I hate renting...

Milspec

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I bought my home when I was 21.

Paid it off when I was 45.

Taxes, maintenance and homeowners insurance is a whole heck of a lot cheaper than a mortgage payment.
Are they though?

When paid off, you no longer have that principle, but taxes keep going up and so does insurance to the point that your monthly is actually higher than when you had the mortgage a few years prior. That is what I am dealing with as my house will be paid off in 5 years, but my taxes have doubled since I took on the mortgage and the insurance rises to meet the new property valuation as well. Once paid off, I only reduce my monthly cost by about $300.
 

Fiesta Red

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Are they though?

When paid off, you no longer have that principle, but taxes keep going up and so does insurance to the point that your monthly is actually higher than when you had the mortgage a few years prior. That is what I am dealing with as my house will be paid off in 5 years, but my taxes have doubled since I took on the mortgage and the insurance rises to meet the new property valuation as well. Once paid off, I only reduce my monthly cost by about $300.
In the area in which I live the property values have increased significantly—thus, property taxes have increased as well.

However, you can “homestead” your property and the property taxes don’t increase as drastically.

My monthly payment decreased by 70%.

Things worked out fine for me—but maybe I’m the exception to the rule.
 

Toto'sDad

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(Your Money) I like it, I love it, I want more of it!
 

teletail

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Are they though?

When paid off, you no longer have that principle, but taxes keep going up and so does insurance to the point that your monthly is actually higher than when you had the mortgage a few years prior. That is what I am dealing with as my house will be paid off in 5 years, but my taxes have doubled since I took on the mortgage and the insurance rises to meet the new property valuation as well. Once paid off, I only reduce my monthly cost by about $300.
Well, don’t rental costs go up too? I live in a small town and the cost of rent is just crazy. Five years ago I had a rental property (since sold) and was glad to get $1,300 a month. Today that same house would rent for at least $2,000 a month, probably more.
 

getbent

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about a year ago, we sat down with our finance guy and the conversation was pretty far reaching, we talked for about 2 hours (first time non zoom in a long time.) We were talking about houses and he said something like, 'if you can live in the most modest home you can stand and put all the rest of the money into investments, the return would be probably 10 times that of buying and selling houses and having equity.

Lets say you were going to invest in a rental house, you might find something around where we live for 500K. If you put 40% down and rented the house for 2500.00 a month (basically the payment, taxes and insurance), over 20 years, you'd never make close to what you could if you had used the original funds and invested. I don't think it would be close. Not to mention, collecting rent, painting, late night calls with water lines breaking.
 

Danb541

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about a year ago, we sat down with our finance guy and the conversation was pretty far reaching, we talked for about 2 hours (first time non zoom in a long time.) We were talking about houses and he said something like, 'if you can live in the most modest home you can stand and put all the rest of the money into investments, the return would be probably 10 times that of buying and selling houses and having equity.

Lets say you were going to invest in a rental house, you might find something around where we live for 500K. If you put 40% down and rented the house for 2500.00 a month (basically the payment, taxes and insurance), over 20 years, you'd never make close to what you could if you had used the original funds and invested. I don't think it would be close. Not to mention, collecting rent, painting, late night calls with water lines breaking.
But this thread is more about buying vs renting, not home ownership vs other investments. At least that’s what it’s evolved in to.
 

BigDaddyLH

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True, but if you rented and took your down payment and invested it instead... you'd be ahead moneywise of the 'buyers' except in the extreme.

Wait, I thought reply #125 was buying a house to rent out as a landlord versus investing that money.

I think one reason that taking out a mortgage and buying a home is a good investment (for SOME people) is that it forces you to set money aside for your monthly mortgage payments -- who wants to go into default? Contrast that to just trying to set aside money for investments; again, SOME people would find that harder to do, and be tempted blow some of that money off instead.
 

sax4blues

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True, but if you rented and took your down payment and invested it instead... you'd be ahead moneywise of the 'buyers' except in the extreme.
My experience was different. 1988 downpayment was $13,000. 2018, 30 yeas of mortgage/tax/insurance/repair costs, (which overtime were less than market rent in our neighborhood), $1,200,000 sale price. Straight line average annual increase of 15.18% on that $13k. S&P500 over that same time straight line average increase 9.25%. That $13k in the S&P500 would be $206,000
 

getbent

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My experience was different. 1988 downpayment was $13,000. 2018, 30 yeas of mortgage/tax/insurance/repair costs, (which overtime were less than market rent in our neighborhood), $1,200,000 sale price. Straight line average annual increase of 15.18% on that $13k. S&P500 over that same time straight line average increase 9.25%. That $13k in the S&P500 would be $206,000
I noted there were outliers. In your area of the south bay an outlier of outliers... a fantastic deal AND protection from prop 13 to grow it.
 

getbent

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Wait, I thought reply #125 was buying a house to rent out as a landlord versus investing that money.

I think one reason that taking out a mortgage and buying a home is a good investment (for SOME people) is that it forces you to set money aside for your monthly mortgage payments -- who wants to go into default? Contrast that to just trying to set aside money for investments; again, SOME people would find that harder to do, and be tempted blow some of that money off instead.

Like the swiss army, some strategies work in multiple scenarios.
 

Preacher

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Just a heads up in regards to my situation.

Rent when we moved in two years ago was an "introductory rate" for new guest. Yep they call us guests instead of renters lol.
2021 Rent - 1995.00
2022 Rent - 2100.00
2023 Rent proposed - 2650.00 And we decided to move as that cost for what we have is just not doable. So we found a house for what we previously were spending on rent and gave our notice to move out. BTW we received the rent increase by note taped to the door of our unit.

I just got a new note taped to the door on last Friday that said that since we were such good renters (yep they used that word) that they could cut us a deal for $2450 a month. I left a message at the office that we were still moving as they were still $300 more than what we are paying for a real house without neighbors on the other side of a 2x6 wall.

So we are seeing falling rental prices here in the DFW area!! :cool:
 

t-ray

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I rented in NYC for 9 years in those big 1970's era tan brick buildings. Biggest hassle was the annual renewal process, but it usually ended up OK. I liked the apartment (great views and location), and was happy to pay the rent. During the plague, I decided to move out and let the lease expire. No problem. I own where I live now. I have moved periodically because of my career, have owned a number of houses over the years and probably have about broken even on the buy/sell experience. Made a great profit on one sale, but lost it all on losses and transaction costs on the others. It is what it is, you just have to budget for it and not get in over your head. The market here in VT during the plague was HOT. Everything on the market sold and prices went through the roof. But that is now cooling, and I suspect prices will settle down considerably over the next couple of years. As far as making money on home ownership, everyone gets lucky: some good some bad.
 

Preacher

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I rented in NYC for 9 years in those big 1970's era tan brick buildings. Biggest hassle was the annual renewal process, but it usually ended up OK. I liked the apartment (great views and location), and was happy to pay the rent. During the plague, I decided to move out and let the lease expire. No problem. I own where I live now. I have moved periodically because of my career, have owned a number of houses over the years and probably have about broken even on the buy/sell experience. Made a great profit on one sale, but lost it all on losses and transaction costs on the others. It is what it is, you just have to budget for it and not get in over your head. The market here in VT during the plague was HOT. Everything on the market sold and prices went through the roof. But that is now cooling, and I suspect prices will settle down considerably over the next couple of years. As far as making money on home ownership, everyone gets lucky: some good some bad.

I think you hit the nail on the head with your last statement. Some get lucky, some do not.

I had friends in 2013 that walked away from their home in Chicago. They had purchased a brand new home in 2007 for $450K in a decent suburb West of Chicago. Four years later, they looked into maybe refinancing their home as they wanted to finish the basement. I will never forget that morning after as he and I were chatting at lunch and he mentioned that the basement remodel was on hold. He said the bank told him that his home was only worth $250K and they did not have enough equity to pull out for a home improvement loan. He was so bummed when he told me that his house was worth half what he had paid for it. He and his wife divorced a year later and he was stuck with paying for the house that his wife lived in and an his apartment until the divorce was finalized. She sold the house for less than they had in it and they had to split the loss.

But then again some people buy good and can cash out after a few years. Others are in for the long haul and build equity through the years.
 

David Barnett

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In the area in which I live the property values have increased significantly—thus, property taxes have increased as well.

However, you can “homestead” your property and the property taxes don’t increase as drastically.

My monthly payment decreased by 70%.

Things worked out fine for me—but maybe I’m the exception to the rule.

The Homestead Tax Credit usually limits property assessment increases to 5%/year. Non-homestead properties can rise 10%/year. Until the assessed and appraised values are equal. There is also a discount - in my state, anyway, homestead properties get $375 knocked off the tax bill.

If you're over 65 or disabled, you can get a freeze on your assessed value. It can only increase if there's new construction.
 

FuzzWatt

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Well, don’t rental costs go up too? I live in a small town and the cost of rent is just crazy. Five years ago I had a rental property (since sold) and was glad to get $1,300 a month. Today that same house would rent for at least $2,000 a month, probably more.

Speaking for my area only, rent can legally only increase by 1.2% annually.

It's moving that gets you. Example - A family member and I used to live in the same building. In 2016 I moved out. My rent at the time was about $1050. Family member's was less caused they'd lived there about 3 years longer.

Fast forward to 2020. I looked at renting in that building again. Same unit now goes for $1300 That family member has not moved and their rent today is $1060.

Landlords can increase rent however they want when there's an opening, so it's always new renters who get the shaft. Once you find a good rental, you stay put.
 

teletail

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Speaking for my area only, rent can legally only increase by 1.2% annually.

It's moving that gets you. Example - A family member and I used to live in the same building. In 2016 I moved out. My rent at the time was about $1050. Family member's was less caused they'd lived there about 3 years longer.

Fast forward to 2020. I looked at renting in that building again. Same unit now goes for $1300 That family member has not moved and their rent today is $1060.

Landlords can increase rent however they want when there's an opening, so it's always new renters who get the shaft. Once you find a good rental, you stay put.
Well I can assure you that that is not how it works in America. Here it's bend over and grab your ankles each time your lease expires.
 




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