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gamerfreak
gamerfreak
Joined: Dec 28, 2014
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March 11th, 2023 at 10:16:30 AM permalink
Quote: billryan

Run some numbers.

You bought your townhouse for 150K and its gone up $130K. If you sold it, lets say you walk away with $200K.
That's a nice down payment on your next place but suppose you decide to rent for a while. You said you want more space for a future family so you don't need it now. Your mortgage was 900, plus homeowners insurance, maintenance, snow removal, PMI, etc, etc so your monthly nut is much bigger. Lets call it $1400 but plug in your own numbers. Now think forward ten years. Your kitchen appliances will have some breakdowns, your HVAC will need servicing, your sidewalk may need replacing. All expenses a homeowner has but a renter doesn't. Once you've made these list a few times, you'll get a better understanding of what you are paying to own your house.
If right now, you are paying $1500 a month but are on the hook for any costly repairs, is paying a bit more from a rental really a bad deal when you have your 200K working for you, and enjoying compound interest instead of laying dormant in your equity? If and when you need more space, you move.

In Vegas, it was a no-brainer as my apartment came with a clubhouse, two pools, and two gyms. My cable/internet package was $75 a month, a higher tier than my friend who paid $160 at his house a few blocks away. That had real value to me.
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My mortgage+insurance+taxes+HOA are $1050 a month. HOA includes grass and snow removal as well as a pool.

The cheapest rent in my area is around $2,200/month. It is not costing me anywhere near $1,250/month to maintain this house in the 6 years Iíve lived here. Even if a big repair came in unexpectedly, it wouldnít be anything close to that amount. Plus I gained about $130k in equity.

Iím still failing to see how I didnít come out ahead here versus renting.
ChumpChange
ChumpChange 
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March 11th, 2023 at 10:20:34 AM permalink
A 1 bedroom apartment may be only 500-700 square feet. A house is a few times bigger.
billryan
billryan
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March 11th, 2023 at 10:22:57 AM permalink
Quote: gamerfreak

Quote: billryan

Home loans are frontloaded so for the first few years you pay for the interest.
I started to do my own research. Buying a $50,000 house with a 5% loan for twenty years ends up costing you double that,


How is this a revelation? Borrowing money isnít free, and mortgages are amortized. It sounds like you should have done that research before buying.

I would agree that buying typically doesnít make sense if you are planning on moving in less than 5 years.

Quote: billryan

plus all the benefits one gets with ownership- taxes, maintenance, landscaping, and the like.


And you donít think these costs are built into rent?

When property taxes go up, rent goes up. When interest rates go up, rent goes up. When maintenance costs go up, rent goes up.

Renting does not shield you from these costs, you are just paying them by proxy. And at a premium, since the landlord still needs their cut.
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The difference, and it is a big difference is I paid my rent and knew that was it for the month. You pay your mortgage and have no idea if your microwave, ac or dishwasher might need replacing. Those expenses sneak up on you while my pay one price covers all.

I know my cost of shelter- it's the price of rent. You can only guess when a major expense is coming.

If you are happy , that's all that matters. If I was 25 and had 200K to invest, it wouldn't be in a house to live in. It might be for a couple of houses to rent out, but not for one to live in, but I understand many people like plain vanilla. Then again I wish I knew half what I know now when I was twenty-five but that's not how the world works.
The difference between fiction and reality is that fiction is supposed to make sense.
DRich
DRich
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March 11th, 2023 at 11:11:21 AM permalink
Quote: billryan



The difference, and it is a big difference is I paid my rent and knew that was it for the month. You pay your mortgage and have no idea if your microwave, ac or dishwasher might need replacing. Those expenses sneak up on you while my pay one price covers all.

I know my cost of shelter- it's the price of rent. You can only guess when a major expense is coming.

If you are happy , that's all that matters. If I was 25 and had 200K to invest, it wouldn't be in a house to live in. It might be for a couple of houses to rent out, but not for one to live in, but I understand many people like plain vanilla. Then again I wish I knew half what I know now when I was twenty-five but that's not how the world works.
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Unless you are signing a 30 year lease at your apartment you really can't compare. On most 30 year mortgages the principle payment and interest payment stay the same for 30 years. Most rental payments will probably triple in that time.

I am not arguing against your premise because I do think it is better for some people to rent and better for some people to own.
Order from chaos
billryan
billryan
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March 11th, 2023 at 11:29:04 AM permalink
Quote: DRich

Quote: billryan



The difference, and it is a big difference is I paid my rent and knew that was it for the month. You pay your mortgage and have no idea if your microwave, ac or dishwasher might need replacing. Those expenses sneak up on you while my pay one price covers all.

I know my cost of shelter- it's the price of rent. You can only guess when a major expense is coming.

If you are happy , that's all that matters. If I was 25 and had 200K to invest, it wouldn't be in a house to live in. It might be for a couple of houses to rent out, but not for one to live in, but I understand many people like plain vanilla. Then again I wish I knew half what I know now when I was twenty-five but that's not how the world works.
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Unless you are signing a 30 year lease at your apartment you really can't compare. On most 30 year mortgages the principle payment and interest payment stay the same for 30 years. Most rental payments will probably triple in that time.

I am not arguing against your premise because I do think it is better for some people to rent and better for some people to own.
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Property taxes will go up over time as well. If you stick around to the end of your thirty-year loan, you will be paying it in dollars that are deeply discounted, but that limits your ability to move for the next thirty years.
I agree renting isn't for everyone. No one approach works for everyone. I just hate people obsessing over home ownership, credit scores and using their houses as ATMs.
The difference between fiction and reality is that fiction is supposed to make sense.
MDawg
MDawg
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March 11th, 2023 at 11:35:46 AM permalink
Property taxes and repair costs are the only reasons that real estate isn't the #1 investment over time (right behind the stock market).
I tell you itís wonderful to be here, man. I donít give a damn who wins or loses. Itís just wonderful to be here with you people. https://wizardofvegas.com/forum/gambling/betting-systems/33908-the-adventures-of-mdawg/
EvenBob
EvenBob
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March 11th, 2023 at 12:01:57 PM permalink
Got my annual tax assessment today from the Township and the assessed value went up $15,000 from last year. That means my house has a cash value of $30,000 more than last year. Which is comical when you think that my family paid $8,000 for this property in 1960. I'll never sell it because I paid it off 35 years ago and I can live here for $145 a month which is what the property tax breaks down to. Where the hell can you live for $145 a month on two acres of land in the country with a creek that runs around the edge of the property. Don't tell me homeownership doesn't pay off. I had the Xfinity guy out here in November he was in his fifties and the leaves were off the trees so you could see the creek from my house at the top of the hill. I won't tell you what he said just take my word for it that it was nothing negative. I'm in the middle of a major remodel now because at my age I won't be able to do it again. Facebook Marketplace just paid off again, last night at 2:00 a.m. I saw a 100-year-old glass door kitchen hutch 30 miles from here for $25 and I immediately sent the woman a message and I went and picked it up today. That was before noon and she said she already had 12 people wanting to buy it if I didn't show up. If I was still in the antique business I could put $175 on this and sell it next week.
It does not suck to be me.
EvenBob
EvenBob
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March 11th, 2023 at 12:06:02 PM permalink
Quote: ChumpChange

A 1 bedroom apartment may be only 500-700 square feet. A house is a few times bigger.
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My house is fairly large but I only live in a small portion of it, the whole upstairs here I rarely even go up there. But the point is all the space is there if I need it you never know when you're going to need it.
It does not suck to be me.
DRich
DRich
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Thanks for this post from:
RogerKint
March 11th, 2023 at 12:32:02 PM permalink
Quote: EvenBob

Quote: ChumpChange

A 1 bedroom apartment may be only 500-700 square feet. A house is a few times bigger.
link to original post



My house is fairly large but I only live in a small portion of it, the whole upstairs here I rarely even go up there. But the point is all the space is there if I need it you never know when you're going to need it.
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You could always get a second wife and have some kids to utilize that space.
Order from chaos
rxwine
rxwine
Joined: Feb 28, 2010
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March 11th, 2023 at 12:46:05 PM permalink
Surely someone on the internet somewhere has compared 30 years of home ownership to 30 years of rental.Or 20 years or somewhere long term.

Thereísí things you can control with both and things you canít. Do you want a home in East Palestine right now after that train derailment or an apartment? Less hassle and waiting in an apartment to move. Maybe in the long run you make out on a settlement in several years from a home, but you might get screwed as well, plus the waiting.

Timing when you sell something is crucial, but not always knowable. I hate to snitch on my parents R.I.P. but they knew their last house had a whole septic system major problem, but it wasnít something that the buyer knew.
Fair is fair, if unprovable claims are insisted to be true, one should be able to use unprovable methods of debunking.

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