Renting vs owning a home and vehicles.

[jeffh81]

My rent is through the roof to live in a non flood area by the water. I bought my camaro as a luxury for the wife and my truck is bare bones with the only option being a V8 engine. I hope to be able to buy a nice condo soon since my wife has graduated and is working a great nursing job.
I owned a travel trailer for 3 years as a single man and loved owning untile the repair time came, i like renting because of my location and the fact someone else does the repairs

 

[Screw-Rice]

Yet another great thread on this forum. I am not a financial expert. My opinion is that home ownership makes sense if you plan on living in the same home for the long haul. Just look at a mortgage amortizer. You will see that you will pay most of your interest up front. You just don't pay x amount of interest every month. So, if you know you're going to move around every five to ten years you would look at renting. Think about it. You would have just been paying mostly on interest and won't have a lot, if any, equity. It would be like renting the house from the bank but you pay for repairs. The market could also change that. I know a person that is still upside down in their house after 9 to 10 years of paying on it.

It really does suck to think about your life and a mortgage. You move out of your parents house and don't have any credit or a down payment, so you get an apartment for a few years. You save and get your first house. You pay interest out the backside in the beginning of the mortgage for 5 to 10 years. You realize the house isn't big enough for your now growing family, or the neighborhood went to crap and you live by a drug dealer that rents. You find a bigger home in a better neighborhood and start another 30 year mortgage at 30 to 35 years of age. You pay it off and retire. Then you start a reverse mortgage to pay for other things that have gone up in price.

And I don't think people that own a home and rent it out are rolling in the dough. I think if you own an apartment or several duplexes, then it would be worth it.


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Without digging too deep into your reply (because I'm feeling lazy), just a few things.

Paying the interest upfront is standard on everything. This is why so many people are upside down on their vehicles. They buy it at say $40k, but 3 years later they owe $34k on something valued at $28k. Difference with a house, you typically put a good amount down, and very rarely do they go down in value. Even worse case and you're at a break even, that is far better than being upside down like you would a vehicle. You also have leverage with a house that isn't even an option with a vehicle.

Reverse mortgages aren't super common either if someone has been responsible with their money. So assuming that as the norm isn't really accurate. Same goes for someone renting their house, that is very situation dependent on how much the may profit (if at all). Where I live you can easily pull an extra few hundred after all expenses when rented out. Same goes for many areas, not so much for others, so have to evaluate on a case by case.

Definitely not a liberal and never called CA my home. Only bought property while stationed there.

Then I'll be the first to welcome you with open arms.

Will someone buy my house and rent it back to me? It only needs a new roof, soffit, siding, a few new windows, maybe a driveway and possibly some foundation work. Don't worry, it has a brand new $10,000 sewer line, a $5,000-ish HVAC system and sweet new garage door.....

Depending on what you would sell it for, and how much rent, I would entertain it .

Lol, it is ironic. But to be fair I was just saying don't finance car mods with a CC and he should think about slowing down on it all together because of his new born. After some back and forth I dropped it as he said he was good.

Here in SA rent is at an equal cost of owning. But because I'm friends with the homeowner I'm way below the market. I could buy a house, but I would be shelling out an extra $600-$800 on a house I would actually want.

I'm not buying a house till I know I will live in it at least 5 years and won't move out of state from it. I'm also not going to trade in a vehicle and carry negative equity on a new loan.

I actually expected him to pop in here and go off on you, since he's seemed pissy lately, lol.

Everyone's situation is different, which is why umbrella statements can be an issue. Plenty younger guys here that don't know any better see someone with new toys and advocating renting could put themselves in a bad situation. Lets face it, plenty of people aren't very bright, and figure they can mirror others without knowing all the info.

 

[jeffh81]

What about people with 2 mortgages and one home?

 

[Never_Enough]

Agreed. I'm just a knucklehead who bought and held real estate, so I was fortunate to amass some wealth by researching, selling, and relocating to another area with a lower cost of living and cheaper home prices. I'd argue that you should "go with what you know" for investments. I haven't had great success at the stock market, so I look for property instead. We have 4 rental properties which pay the mortgage on our "dream home" and with my military retirement, I don't have to work, but feel 53 is way too young to retire. Lastly, buying to me is always better than renting.

One also has to have the income to be able to buy, and pay the monthly note on should there be a time where you have no renters for a property, in the first place. Most people do not have $ to burn like that.

 

[derklug]

Everything is relative to the individual. When I was single, I had a one bedroom apartment and loved it. Cheap rent and I kept my stuff at the shop so didn't need a garage. When I got married, we bought a house, because the wife said so.

 

[Never_Enough]

Banks are advertising on the radio that you can get a home lone with $1500 down. I don't think the banks are real stringent rules now. It is just a matter of time before it collapses again and many people who should never have been given a home loan will default, walk away, and cry about how the big corporate bank took "their" home and put their kids on the street.

Where is that? Not here that's for sure.

 

[Screw-Rice]

What about people with 2 mortgages and one home?

Referring to a second mortgage?

 

[jeffh81]

Referring to a second mortgage?

Yes. I typed it up wrong.

 

[DHG1078]

Some loans allow you to come out with a house with very little out of pocket, especially VA loans which allow 100% LTV. You still have to come up with the escrow funds though. 100% LTV also doesn't "buy down" your interest rate.

 

[Screw-Rice]

Yes. I typed it up wrong.

You're not typically in a good financial position if taking a second mortgage. Not sure if you were alluding it to being something else related.

Some loans allow you to come out with a house with very little out of pocket, especially VA loans which allow 100% LTV. You still have to come up with the escrow funds though. 100% LTV also doesn't "buy down" your interest rate.

True, but you still have control over how you handle the loan, even if you go that route. I had the option of the USDA 100% loan if I bought in a couple of the surrounding areas. You don't have to take the loan that has a higher interest, but if you do to get into a house, you can still choose to pay extra monthly to lower your principle if you want to refinance later with a better rate using your equity. I pay a minimum of an extra $100 every month to principle just to knock the loan down since I have the ability.

That's another thing people do, then regret is when they make themselves "house poor". They go to their max budget and then get stuck having nothing left after their mortgage and it sours the experience.

 

[DHG1078]

You're not typically in a good financial position if taking a second mortgage. Not sure if you were alluding it to being something else related.



True, but you still have control over how you handle the loan, even if you go that route. I had the option of the USDA 100% loan if I bought in a couple of the surrounding areas. You don't have to take the loan that has a higher interest, but if you do to get into a house, you can still choose to pay extra monthly to lower your principle if you want to refinance later with a better rate using your equity. I pay a minimum of an extra $100 every month to principle just to knock the loan down since I have the ability.

That's another thing people do, then regret is when they make themselves "house poor". They go to their max budget and then get stuck having nothing left after their mortgage and it sours the experience.

Absolutely. I was just commenting of the feasibility of getting a mortgage for 1500 down. It probably won't be 1500 down, but you can get close.

 

[CO Mack]

Will someone buy my house and rent it back to me? It only needs a new roof, soffit, siding, a few new windows, maybe a driveway and possibly some foundation work. Don't worry, it has a brand new $10,000 sewer line, a $5,000-ish HVAC system and sweet new garage door.....

exactly!

 

[CompOrange04GT]

Everything is relative to the individual. When I was single, I had a one bedroom apartment and loved it. Cheap rent and I kept my stuff at the shop so didn't need a garage. When I got married, we bought a house, because the wife said so.

Exactly. Am I building a house? Sure.. Slowly

But I havent signed the purchase agreement yet and done a contract. Because I sit here and go..

1. Do I really need 4 bedrooms
2. Do I need a front and back yard to mow
3. Do I need a larger power bill?
Etc Etc Etc

And I keep trying to talk myself out of building the house. Because as someone who isn't married. Renting just seems better for me. As honestly I would use maybe 20% of the house.

Hell even in my small 2 bedroom apartment. I have a nice couch, and a 70 inch tv in the living room. Rarely do I use it unless I have company, I usually lay in my bed to watch TV. So then I go.. Do I really need 2 extra bedrooms, and dining room, blah blah blah. No idea

 

[Blackness03]

Now, it is weird seeing a Porsche Panamera Turbo and a E63 outside a rental .

There's your answer right there.

 

[PhoenixM3]

One also has to have the income to be able to buy, and pay the monthly note on should there be a time where you have no renters for a property, in the first place. Most people do not have $ to burn like that.

When you have a single property it shouldn't be too bid of a deal. Know the rental market in your area, but you'll need a little cash reserve as a parachute. Most people start out house rich, cash poor. We were able to pay a property off early, so the risk of a vacancy wasn't an issue. When we sold this property, we bought two new construction homes in another area knowing damn well that we couldn't afford land and luxury features in SOCAL.

 

[PhoenixM3]

There's your answer right there.

Saw a Bentley (sp?) in an apartment complex. Divorced or sugar daddy payment who knows... Either way it's dumb.

 

[VegasMichael]

I was just as happy in my 600 sq ft apartment as I currently am in my 2500 sq ft house. But in three years or so when I sell it I'll be much happier. Renting makes sense in certain instances. But if you're going to be in the same area for at least 8-10 years and can afford it I would buy.

 

[MG0h3]

I've owned/own condos and a few houses between 330k-145k. Some places I e only lived in a year but didn't expect to move that quickly.

My most recent, which I'm most happy with from a living standpoint, is the 145k house. Brand new and nicely finished (nice tile floors, SS appliances, quartz counters, 3/2/2 1403 sq ft. Payment is 950 so comparable to a 2bd apartment here w/ tax and insurance included.

Owning and renting has worked out well for me. On average I pay about 5k a year out of pocket between my 3 rentals but my taxes are @ 10k a year less than coworkers with the same income/family situation. Plus the principal goes down @1200 a month between the 3 and 1500 a month if I include the one I live in.

Made 65k in 3 yrs on a condo I bought at 19 yrs old. "Lost" @ 200k on two in CA during the bust but I held them and the market has nearly recovered.


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[Never_Enough]

When you have a single property it shouldn't be too bid of a deal. Know the rental market in your area, but you'll need a little cash reserve as a parachute. Most people start out house rich, cash poor. We were able to pay a property off early, so the risk of a vacancy wasn't an issue. When we sold this property, we bought two new construction homes in another area knowing damn well that we couldn't afford land and luxury features in SOCAL.

But said person would have 2 properties. If they are renting one, they need another to live in. There's 2 mortgages or 1 mortgage & 1 rent payment per month.

 

[DriftwoodSVT]

There's times I still wished I lived in a $1600 dollar rental apartment. Our $4400 mortgage isn't very fun.