Renting vs. buying real estate

[ame]

*IF* we can ever sell this crapshack, we will *NEVER* buy again, only rent. Houses are money pits, and it's not worth the upkeep. I'd rather pay each month to make that someone else's problem and leave when I am tired of the location or place itself.

Yes, it is nice having the landlord pay to fix all the issues that come up! In the past two years at our rental, our landlord has put in new carpet in the living/dining room, a new roof, a new bathroom vanity cabinet, and a new furnace all on his dime. That is a nice perk of renting. I don't even want to know how much all that cost. Yikes!

Hope you can sell soon, Ame!

Thankyou! It would take a miracle. haha We are in a good part of town especially for first time buyers but with that, a TON of people are all trying to sell at once. Everyone seems to lose their butt on the sale too.

 

[Lady_Disdain]

We are continuing to look for a house whilst renting.

I dunno. I was really keen to buy, but now I'm beginning to think should rent until my husband gets his partnership.

That way, we will be stable and can buy a house based on his income only. It would also mean we could save enough to put a bigger deposit down (not sure that I want to take on such a big mortgage though)

But I can't shake the idea of renting being a case of throwing money down the drain.

I'm all confused on WHEN to buy, but we do want to be homeowners at some point. This thread is making me think that we shouldn't rush into it. Haven you make a really good point about basing it on one income only. Trouble is, a mortgage of 750k doesn't get you much around here, so we probably will need to add mine on too (this makes us feel so uncomfortable!) Decisions decisions.....

I see this in a very different light. I keep the capital I would have tied up invested. It earns more than enough to cover the rent and the rest is profit. My investments also don't ever need a new roof I admit I can't imagine a housing market where the rent is 7x the value of a mortgage, so what do I know? In my economy, I can rent for around 0.6% of the value of the apartment/month, while a safe investment yields 0.8%/month (already adjusted for income tax).

I also really like the idea that, in an emergency, I can end the rental contract and move into the cheapest room in town, effectively cutting a lot of my fixed costs, while still getting the investment revenue.

 

[Cehrabehra]

We bought our 3 bedroom 2 bath "starter" home in '98 before the bubble. We're in the LA area with an extremely good school district (not LAUSD). 3 kids later in a cramped 1400sq ft home I really really want to move to a bigger home but that won't happen here, it'll cost an easy 1 million for an entry level 4 bedroom which would need work and the thought of that makes me ill. We've since paid off our house, I don't want a crazy mortgage/plus property tax. I want to stay here at least until my last one if out of HS or home prices fall dramatically. If we were in the market now we would rent for sure. It's nutty out there.

We bought ours in 96 and I *think* 2004? We are considering a move to a new state that we havent' lived in before when we go back to the usa and the prices there are really cheap right now.

 

[Porridge]

I'm still in the young, single, and renting with friends category, but I have NEVER had a desire to buy a house. I think I'm very much like Haven in that respect. The thought of being tied down to a property makes my chest tighten. Maybe my viewpoint will change as I get older but I don't know. I like change too much. I think I may be a lifelong renter.

There is nothing wrong with that. It's good to know *what* you want and not be pressured to purchase unless you are sure. Owning your own home is a big responsibility and you need to be ready for it. It is also a huge privilege IMO and if more people treated it as such and didn't rush into buying we might not be in the mess we are in today. The banks never should have given the loans they did to people who just couldn't afford them and the individuals who fell for this should have done their due diligence before accepting. It is a sad situation and it will be a long time before the nation recovers. My heart goes out to all the people who are in foreclosure and in danger of losing their homes. No one deserves this. It is a terrible thing to lose one's home.

Take your time Porridge and while you feel like this renting is the best option for you. Having a home does tie you down. I think of it as a good thing but I can see where it is not a good thing for others.

That's good advice - good advice for everyone really - thanks Missy.

 

[phoenixgirl]

It definitely depends on the market you live in. I think that if you have enough for a 20% downpayment and will still have 6 months living expenses in savings, and your mortgage will be the same or less than your rent, then home ownership *may* be for you.

We bought our house in early 2007 when the market was just starting to adjust. We got a good deal at the time, under the market value. Now that prices have dropped further, we could probably just sell our house for what we paid. So not a great investment at this point considering all the upgrades and fixes we've done, but IMO you're buying for the ability to upgrade the house, for the security of knowing one day it'll be yours free and clear, etc. If you're buying to make a profit and buy something bigger in 3-5 years, then you'd better really do your homework before buying.

We're currently buying a foreclosure as an investment property. We should be able to rent it for about 75% more than our expenses each month. Another way to look at is that if we took the money for the downpayment and invested it in an interest bearing account, we'd get some tiny interest rate right now. We'll get about 15 to 20% of the downpayment in rental income each year this way. So this seems to make financial sense to me, but it's our first time and I'm sure we'll make a lot of rookie mistakes. On the other end, the people who will (hopefully) become our tenants could definitely save money by buying a comparable house instead of renting ours, but they'd have to have the downpayment, the ability to get approved, and the desire to stay long term.

I'm glad we didn't fall into the overextending trap in 2007. In 2004 when I bought our condo, the rules were so much more stringent. I had to provide documentation that I had money for the downpayment as well as my job contract, etc. We didn't put DH, then FI, on the loan because my credit was better than his, and that made a difference back then. Then in 2006 when we were putting a contract on our house, the lender didn't ask for any proof of assets or income, and we asked how much we were approved for, they said, "Oh, however much you want. We'll approve you for a million if you want." Craziness! (We went with a much lower amount.) Really, we were lucky that DH's income eventually increased (he's commission based) because in 2008 and 2009 it dropped a lot, and at that point we were really at our spending max for the mortgage. So I don't think we have escaped unscathed from the market crash because we were smarter than other people; it was really just luck that our neighborhood remained pretty stable and that our income increased.

We have five friends who are renting their old condos because they are underwater in the mortgage and they wanted to move somewhere bigger. It's working out but it's not ideal because they bought high so they're not able to rent them for their expenses.

 

[MichelleCarmen]

I'm REALLY happy with renting! It's taken us a while to find a place we like and we LOVE our current home but we wouldn't have found it if we had purchased a house we were renting a few years back (the owner offered to sell it to us) and that place needed A LOT of work. Our rent is reasonable, as well.

My husband wants to buy a house in a few years from now, but you know, I am not wanting to move again. In fact, even though I prefer renting, if the owners of this house offered to sell, I'd say yes once we had the downpayment ready. Problem is they paid more for the house than it's worth so they'd probably not want to sell!

The only thing that is bugging me about our place is not being able to paint the inside. Or, we CAN paint, but I have to contact the rental agency and have them contact the owner for approval and it'd be fine and all but our living room has VERY high ceilings and I'd have to hire someone to paint it! Two of my friends have commented that I should paint the place. lol! Maybe have a painting party?

 

[MichelleCarmen]

I'm the dissenting opinion here. I have owned, but now I'm renting because I had to move to a new city for my job. I HATE renting. I miss owning so much! I hate calling a landlord whenever something breaks. I spent almost a month looking at rental properties and 75% of them had been trashed in some way. We're talking $350 000+ houses in new subdivisions filled with smoke, with damaged flooring and with holes in the walls. There were very few properties for rent that I would have been willing to live in. The one we finally selected needed a lot of work, but the landlord promised us (and wrote it in to the lease) that he would accomodate the fixes. This included painting, fixing the water softener, fixing the garage door, fixing a hole punched in to the wall, fixing the carpets, cleaning, installing a washing machine, and fixing a toilet. This was seriously one of the best properties we saw and there are so many problems. We've been here for a month and I'm still doing my laundry at a laundrymat because the owner can't afford a new washing machine right now. The toilet in my master bathroom still doesn't flush. If this was my house, the problems would have been dealt with immediately. I wouldn't be forced to spend my Sunday doing laundry at a public laundry place. Now the landlord is mad at me because I removed broken blinds and put up curtains at my expense. There's no winning. He is in violation of the lease, so in theory we could break it and move, but we would lose our deposit and have to pay movers again. I don't want to pay an additional $2000 because the landlord doesn't do his job.

So I would buy in a heartbeat just do cut out the middleman. I'm looking to buy in about a year once I'm settled in to my new job. I don't care if its a bad investment, it beats dealing with a landlord, fixing a neglected property (and most of them here are neglected), and feeling like the house I'm paying top dollar for isn't my home because I have to ok every little design change.

I know I wouldn't feel this way if I had a good landlord, but I think renting is a risky business on both sides. The landlord doesn't want to put money in to the property because he's expecting it to get trashed. We don't want to pay for large fixes because we don't own it. In the end the property suffers and there is frustration on both sides.

Landlords can be a pain! I think if you work through a rental agency, you have much more security. Especially if you work with a well-known realty company.

FWIW, our house didn't come w/a washer and dryer. We knew that a head of time, though, and found a dryer on CL. (we already owned a washer)

 

[partgypsy]

I have no regrets, but my husband and I have low expectations LOL. The places we rented prior to buying a house were very much on the low end of the spectrum. So no nostalgia there. And we did want to nest. We got tired of such things as planting flowers and having them mowed down, appliances that needed multiple fixes, and not being able to change/improve things. I wanted more of a sense of control over our surroundings.

My husband due to staying with a grandfather over the summers who was a rennaisance man, and having jobs like roofer, painter and rehabber is handy and actually enjoys working on houses.
I assumed we would keep renting because we had no down payment saved, but we were able to purchase an old house which needed alot of work but had a decent basic structure. In this way we have a low mortgage payment, and have fixed it up along the way. We DID have to sacrifice on some things. We only have street parking, our backyard is small, and like most people always wish we had 1 more room than we do. But we will own our home in 14 years and pay less on mortgage+insurance+taxes than most people pay in rent in this neighborhood.

 

[maplefemme]

If I never rent again I'll be happy...
I know rentals work great for others, to each his/her own, they just don't fit us.
We are currently renting a house and are planning to build a new house in a new community South of us next Summer/Fall.
Both my SO and I have built a number of new properties whilst in previous relationships and agree that owning fits us better than renting. I have moved 24 times, 20 of which were rentals, I think I have seen it all!

The house we currently rent is owned by a former client of mine. She's an interior designer and she bought this property new about 6 years ago. She recently finished gutting it and remodeling it before we signed a rental agreement.
Thing is, it seems like she's not really done. She has lets herself in numerous times to "finish" certain things, without our permission or notice. She has no respect for our privacy and thinks it strange we have an issue with that and want notice.
The property is beautiful and state of the art, but it's not ours, it doesn't feel like home.

Prior to this we rented an apartment in an area we love, it had everything we wanted, the river, great restaurants, stores, the train, our bank, grocery stores, all within walking distance. However, still with all the issues of typical apartment rental living; small mail slots so packages get left and stolen in the entrance, food smells in the halls, shared laundry, old appliances breaking down, bad landlord.
Both of us lost our last properties in divorces and we couldn't help but feel like we'd taken a big step back being at the mercy of a landlord.

I have been lucky to sell past properties quickly and for profit, even in a tough market. I have had great building experiences with good builders and terrible builds with less than decent ones. Thankfully, armed with knowledge from both, we are being very critical with who we choose to build this next house, especially because we are hoping it's our last, at least for a VERY long time.
It's scary because we are putting a lot on the line and experience has proven that everything can be lost, but for us it's worth it...