and other added costs, owning is cheaper where we are.   Our mortgage on a 2000 sq ft house in good condition on 2 acres is $800/mo (including taxes and insurance).   

Buuut, instead of renting, I'm thinking of downsizing.   B/c things are so inexpensive here, we can spend $80k on a small fixer-upper, put another $20-$40k into it to renovate it to be exactly what we want, with all important things updated.   Once this is done, it should be low maintenance (since it's small, we'll buy to minimize yard maintenance, and it should be in super condition with much of it new having been fixed up).   But, by buying such an inexpensive place, our taxes plus insurance should be so super low (like $100 a mo), and mortgage almost nothing (could even choose to just pay cash and have no mortgage).

Where we currently live, this is probably the least expensive option, we just have to push through the first couple of years of finding a good deal on a small house and getting it all fixed up.

EvenKeeled

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Re: I want to go back to being a renter....
« Reply #17 on: October 04, 2014, 12:39:55 AM »
This is mildly comforting. I'm 55 and have never owned a house. Between not having focused enough on making good money and the very high housing prices here I could never afford to buy.

And it's always made me feel like a failure. My siblings managed to buy, as did almost all of my friends and acquaintances. Bummer.

And I'm tired of living in a small apartment. It's too small to invite more than two people over at a time and embarrassing too.

But now I'm thinking I might be able to retire in about five years thanks to the ideas on this site. And then I'll want to travel (on the cheap), maybe get a part time job near/at a ski resort and ski all winter, backpack around the country, go to Europe for a long stay. And then look for a cheap place to design and build a little house for myself. That could be a way to afford a house, and fulfill a long held dream!

jprince7827

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Re: I want to go back to being a renter....
« Reply #18 on: October 06, 2014, 03:35:45 PM »
A part of me does want to go back to being a renter, but the other part enjoys stomping around "MY" condo knowing I can do whatever the hell I want to it, landlord be damned. It does feel better when it's "mine."

Also, assuming I can sell it for around the same price, I'm paying 1100$/mo for a 1br with underground parking 5 minutes from a Green Line stop in Oak Park, IL, with a balcony, and it's a corner unit. I say assume, because I'm assuming the 500$ principal can be retrieved in a sale - I actually pay 1600$/month, the 1100$ are taxes/HOA, which are gone forever.

For those of you wondering, 1100$/mo in Oak Park for the digs I've got is pretty swell.

agent_clone

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Re: .
« Reply #19 on: October 13, 2014, 04:04:42 AM »
For me, where I live and the current tenancy laws, I loathe and detest renting and will be so happy if I never have to rent ever again in my lifetime. My mortgage repayments are well below market rates for rents where I live.

I also live in australia, but I am in ACT. 

I am considering becoming a renter. 

What is bad about the current tenancy laws?

Do you have further details/information that discuss australian tenancy laws in more detail?

cheers
If you do decide to rent in the ACT stay away from Badenoch Real Estate, there are horror stories on the net about their exit inspections (i.e. they claim a speck of dust means its dirty) and a work mate has also stated that they are racist.

Ultimately your experience with renting will depend upon your landlord/real estate agent.  It is advisable to take timestamped photos when you move into a rental house, and note everything on the condition report.  Unfortunately until you move in (or out of) somewhere you won't necessarily know what your real estate agent is actually like.

Here is a website with tenancy advice for the ACT: http://www.tenantsact.org.au/

Essentially you need to maintain the property as is with fair wear and tear, what fair wear and tear may be disputed by the landlord/real estate agent.  The last place that I rented my housemate used part of the garden to grow a few vegetables, however this may not be possible in all places (we had what I would call a slack landlord, who in the 18 months I was there didn't do an inspection except for the exit one).   Essentially at inspection time, the landlord should be looking for whether the place is clean, and that you haven't damaged it, some real estate agents will note things like little bits of dust, etc.

Bob W

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Re: I want to go back to being a renter....
« Reply #20 on: October 13, 2014, 05:50:01 AM »
People don't own homes.  The homes own them.

Jacana

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Re: I want to go back to being a renter....
« Reply #21 on: October 13, 2014, 06:02:50 AM »
I agree. We're about to sell our house and rent for a while due to a new job relocation. And I can tell you I am really looking forward to renting for the next few years. We bought a dirt cheap fixer-upper in a great spot, but five years of non-stop projects alongside jobs, wedding, baby, grad school; it has really taken over what little free time we had, and a fair bit of money. We are going to make a good profit when we sell, but cash-flowing big projects and problems has been hard. I cannot wait to be able to call a landlord and say "your problem, you fix it."

Bob W

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Re: I want to go back to being a renter....
« Reply #22 on: October 13, 2014, 09:41:11 AM »
I agree. We're about to sell our house and rent for a while due to a new job relocation. And I can tell you I am really looking forward to renting for the next few years. We bought a dirt cheap fixer-upper in a great spot, but five years of non-stop projects alongside jobs, wedding, baby, grad school; it has really taken over what little free time we had, and a fair bit of money. We are going to make a good profit when we sell, but cash-flowing big projects and problems has been hard. I cannot wait to be able to call a landlord and say "your problem, you fix it."

I had a similar experience becoming burnt out on the "home project."   Nothing like waking up to a constant work project.    I still have plenty of punch list items and improvements to do but lack the motivation to do so.    I suppose I will finish them in the next 12 months.

Funny but my wife seems to love owning a home.   Then again she supplies me with an endless list of home to dos.   Apparently she has no skills in home maintenance, repairs, painting etc..     

Spouses,  if you're reading this,  better to keep your home repair and improvement lists to yourself.   Nothing kills the buzz of a marriage or home ownership quicker than "the list."

iris lily

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Re: I want to go back to being a renter....
« Reply #23 on: October 13, 2014, 10:00:46 AM »
Renting is very sensible for many people. I think it's "outside of the box" thinking for some geographic areas such as the midwest where real estate is cheap, yet, renting can be a better financial deal. And landlords love neat, tidy, reliable tenants who stay long term in their units.

Jacana

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Re: I want to go back to being a renter....
« Reply #24 on: October 13, 2014, 10:50:15 AM »

Funny but my wife seems to love owning a home.   Then again she supplies me with an endless list of home to dos.   Apparently she has no skills in home maintenance, repairs, painting etc..     


Ooooh, that's where I went wrong. Here I've been installing lights and floors, fixing washing machines and dishwashers, hanging drywall, taping, caulking, and painting.  I was supposed to let him do it all? Genius. Next house!

Timmmy

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Re: I want to go back to being a renter....
« Reply #25 on: October 13, 2014, 11:14:41 AM »
This has been discussed before but I think that home ownership is the long term better choice as long as long as a few guidelines are followed. 

1. Apples to apples -  When people make this comparison it's often not comparing equals.  Renting a 700sf apartment is not comparable to owning a 1500 sf house.  Make sure you base your purchase on your needs. 

2. You must be the type of person that is willing/able to do some DIY.  If you aren't, the price for qualified labor will kill you. 

3. You must plan on staying for a long time.  5 years is absolutely the minimum.  Otherwise Realtor fees will eat up any potential savings. 

I'm sure there are more but these 3 are critical.

DW and I bought a foreclosure and then did most of the renovation work ourselves.  Our PITI payment is $400 per month and we put nothing down. If you total up all the renovation work and divide it by the months we have lived there, it would be about another $150.  This doesn't include my labor but I enjoy it so I don't charge myself.  You simply can't rent a small house here for that amount.  We've also accumulated about 20k in equity because of the repairs and market changes. 

The bottom line is that this is a uniquely personal decision because it depends as much on you as it does on market conditions. 

Cpa Cat

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Re: I want to go back to being a renter....
« Reply #26 on: October 13, 2014, 11:44:02 AM »
After reading about this crazy spider house, I may never be able to purchase another home...

http://abcnews.go.com/Weird/wireStory/spiders-force-family-upscale-missouri-home-26106285

eil

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Re: I want to go back to being a renter....
« Reply #27 on: October 13, 2014, 12:12:47 PM »
As mentioned earlier, "it depends." It depends on the local market, your goals, your skills, whether you have a family, what you want to spend your free time doing, how far ahead you plan your future, etc. There are situations when it is a good idea to rent, and situations where it is foolhardy at best. However, all things being equal (and I say again, they rarely are), owning is the better option

When you rent, your monthly payments build no equity and rise often. The portion of your monthly payment that doesn't go to taxes, upkeep, and other expenses end up as profit in the landlord's bank account.

When you own, your mortgage payments build equity. (Especially if you pay down extra on the principle.) That is, you essentially "own" a percentage of your house. Depending on short-term market fluctuations, you will get it back when it comes time to sell. Or, once the mortgage is paid off, you own the value of the whole thing. For this reason, many people consider their equity to be a part of their 'stache, especially if their FIRE plans include selling their house and travelling or downsizing to a low cost of living area.

dragoncar

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Re: I want to go back to being a renter....
« Reply #28 on: October 13, 2014, 04:50:29 PM »
I think Timmy nailed it.  I personally love doing fix-up projects -- and my house is in great condition, so at this point I'm basically making up stuff to do. 

I'll disagree about "apples to apples" only for the following reason:  At this point, I don't need a place as big as my current house, and so if I were renting it would be a smaller place.  So it would really make sense to compare to that place I would be renting.  Sadly for the Bay Area, the 1-br apartment I was previously renting had the same monthly payment as my current interest+taxes (after deductions) in a much larger house. 

After reading about this crazy spider house, I may never be able to purchase another home...

http://abcnews.go.com/Weird/wireStory/spiders-force-family-upscale-missouri-home-26106285

OMG, that's my worst nightmare.  I am happy, however, to have read the top comment:

"From the picture, it appears they are putting up a circus tent to have some sort of spider circus."


fiddlercricket

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Re: I want to go back to being a renter....
« Reply #29 on: October 13, 2014, 11:15:51 PM »
I'll disagree about "apples to apples" only for the following reason:  At this point, I don't need a place as big as my current house, and so if I were renting it would be a smaller place.  So it would really make sense to compare to that place I would be renting.  Sadly for the Bay Area, the 1-br apartment I was previously renting had the same monthly payment as my current interest+taxes (after deductions) in a much larger house.

Shouldn't you then compare the cost of a house that's the same size as the apartment you'd be renting?

dragoncar

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Re: I want to go back to being a renter....
« Reply #30 on: October 14, 2014, 12:01:45 AM »
I'll disagree about "apples to apples" only for the following reason:  At this point, I don't need a place as big as my current house, and so if I were renting it would be a smaller place.  So it would really make sense to compare to that place I would be renting.  Sadly for the Bay Area, the 1-br apartment I was previously renting had the same monthly payment as my current interest+taxes (after deductions) in a much larger house.

Shouldn't you then compare the cost of a house that's the same size as the apartment you'd be renting?

No, because I'm not buying a house that size (particularly because they don't exist)

birdman2003

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Re: I want to go back to being a renter....
« Reply #31 on: October 14, 2014, 07:23:38 AM »
I decided to base my rent vs buy calculation on how long I expected to be living here.  With a good job and more than fair pay to go with that job, I'm probably not going to move unless my company relocates me (in which case they would help with moving and relocation expenses).  Once I achieve FI in 10-12 years my house will be paid off and my "rent" will consist of the utilities, property tax, and insurance.  If I was only living here for a couple years I would definitely rent, but it looks like I'll be here longer than that so I bought a modest house where the 15 year mortgage, property tax, insurance, total less than 25% of my take-home pay.

I based my decision to buy a car using a similar (but scaled down) method.  If I only needed a car a few times a year I would probably rent one as needed.  However in the midwest USA a car is necessary for much of the year, so I bought a modest car that I could pay cash for (no need to lease or make payments when a $6k car is in reach of most of MMM's audience).

usmarine1975

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Re: I want to go back to being a renter....
« Reply #32 on: October 14, 2014, 07:32:47 AM »
As a real estate investor, I like your way of thinking.  But I am a bit jaded in my opinion as I need renters in my properties to keep them going.  I think it's an individual decision that should be based on many different factors.  All above comments raise some good to great points.  Despite the usual horrible landlord thoughts.  Yes horrible landlords do abound.  But occasionally you will run into a Landlord that takes pride in providing affordable, quality housing, and is delighted to find great tenants that take equal pride in the home they are providing.

JPinDC

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Re: I want to go back to being a renter....
« Reply #33 on: October 14, 2014, 07:46:46 AM »
I live in the DC metro area and don't feel like it makes sense to buy for me here. I have coworkers who own out in the 'burbs and have had to pay for things like: a new roof, repair of a cracked foundation, mold treatment and drywall repair for a flooded basement, huge tree removal, etc. and I am very content to call my landlord and tell him the front light of the building is out. Maybe someday, but definitely not now!

Zoe

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Re: I want to go back to being a renter....
« Reply #34 on: October 14, 2014, 07:54:24 AM »
I can see both sides, definitely. I disliked being a renter because you couldn't do things like paint (or if you did, you had to paint it back to their neutral color or pay a fee/fine when you moved out), and do any kind of modifications to the property. But I DID like being a renter because I wasn't responsible for maintenance. I remember the entire A/C unit (maybe the whole HVAC, don't remember) had to be replaced in my first apartment. No cost to me!

We finally bought our first house and I'm currently enjoying the repairs/maintenance, but that could very well change. I also like having more than just a wall between us and the neighbors. We have 4 acres now. We try to DIY everything we can, but will pay a professional for things we can't do (like the whole house rewire we had done). And it's hard to explain, but it feels "right". I just like knowing that I can knock down a wall if I want to, or whatever I feel like. We'll put more than $20K in this property since it's all original. But that's the major stuff. But once the major stuff is done, it'll just be small repairs/renovations. And after we refinance next year, our payment will be less than $400/month, taxes are $500/year (maybe a little less), and insurance is $50/month.


Emilyngh

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Re: I want to go back to being a renter....
« Reply #35 on: October 14, 2014, 03:01:13 PM »
I live in the DC metro area and don't feel like it makes sense to buy for me here. I have coworkers who own out in the 'burbs and have had to pay for things like: a new roof, repair of a cracked foundation, mold treatment and drywall repair for a flooded basement, huge tree removal, etc. and I am very content to call my landlord and tell him the front light of the building is out. Maybe someday, but definitely not now!

We used to live around there and I consider our decision to rent there one of the best financial decisions of our lives.   We then moved to a much lower COL area where buying finally made sense, but part of the reason we could then afford to buy is that we rented a small house in a sketch area in the high COL and stached away all our cash.

mymojo

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Re: I want to go back to being a renter....
« Reply #36 on: October 14, 2014, 05:19:02 PM »
I think it really depends on where you live, how long you plan to live there, how quickly you can pay down the mortgage (price, income, rates, fixes, roomates, etc.). I feel like the choice to rent or buy seemed like a no-brainer at first when I bought a condo in SoCal at the bottom of the market. The gov was giving out free down payments and I felt the area would recover well. Now with a few years under my belt, I see there is definitely more to the decision than simply not wanting to 'throw money down a rent well'  to pay for someone else's equity or retirement.

I think there are pros and cons either way, and neither is right for everyone.

Pros:
  • Equity and stable rent.
  • Rental prices will likely rise. After the mortgage is paid off, that is passive income.
  • You can replace the floors, paint, etc. It's YOURS.
  • You have a forever home you can always go back to that provides a static, low yearly cost of living.

Cons:
  • Property insurance, HOA fees, mortgage insurance, upkeep, and no ability to call the landlord to just—fix it :/
  • Equity could tank again. Is money safer in equity, the bank, or stocks/bonds? IDK, I'm not convinced it's safe anywhere.
  • You can't fix your neighbors by moving.
  • You could alternatively use that money to travel, explore other areas to live, or invest. Renting provides quite a bit of freedom.
I (cross fingers and re-check math) plan to have my mortgage paid off in 7 years flat. If all goes well I can use the rental money to supplement my income and gain financial freedom I would not otherwise have. I see it as a valuable ticket out of the corporate rat race, and a good (relatively) safely place to put an investment. And that makes me feel all full of warm fluffles.

But there are many places/times where I would not have bought, and many situations I don't think would have been conducive to buying. Relationships, family, jobs, location, children, debt, etc. etc. are all key factors. I think maintaining quality of life today paired with a preferred end-game is an important balance to keep.

The Vacant Road

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Re: I want to go back to being a renter....
« Reply #37 on: October 17, 2014, 02:18:45 PM »
Go for it.  I encourage my clients to rent if they don't mind it.  It allows you to build up liquid equity which can be used to purchase cash-flowing assets.  Equity tied up in a personal residence is dead equity, meaning equity not generating a return back into your pocket.  Those are dollars not creating more dollars. 

On a side note, paying off your personal home, or any home for that matter, is financially unintelligent.

Best of luck.

mymojo

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Re: I want to go back to being a renter....
« Reply #38 on: October 19, 2014, 12:13:57 PM »
How is that dead equity if the value of your home continues to rise? Not immediately showing up physically in your pocket, but neither is anything currently invested. And why not pay off a home as quickly as possible and forgo years of interest payments? How is eliminating such a large debt a poor choice? Genuinely curious. 

oinkette

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Re: I want to go back to being a renter....
« Reply #39 on: October 22, 2014, 12:35:43 PM »
I live in an area where homes don't appreciate all that much. Lot's of people moving here so rent is just absurd.  All the affordable, close to town apartments are being torn down for "luxury" apartments at double the cost.  Right now, it would literally cost me twice as much for half the space to rent near where I've bought a home.

But when your roof gets a leak (as mine just has) and the AC guy tells you you need a brand new one (as mine recently did) and you know it's ALL on you, even being able to paint my walls and grow a garden in back doesn't seem worth it.

I do know that when I FIRE I will travel a lot, if not full time. I'm trying to think of my house as an investment in that aspect...rent it out and forget about it. It's a lesson learned: I am not the kind of person who can stay in one place forever.

Captain and Mrs Slow

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Re: I want to go back to being a renter....
« Reply #40 on: October 26, 2014, 12:30:58 PM »
Surprised no one mentioned this but the rent to price ratio. We rent in Munich (50% plus cheaper than buying) but own 3 properties in Frankfurt were prices and rents are more in line.

Good old Toronto where buying a condo is almost double the cost of renting. ultimately one is better off owning long term, very few people are disciplined to rent and save the difference. if you don't loke the upkeep involved in own a house than perhaps a condo is the way to go.   

DollarBill

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Re: I want to go back to being a renter....
« Reply #41 on: October 27, 2014, 02:39:06 PM »
I'm fed-up with owning right now. I've been thinking about selling but don't want to pay $15,000 in commission cost. Why would it cost more for a house that cost $200K vs a $100K house? It's still a freaking house...the realtors aren't doing more work. It should be a set cost. I also hate the fact that I still have to pay taxes on something I own. I think the only time you should have to pay taxes is when you buy or sell an item.

I will say I'm glad I bought my house because it changed my way of thinking. Saving more spending less. If I was still renting I would not be as well off as I am today.

daverobev

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Re: I want to go back to being a renter....
« Reply #42 on: October 27, 2014, 05:13:07 PM »
I'm fed-up with owning right now. I've been thinking about selling but don't want to pay $15,000 in commission cost. Why would it cost more for a house that cost $200K vs a $100K house? It's still a freaking house...the realtors aren't doing more work. It should be a set cost. I also hate the fact that I still have to pay taxes on something I own. I think the only time you should have to pay taxes is when you buy or sell an item.

I will say I'm glad I bought my house because it changed my way of thinking. Saving more spending less. If I was still renting I would not be as well off as I am today.

Property tax is for the schools, fire service, etc!

But absolutely, the transaction costs for selling a house in North America are IN. SANE.