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Renting vs. buying a home

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Re: Renting vs. buying a home

#11

Post by skorgu »

nahname wrote: post #8
ljoshua wrote: post #4

One of my favorite interactive pieces from the NYTimes is a Rent vs Buy calculator which is very configurable: http://www.nytimes.com/interactive/business/buy-rent-calcula...

The numbers are very inflated against buying. 10% closing cost, 1.35% property taxes, utilities only if you buy, another 1.35% annually on maintenance/renos/insurance. Who is paying 2.6% of their property value each year on those things? Who gets utilities for free with their rent. That calculator is very dishonest.

Those numbers are configurable. Click the "Advanced settings" button.

Re: Renting vs. buying a home

#12

Post by gdilla »

tibbon wrote: post #3

I've rented for my entire adult like (I'm currently 31 living in Somerville/Boston). While my sister bought her first house in Pittsburgh when she was 23, and my parents had moved between several houses they purchased by my age... I've been happy renting. I didn't want to buy a house until recently, but now I want to buy one around here. Why? For one thing, in the major cities the rents keep going up at a rate faster…

There are other costs to owning - maintenance, property taxes, closing costs, and your agents fee (when you eventually sell - unless you keep forever). I bought a condo at age 24 in LA in 2002. I hated that the HOA could do things like, we need to fix the roofs, so pay up. We voted on it. Ditto re-paving the parkinglot ever x years. Damn if my first year in the condo was somehow fix everything year. Ugh.

Re: Renting vs. buying a home

#14

Post by dsr_ »

tibbon wrote: post #3

I've rented for my entire adult like (I'm currently 31 living in Somerville/Boston). While my sister bought her first house in Pittsburgh when she was 23, and my parents had moved between several houses they purchased by my age... I've been happy renting. I didn't want to buy a house until recently, but now I want to buy one around here. Why? For one thing, in the major cities the rents keep going up at a rate faster…

More to the point, your 30 year mortgage has an effective rate cap. If rates go down during the time you owe it, you can almost certainly refinance. But you never have to refinance at a higher rate. You can also lower the rate by reducing the term.

So far, my mortgage has been refinanced four times, each time reducing the interest rate (due to market conditions) and twice reducing the interest rate by reducing the term (20, 15, and now 10 years).

Being a landlord is a whole different proposition, and I would strongly recommend that you talk to current landlords before you go into that business. MA has excellent renter protection laws... which are not so great for landlords.

Re: Renting vs. buying a home

#15

Post by mrfowler »

tibbon wrote: post #3

I've rented for my entire adult like (I'm currently 31 living in Somerville/Boston). While my sister bought her first house in Pittsburgh when she was 23, and my parents had moved between several houses they purchased by my age... I've been happy renting. I didn't want to buy a house until recently, but now I want to buy one around here. Why? For one thing, in the major cities the rents keep going up at a rate faster…

I did this in Somerville. I bought a two family in 2010. Rent from the bottom unit and one roommate back then covered the mortgage entirely. Of course, with Boston rents rising so much, and a few new carpets and appliances I've been able to raise my original rent close to 40% the last few years.

Now that I've moved on and fully rented it, it's generating close to 2k a month in profit. Not bad since I got a FHA loan and only put 5% down.

Dealing with tenants can be a pain, but I have no regrets. Home ownership has certainly been a path to wealth for me, though I suspect most people who buy single families or condos with no rental income won't get any real returns.

Re: Renting vs. buying a home

#16

Post by ceras »

nahname wrote: post #8
ljoshua wrote: post #4

One of my favorite interactive pieces from the NYTimes is a Rent vs Buy calculator which is very configurable: http://www.nytimes.com/interactive/business/buy-rent-calcula...

The numbers are very inflated against buying. 10% closing cost, 1.35% property taxes, utilities only if you buy, another 1.35% annually on maintenance/renos/insurance. Who is paying 2.6% of their property value each year on those things? Who gets utilities for free with their rent. That calculator is very dishonest.

If you're buying in a typical American market (ie, homes selling for $200k) 2.6% annually on taxes/maintenance/renos/insurance does not seem absurd at all to me. I've heard others argue it's too low.

Re: Renting vs. buying a home

#17

Post by pmorici »

nahname wrote: post #8
ljoshua wrote: post #4

One of my favorite interactive pieces from the NYTimes is a Rent vs Buy calculator which is very configurable: http://www.nytimes.com/interactive/business/buy-rent-calcula...

The numbers are very inflated against buying. 10% closing cost, 1.35% property taxes, utilities only if you buy, another 1.35% annually on maintenance/renos/insurance. Who is paying 2.6% of their property value each year on those things? Who gets utilities for free with their rent. That calculator is very dishonest.

In Baltimore property taxes run close to 2% a year on appraisals that are usually 10% higher than what you actually purchased the property for. Those numbers are pessimistic so they don't mis lead people who don't bother to pay attention to the details.

The property taxes in CA are lower than they might otherwise be if the home values weren't all so high. The government is going to get it's money one way or another.

Re: Renting vs. buying a home

#18

Post by lsiunsuex »

As a renter, you can't do cool stuff like this

http://diy.blogoverflow.com/2012/08/building-a-brick-pizza-o...

conversely, over the last 4 years, we've completely gutted and rebuilt this early 1900s house from all new electrical to plumbing, to insulation and windows. It helps to be handy (which I am) but it can be a money pit...

Re: Renting vs. buying a home

#19

Post by chimeracoder »

nahname wrote: post #8
ljoshua wrote: post #4

One of my favorite interactive pieces from the NYTimes is a Rent vs Buy calculator which is very configurable: http://www.nytimes.com/interactive/business/buy-rent-calcula...

The numbers are very inflated against buying. 10% closing cost, 1.35% property taxes, utilities only if you buy, another 1.35% annually on maintenance/renos/insurance. Who is paying 2.6% of their property value each year on those things? Who gets utilities for free with their rent. That calculator is very dishonest.

> Who gets utilities for free with their rent.

Depends on what you mean by 'utilities', but in New York City, landlords are required to provide heat and hot water to all tenants. Technically they are allowed to itemize this as a recurring surcharge on top of the rent, but in practice I have never seen this done.

Electricity is not included in most modern buildings, though it sometimes is for older buildings which cannot separate the meters per unit easily.

Re: Renting vs. buying a home

#20

Post by iaskwhy »

ljoshua wrote: post #4

One of my favorite interactive pieces from the NYTimes is a Rent vs Buy calculator which is very configurable: http://www.nytimes.com/interactive/business/buy-rent-calcula...

Any idea why it does not allow me to set more than 30 years?
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