Renting for life - a bad idea?

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FIREchief
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Re: Renting for life - a bad idea?

Post by FIREchief »

fyre4ce wrote: Wed Mar 10, 2021 1:24 am
FIREchief wrote: Wed Mar 10, 2021 1:15 am
fyre4ce wrote: Wed Mar 10, 2021 12:54 am In my example you can replace "AC unit" with "shingles" and it should still hold. Roofing companies don't make shingles; they buy them from the same factories as everyone else. And they pay installation crews a market hourly wage to do the install, and it's going to take just about the same number of man-hours for a given size roof, whether the customer lives in the house or not. I'm just not seeing room in the economics for a big systemic difference in price. Again, for a large business-savvy landlord I can see some small benefit from economies of scale, or maybe having some exclusive relationships that cut cost a bit.
LOL. I'm guessing that you're not in this business. Right?
I'm not in the roofing business. But, I deal a lot with subcontractors in my professional life, and am pretty good at telling a competitive proposal apart from a padded one. In any case, I don't see how any of the facts I laid out could be controversial, but again, I'd welcome any real data that goes against my overall conclusion.
So you admit that you're not in the retail rental management business? Thanks for acknowledging that. Your idealistic vision of how supply/demand works in a perfect world is admirable. Unfortunately, we don't live in such a world. 8-)
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fyre4ce
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Re: Renting for life - a bad idea?

Post by fyre4ce »

FIREchief wrote: Wed Mar 10, 2021 1:20 am
fyre4ce wrote: Wed Mar 10, 2021 1:09 am
FIREchief wrote: Wed Mar 10, 2021 12:43 am Please define "long run." Are you assuming that a person just buys a place "knowing" that they will be happy there for a long time and that the neighborhood and their needs will turn out exactly as they expected?
In another post I gave the analogy to insurance, how in the "long run" you can expect to lose money on insurance (insurers collect premiums and pay claims, but also need to cover their operating costs, and profit). You may come out ahead in any one particular case, either by "getting lucky" (eg. buying an umbrella policy and getting a $2M liability claim covered within a year), or by beating the actuarial tables (eg. you're actually a worse driver than your insurer thinks you are, and your expected claims exceeds your premium). But, it's generally accepted financial advice to avoid buying insurance for things you can self-insure, because there are market forces which will tend to make the population of people who buy insurance lose money compared to the population of people who can and do self-insure. That's what I mean by "long run".
So you seem to be saying that there is an actuarial advantage to buying versus renting? There is also an actuarial advantage to self insuring versus buying insurance, but that's not what any sane person recommends. 8-) PIck your poison. I've owned for many more years than I've rented. I'm now a renter for the rest of my life, for reasons mostly non-financial. I don't believe you've even addressed the non-financial pros/cons of renting.
It was just an analogy, to say that similar economic forces (adding a middleman) will have you tend to lose money by buying insurance compared to self-insuring (where possible*), and you will tend to spend more renting the same property vs. buying in the long run. You're correct that I did not consider non-financial factors, which may very well dominate the decision. I really like the Owning vs renting wiki page, which gives a balanced view of many of the financial and non-financial factors that play into the decision. For the record, I don't think expected time to stay in the property is the only factor that should decide on rent vs. buy; I laid out my more nuanced view in a recent post.

*I am only talking about risks that can be self-insured against. I am not saying no one should ever buy any insurance; insurance against catastrophe is a good idea, based on expected utility rather than expected value. That's a separate discussion.
fyre4ce
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Re: Renting for life - a bad idea?

Post by fyre4ce »

FIREchief wrote: Wed Mar 10, 2021 1:33 am
fyre4ce wrote: Wed Mar 10, 2021 1:24 am
FIREchief wrote: Wed Mar 10, 2021 1:15 am
fyre4ce wrote: Wed Mar 10, 2021 12:54 am In my example you can replace "AC unit" with "shingles" and it should still hold. Roofing companies don't make shingles; they buy them from the same factories as everyone else. And they pay installation crews a market hourly wage to do the install, and it's going to take just about the same number of man-hours for a given size roof, whether the customer lives in the house or not. I'm just not seeing room in the economics for a big systemic difference in price. Again, for a large business-savvy landlord I can see some small benefit from economies of scale, or maybe having some exclusive relationships that cut cost a bit.
LOL. I'm guessing that you're not in this business. Right?
I'm not in the roofing business. But, I deal a lot with subcontractors in my professional life, and am pretty good at telling a competitive proposal apart from a padded one. In any case, I don't see how any of the facts I laid out could be controversial, but again, I'd welcome any real data that goes against my overall conclusion.
So you admit that you're not in the retail rental management business? Thanks for acknowledging that. Your idealistic vision of how supply/demand works in a perfect world is admirable. Unfortunately, we don't live in such a world. 8-)
No, I'm not. I have owned my own rental property though, and hired plenty of house contractors, as a homeowner and a landlord. Not to mention my professional work with subcontractors of all sizes. But I keep asking you for data and you keep ignoring the request. I have to turn in for the night, but I'll take your claims more seriously if you can back them up.
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FIREchief
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Re: Renting for life - a bad idea?

Post by FIREchief »

fyre4ce wrote: Wed Mar 10, 2021 1:46 am
FIREchief wrote: Wed Mar 10, 2021 1:33 am
fyre4ce wrote: Wed Mar 10, 2021 1:24 am
FIREchief wrote: Wed Mar 10, 2021 1:15 am
fyre4ce wrote: Wed Mar 10, 2021 12:54 am In my example you can replace "AC unit" with "shingles" and it should still hold. Roofing companies don't make shingles; they buy them from the same factories as everyone else. And they pay installation crews a market hourly wage to do the install, and it's going to take just about the same number of man-hours for a given size roof, whether the customer lives in the house or not. I'm just not seeing room in the economics for a big systemic difference in price. Again, for a large business-savvy landlord I can see some small benefit from economies of scale, or maybe having some exclusive relationships that cut cost a bit.
LOL. I'm guessing that you're not in this business. Right?
I'm not in the roofing business. But, I deal a lot with subcontractors in my professional life, and am pretty good at telling a competitive proposal apart from a padded one. In any case, I don't see how any of the facts I laid out could be controversial, but again, I'd welcome any real data that goes against my overall conclusion.
So you admit that you're not in the retail rental management business? Thanks for acknowledging that. Your idealistic vision of how supply/demand works in a perfect world is admirable. Unfortunately, we don't live in such a world. 8-)
No, I'm not. I have owned my own rental property though, and hired plenty of house contractors, as a homeowner and a landlord. Not to mention my professional work with subcontractors of all sizes. But I keep asking you for data and you keep ignoring the request. I have to turn in for the night, but I'll take your claims more seriously if you can back them up.
I have nothing to back up. You're not the only person with professional experience dealing with corporate subcontractors. That's a different world. I see little relevance comparing the corporate scenario with the DIY landlord situation. I've never been a landlord (thank God!!) and have ample experience dealing with home maintenance contractors as a retail client. :annoyed
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FIREchief
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Re: Renting for life - a bad idea?

Post by FIREchief »

fyre4ce wrote: Wed Mar 10, 2021 1:38 am *I am only talking about risks that can be self-insured against. I am not saying no one should ever buy any insurance; insurance against catastrophe is a good idea, based on expected utility rather than expected value. That's a separate discussion.
Not really. I've seen numerous "catastrophes" encountered by folks who bought their forever, dream homes. :twisted:
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Re: Renting for life - a bad idea?

Post by aj76er »

It’s difficult to make general statements about the rent-vs-buy decision because it is both “local” and “personal”.

To give an antidotal example of my own path: for most of my adult life I have rented and invested heavily in global equities. For the past 20 years this has paid off handsomely as the markets have done well and I have been able to move every five years or so for the best job prospects around the country. Renting has provided me a lot of flexibility and it has been “cheap” relative to buying. Many of the fears about rising rents and inflation that the “common wisdom” purports has not really been an issue, in my experience.

I am now married, in my mid forties, and ready to buy my first house with my DW. We opted to build due to the crazy market and to (hopefully) minimize maintenance costs (in the first 10-20 years). We also got lucky and found something that is exactly what we want (e.g. west facing view, private corner lot, small yard for garden). As a poster earlier in the thread mentioned, the real value of a house for late accumulators and retirees is the imputed rent that it provides when it is paid off. Analyzing numbers from our area:

New construction home total carrying cost (taxes+insurance+HOA): $1250 / month
(Our current residence) Upscale 2br Rental in complex with garage: $2500 / month
Similar Rental SFH in areas we are building: $3500 / month

Therefore, we hope to have anywhere from $1250 to $2250 per month of imputed income when the house is paid off

If we divide the (annual) imputed income by the home equity to get a real rate of return (assuming the equity keeps up with inflation). In our situation, this yields 3-4% real rate of return, which is very close to the expected return of a balanced 3 fund portfolio for the next 10 years.

So in summary, run the numbers for your own local market; be mindful of potential maintenance costs; and, most importantly, make sure that it is right for your own personal circumstances.
"Buy-and-hold, long-term, all-market-index strategies, implemented at rock-bottom cost, are the surest of all routes to the accumulation of wealth" - John C. Bogle
Frank the Tank
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Re: Renting for life - a bad idea?

Post by Frank the Tank »

slowandsteadywins wrote: Tue Mar 09, 2021 9:56 pm
LittleMaggieMae wrote: Tue Mar 09, 2021 6:03 pm
FIREchief wrote: Tue Mar 09, 2021 5:43 pm
OnTrack2020 wrote: Tue Mar 09, 2021 4:54 pm Sometimes houses can just be maintenance money pits and extremely time consuming.
In my 30+ years of home ownership, I believe that it was "all times." :P

I must have missed those times when the houses required no maintenance and consumed none of my time.... We call that "renting" in my world. :D
:sharebeer I agree with FIREchief - houses are always an expense. If after 10 years you haven't done anything to the house (painted? replaced some appliances? fixed things as they broke (the drain under the bathroom sink - replaced a faucet or two - replaced a light switch or a light kit) haven't replaced any carpeting - haven't maintained your patio doors (the sliders get sticky), etc... well it sounds like a house I might want want to buy for just a bit more than a flipper is willing to spend which will still be way less than "market value" of the well maintained but dated house next door.
:)
Renting is nice - you can stay for a year or two - and then move out and into a freshly painted and clean new place to live. You might have managed to not ever have cleaned the bathroom or moped the kitchen floor or cleaned the stove or fridge in your rental (or maybe just did it once before the final inspection). You didn't have clean the window treatments (that got dust/grime covered while you were there). You didn't have to worry too much about the carpeting or the wear and tear on the floors (as long as you did normal wear and tear). You don't ever have to think (geez, the fridge is making a different noise - it's 10 years old... better start thinking about what it will take to replace it.) if you don't a light fixture/cieling fan - no worries when you move you won't have to live with it anymore. annoying neighbors? no problem a year or two and you are moving.

Renting is not necessarily a bad thing - it frees up lots of mental energy (and physical energy) to things you want to do - not things you HAVE to do (so the place you live doesn't fall into disrepair or get really really grody).
Absolutely! As a single person, with a federal job, renting allows me the flexibility to move much quicker for job opportunities unburdened by the weight of a geographical location. In fact I’ve been staying in furnished locations that build some or all of the utilities into one flat price which is very nice for budgeting and staying within my means.

For me the flexibility outweighs any extra costs compared to ownership. If I had a family, I’d say that would change things.
This is an important point regarding where you are in life.

I own a house because I *don't* want to stay in a place for just a year or two. At this stage of my life with a spouse and two school-aged children, the ability to *not* have to move is actually worth a lot to me. After having moved into a new house a couple of years ago with our family, the mere thought of moving every year or two legitimately makes me nauseous. Short of unforeseen financial collapse that necessitates selling, I have no desire to ever move again while our kids are still living with us.

Now, to be sure, I felt differently as a single and DINK that rented apartments in my 20s and I might feel differently as an empty nester in my 60s. At those stages in life, there might be a higher premium on "flexibility" and "mobility", whereas I'm in the stage in life where "stability" (e.g. school quality, safety, living space, etc.) is the most important consideration in choosing a place to live.
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Re: Renting for life - a bad idea?

Post by quantAndHold »

The best financial decision we ever made was buying the house we’re in. All in, including maintenance costs, we came out way ahead of where we would be if we had rented a similar place for 20+ years. But we live in Southern California, so our experience may not transfer to everyone.

The second best financial decision we ever made was buying a house in Seattle when we lived there temporarily. It was obvious what was happening in the housing market when we moved there. We bought it as an investment, lived in it, and sold it for a substantial profit when we left.

The worst two financial decisions we ever made were also both houses, bought in a hot Southern California property market in the early 90’s, just before the crash. We took a small bath on those. The experience made us much better at evaluating real estate in the future.

The best *life* decision we made was buying the house we’re in now. Housing inflation is a real thing, and if we hadn’t bought this place back in the 90’s, we couldn’t afford to live where we’re living now. Owning the house gave us a lot of stability that we wouldn’t have had if we were subject to the whims of landlords and property markets.
Yes, I’m really that pedantic.
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Re: Renting for life - a bad idea?

Post by luminous »

aj76er wrote: Wed Mar 10, 2021 12:29 pm So in summary, run the numbers for your own local market; be mindful of potential maintenance costs; and, most importantly, make sure that it is right for your own personal circumstances.
Indeed! In our situation, we'd yield 1.3-2.25% real rate of return from buying, which is lower than the expected return of a balanced 3 fund portfolio for the next 10 years. So we'll remain renters.
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Re: Renting for life - a bad idea?

Post by sperry8 »

stocknoob4111 wrote: Tue Mar 09, 2021 9:38 am Dave Ramsey recently had a guest on who asked about this, she wanted to get rid of her house and rent for the next 30 years due to the flexibility it offers. He strongly advised against it with this statement.. and I quote verbatim : "Since rents are constantly going up you are destabilizing your life. Renting for 30 years means that you are a victim of the Real Estate market instead of riding the wave"

https://www.youtube.com/watch?v=-CMlPY7eNJ4

What are your thoughts on this? I am a renter and this has always concerned me.. exposing myself to wildly vacillating housing costs, and exposing myself to a situation where i'll be just priced out totally if there is widespread inflation.

On the other hand it may be not be such a big deal as rents will only go up so much as incomes, and incomes don't seem to be inflating and there is little chance they will in the next 20 years.

Asking this question because I've been a renter all my life and intend to continue being a renter... but from time to time I heard this type of argument and wonder if there are risks and try to understand how legitimate these risks are and the consequences of these risks.
I've never owned a home in my life and my life was anything but destabilized. I preferred the flexibility and did not see these ever increasing rents he describes.
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Re: Renting for life - a bad idea?

Post by gideon trumpet »

stocknoob4111 wrote: Tue Mar 09, 2021 9:38 am Dave Ramsey recently had a guest on who asked about this, she wanted to get rid of her house and rent for the next 30 years due to the flexibility it offers. He strongly advised against it with this statement.. and I quote verbatim : "Since rents are constantly going up you are destabilizing your life. Renting for 30 years means that you are a victim of the Real Estate market instead of riding the wave"

https://www.youtube.com/watch?v=-CMlPY7eNJ4

What are your thoughts on this? I am a renter and this has always concerned me.. exposing myself to wildly vacillating housing costs, and exposing myself to a situation where i'll be just priced out totally if there is widespread inflation.

On the other hand it may be not be such a big deal as rents will only go up so much as incomes, and incomes don't seem to be inflating and there is little chance they will in the next 20 years.

Asking this question because I've been a renter all my life and intend to continue being a renter... but from time to time I heard this type of argument and wonder if there are risks and try to understand how legitimate these risks are and the consequences of these risks.
Stability comes from a high savings rate over time and a nest egg large enough to give you financial freedom. It does not come from homeownership per se. On average, home prices and rents will rise with inflation. Your nest egg (if it consists primarily of common stocks) will also rise with inflation. If you are concerned that your income will not rise with inflation, that is likely to be a more destabilizing factor in your life than renting. It would mean that the real value of your labor is decreasing over time, even as your experience on the job is increasing -- potentially a problem.

If the question were solely when does homeownership tend to increase net wealth relative to renting over time (because it results in a lower overall cost of living in an otherwise identical home over the compared period) the answer would depend on how long the person stayed in the home. The more often one moves, the more difficult it is to recoup the transaction costs associated with buying and selling. On his website, Ramsey suggests people buy only when they plan to stay in the same place "at least several years." (www.daveramsey.com/blog/best-time-to-buy-a-house) That makes sense, although there's a lot of uncertainty in that figure.

Personally, I feel comfortable buying if I plan to stay in the same neighborhood for a decade. At the 6-7 year mark, I might expect to break even but renting is easier, so I'd still prefer it if I knew I'd be out in that time. Anything five years or less, I would not even consider buying. (I also would not consider buying before marriage because, as Dave says, you may discover you bought the wrong house!)
fyre4ce
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Re: Renting for life - a bad idea?

Post by fyre4ce »

One mistake I see commonly in "rent vs buy" analysis is not comparing the same or similar properties. Commonly, when someone is younger, single, early in their career, they rent a small apartment, because income is lower, the freedom to relocate without buying/selling is valuable, and housing needs are less (eg. don't need lots of bedrooms or a good school district). Then, when mid-career and married with kids, they buy a bigger and more expensive single family home, for the extra space, and the stability that comes from owning. This progression makes sense for many people, and the housing market reflects this by offering many more smaller units to rent and many more SFH's to buy. Naturally, the SFH is more expensive, and they reminisce about the days of having a $x00 rent payment rather than a $X,000 mortgage payment. Well, sure, you're consuming more housing. An accurate analysis needs to compare like properties - either apartment vs. condo, or renting vs. buying a SFH. The decision of what size/type of property to live in (unit in a multi-family building, townhouse, SFH, etc.) should come first, then you should decide whether to rent or buy it.
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Re: Renting for life - a bad idea?

Post by humbledinvestor »

FIREchief wrote: Wed Mar 10, 2021 2:00 am
fyre4ce wrote: Wed Mar 10, 2021 1:38 am *I am only talking about risks that can be self-insured against. I am not saying no one should ever buy any insurance; insurance against catastrophe is a good idea, based on expected utility rather than expected value. That's a separate discussion.
Not really. I've seen numerous "catastrophes" encountered by folks who bought their forever, dream homes. :twisted:
Yes a friend is doing a full renovation of a home. It has been a nightmare situation costing a lot more than expecting, the GC being hired, my friend becoming a GC and hiring all the subs separately, suing the GC and on and on.
muddlehead
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Re: Renting for life - a bad idea?

Post by muddlehead »

Not a bad idea at all if you can save a ton of money every month without cheating. Mortgages are forced savings accounts.
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Re: Renting for life - a bad idea?

Post by abuss368 »

Like anything there are advantages and disadvantages. Everyone is different.

If you move around a lot or prefer flexibility perhaps renting is a better strategy.

Tony
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Re: Renting for life - a bad idea?

Post by mrspock »

It depends what you do with the money and if your house is paid off.

If it’s paid off the effects of leverage are eliminated, and at that point equity investing should mop the floor with real estate after expenses.

Also, after a certain point, your primary residence just isn’t a significant piece of your net worth. At that point rent vs own is a lifestyle decision, it has a vanishingly small impact on your financial independence.
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Re: Renting for life - a bad idea?

Post by abuss368 »

mrspock wrote: Wed Mar 10, 2021 7:48 pm It depends what you do with the money and if your house is paid off.

If it’s paid off the effects of leverage are eliminated, and at that point equity investing should mop the floor with real estate after expenses.

Also, after a certain point, your primary residence just isn’t a significant piece of your net worth. At that point rent vs own is a lifestyle decision, it has a vanishingly small impact on your financial independence.
Well said. After a certain period of time the impact to net worth is much smaller. However comparing the cash flow impact of a paid off home to renting is another matter.

Our home has appreciated significantly and the mortgage is only 2.75%. This will allow us to down size to an ideal home in the next stage in life.

Tony
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Neus
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Re: Renting for life - a bad idea?

Post by Neus »

Do you have a spouse who agree with u?

I have a house fully paid off before marriage, but turns out my wife didn’t like the location (city)

She prefer to rent at new location (suburb) than live in the existing house

So we move to suburb

I’m happily renting at this suburb, as i can invest the money elsewhere, but recently she want to buy because she want to custom build the house and modify the interior as she want

The problem is my old house haven’t sold yet so i will need to put liquid money to buy

My point is:
- it’s really hard to sell a house if the economy ain’t strong
- Make sure your spouse agree with your plan

Neus
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Re: Renting for life - a bad idea?

Post by Tattarrattat »

We lived in a house we owned for 21 years in an affluent suburb. When we sold and moved out, we analyzed the economics. We sold the house for much more than we paid for it. When we calculated the rate of return it was 3.1% per year. The SP500 in the same period returned about 10% per year. Clearly the house was the worse investment. What about rent? I added up the non-purchase costs of the house: two roofs, two indoor and outdoor paintings, renovated kitchen and 3 bathrooms, new furnace, busted sewer pipe, landscaping, mortgage interest, enormous taxes every year, etc. The home costs were more than what rent would have cost for a similar house in a similar neighborhood. Owning loses again. I came out hundreds of thousands of dollars poorer owning vs renting. This myth that "owning," even long term, is cheaper than renting is only true if you buy a house in a time and place with robust price appreciation, in a time with poor stock market appreciation. If I had bought in maybe Palo Alto or Brooklyn, the home appreciation probably would have put me ahead. But as it stood, buying a reasonable house in a reasonable neighborhood, making reasonable upgrades, put me at a loss. One argument for ownership is for people who don't have the discipline to invest the capital, so called "forced savings." In that scenario, yes, owning is wiser.
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FIREchief
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Re: Renting for life - a bad idea?

Post by FIREchief »

Tattarrattat wrote: Wed Mar 10, 2021 9:10 pm We lived in a house we owned for 21 years in an affluent suburb. When we sold and moved out, we analyzed the economics. We sold the house for much more than we paid for it. When we calculated the rate of return it was 3.1% per year. The SP500 in the same period returned about 10% per year. Clearly the house was the worse investment. What about rent? I added up the non-purchase costs of the house: two roofs, two indoor and outdoor paintings, renovated kitchen and 3 bathrooms, new furnace, busted sewer pipe, landscaping, mortgage interest, enormous taxes every year, etc. The home costs were more than what rent would have cost for a similar house in a similar neighborhood. Owning loses again. I came out hundreds of thousands of dollars poorer owning vs renting. This myth that "owning," even long term, is cheaper than renting is only true if you buy a house in a time and place with robust price appreciation, in a time with poor stock market appreciation. If I had bought in maybe Palo Alto or Brooklyn, the home appreciation probably would have put me ahead. But as it stood, buying a reasonable house in a reasonable neighborhood, making reasonable upgrades, put me at a loss. One argument for ownership is for people who don't have the discipline to invest the capital, so called "forced savings." In that scenario, yes, owning is wiser.
Great post. Thanks for sharing. :beer
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sfnerd
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Re: Renting for life - a bad idea?

Post by sfnerd »

I bought a home in 2003. Moved a year later due to work.

Eventually sold the home (after being an inadvertent landlord) for the same price I bought it, 12 years later.

I just looked at the price, and it is up mildly from where I bought and sold it. Total price appreciation comes to 1.1% per year, so inflation adjusted it’s about -1%.

This is in a nice area in a big college town.

While I was lucky to have great tenants, this was not a good investment. Even if I had stayed put, it would have been much, much worse than renting.

On the flip side, I never bought when I lived in San Francisco. I wish I had. I looked at a $1m place when I moved there, but passed because it was “too expensive”, even though it was easily affordable for me. Now that place is worth we’ll over $3m.

Real estate is very local. Buy if it’s a place you plan to stay in, if it’s affordable for you to do so, and if it is personally valuable to you.
reader79
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Re: Renting for life - a bad idea?

Post by reader79 »

We have owned homes and rented. We are renting now and absolutely love it. I doubt we will ever own a primary residence again, except in an owner-occupied situation where we own a piece of real estate and rent out a portion to someone else to cover the majority of the cost. Thinking that you're ever going to make more than the stock market consistently with your primary residence is delusional.
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Re: Renting for life - a bad idea?

Post by rascott »

1) Housing is an expense in life. You have to decide at what level you want to consume it.

2) Landlords aren't in the charity business. They don't provide you housing to break even.

Renting is a more expensive way to live life, over your entire lifetime........ on average. In certain circumstances it makes sense (if you are going to be moving often, lifestyle freedom, etc).

Beyond that, it's common sense that owning is a better financial decision in most markets. Extremes in VHCOL, being ignored.



I've owned a bunch of real estate (and still do). Some has worked great, some hasn't. Like buying stocks with a lot more control. But you can never control everything
rascott
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Re: Renting for life - a bad idea?

Post by rascott »

reader79 wrote: Thu Mar 11, 2021 1:47 am We have owned homes and rented. We are renting now and absolutely love it. I doubt we will ever own a primary residence again, except in an owner-occupied situation where we own a piece of real estate and rent out a portion to someone else to cover the majority of the cost. Thinking that you're ever going to make more than the stock market consistently with your primary residence is delusional.


Lol. Based upon what? Your assumption just isn't true. My % returns on many, many houses have destroyed the stock market. But you actually need to know a bit of what you're doing.
TheDoctor91
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Re: Renting for life - a bad idea?

Post by TheDoctor91 »

Can we just say, no one knows? How is this not like timing the stock market? At any point, things can happen that derail your plans that’s out of your control.

Eg people that were denied out of moving for job opportunities because they were significantly underwater in 2008, never mind the speculators.

People bought the top of the market in Toronto in the 80s and then it took about 20 years to recover, and then went vertical.

No one predicted the crash of oil to be as violent as it was and people are still underwater in Alberta a decade later, meanwhile someone buying in Vancouver was handsomely rewarded.

I believe home ownership is the way to go once you’re confidently settled in your place of residence for the medium to long term. It’s akin to buying VTI and not caring what’s happening on the news because they don’t need their portfolio. Short term is anyone’s guess.

I suppose you can look at price to rent ratios and take that as a price to earnings ratio, but that’s still market timing lol. It’s been “irrational” to buy in Toronto and Vancouver for a very long time, yet here we are.
checkyourmath
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Re: Renting for life - a bad idea?

Post by checkyourmath »

Flannelbeard wrote: Tue Mar 09, 2021 10:54 am
checkyourmath wrote: Tue Mar 09, 2021 10:29 am It all depends upon the numbers. I do enjoy people buying housing right now. The numbers are absurd in most urban areas. The riding the wave thing is fun if you are lucky, but probably no so fun if the wave turns into a tsunami.
The median home purchase price in our neck of the Greater Boston Area is about a 23-25x multiple of our rent. It truly boggles the mind.

We make 2.5x the median household income in the towns that we're shopping in and we feel "priced out" (not in terms of what the bank will loan us, but what we feel is reasonable to spend to end up with a payment we feel is fair compared to our rent).

Who is sustaining this market? People FOMO buying at 5x their household income? It all feels so eerie.
We are in the exact same situation. I am an engineer and she is a professor with about 15 years of work experience, but can't afford a house in the Denver area. The median income here is 60k and median home price is 600k. Cool! I think people forget that someone eventually has to be able to sell the mortgage in the long run. If someone buys now at 5x income. They can hope for income to increase faster than inflation which hasn't happened in 40 years or that the next person is able to sell to someone willing to go 7x income.

I thought the end of mortgage forbearance would be the monkey that breaks the camels back, but now we are waiting until June 30, 2021 to see how this all plays out. My guess is they will extend it again for 6 months. We are going to have spring stimulus and fall stimulus for the rest of the 2020s. It would probably be smarter to adjust the tax brackets, so people don't game the system.
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Re: Renting for life - a bad idea?

Post by Caduceus »

I think the valuation of the property matters. I could see renting for life to be a good financial proposition depending on my analysis of the local housing market and rents.

I think people would rent smaller and cheaper places than houses that they might otherwise buy, so I think if you're renting not because you cannot afford a house but because you'd rather rent, there's a good chance you would come out ahead.

The folks listening to Dave Ramsey are folks that probably need the forced savings of a mortgage to build long term wealth.
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Re: Renting for life - a bad idea?

Post by bi0hazard »

Tattarrattat wrote: Wed Mar 10, 2021 9:10 pm What about rent? I added up the non-purchase costs of the house: two roofs, two indoor and outdoor paintings, renovated kitchen and 3 bathrooms, new furnace, busted sewer pipe, landscaping, mortgage interest, enormous taxes every year, etc. The home costs were more than what rent would have cost for a similar house in a similar neighborhood. Owning loses again.
Can you explain this, number-wise ? After you sold your house, your “non-purchase “ items equaled more than 21 years of renting? That sounds terrible. Personally , I’m not into remodeling, I paid off my loan in 9 years and my roof is covered by insurance , so it may be different, though still can’t compute this happening where I live.
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Re: Renting for life - a bad idea?

Post by FIREchief »

bi0hazard wrote: Thu Mar 11, 2021 9:53 am my roof is covered by insurance
Really? If the roof just reaches end of life, your insurance company will buy you a new one? I've never heard of that before. Do you mind sharing which insurance company?
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Re: Renting for life - a bad idea?

Post by FireProof »

This question actually has a simple answer. No, renting for life is not inherently a bad idea.
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Re: Renting for life - a bad idea?

Post by Marseille07 »

Generally yes, it is a bad idea because renting costs more per month and owning eventually becomes cheaper after X years.

The question is what is X, but 3~10 years would be a good ballpark.
Out_the_Door
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Re: Renting for life - a bad idea?

Post by Out_the_Door »

JL Collins has a blog post dedicated to renting which is an interesting read...But to put my two cents in...I was raised in NYC and was born a renter. I moved to SoCal in my 30's and immediately bought a house in the suburbs. It was the american dream and I hated it. After five years I sold and rented in Los Angeles to be closer to the action. I compromised and bought a condo near everything and pay a mortgage that's a third of what the rents are in this part of town. I still see myself living here for the next 20 years or until the big quake happens and sinks the west coast. I have no desire to engage in any sort of homeownership again if and when I do move out of this area. I believe if you live in the 98% of the country that's not LA, NYC, SanFran, Seattle that you are better off renting.
bi0hazard
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Re: Renting for life - a bad idea?

Post by bi0hazard »

FIREchief wrote: Thu Mar 11, 2021 3:39 pm
bi0hazard wrote: Thu Mar 11, 2021 9:53 am my roof is covered by insurance
Really? If the roof just reaches end of life, your insurance company will buy you a new one? I've never heard of that before. Do you mind sharing which insurance company?
State Farm. Roofs that need to be replaced twice in just 20 years were presumably damaged by storms, rather than “end-of-life “, which is what happens here in north Texas for example. Insurance companies provide Actual Cash Value (ACV) or Replacement Cost Value (RCV) coverage. I assume owners and renters have insurance, so again, I’d like to see the cost breakdown which I commented on, so we can learn.
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Re: Renting for life - a bad idea?

Post by FIREchief »

bi0hazard wrote: Fri Mar 12, 2021 1:57 am
FIREchief wrote: Thu Mar 11, 2021 3:39 pm
bi0hazard wrote: Thu Mar 11, 2021 9:53 am my roof is covered by insurance
Really? If the roof just reaches end of life, your insurance company will buy you a new one? I've never heard of that before. Do you mind sharing which insurance company?
State Farm. Roofs that need to be replaced twice in just 20 years were presumably damaged by storms, rather than “end-of-life “, which is what happens here in north Texas for example. Insurance companies provide Actual Cash Value (ACV) or Replacement Cost Value (RCV) coverage. I assume owners and renters have insurance, so again, I’d like to see the cost breakdown which I commented on, so we can learn.
Wow. Two roofs in 20 years. How sky high did they jack your rates after that?
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Re: Renting for life - a bad idea?

Post by FIREchief »

FireProof wrote: Thu Mar 11, 2021 3:52 pm This question actually has a simple answer. No, renting for life is not inherently a bad idea.
8-) :sharebeer
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Re: Renting for life - a bad idea?

Post by FIREchief »

Marseille07 wrote: Fri Mar 12, 2021 12:21 am Generally yes, it is a bad idea because renting costs more per month and owning eventually becomes cheaper after X years.

The question is what is X, but 3~10 years would be a good ballpark.
Unless "stuff" happens. And, stuff has a way of happening in life. :twisted: :annoyed
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Marseille07
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Re: Renting for life - a bad idea?

Post by Marseille07 »

FIREchief wrote: Fri Mar 12, 2021 3:07 am
Marseille07 wrote: Fri Mar 12, 2021 12:21 am Generally yes, it is a bad idea because renting costs more per month and owning eventually becomes cheaper after X years.

The question is what is X, but 3~10 years would be a good ballpark.
Unless "stuff" happens. And, stuff has a way of happening in life. :twisted: :annoyed
In theory, "stuff" happens no matter how you live. If you're renting and repairs happen, you may not be responsible but the landlord has been charging you in the shape of higher rent. This is kind of like property taxes - it'd be crazy for the renter to think they aren't paying property taxes, because they definitely are.
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Re: Renting for life - a bad idea?

Post by ponyboy »

Tattarrattat wrote: Wed Mar 10, 2021 9:10 pm We lived in a house we owned for 21 years in an affluent suburb. When we sold and moved out, we analyzed the economics. We sold the house for much more than we paid for it. When we calculated the rate of return it was 3.1% per year. The SP500 in the same period returned about 10% per year. Clearly the house was the worse investment. What about rent? I added up the non-purchase costs of the house: two roofs, two indoor and outdoor paintings, renovated kitchen and 3 bathrooms, new furnace, busted sewer pipe, landscaping, mortgage interest, enormous taxes every year, etc. The home costs were more than what rent would have cost for a similar house in a similar neighborhood. Owning loses again. I came out hundreds of thousands of dollars poorer owning vs renting. This myth that "owning," even long term, is cheaper than renting is only true if you buy a house in a time and place with robust price appreciation, in a time with poor stock market appreciation. If I had bought in maybe Palo Alto or Brooklyn, the home appreciation probably would have put me ahead. But as it stood, buying a reasonable house in a reasonable neighborhood, making reasonable upgrades, put me at a loss. One argument for ownership is for people who don't have the discipline to invest the capital, so called "forced savings." In that scenario, yes, owning is wiser.
People hate to hear this. No one wants to ever think about or admit that they were wrong. I didnt purchase my home as an investment so I dont care. But if people think owning a home is cheaper, I have a bridge to sell them.
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Re: Renting for life - a bad idea?

Post by stoptothink »

ponyboy wrote: Fri Mar 12, 2021 11:13 am
Tattarrattat wrote: Wed Mar 10, 2021 9:10 pm We lived in a house we owned for 21 years in an affluent suburb. When we sold and moved out, we analyzed the economics. We sold the house for much more than we paid for it. When we calculated the rate of return it was 3.1% per year. The SP500 in the same period returned about 10% per year. Clearly the house was the worse investment. What about rent? I added up the non-purchase costs of the house: two roofs, two indoor and outdoor paintings, renovated kitchen and 3 bathrooms, new furnace, busted sewer pipe, landscaping, mortgage interest, enormous taxes every year, etc. The home costs were more than what rent would have cost for a similar house in a similar neighborhood. Owning loses again. I came out hundreds of thousands of dollars poorer owning vs renting. This myth that "owning," even long term, is cheaper than renting is only true if you buy a house in a time and place with robust price appreciation, in a time with poor stock market appreciation. If I had bought in maybe Palo Alto or Brooklyn, the home appreciation probably would have put me ahead. But as it stood, buying a reasonable house in a reasonable neighborhood, making reasonable upgrades, put me at a loss. One argument for ownership is for people who don't have the discipline to invest the capital, so called "forced savings." In that scenario, yes, owning is wiser.
People hate to hear this. No one wants to ever think about or admit that they were wrong. I didnt purchase my home as an investment so I dont care. But if people think owning a home is cheaper, I have a bridge to sell them.
Reality is "people who don't have the discipline to invest the capital, so called "forced savings" probably represents the majority of our population. If you are not part of that demographic, they are a million factors that go into whether buying or renting is best for building wealth.
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Re: Renting for life - a bad idea?

Post by mcraepat9 »

stoptothink wrote: Fri Mar 12, 2021 11:20 am
ponyboy wrote: Fri Mar 12, 2021 11:13 am
Tattarrattat wrote: Wed Mar 10, 2021 9:10 pm We lived in a house we owned for 21 years in an affluent suburb. When we sold and moved out, we analyzed the economics. We sold the house for much more than we paid for it. When we calculated the rate of return it was 3.1% per year. The SP500 in the same period returned about 10% per year. Clearly the house was the worse investment. What about rent? I added up the non-purchase costs of the house: two roofs, two indoor and outdoor paintings, renovated kitchen and 3 bathrooms, new furnace, busted sewer pipe, landscaping, mortgage interest, enormous taxes every year, etc. The home costs were more than what rent would have cost for a similar house in a similar neighborhood. Owning loses again. I came out hundreds of thousands of dollars poorer owning vs renting. This myth that "owning," even long term, is cheaper than renting is only true if you buy a house in a time and place with robust price appreciation, in a time with poor stock market appreciation. If I had bought in maybe Palo Alto or Brooklyn, the home appreciation probably would have put me ahead. But as it stood, buying a reasonable house in a reasonable neighborhood, making reasonable upgrades, put me at a loss. One argument for ownership is for people who don't have the discipline to invest the capital, so called "forced savings." In that scenario, yes, owning is wiser.
People hate to hear this. No one wants to ever think about or admit that they were wrong. I didnt purchase my home as an investment so I dont care. But if people think owning a home is cheaper, I have a bridge to sell them.
Reality is "people who don't have the discipline to invest the capital, so called "forced savings" probably represents the majority of our population. If you are not part of that demographic, they are a million factors that go into whether buying or renting is best for building wealth.
+1

Query whether Bogleheads generally fit into that demographic...
Amateur investors are not cool-headed logicians.
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JoMoney
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Re: Renting for life - a bad idea?

Post by JoMoney »

ponyboy wrote: Fri Mar 12, 2021 11:13 am...
People hate to hear this. No one wants to ever think about or admit that they were wrong. I didnt purchase my home as an investment so I dont care. But if people think owning a home is cheaper, I have a bridge to sell them.
A lot of the results are location and time period dependent. I've seen numbers for the San Francisco bay-area suggesting that over the past decade if one could have gotten into a mortgage on a house and a HELOC, they could have withdrawn a six-figure income + housing payments from the HELOC, sold the house at the end for enough to cover the debt and still have cash left over.

.. but of course, something similar could be said about a leveraged investment in the S&P 500 over the past decade if you could get a similarly large fixed rate loan to invest in that.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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Re: Renting for life - a bad idea?

Post by finite_difference »

rascott wrote: Thu Mar 11, 2021 2:41 am 1) Housing is an expense in life. You have to decide at what level you want to consume it.

2) Landlords aren't in the charity business. They don't provide you housing to break even.

Renting is a more expensive way to live life, over your entire lifetime........ on average. In certain circumstances it makes sense (if you are going to be moving often, lifestyle freedom, etc).

Beyond that, it's common sense that owning is a better financial decision in most markets. Extremes in VHCOL, being ignored.



I've owned a bunch of real estate (and still do). Some has worked great, some hasn't. Like buying stocks with a lot more control. But you can never control everything
It depends on the landlord though. Some individual landlords just want a good tenant that covers the mortgage. Some lose money. Those inefficiencies can be taken advantage of.

Also, the expense ratio of owning a house is about 2% by my estimation. Maybe 1% if you DIY, in which case you are spending significant time on your house. You might enjoy it, but on the other hand you might not!
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bi0hazard
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Re: Renting for life - a bad idea?

Post by bi0hazard »

Here’s an interesting rent vs buy calculator. I only used my location for single family houses in Tx. I don’t see how long term renting is financially rewarding (on top of the dreaded thought that I am financing someone else’s investment -rent- ). Does anyone have real life data on renting coming out ahead long term? That would be of actual benefit to this thread.


https://www.nerdwallet.com/mortgages/re ... calculator
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Re: Renting for life - a bad idea?

Post by gblack »

ponyboy wrote: Fri Mar 12, 2021 11:13 am
Tattarrattat wrote: Wed Mar 10, 2021 9:10 pm We lived in a house we owned for 21 years in an affluent suburb. When we sold and moved out, we analyzed the economics. We sold the house for much more than we paid for it. When we calculated the rate of return it was 3.1% per year. The SP500 in the same period returned about 10% per year. Clearly the house was the worse investment. What about rent? I added up the non-purchase costs of the house: two roofs, two indoor and outdoor paintings, renovated kitchen and 3 bathrooms, new furnace, busted sewer pipe, landscaping, mortgage interest, enormous taxes every year, etc. The home costs were more than what rent would have cost for a similar house in a similar neighborhood. Owning loses again. I came out hundreds of thousands of dollars poorer owning vs renting. This myth that "owning," even long term, is cheaper than renting is only true if you buy a house in a time and place with robust price appreciation, in a time with poor stock market appreciation. If I had bought in maybe Palo Alto or Brooklyn, the home appreciation probably would have put me ahead. But as it stood, buying a reasonable house in a reasonable neighborhood, making reasonable upgrades, put me at a loss. One argument for ownership is for people who don't have the discipline to invest the capital, so called "forced savings." In that scenario, yes, owning is wiser.
People hate to hear this. No one wants to ever think about or admit that they were wrong. I didnt purchase my home as an investment so I dont care. But if people think owning a home is cheaper, I have a bridge to sell them.
I don't get these arguments for maintenance. Who pays for the maintenance on rental properties? The landlords out of the goodness of their hearts? Those costs get passed along to the renters in the long term.

There are a few ways I can see someone coming out ahead by renting:

1) Move a lot. Upsizing and downsizing for lifestyle purposes faster than one might if "stuck" owning, ie consume "less" housing when you don't need it. For instance, moving to a smaller house right when kids leave for college. Or, rent in a good school district when the kids are in school and leave after, etc.

2) Or, you bet on rents/housing costs going down and it works out for you. The irony is that a bunch of other threads on the forum suggest we are in a housing "bubble," which sort of goes against what this post is arguing.

There are a lot of variables, but I feel like the "renting for life" arguments are more lifestyle arguments than financial. And a lot of the critiques of buying houses are actually a critique of buying too much house, not buying in general.
Walkure
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Re: Renting for life - a bad idea?

Post by Walkure »

Tattarrattat wrote: Wed Mar 10, 2021 9:10 pm We lived in a house we owned for 21 years in an affluent suburb. When we sold and moved out, we analyzed the economics. We sold the house for much more than we paid for it. When we calculated the rate of return it was 3.1% per year. The SP500 in the same period returned about 10% per year. Clearly the house was the worse investment. What about rent? I added up the non-purchase costs of the house: two roofs, two indoor and outdoor paintings, renovated kitchen and 3 bathrooms, new furnace, busted sewer pipe, landscaping, mortgage interest, enormous taxes every year, etc. The home costs were more than what rent would have cost for a similar house in a similar neighborhood. Owning loses again. I came out hundreds of thousands of dollars poorer owning vs renting. This myth that "owning," even long term, is cheaper than renting is only true if you buy a house in a time and place with robust price appreciation, in a time with poor stock market appreciation. If I had bought in maybe Palo Alto or Brooklyn, the home appreciation probably would have put me ahead. But as it stood, buying a reasonable house in a reasonable neighborhood, making reasonable upgrades, put me at a loss. One argument for ownership is for people who don't have the discipline to invest the capital, so called "forced savings." In that scenario, yes, owning is wiser.
You mentioned mortgage interest under non-purchase costs, which makes me think you are either double counting it against both the capital gain and the imputed rent or you incorrectly calculated your leveraged return on the home value at time of sale.

Alternatively, 10% nominal SP is the incorrect benchmark. Say you buy a house for $500k cash. Twenty years later, you sell for $1m. By rule of 72, doubling in 20 years = 3.6% unleveraged return. Sure, you could have lump summed 500k into the SP500 on day one, banked a 10% return ex post, and ended up with over $3.3m instead. But you didn't have 500k on day one, you had 100k down and a 400k 20yr mortgage @ 3%. For simplicity, ignore refinancing and mortgage interest deductions. So the comparison is to an initial investment of 100k and DCAing a forced savings payment of $2,218.39 each month for 20 years, for a total shy of $2.4m.
Last edited by Walkure on Fri Mar 12, 2021 1:51 pm, edited 1 time in total.
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Re: Renting for life - a bad idea?

Post by willthrill81 »

Financially, it largely comes down to whether renting or owning will result in a lower lifetime cost. That is highly area dependent.
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Re: Renting for life - a bad idea?

Post by aj76er »

checkyourmath wrote: Thu Mar 11, 2021 9:16 am
Flannelbeard wrote: Tue Mar 09, 2021 10:54 am
checkyourmath wrote: Tue Mar 09, 2021 10:29 am It all depends upon the numbers. I do enjoy people buying housing right now. The numbers are absurd in most urban areas. The riding the wave thing is fun if you are lucky, but probably no so fun if the wave turns into a tsunami.
The median home purchase price in our neck of the Greater Boston Area is about a 23-25x multiple of our rent. It truly boggles the mind.

We make 2.5x the median household income in the towns that we're shopping in and we feel "priced out" (not in terms of what the bank will loan us, but what we feel is reasonable to spend to end up with a payment we feel is fair compared to our rent).

Who is sustaining this market? People FOMO buying at 5x their household income? It all feels so eerie.
We are in the exact same situation. I am an engineer and she is a professor with about 15 years of work experience, but can't afford a house in the Denver area. The median income here is 60k and median home price is 600k. Cool! I think people forget that someone eventually has to be able to sell the mortgage in the long run. If someone buys now at 5x income. They can hope for income to increase faster than inflation which hasn't happened in 40 years or that the next person is able to sell to someone willing to go 7x income.

I thought the end of mortgage forbearance would be the monkey that breaks the camels back, but now we are waiting until June 30, 2021 to see how this all plays out. My guess is they will extend it again for 6 months. We are going to have spring stimulus and fall stimulus for the rest of the 2020s. It would probably be smarter to adjust the tax brackets, so people don't game the system.
The problem is that homes are no longer built for the median income anymore. Instead, they are built for dual income, professional married couples. Thank of two engineers each making $300k, or an engineer and a physician making a combined $500k to 600k per year. The median home price (600k) looks downright cheap compared to those incomes.
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FIREchief
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Re: Renting for life - a bad idea?

Post by FIREchief »

gblack wrote: Fri Mar 12, 2021 12:22 pm
ponyboy wrote: Fri Mar 12, 2021 11:13 am People hate to hear this. No one wants to ever think about or admit that they were wrong. I didnt purchase my home as an investment so I dont care. But if people think owning a home is cheaper, I have a bridge to sell them.
I don't get these arguments for maintenance. Who pays for the maintenance on rental properties? The landlords out of the goodness of their hearts? Those costs get passed along to the renters in the long term.
I've owned and I've rented. When I owned and needed any meaningful maintenance or repairs on the house, more often than not I was like fresh blood in the water. I live in a medium sized urban area, and those who install roofs, do concrete work, treat for termites, upgrade landscaping, remodel, etc. operate at a huge profit margin with those customers who actually wind up paying them. When I rent, the landlords enjoy economies of scale on maintenance and repairs so that it's likely cheaper for me even after they add a market based profit margin.
There are a few ways I can see someone coming out ahead by renting:

1) Move a lot. Upsizing and downsizing for lifestyle purposes faster than one might if "stuck" owning, ie consume "less" housing when you don't need it. For instance, moving to a smaller house right when kids leave for college. Or, rent in a good school district when the kids are in school and leave after, etc.
This is an extremely valid point. It's hard to place a value on not only the scaleability of renting, but also the geographic flexibility (both local and beyond).
2) Or, you bet on rents/housing costs going down and it works out for you. The irony is that a bunch of other threads on the forum suggest we are in a housing "bubble," which sort of goes against what this post is arguing.
I think it goes along with what many are saying. If we're in a bubble, and pops happen, than folks could be back to 2009 (underwater and stuck with a house they may decide they no longer want).
There are a lot of variables, but I feel like the "renting for life" arguments are more lifestyle arguments than financial. And a lot of the critiques of buying houses are actually a critique of buying too much house, not buying in general.
I think you're exactly right here. I've owned and rented. I rent now (and likely for the rest of my life) for the carefree lifestyle. We have 24/7 maintenance for emergencies and next day service for everything else. I know both of our maintenance guys by name and absolutely love being able to just "call the guy" whenever we need anything.

I do see one financial benefit from renting that is hard to quantify. It's like catastrophic insurance coverage. As a renter, I am guaranteed to be able to live in a place of my choosing at market driven rates forever. I am insulated from any real estate disasters, because I can simply move. This is not true of buying a home. 99+% never have any catastrophic events, but there is always the chance that I will wake up as a homeowner some day and find out that the wheel came up double zero. I have a sinkhole in my yard. Half my yard just disappeared in a mudslide. The house next door was just condemned. They just discovered a meth lab on my street. A gang just moved in. A chemical dump was just discovered. Okay, most of those are highly unlikely. Then there are the major plumbing leaks, structural failures, fires, etc. Sure, there is insurance for these but there are costs beyond the dollars and cents. We had a home development in our area that started building new homes and after the development was about half complete, foundations started to crumble. Apparently, the land was near an aquafer and too unstable to build on. The builder went bankrupt overnight and I don't believe homeowners insurance covered such things. "Fortunately" for most buyers, they just walked away and defaulted, sticking the mortgage holders with the losses. No thanks. I'll play the part of the sucker who is buying a building / SFH for my landlord, and I'll likely sleep better at night than that guy who is getting all my money. 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Marseille07
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Re: Renting for life - a bad idea?

Post by Marseille07 »

bi0hazard wrote: Fri Mar 12, 2021 11:48 am Here’s an interesting rent vs buy calculator. I only used my location for single family houses in Tx. I don’t see how long term renting is financially rewarding (on top of the dreaded thought that I am financing someone else’s investment -rent- ). Does anyone have real life data on renting coming out ahead long term? That would be of actual benefit to this thread.


https://www.nerdwallet.com/mortgages/re ... calculator
Long term renting is not financially rewarding. I see lots of posters justifying renting because they bought properties requiring a lot of maintenance. Home ownership doesn't have to be that way.
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slowandsteadywins
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Re: Renting for life - a bad idea?

Post by slowandsteadywins »

bi0hazard wrote: Fri Mar 12, 2021 11:48 am Here’s an interesting rent vs buy calculator. I only used my location for single family houses in Tx. I don’t see how long term renting is financially rewarding (on top of the dreaded thought that I am financing someone else’s investment -rent- ). Does anyone have real life data on renting coming out ahead long term? That would be of actual benefit to this thread.


https://www.nerdwallet.com/mortgages/re ... calculator
Thanks for sharing this tool. Nerd Wallet seems to come in handy quite often with these sort of things. I did the calculations, and I would be better off renting for around 6-12 years before break even if I bought the same property and all associated fees. I may be here that long, but I can also re-assess and move prior to then; and have the flexibility and freedom to change locations as the economy and job opportunities shift. Single, no kids, no debt, and my current place includes furnishings and most utilities in the rent price.
"Nothing in this world can take the place of persistence...Persistence and determination alone are omnipotent." -Calvin Coolidge | P!
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