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Is It Better to Rent or Buy?

nytimes.com

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Re: Is It Better to Rent or Buy?

#111

Post by larrys »

tolmasky wrote: post #72
larrys wrote: post #48

Earlier quoted context omitted.

"If you rent, you can leave whenever the heck you want and then go live wherever the heck you want. " You can do that when you own as well. You have to sell your house. After all you can't just get out of a lease whenever you want it goes according to a fixed time period. You have constraints as far as lease renewal, term and things like that. If you own you can decide at any point to sell (although certain times of…

> Similar to the fact that some people would rather go to a different vacation spot each year rather than own a vacation home in the same place. In that case an argument can be made that it makes sense to actually pay more to rent than to own because you are deriving some other benefit from not owning that is actually worth more (maybe that is what you are saying..) Yup, I think you've come up with a really helpful a…

As another example I always buy a car for cash and never lease. I want to be able to wake up any morning and get a new car exactly when I want. And I don't want to have to obsess over miles on the car or at least have it quantified "12k miles .30 overage". Not even a money issue it just takes the "fun" out of it.

Your point re: renting (and my point) as I pointed out in a reply in my other comment is really the gist of what I didn't like about this article. It reduced everything down to a dollar amount when the decision for everyone is much more complicated. It's actually one of the things I don't like about "Internet advice" it's really hard to come up with a comprehensive analysis of all the reasons people make certain decisions.

Re: Is It Better to Rent or Buy?

#112

Post by larrys »

gfodor wrote: post #92
larrys wrote: post #48

Earlier quoted context omitted.

"If you rent, you can leave whenever the heck you want and then go live wherever the heck you want. " You can do that when you own as well. You have to sell your house. After all you can't just get out of a lease whenever you want it goes according to a fixed time period. You have constraints as far as lease renewal, term and things like that. If you own you can decide at any point to sell (although certain times of…

You are 100% incorrect on your first point. Selling a home is not easy nor cheap, takes time, and is wrought with uncertainty. It's usually a low liquidity environment. On the renting side, terminating a lease early is generally trivial. I've terminated several of the leases I've signed over the years mid-term by finding a new tenant for the landlord beforehand and having that person take over or sign a new lease. La…

I guess in the end I just like to do what I want to do and not have to ask for permission or get approval.

I purchased our offices and wanted to install a door and just did it. I want to put in an alarm system I know it potentially adds to the property value. New carpets? Sure since even if we move it has value to a new owner (not 20 years later of course...) I didn't have to clear it with anyone and I didn't have to think about all the fine print in a lease or anything else.

But I do see your point.

Re: Is It Better to Rent or Buy?

#113

Post by dzohrob »

mbostock wrote: post #18

Author here. Thought I’d highlight my favorite, perhaps non-obvious feature: the slope of the charts tells you whether the variable is positively or negatively correlated with the cost of buying. And depending on the settings, that slope can change from positive to negative. For example with the defaults, the down payment chart is flat. This means the total cost of buying is relatively unaffected by the size of your…

This is super-helpful, thanks for posting!

One quick suggestion: it would be great to be able to save the numbers you've punched in so you can share a URL with someone (e.g., spouse, parents) next time the rent v. buy discussion comes up.

Re: Is It Better to Rent or Buy?

#114

Post by renaudg »

millstone wrote: post #57

My wife and I found a great apartment to rent. It was spacious, quiet location, reasonable rent. We were happy for a few years. Then the owners sold the complex, and the new owners set out to remodel everything, very much against our wishes. Construction crews started entering our apartment. They came in while we were out, laying down plastic sheets and moving our furniture around. They sometimes came in while I was…

This is insane and would be illegal in most European countries, AFAIK.

Re: Is It Better to Rent or Buy?

#115

Post by sarah2079 »

gfodor wrote: post #93

The problem with this (admittedly very good) calculator is there are two key knobs that require massive amounts of speculation but have a huge impact on the decision: projected return on investment and expected home price growth. Good luck predicting either of these over the next 10 years.

I wouldn't say this is a problem with a calculator. These two factors make predicting whether renting or buying will be better really hard in some cases, and the page makes that clear. I see it as an interactive tool that helps you explore all the variables involved rather than a calculator designed spit out a clear yes or no answer in every case.

Re: Is It Better to Rent or Buy?

#116

Post by millstone »

blub wrote: post #79
millstone wrote: post #57

My wife and I found a great apartment to rent. It was spacious, quiet location, reasonable rent. We were happy for a few years. Then the owners sold the complex, and the new owners set out to remodel everything, very much against our wishes. Construction crews started entering our apartment. They came in while we were out, laying down plastic sheets and moving our furniture around. They sometimes came in while I was…

Which country was this in? I find it incredible...is it everywhere like this?

This was in the USA, where the law states that landlords and their hired contractors may enter during "reasonable hours" for "improvements."

Probably rendering the apartment inhabitable for hours every day is not legal, and I could have sued for some compensation, but living there had gotten so miserable with the construction noise and random water shutoffs that I just wanted out.

Re: Is It Better to Rent or Buy?

#117

Post by refurb »

greedo wrote: post #73
refurb wrote: post #47

The calculator is surprisingly accurate based on some math I did late last year when thinking about buying a house. A small (1300 sq ft) house in SF can be bought for $750K in some neighborhoods in the south of the city. The ones in between the fancy ones and the crappy ones. I did a pretty detailed analysis of what everything would cost. Loss of investment income on the down payment, insurance, property taxes, etc.…

I might be missing something, but if house prices rise just 1% annually, your differential would shrink dramatically in favor of ownership.

In the scenario I modeled, I was assuming around ~3% growth.

Rent control definitely favors renting in a lot of situations. If you were at the whim of your landlord, then I could see buying being more attractive, especially in a market where housing prices are going up.

The real kicker about owning a house is that housing prices never go up a nice steady 2% or 3% per year. They go up 5% one year, then down 5% the next. If you don't have control over when you sell (loss of a job, etc), that can really hammer you.

Re: Is It Better to Rent or Buy?

#118

Post by humannature »

seanmcdirmid wrote: post #31
Frozenlock wrote: post #20

Earlier quoted context omitted.

And you still need to pay taxes (rent) to your municipality (landlord). So if I summarize, you can't do what you want with it and you need to pay your landlord. Why are people calling this 'owning' a house?

There are countries that lack property taxes, but they tend to be communist (china) and you are only buying a 99 year lease. Also, the lack of property taxes doesn't work very well, as it encourages speculation and then sitting on then property doing much with it waiting for values to rise. Property taxes enforces mandatory deprecation (you have to make it productive enough to at least pay the tax) and also funds thi…

For someone who lives in China I thought you would be more informed, anyway the house leases in China are 70 years, and also some big cities in China (Chongqing and Shanghai) have already started implementing property taxes.

Re: Is It Better to Rent or Buy?

#119

Post by refurb »

lazyant wrote: post #67

We need one like this but Canada; no tax breaks on mortgage interests or property taxes up here :-(

Canada also doesn't have 30-year mortgage terms. The loans are still amortized over 30 years, but you need to renew the mortgage every 5 years or so.

If you lock in a super low interest rate, you only lock it in for 5 years (10 years are available as well, but you pay a premium in terms of interest rate).

Re: Is It Better to Rent or Buy?

#120

Post by gnoway »

hkmurakami wrote: post #33
jleyank wrote: post #2

I said this when such a thread came up the last time: If you can (easily) switch jobs without moving it might make sense to buy. If you can't, however, renting is the safer option as you can move if/when there is a problem with the job. Domiciles can be rather illiquid at times, which sucks when you need to move for work. It's a separate question if it's worthwhile to buy at all, as that's dependent on geography, pre…

Some people say "oh you can always rent the house out!" but they often forget that once they move away and have to hire a property management firm, the fees that they'll have to pay will erode the rent revenue below breakeven with the mortgage payments (without such a manager, you can frequently break even or better vs mortgage)

In at least one US State, your property taxes are different if you're living in the home vs. renting it out. In my case, losing the homeowner's exemption would almost double my property taxes.

I'm not sure if you get to deduct property taxes for non-homestead property on your federal return either. In my case, losing this deduction would force me to use the standard deduction instead of itemizing. So, a possible double-whammy.

edit: note this is for the US.

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