Poll: Buy or rent?

[albaby1]

@MarkR

I just looked at zillow and it says my house is worth $1.4M right now (which seems absurd to me). It’s the same house that I bought for $234k 25+ years ago. And even with those absurd numbers, it’s only gone up by about 7% a year (not including ANY of the improvements I’ve made over the decades which would only reduce that average gain)! The S&P500 beat that handily over most 30 year periods. And in the right S&P500 fund, the expenses are only a few basis points.

Well, you have to consider the cost of rent in that calculation as well. And the benefit of not having to move.

My own experience was a little extreme, but not altogether uncommon for someone living in a city. Before I bought my first apartment, I rented. But I ended up having to move six times in five years - which was exceedingly unpleasant. For me, the benefit of owning has never been return on investment, but security - knowing that I could structure my life around having a fixed address and not having to worry about being involuntarily relocated.

[Wyomingtim]

@albaby1

For me, the benefit of owning has never been return on investment, but security - knowing that I could structure my life around having a fixed address and not having to worry about being involuntarily relocated.

That’s particularly important where I live, in Jackson, WY. Housing here is, and has been since I moved here in 1999, in short supply. Which means if you rent, and you lose your lease, you can be homeless due to there being nothing else available to rent. Vacancy rates here have been essentially zero since I got here. Rental units are overcrowded and impossible to find. If you want stability here, you gotta own.

[DrBob2]

@intercst

Why can’t you become “civically engaged” without the burden of the poor return of “home ownership”?

Well, you can. I can also think of a couple of reasons why the engagement might be higher for home owners:

• more skin in the game
• longer residence time (renters move 5x more than owners)

DB2

[wecoguy]

A handy calculator to show what we’ve gained over the years… Applied to my home, applied to my stock holdings, rather surprising…

Percentage Increase Calculator

[WendyBG]

@MarkR

Basically, crooks troll the property records to find paid off houses, and then create fake documentation to transfer the deed or to put a mortgage on it.

@MarkR this is a reason to contact the credit reporting firms (Experian, TransUnion and Equifax) to put a lock or freeze on your credit. That prevents anyone from taking out a loan under your name.

Wendy

[intercst]

@Goofyhoofy

You keep ignoring that they made the improvements to enjoy the home more . You can’t do that with a rental.

Sure I can, as long as I Iive in a major metropolitan area with an abundance of housing choices.

If I take a fancy to granite countertops and a shower head that pulsates 25 different ways, there are likely properties in my neighborhhood with those amenities at a higher monthly rent. Then I can do the rent vs.buy analysis to determine if it’s better to rent or buy a home with the amenties I desire.

I take no pride in home ownership. I’m willing to buy one if it’s cheaper than renting (which I did in 2012), but failing that, I’d still happily be a renter.

intercst

[steve203]

@intercst

Why can’t you become “civically engaged” without the burden of the poor return of “home ownership”?

That is part of the conformity propaganda: “you can’ t be a good citizen unless you own a house”, Goes hand in hand with “if you want to be healthy, wealthy, have a long life, you need to be married and go to church”.

Steve

[intercst]

@WendyBG

@MarkR this is a reason to contact the credit reporting firms (Experian, TransUnion and Equifax) to put a lock or freeze on your credit. That prevents anyone from taking out a loan under your name.

I got a Wells Fargo credit card 2 months ago because it promised 2% cash back on everything plus a $200 statement credit if I spent $500 over the next 3 months.

Last week the card didn’t work at Safeway and when I call Wells Fargo they said that my account had been hacked and someone had my Social Security number (I suspect that’s true of about half the US population by now)

Anyways, the problem was that I had a Wells Fargo checking account about 15 years ago that I canceled when they attempted to impose a fee on me. (This was probably the eartly stages of the big Wells Fargo banking account fraud.) Someone attempted to access an ATM machine using my old phone number attached to the canceled checking account.

I had to go to a local Wells Fargo branch with 2 forms of ID to “reestablish my identity” to get the credit card unlocked. Then they told me to call all 3 credit reporting agencies to put a fraud alert and credit freeze on all my accounts. I thought I did that years ago – maybe they expire with time?

intercst

[flyerboys]

Too many variables, especially as to behavior of renter or buyer.

From college through my salaried years before going on my own as a private consultant (still sweating remembering the level of risk and bravado) I rented and lived in 7 different locations. One was a steal (1/8 cost of dorm room and board) because was in an extremely crime ridden part of Cambridge, Massachusetts (this was long long long ago) and I knew how to create very effective electro-mechanical crime deterrence. It was cheap, cosy, convenient to classes at MIT and Harvard, and utterly safe as I used it.

Second was my first boarding house. Third was my gigantic firetrap extremely profitable 2nd boarding house, for which the crux was I had to find the drunken landlord (I knew every Irish bar in Somerville) every late mid-month so that on the last Friday of the month he could soberly bribe the city building inspector to not condemn the whole damn firetrap mess. Fourth rental was the size of a walk in closet, but up on a hill overlooking my favorite California surfing spot, and only a 5 mile bikeride from work. Fifth was market price, but with a swimming pool and oodles of the tenants were airline stewardesses who, uhm, shared their entries from little black books of hot needy men (I only lasted six months there). Sixth was an absurdly gigantic badly designed “owners unit” in an apartment complex I got for cheap by also maintaining the pool while wearing speedos and boarding the two idiot dogs of the owners in the up the stairs 2nd bedroom.

Every home I have bought (5 so far), I bought with a business plan taking into account

1 location*,
2 sufficient obviously difficult for most but easy for me horrid problems needing remedies**,
3 financing mortgage plan,
4 selling/rental plan.

Homes for me have always been investments first and places to live second (no kids makes it easier).

I have done splendidly, but few people can do what I do as to architectural/engineering comprehension, DIY remediation, and predicting urban RE trends. From conversations with others I know there is a huge wide spectrum across all kinds of other strategies with similar specific details bearing on the rent buy question.

The crux, never think of housing as a “given” or you will be taken.

d fb

*location, location, location LOL My very best was this house, the oldest (built in 1923) house, and closest while most isolated from tourists hordes of the fabled neighborhood under the Hollywood sign. Its location was perfect, but when I bought it was literally collapsing from idiot remodels and neglect.

Historic Los Angeles

**Collapsing structures I knew how to jack up and repair, electrical circuits and breakers and plumbing dated waaaay back around WWI I knew how to bring into modern times, and hideous interiors I knew the right queens who would do a redesign I paid for materials and they’d do just “for the fun of it”.

[AlphaWolf]

Ok, some thoughts on this great thread and the great back and forth.

I think what we’re trying to quantify here is something that can’t really be quantified; happiness

My best guess is that the majority of people on these threads are pretty satisfied with their lives. We live where we want, we’re not scrounging for our next meal, we’re able to handle most financial emergencies, we have portfolios, we have healthcare. And every one of us has taken a different path to that happiness. Some are single, some married, some with partners. Most probably with a college degree. Some with no kids, some with kids (boy, try doing an ROI on having a kid. ).

It seems that we’re each happy to either rent or own a home, lease or own a car, etc.

Ms. Wolf and I have good friends who decided to not have kids and they seem very happy about it. I wouldn’t trade my sons for anything. And don’t get me started on grandchildren. When I see them, I am filled with boundless joy. Then they wake up.

I hope this great thread continues. But basically, we’re discussing what makes each of us happy.

For me, it’s living in the only home I’ve ever owned, debt free (I get that debt can have value, but I don’t like it). YMMV. We are all the same in some respect, but we’re also each unique.

Carry on.

[intercst]

@albaby1

For me, the benefit of owning has never been return on investment, but security - knowing that I could structure my life around having a fixed address and not having to worry about being involuntarily relocated.

In 30 years of renting, I was never involuntarily relocated. As long as you pay the rent on time and are respectful of your neighbors, why would they want to get rid of you?

Of course, I’ve always been renting in large apartment complexes with professional management in upscale neighborhoods. I’ve never rented from a mom & pop landlord where a child getting married might be a reason to evict the only tenant.

intercst

[intercst]

@AlphaWolf

(boy, try doing an ROI on having a kid. ).

Absolutely! Many people think that single people have an advantage in retiring early. The arithmetic says that’s not true. The sweet spot is (married or not) couples without kids – two incomes and the need to fund the expenses of only one household between them.

intercst

[flyerboys]

@AlphaWolf

boy, try doing an ROI on having a kid. ).

Because the ROI is close to infinite, however troublesome.

I am extremely fortunate in having nieces nephews godchildren, most now with their own children, who have been extremely generous with their time with me and husband. But it aint the same.

d fb

[intercst]

{{A condominium in downtown San Francisco, an area that’s been rocked by several problems in the past few years, was sold last week for about half of its purchase price in 2019, as shown on real estate marketplace Zillow.

The property, a two-bedroom, two-bathroom condo on 1075 Market St, a five-minute driving distance from Union Square and a three-minute driving distance from the troubled neighborhood of Tenderloin, was listed for sale on Zillow on January 18 for $695,000. After spending months on the market, it was sold on April 8 for $675,000—about half of the price commanded by the condo in late May 2019, when it was sold for $1,250,000 }}

1075 Market St #513, San Francisco, CA 94103 | MLS# 424003234 | Redfin

I bet that May 2019 purchaser wishes he did a “rent vs. buy” analysis. {{ LOL }} What’s the loss on something like that if you paid 20% down on a mortgage? The SELLER is going to be bringing about a $400,000 check to the closing. Maybe he fled to Belize?

intercst

[Goofyhoofy]

@intercst

Sure I can, as long as I Iive in a major metropolitan area with an abundance of housing choices.

If I take a fancy to granite countertops and a shower head that pulsates 25 different ways, there are likely properties in my neighborhhood with those amenities at a higher monthly rent. Then I can do the rent vs.buy analysis to determine if it’s better to rent or buy a home with the amenties I desire.

Right. So you can pack up everything you own, put it all in boxes, carry it down three flights, rent a U-Haul, drive a half mile, and reverse the process, spending two weeks of grunt labor doing it - or pay the equivalent of another month’s rent to have someone else do it. Got it. What a terrific choice!

How about if you love your place but just want a bigger tub? Or love your place but want to remove the wall between the kitchen and the living room? Or want to put a satellite dish on the roof? Or add a workshop to restore cars or make furniture? Or put in a gas fireplace? Or a whole house generator? Or solar panels?

Right, I remember. Move. Seems like you are willing to dramatically limit your options in favor of having a few more dollars in your bank account. Well, no judgement, and that’s OK for you, but try to understand why others don’t share the sentiment.

[intercst]

@Goofyhoofy

Right. So you can pack up everything you own, put it all in boxes, carry it down three flights, rent a U-Haul, drive a half mile, and reverse the process, spending two weeks of grunt labor doing it - or pay the equivalent of another month’s rent to have someone else do it. Got it. What a terrific choice!

That’s nonsense. I’ve stayed in my rental homes an average of 5 years. But I did do a rent vs. buy analysis when the lease came up for renewal. Things don’t change that quickly that you’re moving every year.

The big savings is in avoiding the large skim rate in real estate. When I paid cash for my home in 2012, the closing costs were only about 0.50% of the purchase price, versus 3% to 4% for a buyer with a mortgage and all the extra fees and expenses that come with a mortgage.

intercst

[albaby1]

@intercst

In 30 years of renting, I was never involuntarily relocated. As long as you pay the rent on time and are respectful of your neighbors, why would they want to get rid of you?

Of course, I’ve always been renting in large apartment complexes with professional management in upscale neighborhoods. I’ve never rented from a mom & pop landlord where a child getting married might be a reason to evict the only tenant.

In three cases, the unit was sold. In two case, the building was converted from apartments to condos. In one case, the building was being shut down entirely for a year to do a major upgrade to the facilities, and they threw everyone out rather than try to do it piecemeal. The neighborhood that I wanted to live in didn’t have very many “large apartment complexes with professional management” - it was dominated by condominiums, so your choices were usually restricted to mom & pop landlords. And once my wife and I were having kids, we definitely didn’t want our living situation to be out of our control.

I’m with Goofy on this - rent vs. own is a Harpsichord Scenario. Sure, you can LYBM it and try to maximize the pesos in your bank account - “minimize the skim.” But if you end up spending thirty years of your life living somewhere that isn’t what you really want? Whether it’s worth giving that up to put a few extra thousand in your retirement account is a choice, not something with a clear-cut answer.

[Goofyhoofy]

@intercst

That’s nonsense. I’ve stayed in my rental homes an average of 5 years

OK. Different stroke and all. I moved almost every year between my 20’s and 30’s. In broadcasting, and as a young DJ, that’s how it works. In fact until I bought my first condo (age 34) I had moved 9 times. (That’s the condo I lived in, then kept as a rental while others paid my mortgage [thank you very much] until 2019.) Sometimes it was because I moved markets. Once I was fired. (Not unusual in that line of work.) Once it was because I hated the heavy footed clod who lived upstairs. Once it was to get a 2nd bedroom. I forget all the other reasons, but they were real or I wouldn’t have gone through the angst. (Oh wait, once it was to move in with a girlfriend!)

Renting is OK if that’s what you want to do, I have no complaint with those who do. But putting the argument strictly in terms of “investment returns” misses what should really be the most important part of the conversation: “life satisfaction.” For some that is to see a higher bank balance. For most, I suspect, it’s “quality of living”.

[MarkR]

@WendyBG

That prevents anyone from taking out a loan under your name.

That (using my credit) is not the scam I am talking about. I am talking about a far more nefarious scam. They put the house up for sale, usually at a bargain price, an unsuspecting buyer (or often someone untraceable and affiliated with them) comes along and “buys” the house with a hefty mortgage, they fake the deed transfer docs (very easy to do in many jurisdictions), the closing happens, the mortgage bank transfers the money to the “seller”, and then they all abscond with the money, It’s especially nefarious because it often can’t be fixed until long after the scam completes.

If there is still a mortgage attached to my deed, then this scam can’t happen as easily because that old mortgage (in my name) needs to be satisfied first, and it all gets recorded at the same time, so many more people have eyes on the docs, including most likely a title insurer. And they’re pretty savvy.

[MarkR]

@intercst

I’ve never rented from a mom & pop landlord where a child getting married might be a reason to evict the only tenant.

I had to leave apartments for:

1. Dude came back from London and needed his apartment back.
2. Landlord’s daughter getting married and they needed the apartment for the new young couple. They even invited me to the wedding, but I was on a business trip overseas that week so couldn’t attend.
3. Incessant leaks that flooded the place, lived there for 2 months, landlord promised to fix, gave up and left.
4. Flatmate owned apartment and he decided to marry his girlfriend so I had to leave.
5. I got married so left to move in to a different apartment with my new wife.
6. Bought a house so left apartment to move in to it.

I moved 9 times (maybe 10) between graduating college and getting married, now in my house for more than 25 years, far longer than any other place I’ve ever lived.