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Renting is Throwing Money Away, Right? (2015)

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

#481

Post by Simulacra »

ironjunkie wrote: post #139
Simulacra wrote: post #81

Earlier quoted context omitted.

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).

Oversimplified statement. You still had to put a downpayment that didn't go somewhere else for the whole length of your mortgage. Also, if your rent covers your mortgage, I will assume that you were simply lucky enough that in your particular area the housing market rose more rapidly than in others (for example the bay area). But you didn't know this in advance and it could very well have gone the other way around.

Me? Oh, no my only payments were about $3,000 in the closing costs. I did NOT have to put down a sizable down payment because I got an FHA backed loan.

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

#482

Post by Simulacra »

traytonwhite wrote: post #430
Simulacra wrote: post #81

Earlier quoted context omitted.

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).

Your renter pays the market rate for rent for that property (in general). In your case, that happens to work out in your favor. But in a place like SF, a 2 bedroom apartment costs $1.5 million, which is ballpark $7k+ a month. I can rent a 2 bedroom for less than half that because the market is simply not paying $7k a month for 2 bedroom apartments. I've also rented a house where my rent payment did not even cover the…

Actually, I screwed up there. I am charging below market rate. I was most concerned with finding a good tenant that would cover my fixed costs each month, plus $100 profit for repair, etc. My place got 4 applications within 12 hours of listing. If I'd known then what I know now, I would've priced it $3-400 more!

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

#483

Post by Simulacra »

scarface74 wrote: post #252
Simulacra wrote: post #81

Earlier quoted context omitted.

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.

Mortgage insurance. It's requires for my FHA loan, but I've also paid 3 months ahead on my mortgage to give me additional breathing room.

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

#484

Post by conanbatt »

kcanini wrote: post #463
conanbatt wrote: post #389

Earlier quoted context omitted.

Gotta say I always found this incredible. Rent control is so stupid that even it has to put rules on not being used. Who is being harmed by a rent-controllee sub-leasing? Literally no one. Because the harm to the owner is already made in the form of rent control.

> Who is being harmed by a rent-controllee sub-leasing? Literally no one. The owner is harmed, because otherwise they could have gotten a new tenant and raised the rent back up to market rate.

Only if the tenant leaved. If leaving loses the rent-control, the tenant will stay. The price is well below market rate, then they wouldnt even get roomates, harming the entire rental market on both ends: by removing profits from the owner and decreasing supply.

If rent-control didn't have the restriction, then it wouldnt make a dent into rent prices, but it would clearly show that it is a mere transfer from the owner to the rent-controllee.

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

#485

Post by chrisabrams »

jwong_ wrote: post #28
chrisabrams wrote: post #10

Earlier quoted context omitted.

Your property taxes and mortgage insurance are deductible where rent is not. If you look hard enough in NJ/NY areas you can find places where the principal is near the rent price and you deduct the rest. In the long run that works out to your favor. Not everyone can afford such a situation and the new Trump tax changes don't help either. Just saying "I should rent" is irresponsible because you think you're bumping th…

What do you use to find these areas? Is there any particular neighborhoods you're willing to share?

Start with mashvisor.com to get a good feel for what areas with fit the stragetgy(ies) you have.

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

#486

Post by scarface74 »

Simulacra wrote: post #483
scarface74 wrote: post #252

Earlier quoted context omitted.

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.

Mortgage insurance. It's requires for my FHA loan, but I've also paid 3 months ahead on my mortgage to give me additional breathing room.

Mortgage insurance doesn't protect you, it protects the bank. The bank can still foreclose just as fast, they are just guaranteed to get their money if the price they sell the home for is less than the amount you owe.

But it still only takes one bad tenant or one good tenant that comes on hard times to cause you to lose all of the profit.

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

#487

Post by hvidgaard »

VLM wrote: post #374
uxp100 wrote: post #331

Earlier quoted context omitted.

I think this is a good post and a good perspective to take, but its worth pointing out you bought an expensive washing machine, though if its more reliable, then that's probably the better purchase. On good days I do like my house hobby. I mainly bought a house because I kept having to move every year, renting flats in houses where they decided they wanted to sell, or move in themselves, etc. So now only the bank and…

Not so, I bought the cheapest washing machine I could get. I dropped about $1200 cash on a speed queen that'll last me maybe 20 years. Joe 6 pack finances a new LG every three years at 29.99% credit card interest for $600 and thinks I'm getting ripped off. Its just like the situation with hiking boots, I can only afford the $250 boots that last many years, I'm not rich enough to afford the $100 boots that only last o…

Or you can buy a Bosch for $400 on sale. One of the not fancy models and it'll last you 10 years easily. It's also serviceable if you need to repair it - not to the degree of a Speed Queen, but totally doable. It's also significantly cheaper to run compared to a Speed Queen. With that in mind you can probably buy 3 of them (including delivery) for the same price of a Speed Queen over a 20 year period.

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

#488

Post by zwischenzug »

crispyporkbites wrote: post #440
zwischenzug wrote: post #407

Earlier quoted context omitted.

Yes, exactly. Around 2% of purchase value. You'd be surprised what you can get renting, area depending.

That's not possible, you're not getting a place for 2% of purchase value on the open market. There are no £1mn properties available for £1,666/month, or £500,000 places for £833/month, it's more than double that everywhere in London

I can't respond to this without revealing my personal information. A neighbour paid 900K for a house similar to ours, and we pay less than 1666/month.

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

#489

Post by zwischenzug »

zwischenzug wrote: post #488
crispyporkbites wrote: post #440

Earlier quoted context omitted.

That's not possible, you're not getting a place for 2% of purchase value on the open market. There are no £1mn properties available for £1,666/month, or £500,000 places for £833/month, it's more than double that everywhere in London

I can't respond to this without revealing my personal information. A neighbour paid 900K for a house similar to ours, and we pay less than 1666/month.

Here's an example (not mine):

http://www.rightmove.co.uk/house-prices/SE21/Woodhall-Drive....

sold for 1.8m in 2014. At current prices that's around 2.5 mill.

Asking rent is: 4k/month

http://www.rightmove.co.uk/property-to-rent/property-7277581...

suspect you'll get it for far less than that.

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

#490

Post by mrweasel »

rosege wrote: post #456
mrweasel wrote: post #212

Earlier quoted context omitted.

Just as an example from Denmark: My parents have a house financed with a load with negative interests.

how does that work? does the bank pay them for taking their money?

The amount is very low, and I'm sure there are fees that will eat any "profit".

It's important to understand the it's not the bank that lend you the money to buy your house, at least not directly. You home is financed by bonds, issued by a sort of credit union. Investors then buy those bonds, pensions funds for instance. The Danish housing marked is extremely stable, so it's a safe place to put your money. So some investors will be willing to take a small lose on buying bonds in homes, in return for safety.

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