Renting vs owning a home and vehicles.
- Thread starter ssj4sadie
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If you're a landlord you price the Rent accordingly
Rent = Mortgage payment + Insurance + repairs + profit
Now if you own the home you have the same costs but the "profit" goes into your pocket.
So why is renting better?
Rent = Mortgage payment + Insurance + repairs + profit
Now if you own the home you have the same costs but the "profit" goes into your pocket.
So why is renting better?
bottom line is, if you can afford a 30-50k car, you can afford a house. so IMO yes it is stupid to rent (unless you are young), and it is stupid to rent a house while owning a brand new/expensive car. I rented for a bit, because I couldn't afford a house. I also had shitty $5000 cars. I saved up and bought a house when I was 22. There is no way I could have done that if I had bought a brand new car.
This.
Kids that are too scared to buy will justify their poor financial choices three ways from Sunday to avoid financial realities.
my father owns 5 houses. 4 of which are rentals. he advocates paying them off as quickly as possible. as he always says, if you lose your income, you can always sleep in your house. even without electricty/water/gas. and you can collect enough cans to pay your property taxes.
like my cars, i like to modify my home. which you cant do when youre renting. plus you can always get that lovely "we're selling the house" message that one friend just received. so he's about to lose his cheap rent. in this area, not only are affordable homes scarce, so are places to rent. rents are out of control in the LA area.
unless you bought at the really high point in the market and had an ARM loan, you wont lose your ass on selling your house (location dependent of course). if after 5 years you decide to sell, and you only break even, its like you just lived rent free for 5 years. and if you sold for a little under what you paid, that's still money you would have lost paying rent.
of course, much of this depends on the location. even in So Cal its not all roses. my father owns 4 rental homes in an area (the sticks) where there is tons of unemployment so its hard to find decent renters who actually have jobs. and the rent barely covers the mortgage. and he does 95% of the repairs himself so it works for him.
two of my buddies bought into a real estate investment in 29 Palms yeeeears ago with plans to rent the houses to military families. a huge new development. well then the USMC started downsizing the base and tons of those homes are vacant. they lost their value big time and my buddies often had their houses sit vacant for months at a time. they ended up having to rent them for less than their mortgage payment just to get people into them. the value tanked on the homes and selling them isnt even really an option as most of the potential buyers dont stay long (military families). my one friend had two. he was able to short sell one. he may end up walking away from the other one. the other buddy is stuck with his because he makes so much money at his job that his financial adviser told him he really needs to hang onto it, even if losing money. (i dont remember the particulars but tax reasons).
a lot of that has to do with rental properties and if you're for or against but that's a whole nother thread lol
like my cars, i like to modify my home. which you cant do when youre renting. plus you can always get that lovely "we're selling the house" message that one friend just received. so he's about to lose his cheap rent. in this area, not only are affordable homes scarce, so are places to rent. rents are out of control in the LA area.
unless you bought at the really high point in the market and had an ARM loan, you wont lose your ass on selling your house (location dependent of course). if after 5 years you decide to sell, and you only break even, its like you just lived rent free for 5 years. and if you sold for a little under what you paid, that's still money you would have lost paying rent.
of course, much of this depends on the location. even in So Cal its not all roses. my father owns 4 rental homes in an area (the sticks) where there is tons of unemployment so its hard to find decent renters who actually have jobs. and the rent barely covers the mortgage. and he does 95% of the repairs himself so it works for him.
two of my buddies bought into a real estate investment in 29 Palms yeeeears ago with plans to rent the houses to military families. a huge new development. well then the USMC started downsizing the base and tons of those homes are vacant. they lost their value big time and my buddies often had their houses sit vacant for months at a time. they ended up having to rent them for less than their mortgage payment just to get people into them. the value tanked on the homes and selling them isnt even really an option as most of the potential buyers dont stay long (military families). my one friend had two. he was able to short sell one. he may end up walking away from the other one. the other buddy is stuck with his because he makes so much money at his job that his financial adviser told him he really needs to hang onto it, even if losing money. (i dont remember the particulars but tax reasons).
a lot of that has to do with rental properties and if you're for or against but that's a whole nother thread lol
But according to a few above you, one just figures out how much profit they want and boom rolling in dough.
Don't get me wrong if I were like the majority of Americans and lived forever in the place I grew up and wouldn't be moving anywhere. I would definitely be making a mortgage payment as opposed to rent. Hell I would even consider being a landlord again if I could drop by the house when repairs are made.
I grew up in 29 Palms. Our family has commercial property and several other properties out there. Great place to buy cheap property. Problem is it will ALWAYS be cheap.... at least in my and my kids' lifetimes.
Not a great place to invest in real estate IMO.
and besides location, it also depends on each persons' individual scenario. if you're single or your job has you relocating every few years or some other reason...
when i was in high school my father had a home repair business. he had a customer with a home in bel air. something akin to the Fresh Prince's house lol. at the time, it was a guy renting it. for $15k a month! (1994). he was the CEO of Planet Hollywood iirc and wasnt from the area so he was just renting. of course, that guy probably made that much in a day, if not more.
i believe it was a couple of years after 9/11 and the military was sending troops out like crazy so some land developer had a bright idea to build a massive housing development and got a bunch of investors to hop on board. they were expecting the area to BOOM. then over the years, things changed and they started relocating lots of personnel to Camp Pendelton.
when i was in high school my father had a home repair business. he had a customer with a home in bel air. something akin to the Fresh Prince's house lol. at the time, it was a guy renting it. for $15k a month! (1994). he was the CEO of Planet Hollywood iirc and wasnt from the area so he was just renting. of course, that guy probably made that much in a day, if not more.
i believe it was a couple of years after 9/11 and the military was sending troops out like crazy so some land developer had a bright idea to build a massive housing development and got a bunch of investors to hop on board. they were expecting the area to BOOM. then over the years, things changed and they started relocating lots of personnel to Camp Pendelton.
Thats not what I meant. I meant thats how most landlords that don't pay cash for the homes figure their rent pricing. No one is renting at a loss, they're renting at a profit, or at the very least no profit and just hoping you pay the mortgage for them.
I have a friend that wanted to get into rental property and priced his property just as I said. He priced the "profit" at $50 a month, his main goal was to have someone pay the mortgage for him. He's now the largest rental property owner in town and has moved on to commercial property.
I rent because:
A) I can't afford a down payment now, or anytime in the near future. My ex-wife gets over 50% of my paycheck at the moment. By the time that's over, and I wait to save for down payment, I'll either be pushing up daisies, or at the very least, too old to enjoy what's left of my life.
B) When I did own a house, I hated everything about it. The mortgage, the maintenance, the yard work, etc.
A) I can't afford a down payment now, or anytime in the near future. My ex-wife gets over 50% of my paycheck at the moment. By the time that's over, and I wait to save for down payment, I'll either be pushing up daisies, or at the very least, too old to enjoy what's left of my life.
B) When I did own a house, I hated everything about it. The mortgage, the maintenance, the yard work, etc.
Yard work is what you make it to be. You could have someone do it for you, or make a "maintenance free" yard.
My front and back yard is desert-scaped. A few drought resistant plants on automated watering system. No grass to mow. Just have to pull some weeds on occasion, and trim the palm trees once or twice a year. Granted a desert-scaped yard probably looks better in the desert lol.
My front and back yard is desert-scaped. A few drought resistant plants on automated watering system. No grass to mow. Just have to pull some weeds on occasion, and trim the palm trees once or twice a year. Granted a desert-scaped yard probably looks better in the desert lol.
You make it sound like it's hard to sell a home and move.
it can be depending on where you live. some places are just dead when it comes to the real estate market. Vegas experienced a development boom and then when the bubble popped tons of people walked away from their homes, leaving entire neighborhoods empty. some people were hanging onto their homes and trying to sell them but most buyers werent looking to buy into ghost town of a neighborhood.
and then you have some areas where there are just no jobs. people dont want to move there. people are trying to get out. it can be really tough to sell a home in an area like that. and just as tough to move and rent the place out.
The entire country went through that. I still don't think it's hard under normal circumstances to sell a home and that's nothing but an excuse. There are some markets that are dead but they certainly aren't the norm. The poster I quoted said he wants to be able to move and buying a home prevents him from doing that apparently. The average time on the market in San Antonio is currently 71 days. Like I said, houses rarely tie people down and people generally don't move around as much as they say they want to.
If I would have tried to sell my home when I moved in '13 I would have had to come out of pocket a good amount. So yeah it can be hard. But when I sold it this year it was only on the market a month and I made a decent amount on it. But the process of selling it taught me to never trust a property management company.
When we moved overseas (Navy) we opted to rent out, vice sell the home we'd owned for about 6 years. We rented in Italy, and were afraid to purchase property in a foreign country. My wife and both worked and we made additional payments on our mortgage and paid the 30 year note in 17. Yep, we paid a good portion of our Italian landlord's house too, but military pay overseas provided a decent quality of life. I'm anxious to get back stateside and enjoy life. We may have one or two more real estate transactions, but only if it increases our income.
That all depends on what you're trying to accomplish with the sale. If you're trying to make money, the asking price you require can make it harder to move. If you're just trying to get out from under it, price be damned, sure it's easy. Just lower the price until it sells.
It's not hard to break even in the housing market if you're smart about buying. You have to get away from the "my house makes me money" / "It's always a good time to buy" mentality.
So what are the things to be smart about?
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