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The real cost of owning a home

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Re: The real cost of owning a home

#621

Post by kccqzy »

rwmj wrote: post #246
vikingerik wrote: post #197

Earlier quoted context omitted.

Yes, this is broadly correct. The free market will (roughly) arbitrage out any differences between owning and renting. The hidden factor is that whatever money you have in house equity represents opportunity cost that it isn't in investments. If you have 400k in a house and the stock market returns 6% over inflation, then the opportunity cost is 2k per month in interest, which is comparable to what you'd pay in rent.…

But the same argument applies to landlords too. Why are they willingly losing money?

A lot of small mom-and-pop landlords are certainly losing money. Especially when they buy properties as their own residence but later converted to a rental. The majority of the Bay Area housing market has basically zero properties that would make a landlord profitable; you only need to compare the market value of a house against the market rent.

And this is really no different from the majority of stock pickers or day traders. They just lose money.

Re: The real cost of owning a home

#622

Post by iamalizard »

joshstrange wrote: post #361

> I bought my home in Auburn, WA for $321k, and sold it a few years later for $333k. After all the costs to buy and sell it, I probably lost more money on it than I would have spent renting an apartment. Any half-competent realtor will tell you that if you aren't going to stay in a house for 3+ years you will probably lose money on closing costs/fees. Contrast this with my house, I stayed in it for ~6 years and the h…

> the "included" maintenance is dog shit

In my experience it usually is.

> Right as I was moving out they wanted to add a $25/mo pet fee

If my landlord did that, I'd be quite surprised as he obviously knew I have 2 small dogs when I moved in and they haven't done any damage. Is your landlord managing lots of properties, not just your own? It's the type of added fee I'd expect from a faceless company, not a person I've had a relationship with for a while.

> they removed our cable modems and made everyone use wifi-only (limit 10 devices)

That would've driven me mad.

Re: The real cost of owning a home

#623

Post by justinram11 »

I actually enjoy it much more than I thought I would.

I love tinkering and solving problems on the computer, and it's fun to have a space to do it with my hands in the real world. Learning the basics of carpentry to erect a fence, basics of plumbing and the various international fitting types to install a (from japan) bidet toilet, cat6 throughout the house and trench out to the garage, basics of hvac for a whole-house humidifier and smart thermostat (MN winters) -- have all felt like very fun projects.

Next project is probably trying to replace the plumbing up to our second floor bathroom with pex (water pressure upstairs is very poor).

Also helps that I have a very handy dad that I can fall back on to ask questions or help.

Re: The real cost of owning a home

#624

Post by iamalizard »

lbrito wrote: post #376

These own-vs-buy comparisons always compare an idealized rental situation vs a concrete ownership situation. Its never realistic (although this article does acknowledge it: "My 1983 home had been used as a rental for years, so much of the maintenance had been neglected". Specifically: people think about maintenance costs as a "con" in owenership, but its not like in the alternative (renting) you'll get all of those t…

And when you invest in something because the landlord won't do it, then move to another rental for some reason, you may have to do it all over again. Especially for upgrades. When you own the logic is "I'll pay X for this and it will hold for ~Y years". When you rent it's "I'll pay X for this and if I leave before ~Y, I'll have overpaid on a per-year basis".

Re: The real cost of owning a home

#625

Post by laughing_man »

IMO most childless people would be better off renting (kids change the whole set of incentives). Exceptions would be people with hobbies that require a lot of space or a yard, and light sleepers.

A house means a better standard of living, but you definitely pay for it. I spent $25k replacing a fence at my house this year, and I'll need to spend another $20k to replace the air within the next few. The roof, another $30k, is coming up too. Where I live you can rent for quite awhile with $75k.

While it's true rent goes up over time, if you take the money you're not putting into a house and invest it, your investments will go up over time as well.

Re: The real cost of owning a home

#626

Post by yieldcrv »

> After all the costs to buy and sell it, I probably lost more money on it than I would have spent renting an apartment.

Don't tell that to real estate permabulls, even the idea of a landlord making money for a month or two between them paying banks for homes is a whole diatribe.

Money in the toilet! They surmise, as if trading equities wasn't an option, or any other way to make money faster wasn't an option. As if other leveraged investments don't exist. As if leveraged investments that can optionally generate cash flow don't exist. As if they aren't such poor traders that they need the extremely slow collateral calls of real estate to survive.

Because one of the dozen middlemen fumbled the bag, the real estate flipper had to pay rent for a month! Woe! They couldn't live in yet another suboptimally located suburb far away from stimulation or economic center, instead of using some of that that capital to rent somewhere in the middle of where people would actually want to live while putting the rest in equities or a productive business

Re: The real cost of owning a home

#627

Post by bombcar »

taneq wrote: post #608
bombcar wrote: post #482

Earlier quoted context omitted.

If you treat your house like a rental that you rent to yourself, you can avoid a bunch of headaches - mainly because you’ve given yourself “permission” to spend on it.

Yeah but then I have to deal with my tenant. :P

Evicting yourself and taking yourself to court could have fun Fogerty vs Fogerty vibes!

Re: The real cost of owning a home

#628

Post by [deleted] »

laughing_man wrote: post #625

IMO most childless people would be better off renting (kids change the whole set of incentives). Exceptions would be people with hobbies that require a lot of space or a yard, and light sleepers. A house means a better standard of living, but you definitely pay for it. I spent $25k replacing a fence at my house this year, and I'll need to spend another $20k to replace the air within the next few. The roof, another $3…

[deleted]

Re: The real cost of owning a home

#629

Post by laughing_man »

mc3301 wrote: post #575
groby_b wrote: post #518

Earlier quoted context omitted.

> He's under the building doing plumbing or electric one day. I believe I've encountered that guys electrical work, and it ain't sage :) (I.e. there are a few of those "fix it all" guys, but they're not always code compliant. They do get stuff done, though)

Plumbing: plumber. Electrics: electrician. Most other things (besides obvious big things like foundation, drainage, roofing, load supporting areas) can be done with a good "fix it all" kinda person, or (with patience) youtube.

Plumbing isn't all that complicated, really. There are things you have to understand, but a little research will take you a long way.

I only call the plumber when I don't have the equipment I'd need, like cameras and snakes.

Re: The real cost of owning a home

#630

Post by kccqzy »

laughing_man wrote: post #625

IMO most childless people would be better off renting (kids change the whole set of incentives). Exceptions would be people with hobbies that require a lot of space or a yard, and light sleepers. A house means a better standard of living, but you definitely pay for it. I spent $25k replacing a fence at my house this year, and I'll need to spend another $20k to replace the air within the next few. The roof, another $3…

Theoretically these capital expenses like fence replacement or roof replacement should have been deducted from the market value of a house when you buy it: a theoretically rational buyer would take into account the present value of future capital projects. And this just goes to show how much the market value of a house is now much higher than the present value of all future rent. In simpler words, the market is frothy. Buyers just hope the market remains frothy when they sell.
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