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Renting is Throwing Money Away, Right? (2015)

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Re: Renting is Throwing Money Away, Right? (2015)

#251

Post by scarface74 »

ShadowFaxSam wrote: post #200

This same principal can be applied to buying or leasing a car. When I first graduated college and had my first "adult" job I wanted to purchase my first car. The general mantra I heard was "Leasing is throwing money away". I ended up financing my first car, (used) thinking I was making the correct financial decision. The problem with someone fresh out of college buying or financing a car is they really have no idea w…

Until you get a new job where the commute is causing you to put more miles on your car than the lease allows....

Re: Renting is Throwing Money Away, Right? (2015)

#252

Post by scarface74 »

Simulacra wrote: post #81
monkmartinez wrote: post #78

Earlier quoted context omitted.

I own my home in a relatively cheap COL area... I would rather rent. Houses nickel and dime you to death. The expenses pile up at both the front and back of the transaction... that is, when you buy and finally sell. Please show me how the small increases in property value multiplies my initial investment. The problem is most people don't move sideways or down... they move up, thus negating any windfall in investment…

My renter pays for my mortgage which includes principal and interest, landlord insurance, and taxes. Not to mention an additional $380 a month and profit that I put towards the principal and my 401(k).

Until your renter stop paying and if takes you three to six months to evict them or until they trash the place and you have to pay for repairs.

Been there. Done that.

Re: Renting is Throwing Money Away, Right? (2015)

#253

Post by BoorishBears »

loxs wrote: post #244
BoorishBears wrote: post #242

Earlier quoted context omitted.

Isn’t the idea that you don’t worry about it? You’ll still have your home. On the other hand, if the market explodes and renters who are paying prices below market start getting forced to pay more or move out, you’re left with no options

Yeah but if the market collapses and you lose your job, you'll be forced to sell at a huge loss

How does a drop in the local housing market lead to you losing your job? A general market crash causes many people to lose their jobs, it doesn’t discriminate against homeowners.

The renters are probably in a worse position in that case too, stop paying rent for a month and you’ll be evicted the next month. Stop paying your mortgage and the bank will at least work with you for a little longer.

Re: Renting is Throwing Money Away, Right? (2015)

#254

Post by [deleted] »

tomohawk wrote: post #219

We've been living in an era of low inflation for quite some time. When inflation becomes more of a real issue again, renting is really going to look like a poor decision next to buying as rents skyrocket. What if this happens as you're getting ready to retire? The calculations in the article assume PMI (not putting 20% down) and making minimum payments. Purchasing a dwelling this way adds risk and expense. It's bette…

[deleted]

Re: Renting is Throwing Money Away, Right? (2015)

#255

Post by digianarchist »

Simulacra wrote: post #81
monkmartinez wrote: post #78

Earlier quoted context omitted.

I own my home in a relatively cheap COL area... I would rather rent. Houses nickel and dime you to death. The expenses pile up at both the front and back of the transaction... that is, when you buy and finally sell. Please show me how the small increases in property value multiplies my initial investment. The problem is most people don't move sideways or down... they move up, thus negating any windfall in investment…

My renter pays for my mortgage which includes principal and interest, landlord insurance, and taxes. Not to mention an additional $380 a month and profit that I put towards the principal and my 401(k).

Here in Toronto landlords are actually paying above the rent in order to meet their mortgage/insurance obligations.

https://betterdwelling.com/cibc-over-44-of-toronto-condo-inv...

Re: Renting is Throwing Money Away, Right? (2015)

#256

Post by eaenki »

jacquesm wrote: post #238
neuxenian wrote: post #208

Earlier quoted context omitted.

Leverage cuts both ways, though. As someone who just sold their house, the costs are a percent of the sale. You don't get taxed on the sales (generally) but you will probably have to pay real estate sales costs. So yes, if your home increases by 3%, you've gained 15% growth on your investment, but if the sale cost is 5% of the the sale price, then things aren't so clear anymore. The real calculation is the total mont…

5% is the norm in the United States, elsewhere it is a fraction of that. US consumers have become accustomed to being ripped off by realtors.

In Italy 5% is the norm as well.

Re: Renting is Throwing Money Away, Right? (2015)

#257

Post by littlestymaar »

bvm wrote: post #230
laurencerowe wrote: post #180

Earlier quoted context omitted.

US mortgage rates are generally quoted for 30 year fixed rates (about 4.5% currently.) Rates in the U.K. are much lower but those tend to be variable rates which will increase in line with central bank interest rates when those economies begin to recover.

I've just signed a 3-year fixed term @ 1.49% (at which point i'll then have to find another...). I'm pretty amazed at how different it seems to be in the US.

A 3-year fixed term cannot reasonably be compared with a 30-year one though.

Re: Renting is Throwing Money Away, Right? (2015)

#258

Post by maccard »

ShadowFaxSam wrote: post #220
maccard wrote: post #216

Earlier quoted context omitted.

If you had moved to Europe with a lease, you probably wouldn't have been able to hand over the car and walk away (unless you were at a certain point in the lease), so you would have been on the hook for the lease payments.

True, but the average term of a lease is only 24-36 months while the length of term for financing a car is 60-84 months. (I had a 72 month plan). So you can get out of a lease much earlier, and if you do exit early, you typically only have to make the next 6 months of payments.

A 6 year finance plan is quite a long term. I financed my first car over a 3 year term. You could equally have taken out a 72 month lease and been stuck in the same (possibly even worse) situation.

> if you do exit early, you typically only have to make the next 6 months of payments.

Two things here. 1) I doubt that most leases will let you terminate the contract that early, and 2) if you can, you still have 6 months of payments, which if you compare to the loss you made on your car selling it, the numbers probably compare (deliberately).

Ultimately, you made medium term financial commitment and that's a bad decision if you need to exit it early.

Re: Renting is Throwing Money Away, Right? (2015)

#259

Post by scarface74 »

Simulacra wrote: post #80

This is a really poorly written and exaggerate article. I purchased a home in 2015, I had to pay $3000 to close with no further down payment. After three years I had to move for work. I'm now renting that house out, and earning $380 a month in profit. That house is mine. Our use that profit to pay extra on the principal and contribute to my 401(k). Someday, that house will be paid for, and it will be all mine. Then a…

If you are not a local landlord, that increases all of the other risks of being a landlord - bad tenants, tenants who don't pay and a drawn out eviction process, vacancies, etc.

If you are a long distance landlord and have a third party take care of all that for you, you end up paying around 10% of the rent per month and at least 50% of the first months rent for a new tenant for them to find one for you.

After my experience with being a landlord, I said the only way I would do it again was if it was some type of multi unit deal and I could afford a 75% occupancy rate, and someone else to manage it.

Re: Renting is Throwing Money Away, Right? (2015)

#260

Post by quickthrower2 »

jstanley wrote: post #223
phamilton wrote: post #206

Earlier quoted context omitted.

How are buying agents compensated in the UK?

You wouldn't typically use one.

To add to this the UK market is beautifully transparent, with streets of very similar architecture / size houses or apartments to compare to. You can nail down the price you'd expect to pay, and it is very British to go in and make an offer with the agent, with no buyers agent. I didn't know such things existed until recently by watching shows like "Million Dollar Listing New York" etc.
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