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My thoughts on renting versus buying

milesbarr.me

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Re: My thoughts on renting versus buying

#241

Post by Marsymars »

dbish wrote: post #207
jcims wrote: post #66

The home buying process seems to have been thoroughly corrupted, at least in the US. The transaction costs are high, parasitic HOAs and paying over ask have been normalized, new homes are built as cheaply as possible, investors are driving up costs, etc. etc. The investment aspect is a bit overrated. You can't get that money 'back' because you still need a place to live. Most folks just flip their equity into the nex…

Also would add that the vast majority of realtors are just middlemen who take their cut and add little to no value.

My biggest regret as a first-time homebuyer was not hardballing every realtor in the city to see who would facilitate my transaction at the lowest cost.

Re: My thoughts on renting versus buying

#242

Post by bluefirebrand »

foxglacier wrote: post #226
carlosjobim wrote: post #139

Earlier quoted context omitted.

What? That cash goes to the landlord.

In the same way the interest payments on a mortgage go the the bank. And the interest is often the majority of the payments people make on a mortgage. If you're renting, in a market where rents are about the same or lower than mortgage interest, then you keep the leftover cash that the buyer put into their house and you can put into whatever investment you choose.

> In the same way the interest payments on a mortgage go the the bank

Yeah, but at least you own something at the end of it

> And the interest is often the majority of the payments people make on a mortgage

Only if you're stupid and only ever pay the bare minimum. Of course many people unfortunately are

Re: My thoughts on renting versus buying

#243

Post by bluefirebrand »

phil21 wrote: post #227
cramsession wrote: post #126

Earlier quoted context omitted.

If you compare equally sized places, rent is pretty much always higher. At least it has been in every city/town I’ve ever lived in. Renting is not cheap, you’re paying a premium to the landlord.

Not all landlords min/max for peak financial outcome. My landlord for 15 years raised rent exactly once when property taxes had a large jump one year, and was already under market when I started the first lease. His mortgage was long paid off and he optimized for least hassle vs max money. Worked out for both of us - I called him maybe once a year at most, and he had a decent passive income stream reliably come in wi…

> Not all landlords min/max for peak financial outcome

An enormous number if rentals are owned by private equity not by individuals, so rental markets are pretty dominated by landlords min/maxing for peak financial outcome

Re: My thoughts on renting versus buying

#244

Post by Marsymars »

al_borland wrote: post #89
antonymoose wrote: post #77

Earlier quoted context omitted.

The $6k number is a touch high, but the answer is realistically 30-something DINKs and up. I make $150k a year, let’s say, and if I have a spouse with a corporate career let’s say it’s similar so maybe $250k-300k per year in income? Well that’s about $12,000 in income after taxes, medical, and a 10% retirement contribution. So, yes, $6k per month is house-poor numbers, but it’s workable for sure. If you’re even bette…

Making that much, I wouldn’t want to put anymore than 25% of my take-home toward rent. That would mean making $312k take-home… after taxes, retirement, etc. Maybe I’m conservative, but being house poor while making $300k is insane. I’m thinking someone would need to be pushing $400-500k for household income. That would put them in the top 3%. I don’t get the supply and demand curve on it. Making that much, and rentin…

> I’m thinking someone would need to be pushing $400-500k for household income. That would put them in the top 3%. I don’t get the supply and demand curve on it. Making that much, and renting. It’s an even smaller market than the full 3%.

I know a couple in that range of HHI (doctor/lawyer) who sold their house and moved to a rental in that range.

Their take is that their time is very valuable to them, and dealing with their house involved a bunch of time spent on management and administration that can’t be made to adequately go away without effectively hiring a house manager.

Re: My thoughts on renting versus buying

#245

Post by onecommentman »

defterGoose wrote: post #215

The author disclaims that he's not a homeowner at the very end of the article, but these types of pieces steelmanning renting always read to me as thinly veiled pleas of "please exit the market so I can have more".

And over the decades there have been many more pro-renting pieces like this in the general press than pro-home ownership. I’ve assumed the pieces are bankrolled by the investment community, because investment bankers can’t make money off of your money if your money is locked up in a home.

“Rent your apartment, save the difference, invest it in the financial casino of your choice and maybe you’ll win big this time.” Or maybe not. But the house (investment brokers) always win.

Re: My thoughts on renting versus buying

#246

Post by hmmokidk »

kibwen wrote: post #15

> The Flexibility of Renting Is Undervalued And the stability of buying is undervalued. It's telling that this article frames housing as an investment vehicle rather than as a basic necessity. And it's not just a necessity because it shelters you from the elements and gives you storage for your stuff; it anchors you in a neighborhood and allows you to begin forming a local community. The flexibility of renting that t…

Befriending is a weak argument, unless there’s something I am missing. Growing up my family kind of befriended one neighbor, and we just know what they’re up to and who bought and demolished their home.

So like… Is that really that important?

Re: My thoughts on renting versus buying

#249

Post by nicbou »

moooo99 wrote: post #49

First of all, I fundamentally disagree on the notion that buying a home should be considered an investment (I would go as far as to argue that this attitude is part of the reason the real estate markets are so broken in many places of the world). I don't want to be rich and I don't need to be - I just want a place where my kids some day can grow up, where I can enjoy the sun in the garden and invite family and friend…

Buying in Germany seems widely considered as a bad idea, both for renting and for living in. It's more of a lifestyle decision, if it really makes you happy.

Re: My thoughts on renting versus buying

#250

Post by HaZeust »

crooked-v wrote: post #170
klipt wrote: post #145

Earlier quoted context omitted.

Depends where you live though. In the SF Bay Area, buying requires a monthly payment several times larger than the rent for an equivalent place.

The Bay Area market is a bizarre one because of how Prop 13 and extremely thorough renter protections lead to perverse incentives for everyone.

Denver is like it too, what's your prescription there?
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