Renting for life - a bad idea?

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tj
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Re: Renting for life - a bad idea?

Post by tj »

Marseille07 wrote: Mon Jun 20, 2022 4:18 pm
tj wrote: Mon Jun 20, 2022 4:14 pm
Marseille07 wrote: Mon Jun 20, 2022 3:54 pm
tj wrote: Mon Jun 20, 2022 3:50 pm My opinion is the opposite - you don't "have" the equity. It's stuck inside the condo until you sell it. When you rent, you don't have $$$ tied up in real estate 🤷🏻‍♂️
Okay, but owning a house might let you go 100/0 on your AA because worst comes worst, you can HELOC or sell the property.

A renter running 60/40 because they have nothing to fall back on...essentially you're tying $$$ up in bonds instead. Our friend Apathizer's allocation is fairly conservative, for example.

Why would the renter be more inclined to hold bonds?
I already explained...a homeowner can sell the property if they absolutely must. A renter can't do that.
The renter doesn't need to do that because they have less of their net worth stuck in illiquid asset.
toomanysidehustles
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Re: Renting for life - a bad idea?

Post by toomanysidehustles »

Apathizer wrote: Thu Apr 07, 2022 12:08 am
That's why it's prudent to keep your possessions minimal, regardless of whether you rent or own. It greatly simplifies things. The next time I move, I plan to make sure everything I have fits in a minivan.
Sounds horrible TBH, but this goes to show some people live very different lives. I moved to CO from GA in 1999 at 24 years old with more stuff than that.
Lykko
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Re: Renting for life - a bad idea?

Post by Lykko »

In the ideal renting situation yes you'd have more time for leisure as you wouldn't have to worry about repairs and maintenance to the house, and you would have a lawn service as part of the rental agreement. The landlord or property management company would be responsive and care about the property and send a handyman when something broke. You'd be more mobile and have less $$$ tied up in the property so more of your funds could be liquid. You'd have a lease that stipulates a time period where you'd be guaranteed to be able to stay and put down roots.

The reality is that if something breaks you don't have the luxury of just calling someone and having someone else pay for it because in most situations the landlord doesn't care that you have to live with a broken heater for a few weeks, or that the sink is broken, or that the cabinet door won't close anymore. So instead of having more time to recreate and a higher standard of living you end up just dealing with things yourself or worse living in a dump where half of everything is damaged or broken.

In reality the rent will rise each time the lease is up so you don't really have a reliable amount of liquid $$$ because the amount you owe changes from year to year, or worse the person who does own the property decides to sell at any point and then you have to spend that liquid $$$ moving yourself or hiring professionals to move you if you got too comfortable.

I am probably jaded because I've been renting for too long but I've seen every bad thing that can happen to a renter and lived most of it myself.
Kinkajou82
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Re: Renting for life - a bad idea?

Post by Kinkajou82 »

Owning helps me sleep at night.

Edit: Owning after paying off the mortgage helps me sleep at night.
Last edited by Kinkajou82 on Tue Jun 21, 2022 1:12 am, edited 1 time in total.
nigel_ht
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Re: Renting for life - a bad idea?

Post by nigel_ht »

AerialWombat wrote: Sat Jun 18, 2022 8:57 pm I’ve now accumulated power tools...
This right here puts minivan minimalism at risk for me...
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FreddieFIRE
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Re: Renting for life - a bad idea?

Post by FreddieFIRE »

Lykko wrote: Mon Jun 20, 2022 4:52 pm The reality is that if something breaks you don't have the luxury of just calling someone and having someone else pay for it because in most situations the landlord doesn't care that you have to live with a broken heater for a few weeks, or that the sink is broken, or that the cabinet door won't close anymore. So instead of having more time to recreate and a higher standard of living you end up just dealing with things yourself or worse living in a dump where half of everything is damaged or broken.

or worse the person who does own the property decides to sell at any point and then you have to spend that liquid $$$ moving yourself or hiring professionals to move you if you got too comfortable.
I've owned three houses. The last one, I owned 23 years and paid off the entire mortgage after 15. I now rent a nice apartment and have none of the problems that you describe above. I have 24/7 maintenance response for broken heaters. Next day for sink problems. There is zero risk of my being forced to move because of a sale by the landlord.
A house and a job. Once the American dream. Two things I'll never again have. Life is simple (and good).
Marseille07
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Re: Renting for life - a bad idea?

Post by Marseille07 »

tj wrote: Mon Jun 20, 2022 4:26 pm The renter doesn't need to do that because they have less of their net worth stuck in illiquid asset.
I was talking about a situation where SHTF and a homeowner is forced to sell their residence to get some cash.

If you're a renter and SHTF, you don't have anything to sell. This is why the renter's AA needs to be more conservative. If you're claiming that SHTF doesn't happen on the renter, I don't quite agree with that.
toomanysidehustles
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Re: Renting for life - a bad idea?

Post by toomanysidehustles »

FreddieFIRE wrote: Mon Jun 20, 2022 5:47 pm I now rent a nice apartment and have none of the problems that you describe above. There is zero risk of my being forced to move because of a sale by the landlord.
Out of curiosity..........how can you say you rent and you have zero risk of being forced to move in the same post?

I have acquaintances who own apartment buildings and none of them thought they would ever sell. All of them have sold and rolled/1031'd into bigger unit properties. Pretty sure the new owners raised rents on every unit after the sale too.
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FreddieFIRE
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Re: Renting for life - a bad idea?

Post by FreddieFIRE »

toomanysidehustles wrote: Mon Jun 20, 2022 7:03 pm
FreddieFIRE wrote: Mon Jun 20, 2022 5:47 pm I now rent a nice apartment and have none of the problems that you describe above. There is zero risk of my being forced to move because of a sale by the landlord.
Out of curiosity..........how can you say you rent and you have zero risk of being forced to move in the same post?

I have acquaintances who own apartment buildings and none of them thought they would ever sell. All of them have sold and rolled/1031'd into bigger unit properties. Pretty sure the new owners raised rents on every unit after the sale too.
My rent going up doesn't force me to move. I'll gladly pay market prices for the duration. 8-)
A house and a job. Once the American dream. Two things I'll never again have. Life is simple (and good).
Apathizer
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Re: Renting for life - a bad idea?

Post by Apathizer »

Marseille07 wrote: Mon Jun 20, 2022 6:51 pm
tj wrote: Mon Jun 20, 2022 4:26 pm The renter doesn't need to do that because they have less of their net worth stuck in illiquid asset.
I was talking about a situation where SHTF and a homeowner is forced to sell their residence to get some cash.

If you're a renter and SHTF, you don't have anything to sell. This is why the renter's AA needs to be more conservative. If you're claiming that SHTF doesn't happen on the renter, I don't quite agree with that.
If a renter has diversified stocks and bonds they have plenty to sell. They can also sell as much or little as they want or need whenever they want. Even if the markets are down, they still have more flexibility.

If the real estate market crashes (SHTF), the owner probably won't be able to sell so easily or maybe not at all. Unlike selling stocks and bonds, selling real estate requires finding a specific buyer which could be difficult in a bad market.

As as I've said before, hell, a renter can just bail and the consequences won't be nearly so bad as a mortgagor being foreclosed on.
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Marseille07
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Re: Renting for life - a bad idea?

Post by Marseille07 »

Apathizer wrote: Tue Jun 21, 2022 1:02 am If a renter has diversified stocks and bonds they have plenty to sell. They can also sell as much or little as they want or need whenever they want. Even if the markets are down, they still have more flexibility.

If the real estate market crashes (SHTF), the owner probably won't be able to sell so easily or maybe not at all. Unlike selling stocks and bonds, selling real estate requires finding a specific buyer which could be difficult in a bad market.

As as I've said before, hell, a renter can just bail and the consequences won't be nearly so bad as a mortgagor being foreclosed on.
By SHTF I'm talking about a personal level, not the market.

And you're reinforcing my point by this: "diversified stocks and bonds they have plenty to sell." A homeowner can go heavy in equities because their home acts like holding a bond / REIT position.
furwut
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Re: Renting for life - a bad idea?

Post by furwut »

After spending the morning reading this thread from the beginning I’m none the wiser except to say it’s a highly personal and locally variable decision. Just don’t buy because it’s “the thing responsible adults do at a certain age”.
Californiastate
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Re: Renting for life - a bad idea?

Post by Californiastate »

Buy because it makes realistic long term financial sense. Make an honest assessment of where you want to be in 30 years. Are you confident and disciplined enough to rent and invest to cover inflated rental pricing for perpetuity? What sacrifices will need to be made to purchase a home? Will you need to forego an extensive vacation schedule to save up a down payment? Will you be happy staying at home to save money? Everyone can't afford to finance a home along with toys and yearly European vacations. I know more than a few younger working adults who are living for the moment. I assume they are camping on the idea of inheriting their retirement.
Apathizer
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Re: Renting for life - a bad idea?

Post by Apathizer »

Marseille07 wrote: Tue Jun 21, 2022 10:16 am
Apathizer wrote: Tue Jun 21, 2022 1:02 am If a renter has diversified stocks and bonds they have plenty to sell. They can also sell as much or little as they want or need whenever they want. Even if the markets are down, they still have more flexibility.

If the real estate market crashes (SHTF), the owner probably won't be able to sell so easily or maybe not at all. Unlike selling stocks and bonds, selling real estate requires finding a specific buyer which could be difficult in a bad market.

As as I've said before, hell, a renter can just bail and the consequences won't be nearly so bad as a mortgagor being foreclosed on.
By SHTF I'm talking about a personal level, not the market.

And you're reinforcing my point by this: "diversified stocks and bonds they have plenty to sell." A homeowner can go heavy in equities because their home acts like holding a bond / REIT position.
That assumes someone can do both, but that's not necessarily the case. In fact for most it isn't, at least in the US, where most people have most of their equity in their owned or mortgaged home, with little else in other investments.
Californiastate wrote: Tue Jun 21, 2022 11:45 am Buy because it makes realistic long term financial sense. Make an honest assessment of where you want to be in 30 years. Are you confident and disciplined enough to rent and invest to cover inflated rental pricing for perpetuity? What sacrifices will need to be made to purchase a home? Will you need to forego an extensive vacation schedule to save up a down payment? Will you be happy staying at home to save money? Everyone can't afford to finance a home along with toys and yearly European vacations. I know more than a few younger working adults who are living for the moment. I assume they are camping on the idea of inheriting their retirement.
How confident can most of us be of being reasonably certain of what we want and where we'll be over then next 3 decades? I've always lived on the west coast. A decade ago I thought I'd retire here, but with high costs, wildfires, and more frequent and intense heat-waves I'm considering retiring in the Great Lakes region where costs are lower and the effects of climate change are expected to be less severe.

But maybe I'll try it, won't like it, and will want to move elsewhere. That's why I prefer to rent. It's much simpler and more flexible. If I were reasonably certain of the area I want to live over the next 30 years owning would probably make sense, but again how many of us can be reasonably certain of that?
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Californiastate
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Re: Renting for life - a bad idea?

Post by Californiastate »

Apathizer wrote: Tue Jun 21, 2022 12:07 pm
Marseille07 wrote: Tue Jun 21, 2022 10:16 am
Apathizer wrote: Tue Jun 21, 2022 1:02 am If a renter has diversified stocks and bonds they have plenty to sell. They can also sell as much or little as they want or need whenever they want. Even if the markets are down, they still have more flexibility.

If the real estate market crashes (SHTF), the owner probably won't be able to sell so easily or maybe not at all. Unlike selling stocks and bonds, selling real estate requires finding a specific buyer which could be difficult in a bad market.

As as I've said before, hell, a renter can just bail and the consequences won't be nearly so bad as a mortgagor being foreclosed on.
By SHTF I'm talking about a personal level, not the market.

And you're reinforcing my point by this: "diversified stocks and bonds they have plenty to sell." A homeowner can go heavy in equities because their home acts like holding a bond / REIT position.
That assumes someone can do both, but that's not necessarily the case. In fact for most it isn't, at least in the US, where most people have most of their equity in their owned or mortgaged home, with little else in other investments.
Californiastate wrote: Tue Jun 21, 2022 11:45 am Buy because it makes realistic long term financial sense. Make an honest assessment of where you want to be in 30 years. Are you confident and disciplined enough to rent and invest to cover inflated rental pricing for perpetuity? What sacrifices will need to be made to purchase a home? Will you need to forego an extensive vacation schedule to save up a down payment? Will you be happy staying at home to save money? Everyone can't afford to finance a home along with toys and yearly European vacations. I know more than a few younger working adults who are living for the moment. I assume they are camping on the idea of inheriting their retirement.
How confident can most of us be of being reasonably certain of what we want and where we'll be over then next 3 decades? I've always lived on the west coast. A decade ago I thought I'd retire here, but with high costs, wildfires, and more frequent and intense heat-waves I'm considering retiring in the Great Lakes region where costs are lower and the effects of climate change are expected to be less severe.

But maybe I'll try it, won't like it, and will want to move elsewhere. That's why I prefer to rent. It's much simpler and more flexible. If I were reasonably certain of the area I want to live over the next 30 years owning would probably make sense, but again how many of us can be reasonably certain of that?
Sell the property and move. Who knows, you might even make a little money on the transaction.
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Re: Renting for life - a bad idea?

Post by Apathizer »

Californiastate wrote: Tue Jun 21, 2022 12:20 pm
Apathizer wrote: Tue Jun 21, 2022 12:07 pm
Marseille07 wrote: Tue Jun 21, 2022 10:16 am
Apathizer wrote: Tue Jun 21, 2022 1:02 am If a renter has diversified stocks and bonds they have plenty to sell. They can also sell as much or little as they want or need whenever they want. Even if the markets are down, they still have more flexibility.

If the real estate market crashes (SHTF), the owner probably won't be able to sell so easily or maybe not at all. Unlike selling stocks and bonds, selling real estate requires finding a specific buyer which could be difficult in a bad market.

As as I've said before, hell, a renter can just bail and the consequences won't be nearly so bad as a mortgagor being foreclosed on.
By SHTF I'm talking about a personal level, not the market.

And you're reinforcing my point by this: "diversified stocks and bonds they have plenty to sell." A homeowner can go heavy in equities because their home acts like holding a bond / REIT position.
That assumes someone can do both, but that's not necessarily the case. In fact for most it isn't, at least in the US, where most people have most of their equity in their owned or mortgaged home, with little else in other investments.
Californiastate wrote: Tue Jun 21, 2022 11:45 am Buy because it makes realistic long term financial sense. Make an honest assessment of where you want to be in 30 years. Are you confident and disciplined enough to rent and invest to cover inflated rental pricing for perpetuity? What sacrifices will need to be made to purchase a home? Will you need to forego an extensive vacation schedule to save up a down payment? Will you be happy staying at home to save money? Everyone can't afford to finance a home along with toys and yearly European vacations. I know more than a few younger working adults who are living for the moment. I assume they are camping on the idea of inheriting their retirement.
How confident can most of us be of being reasonably certain of what we want and where we'll be over then next 3 decades? I've always lived on the west coast. A decade ago I thought I'd retire here, but with high costs, wildfires, and more frequent and intense heat-waves I'm considering retiring in the Great Lakes region where costs are lower and the effects of climate change are expected to be less severe.

But maybe I'll try it, won't like it, and will want to move elsewhere. That's why I prefer to rent. It's much simpler and more flexible. If I were reasonably certain of the area I want to live over the next 30 years owning would probably make sense, but again how many of us can be reasonably certain of that?
Sell the property and move. Who knows, you might even make a little money on the transaction.
But frequently buying and selling property has many high, unrecoverable costs and can be very risky. Every time you buy or sell there are buyer and seller costs, so if you might move frequently renting is much more practical.
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Re: Renting for life - a bad idea?

Post by investnoob »

I am currently renting because I don't find it affordable to buy in the place/neighbourhood I want to live.
I found a decent apartment that only takes up around 25% of my net income.

If I bought an equivalent apartment it would probably take about 50-60% of my net income with 20% down.

The mortgage would be gone in 25 years, but until then I find it would be too tight. Its not likely that my income will go up to make up the difference until then.
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Re: Renting for life - a bad idea?

Post by Apathizer »

investnoob wrote: Tue Jun 21, 2022 12:49 pm I am currently renting because I don't find it affordable to buy in the place/neighbourhood I want to live.
I found a decent apartment that only takes up around 25% of my net income.

If I bought an equivalent apartment it would probably take about 50-60% of my net income with 20% down.

The mortgage would be gone in 25 years, but until then I find it would be too tight. Its not likely that my income will go up to make up the difference until then.
If you can maintain such figures consistently and are happy with your rentals there's no reason for you to own. Ever. You're much better off renting and investing your ample disposable income.

If you aren't too particular about your living situation there are usually affordable rentals available even in a tight market. While finding a good situation might be difficult, a disciplined, investing renter is likely to put themselves in an equal or better situation than a homeowner without all the risk and responsibility of a homeowner.
Last edited by Apathizer on Wed Jun 22, 2022 2:21 am, edited 1 time in total.
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Californiastate
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Re: Renting for life - a bad idea?

Post by Californiastate »

Apathizer wrote: Tue Jun 21, 2022 2:51 pm
investnoob wrote: Tue Jun 21, 2022 12:49 pm I am currently renting because I don't find it affordable to buy in the place/neighbourhood I want to live.
I found a decent apartment that only takes up around 25% of my net income.

If I bought an equivalent apartment it would probably take about 50-60% of my net income with 20% down.

The mortgage would be gone in 25 years, but until then I find it would be too tight. Its not likely that my income will go up to make up the difference until then.
If you can maintain such figures consistently and are happy with your rental there's no reason for you own. Ever. You're much better off renting and investing your ample disposable income.

If you aren't too particular about your living situation there are usually affordable rentals available even in a tight market. While finding a good situation might be difficult, a disciplined, investing renter is likely to put themselves in an equal or better situation than a homeowner without all the risk and responsibility of a homeowner.
Your idea works in theory. I’ve yet to meet anyone who is better off over the previous 30 years by only renting. I know some on here have rued the day they bought their homes in 2005.
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Re: Renting for life - a bad idea?

Post by Apathizer »

Californiastate wrote: Tue Jun 21, 2022 3:21 pm
Apathizer wrote: Tue Jun 21, 2022 2:51 pm
investnoob wrote: Tue Jun 21, 2022 12:49 pm I am currently renting because I don't find it affordable to buy in the place/neighbourhood I want to live.
I found a decent apartment that only takes up around 25% of my net income.

If I bought an equivalent apartment it would probably take about 50-60% of my net income with 20% down.

The mortgage would be gone in 25 years, but until then I find it would be too tight. Its not likely that my income will go up to make up the difference until then.
If you can maintain such figures consistently and are happy with your rental there's no reason for you own. Ever. You're much better off renting and investing your ample disposable income.

If you aren't too particular about your living situation there are usually affordable rentals available even in a tight market. While finding a good situation might be difficult, a disciplined, investing renter is likely to put themselves in an equal or better situation than a homeowner without all the risk and responsibility of a homeowner.
Your idea works in theory. I’ve yet to meet anyone who is better off over the previous 30 years by only renting. I know some on here have rued the day they bought their homes in 2005.
Well, I'm one of those people who is better off having rented. I have at last as much in my ROTH as I would had I bought, and a ROTH is simpler and more tax-advantaged.

Most recent home-buyers regret their purchase. Since there are so many who profit from real estate, they have a vested interest in perpetuating the 'buying a home will make you happy' fallacy, but that's simply not the case.
https://www.businessinsider.com/millenn ... ket-2022-2
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Californiastate
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Re: Renting for life - a bad idea?

Post by Californiastate »

Apathizer wrote: Tue Jun 21, 2022 3:30 pm
Californiastate wrote: Tue Jun 21, 2022 3:21 pm
Apathizer wrote: Tue Jun 21, 2022 2:51 pm
investnoob wrote: Tue Jun 21, 2022 12:49 pm I am currently renting because I don't find it affordable to buy in the place/neighbourhood I want to live.
I found a decent apartment that only takes up around 25% of my net income.

If I bought an equivalent apartment it would probably take about 50-60% of my net income with 20% down.

The mortgage would be gone in 25 years, but until then I find it would be too tight. Its not likely that my income will go up to make up the difference until then.
If you can maintain such figures consistently and are happy with your rental there's no reason for you own. Ever. You're much better off renting and investing your ample disposable income.

If you aren't too particular about your living situation there are usually affordable rentals available even in a tight market. While finding a good situation might be difficult, a disciplined, investing renter is likely to put themselves in an equal or better situation than a homeowner without all the risk and responsibility of a homeowner.
Your idea works in theory. I’ve yet to meet anyone who is better off over the previous 30 years by only renting. I know some on here have rued the day they bought their homes in 2005.
Well, I'm one of those people who is better off having rented. I have at last as much in my ROTH as I would had I bought, and a ROTH is simpler and more tax-advantaged.

Most recent home-buyers regret their purchase. Since there are so many who profit from real estate, they have a vested interest in perpetuating the 'buying a home will make you happy' fallacy, but that's simply not the case.
https://www.businessinsider.com/millenn ... ket-2022-2
Did you seriously just link an article that highlighted millennial feelings about home purchases to defend your point?
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Re: Renting for life - a bad idea?

Post by 8foot7 »

Californiastate wrote: Tue Jun 21, 2022 3:21 pm I’ve yet to meet anyone who is better off over the previous 30 years by only renting.
Me, either.

I don't know about others, but for me, a goal of mine was to be able to live in a situation where I didn't have to be "too particular about [my] living situation," which I assume means in tight markets living with roommates, sharing a kitchen, having a single bedroom to myself and everything else common, living in someone's basement or attic, sleeping on a camping mattress, etc. I think it's very nearly bogus to compare living in those types of situations to living in even a small house or condo. Maybe the numbers pencil out but there has to be a quality of life factor. And you'll never convince me people want to live that way for 30 years.
Last edited by 8foot7 on Tue Jun 21, 2022 4:04 pm, edited 1 time in total.
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Re: Renting for life - a bad idea?

Post by BogleMelon »

Apathizer wrote: Tue Jun 21, 2022 3:30 pm Since there are so many who profit from real estate,
The same folks exist for renting. You won't see or deal with them directly though, but their costs and fees will come down to you (after a markup) through your landlord.
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Re: Renting for life - a bad idea?

Post by ExTx »

fredflinstone wrote: Tue Mar 09, 2021 9:48 am It depends on the individual's circumstances.

The following factors arguing in favor of owning vs renting:

- home prices low relative to rents
- individual in question has little need/desire for flexibility
- individual is handy and/or enjoys home maintenance
- individual lives in a place like Florida or Texas in which homesteads are completely exempt from creditors
- individual believes that home prices will rise during the next few years.
- indivdual cannot obtain a home he or she wants as a renter
- individual desires a large mortgage for tax purposes.

In some circumstances, renting is a reasonable option -- particularly if flexibility is important to you.

If even renting does not give you enough flexibility there is another option you may wish to consider: living out of AirBNBs full time. This is less costly than many people think and provides almost limitless flexibility.

Can you explain the last sentence about a large mortgage for tax purposes? I've only owned paid of houses, or paid cash, but I'm out of my RE holdings, so I'm waiting and may do a 30 yr with a large downpayment.
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Re: Renting for life - a bad idea?

Post by FreddieFIRE »

Californiastate wrote: Tue Jun 21, 2022 3:21 pm I’ve yet to meet anyone who is better off over the previous 30 years by only renting.
Speaking strictly in financial terms, I'm sure you're correct in the vast majority of cases.
8foot7 wrote: Tue Jun 21, 2022 4:00 pm Maybe the numbers pencil out but there has to be a quality of life factor.
This. Quality of life means vastly different things for different people. Using that 30 year timeframe, I owned a house (two different ones) for about 26 of those thirty years. I now rent. The first house barely broke even after 7 years and a LOT of sweat equity (think landscaping, painting, etc.). The other appreciated about 54% over 23 years of ownership. That's a 2.4% nominal rate of return. Sure, I had imputed income from living there, but I also paid interest on a mortgage (it wasn't the free money back then) and spent a lot of money on roofing upgrades, landscaping, appliance replacements, etc. Bottom line is that my bottom line may now be worse off but my quality of life is vastly improved. 8-)
A house and a job. Once the American dream. Two things I'll never again have. Life is simple (and good).
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Re: Renting for life - a bad idea?

Post by sailaway »

FreddieFIRE wrote: Tue Jun 21, 2022 5:26 pm
Californiastate wrote: Tue Jun 21, 2022 3:21 pm I’ve yet to meet anyone who is better off over the previous 30 years by only renting.
Speaking strictly in financial terms, I'm sure you're correct in the vast majority of cases.
8foot7 wrote: Tue Jun 21, 2022 4:00 pm Maybe the numbers pencil out but there has to be a quality of life factor.
This. Quality of life means vastly different things for different people. Using that 30 year timeframe, I owned a house (two different ones) for about 26 of those thirty years. I now rent. The first house barely broke even after 7 years and a LOT of sweat equity (think landscaping, painting, etc.). The other appreciated about 54% over 23 years of ownership. That's a 2.4% nominal rate of return. Sure, I had imputed income from living there, but I also paid interest on a mortgage (it wasn't the free money back then) and spent a lot of money on roofing upgrades, landscaping, appliance replacements, etc. Bottom line is that my bottom line may now be worse off but my quality of life is vastly improved. 8-)
Over 30 years, I have lived in several different cities and two different countries. My adult (very nearly exactly 30 years of being so) record in one place is 4 years. The three and a half years that I did own only paid off because I got the very best of the GFC recovery first time home buyer grants.

We might be better off if we had bought 4 years ago, due to leverage, but we would have also paid more in taxes, interest and HOA than we did in rent, plus the landlord has had to replace two appliances and treat for termites (the unit we would have bought had upgraded appliances, though, so we might not have had those expenses).
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Re: Renting for life - a bad idea?

Post by Johndoefire65 »

Depends. Dozens of factors
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Re: Renting for life - a bad idea?

Post by Apathizer »

BogleMelon wrote: Tue Jun 21, 2022 4:04 pm
Apathizer wrote: Tue Jun 21, 2022 3:30 pm Since there are so many who profit from real estate,
The same folks exist for renting. You won't see or deal with them directly though, but their costs and fees will come down to you (after a markup) through your landlord.
Most of the time the long-term cost of renting is only slightly higher than the long-term cost of owning.

While rent might be higher in the short term, whenever there's a dearth of available rentals developers have an incentive to build more rentals to take advantage of the market. This brings the long term total cost of renting close to the total cost of owning.

So yes, if you're reasonably certain you're going to live in an area at least several years owning will probably be less expensive, but the trade-off is complexity, risk and inflexibility. For some that might be a reasonable trade-off but for others it isn't.
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Re: Renting for life - a bad idea?

Post by airborne »

furwut wrote: Tue Jun 21, 2022 10:45 am After spending the morning reading this thread from the beginning I’m none the wiser except to say it’s a highly personal and locally variable decision. Just don’t buy because it’s “the thing responsible adults do at a certain age”.
This is likely the most accurate post on the thread. I just can’t understand the seemingly religious fervor parts of the pro-ownership crowd have. If it’s best for you, great; it isn’t best for everyone no matter how you try to rationalize your opinion.
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Re: Renting for life - a bad idea?

Post by Goal33 »

My wife wanted to own a cute little house. So renting for life would have been a bad idea. Transaction costs on the RE were cheaper than divorce. So we bought. The timing worked out financially but it wasn’t a financial decision.
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Re: Renting for life - a bad idea?

Post by Goal33 »

My wife wanted to own a cute little house. So renting for life would have been a bad idea. Transaction costs on the RE were cheaper than divorce. So we bought. The timing worked out financially but it wasn’t a financial decision.
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Re: Renting for life - a bad idea?

Post by retire2022 »

op

This is a great rant by John Oliver 3 days ago: https://www.youtube.com/watch?v=L4qmDnYli2E

(some words in audio are not censored)
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Re: Renting for life - a bad idea?

Post by FreddieFIRE »

Goal33 wrote: Thu Jun 23, 2022 8:44 pm My wife wanted to own a cute little house. So renting for life would have been a bad idea.
Couldn't you rent a cute little house?
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Re: Renting for life - a bad idea?

Post by Goal33 »

FreddieFIRE wrote: Fri Jun 24, 2022 12:09 am
Goal33 wrote: Thu Jun 23, 2022 8:44 pm My wife wanted to own a cute little house. So renting for life would have been a bad idea.
Couldn't you rent a cute little house?
No. She wanted to own it.
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Re: Renting for life - a bad idea?

Post by EnjoyIt »

My opinion based on being a no mortgage home owner and now a renter.

1) renting is easier and less stressful if you find the right house and the right landlord. I have had issues in the past when I was younger, poor, and had to take what I can get.

2) Renting gives us more flexibility with regards to moving which is nice. Home ownership gives us flexibility with the home and making any additions.

3) Renting is temporary for us which gives us less desire to decorate and make the place our own. On the one hand we don’t waste money but on the other, the place is less homey.

4) When we buy, we tend to spend more money on wants as opposed to needs. When we rent, we are willing to settle on certain things and therefor we tend to rent less house.

5) When we own a house we make upgrades that we desire such as building out a media room, updating kitchen cabinets or updating the master bath. Sure we get some of that money back when we sell, but only at a fraction of the expense. We would never spend that kind of money on a rental.

6) In our area, although real estate prices have gone up, even historically, it has been far more advantageous to invest in a 70/30 portfolio which is what we have. During the time we owned the house, we would have been way richer if we rented. Who knows what future market and real estate returns will look like.

7) We currently rent because we desire the flexibility, but eventually we plan to buy because we are willing to spend extra money on this lifestyle choice. Also, I would prefer, once retired to live in a mortgage free home with solar panels and an electric car to keep monthly expenditures lower. I foresee us retiring in the 24% tax bracket. That means that any additional dollar we withdraw may very well be coming from my pretax accounts and I will have to pay 24% extra due to taxes. Minimizing retirement expenses by being mortgage free appears to be the correct choice for us. But I’ll be doing that math when the time comes.

8) At the end of the day rent vs buy is a personal choice based on lifestyle, location, and expenses. Each person/family should evaluate their own pros and cons and make their own choices.
Last edited by EnjoyIt on Fri Jun 24, 2022 1:22 pm, edited 1 time in total.
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Re: Renting for life - a bad idea?

Post by sailaway »

EnjoyIt wrote: Fri Jun 24, 2022 11:10 am

3) Renting is temporary for us which gives us less desire to decorate and make the place our own. On the one hand we don’t waste money but on the other, the place is less homey.

The homeyness of our home comes more from blankets and using the space in our own way. We have no coffee table, because we use the floor space for yoga and exercise. My husband has a folding outdoor rocking chair that he uses in place of an arm chair, because it is what he wants.

The only thing hung on the wall was a TV, although our roommate did have one painting hung in the common area for awhile. Bare walls are how I know I am home: don't see this often any place else!
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Re: Renting for life - a bad idea?

Post by Apathizer »

EnjoyIt wrote: Fri Jun 24, 2022 11:10 am...
8) At the end of the day rent vs buy is a personal choice based on lifestyle, location, and expenses. Each person/family should evaluate their own pros and cons and make their own choices.
Yes, others have made the same point and I think it's worth repeating. There are many considerations unrelated to finance. Some people need or want space for projects and hobbies, others don't. Some people love gardening and yard-work, others don't. Some people are reasonably certain they'll stay in the same area at least several years, others aren't.

But in my experience, the pro-ownership side is more zealous. It's more common to hear people say something like 'renting is just throwing money away' and to aggressively promote homeownership than it is for renters to discourage owning. Maybe that's why we renters sometimes push back so harder than we should. :happy
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Re: Renting for life - a bad idea?

Post by FreddieFIRE »

Apathizer wrote: Sat Jun 25, 2022 12:01 pm But in my experience, the pro-ownership side is more zealous. It's more common to hear people say something like 'renting is just throwing money away' and to aggressively promote homeownership than it is for renters to discourage owning. Maybe that's why we renters sometimes push back so harder than we should. :happy
I think it's great when folks flock towards home ownership. It helps keep my rental costs down. 8-)
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Re: Renting for life - a bad idea?

Post by Marseille07 »

Apathizer wrote: Sat Jun 25, 2022 12:01 pm But in my experience, the pro-ownership side is more zealous. It's more common to hear people say something like 'renting is just throwing money away' and to aggressively promote homeownership than it is for renters to discourage owning. Maybe that's why we renters sometimes push back so harder than we should. :happy
Well if all of your belongings fit in a minivan and if you only require 200 sqft of space, then renting can make sense.

Owning a house makes certain assumptions in terms of household items & space, even if we consider a very small unit.
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Re: Renting for life - a bad idea?

Post by FreddieFIRE »

Marseille07 wrote: Sat Jun 25, 2022 12:21 pm
Apathizer wrote: Sat Jun 25, 2022 12:01 pm But in my experience, the pro-ownership side is more zealous. It's more common to hear people say something like 'renting is just throwing money away' and to aggressively promote homeownership than it is for renters to discourage owning. Maybe that's why we renters sometimes push back so harder than we should. :happy
Well if all of your belongings fit in a minivan and if you only require 200 sqft of space, then renting can make sense.
Can't I just rent a bigger place if I can't bring myself to part with a bunch of crap?
Last edited by FreddieFIRE on Sat Jun 25, 2022 5:23 pm, edited 1 time in total.
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Re: Renting for life - a bad idea?

Post by av111 »

FreddieFIRE wrote: Sat Jun 25, 2022 12:11 pm
Apathizer wrote: Sat Jun 25, 2022 12:01 pm But in my experience, the pro-ownership side is more zealous. It's more common to hear people say something like 'renting is just throwing money away' and to aggressively promote homeownership than it is for renters to discourage owning. Maybe that's why we renters sometimes push back so harder than we should. :happy
I think it's great when folks flock towards home ownership. It helps keep my rental costs down. 8-)
Many homeowners love tenants
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Re: Renting for life - a bad idea?

Post by FreddieFIRE »

av111 wrote: Sat Jun 25, 2022 4:49 pm
FreddieFIRE wrote: Sat Jun 25, 2022 12:11 pm
Apathizer wrote: Sat Jun 25, 2022 12:01 pm But in my experience, the pro-ownership side is more zealous. It's more common to hear people say something like 'renting is just throwing money away' and to aggressively promote homeownership than it is for renters to discourage owning. Maybe that's why we renters sometimes push back so harder than we should. :happy
I think it's great when folks flock towards home ownership. It helps keep my rental costs down. 8-)
Many homeowners love tenants
Yep. It is sometimes a win-win. A person who is good at owning/maintaining a house makes a fair profit while another person has a nice place to live and can focus on more important stuff. 8-)
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Re: Renting for life - a bad idea?

Post by Apathizer »

FreddieFIRE wrote: Sat Jun 25, 2022 12:45 pm
Marseille07 wrote: Sat Jun 25, 2022 12:21 pm
Apathizer wrote: Sat Jun 25, 2022 12:01 pm But in my experience, the pro-ownership side is more zealous. It's more common to hear people say something like 'renting is just throwing money away' and to aggressively promote homeownership than it is for renters to discourage owning. Maybe that's why we renters sometimes push back so harder than we should. :happy
Well if all of your belongings fit in a minivan and if you only require 200 sqft of space, then renting can make sense.
Can't I just rent a bigger place if I can't bring myself to part with a bunch of crap?
Sure you can, although one thing I really love about having a small living space is that it forces minimalism. My place is about 800 sq' and it's still at least 2x more space than I need. When I first moved in my neighbors and mom felt sorry for me not having much and were always trying to give me stuff. It took awhile for them to understand I prefer it that way. Eventually we or someone else has to move or otherwise deal with our stuff, so having little of it greatly simplifies things.
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Re: Renting for life - a bad idea?

Post by FreddieFIRE »

Apathizer wrote: Sat Jun 25, 2022 5:45 pm
FreddieFIRE wrote: Sat Jun 25, 2022 12:45 pm
Marseille07 wrote: Sat Jun 25, 2022 12:21 pm
Apathizer wrote: Sat Jun 25, 2022 12:01 pm But in my experience, the pro-ownership side is more zealous. It's more common to hear people say something like 'renting is just throwing money away' and to aggressively promote homeownership than it is for renters to discourage owning. Maybe that's why we renters sometimes push back so harder than we should. :happy
Well if all of your belongings fit in a minivan and if you only require 200 sqft of space, then renting can make sense.
Can't I just rent a bigger place if I can't bring myself to part with a bunch of crap?
Sure you can, although one thing I really love about having a small living space is that it forces minimalism. My place is about 800 sq' and it's still at least 2x more space than I need. When I first moved in my neighbors and mom felt sorry for me not having much and were always trying to give me stuff. It took awhile for them to understand I prefer it that way. Eventually we or someone else has to move or otherwise deal with our stuff, so having little of it greatly simplifies things.
Preach it brother!! I'm right there with you. 8-)
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Re: Renting for life - a bad idea?

Post by av111 »

FreddieFIRE wrote: Sat Jun 25, 2022 5:25 pm
av111 wrote: Sat Jun 25, 2022 4:49 pm
FreddieFIRE wrote: Sat Jun 25, 2022 12:11 pm
Apathizer wrote: Sat Jun 25, 2022 12:01 pm But in my experience, the pro-ownership side is more zealous. It's more common to hear people say something like 'renting is just throwing money away' and to aggressively promote homeownership than it is for renters to discourage owning. Maybe that's why we renters sometimes push back so harder than we should. :happy
I think it's great when folks flock towards home ownership. It helps keep my rental costs down. 8-)
Many homeowners love tenants
Yep. It is sometimes a win-win. A person who is good at owning/maintaining a house makes a fair profit while another person has a nice place to live and can focus on more important stuff. 8-)
Many homeowners hire out these maintenance tasks so they can focus on more important stuff while making money
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Re: Renting for life - a bad idea?

Post by Raraculus »

Just for funsies and curiosity, I checked out rent prices in my area on Zillow. The rents have gone from crazy to insane. :shock: It would cost me roughly $1,500 a month extra to rent in my neighborhood. That is an extra 18K/year devoted to housing. Owning a home is truly an inflation hedge.

I can see how 'forced saving' helps people like me and millions others. I did not actively invest in stocks until 2019, at a late age. I just didn't know any better. I was afraid of the stock market. Looking back, I wish I started stock investing in my 20's. This is my fault - no one else. I'll just have to make peace and carry on. Do better. Now is the best time to start investing. Etc.

I did pay off my home in 2020. All of that home equity just locked up, and I was no wiser. I just started investing in stocks and paying off the mortgage freed me up to invest aggressively. Had I been a clueless renter all of this time, I would have not been able to invest in the stock market even if I truly needed to do so. Blithely doing my payments all of those years and putting up with homeownership now has paid me dividends today.

Ironically, I started the process of doing a cash-out refinance in early January 2022. The interest rate was okay, like 2.99% or something. But, the fees were a bit too much - around $10k. I was planning on using the cash-out proceeds to invest further into the stock market. I can see I dodged a bullet.

Know what? I'll take and keep my home, thank you very much. I'm grateful for the opportunities afforded to me to improve my lot in life despite my late start. It's all good. :beer
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Re: Renting for life - a bad idea?

Post by rkhusky »

Raraculus wrote: Wed Jun 29, 2022 12:06 am Just for funsies and curiosity, I checked out rent prices in my area on Zillow. The rents have gone from crazy to insane. :shock: It would cost me roughly $1,500 a month extra to rent in my neighborhood. That is an extra 18K/year devoted to housing. Owning a home is truly an inflation hedge.
But your taxes and maintenance costs also go up with inflation.

Rent versus own is a quality of life issue more than it is a financial issue.
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Re: Renting for life - a bad idea?

Post by Apathizer »

Raraculus wrote: Wed Jun 29, 2022 12:06 am Just for funsies and curiosity, I checked out rent prices in my area on Zillow.
Zillow? Try apartments.com or craigslist. There are still plenty of great deals.
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Re: Renting for life - a bad idea?

Post by Mustang8307 »

I rented the same place for 12 years and just bought a new place last month. First impression: Owning is pretty terrible.
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Re: Renting for life - a bad idea?

Post by princetontiger »

I can't speak for any market other than Manhattan.

Between 2010 and 2020, renting a luxury apartment and investing 100% of the proceeds in $SPY generated superior returns.

Every friend who bought a crummy prewar coop or apartment saw 2-3% per annum (total of 20% over the decade) appreciation and regretted it. Frankly, it was almost a tie when you factor in some of the tax benefits.. however, maintenance and repairs ain't cheap.

In many cases, folks who have purchased since 2015 remain underwater or flat (Manhattan prices have been in decline since).

Manhattan = rent luxury and invest in stocks

PS- Not only do we have more money than our "owner" friends, but we have far happier lives. 24/7 maintence, gym, baby playroom, roof deck, elevator, lobby, etc. People many times don't factor in the non-monetary satisfaction!
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