291–300 of 318 posts
Earlier quoted context omitted.
Not in New York.
Rents in New York are notoriously high.
That's important for both political and social reasons, and for peace of mind ones. For example, I know way too many people who rented a place, treated it well, paid exactly what they needed to and who were model tenants... that then got kicked out in short order because the landlord decided they'd make more money selling the property or by trying to find new (and better paying) inhabitants.
Owning means not worrying about that situation. About being told you've got a few months to get lost, and the resulting pressure to find a new place before homelessness sets in.
There's also the political side. I know rental agreements are stronger than many similar ones in other industries, and that it seems unlikely now, but renting feels like you're leaving your life and usage of a service up to the whims of a third party, and one that could easily decide to terminate said service if you get into a controversy or legal trouble. We've all seen cases where large companies kicked out customers that made them look bad, even when what they were doing was entirely legal.
Owning things means you don't lose them if someone else hates you and everything you stand for, and gives you stability when you get caught in drama of any kind.
Meanwhile, the control side can't be overstated here. Landlords can decide you can't alter the property in any way, including hanging up paintings or shelves or changing the lighting. They can decide that pets aren't allowed, or how many people can live at a property. They can refuse to upgrade or install services that might be necessary for many of us, like high-speed internet.
Owning means you're the one that chooses how you want to decorate the property, what changes can be made, and who/what can live there. I can choose to have everything remodelled or reinstalled or replaced depending on my tastes, to have pets or roommates, to upgrade or install whatever services I need and how I want everything room laid out and decorated.
For me, that's how I treat basically everything. Why give up stability and control for convenience in any situation? I don't lease vehicles, use streaming services or rent any physical object, and I avoid digital games and cloud services unless absolutely necessary.
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If you're young and you buy, you could get roommates and have them pay rent. That would definitely tilt the benefits heavily to buying.
Obviously the risk of this is significantly higher than just renting. If you have your first job and therefore little to no liquid cash, and then on top of that you require tenants to make your mortgage, you're in a pretty risky position. That means that if just about anything goes wrong you can be absolutely fucked.
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The main difference is that you can invest the difference in renting vs owning, and you might come out on top in the long run. It depends on the housing market, the stock market, and where you are.
How do you invest a negative amount of money into an asset? Because the difference between renting and owning is always a net loss, a negative value each month.
Made up numbers: consider:
Mortgage: 2,000 Home price: 200,000 Difference from rent: -500
Rent: 1,500 Home price: 0 Difference from mortgage: +500
If (500/month invested over 30 years) > (200,000 appreciated home price over 30 years) then you came out on top by renting.
It might be or it might not be.
Also, the type of asset matters. Stock might be a more flexible asset than real estate, in which case you should probably rent depending on your location.
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Homes are not low-risk or stable at all - you transfer the risk to your job. If you lose your employment and you have a home, that's a much riskier situation than if you're renting. Because, if you cant find a job in time or in a very small location radius, you must sell. The mobility of renting lowers the risk associated with extraordinary life events which requires relocation.
If you live in a non-rent-stabilized apartment in a market where annual rent increases are the norm, then by renting you condemn yourself to permanent downward mobility unless your income increases by more than your rent every year. 8-10% annual rent increases are not unusual at all in NYC/LA/SF - maybe you can get a 10% raise every year, but I'd wager even most HN posters can't. For this reason alone, it makes sense…
Can't really move companies easily if you're owning a home, ergo, about 10% potential loss per year over renting, not including the difference in investments you could achieve by having more liquid income w renting vs buying.
Buying DOES make sense. I think it almost never makes sense if you're early in your career. The ceiling is just too high to give up potential earnings that early. The closer you get to the ceiling though, the more sense buying a home makes.
It's interesting to paint the homeowner as an emotional person and the renter as the pragmatic, however both are roughly equally emotional. As the rent prices keep rising, the renter in the end will end up spending much more money in the same duration as a mortgage, won't they? After a few years, when they end up owning more of the property, they can secure a good deal with better monthly mortgage payments. They can…
How about the act of buying itself? Here where I live, you need to pay 12% on top of the home price simply for taxes and notary service. IMO it's one of the biggest obstacles and why most Swiss people prefer to rent.
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How do you invest a negative amount of money into an asset? Because the difference between renting and owning is always a net loss, a negative value each month.
No, it's not, not always is my point. We don't count the asset of having the home because we're comparing that part to the stock market investment. Made up numbers: consider: Mortgage: 2,000 Home price: 200,000 Difference from rent: -500 Rent: 1,500 Home price: 0 Difference from mortgage: +500 If (500/month invested over 30 years) > (200,000 appreciated home price over 30 years) then you came out on top by renting. I…
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Who are these people who can afford $6k/month for a rental? It has to be a very small percentage of the population, yet I see these kind of numbers thrown around a lot. Statistically, I’m in the top ~5% of income earners (from the data I can find), with no debt, and I couldn’t afford $6k/month. I bought a house because I don't understand the rental market anymore. I don’t really like being a home owner, but the rent…
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…
Earlier quoted context omitted.
No, it's not, not always is my point. We don't count the asset of having the home because we're comparing that part to the stock market investment. Made up numbers: consider: Mortgage: 2,000 Home price: 200,000 Difference from rent: -500 Rent: 1,500 Home price: 0 Difference from mortgage: +500 If (500/month invested over 30 years) > (200,000 appreciated home price over 30 years) then you came out on top by renting. I…
What I'm trying to say is that there is nowhere on the planet where the rent is less than the mortgage. So your situation is impossible, it simply does not happen. If it happened for 10% or 20% of properties, then I agree with your considerations. But it happens for less than 0% of properties.
- multi-unit buildings are significantly more efficient in cost per-unit.
The cost of a 1500 sqft apt and 1500 sqft home is not the same, the home is going to cost a few times more. Because it's on its own lot, with its own land, and it's on the ground, and it gets its only municipalities (gas, water, steam, electricity), and then it also has its own road requirements.
Basically with, say, a 12 story block you can get hundreds of units for the same amount amount of land (and associate cost) as a few homes. And then you can spread the cost of municipalities, too.
Even with just a duplex or dingbat you're looking at the same land costs and the equivalent accomodations as a few homes. But it doesn't scale linearly, meaning a duplex != the cost of 2 homes.
Also large landlords (corps) can spread the cost of price across all their units. Meaning, like Walmart, some are loss leaders for competitive reasons and some make more money than they need to.
Interestingly, the cost per unit continues to go down until about 12 stories. Then it goes back up, because of building requirements. Which is why commie blocks were historically 8 to 12 stories tall, it's the cheapest way to build housing.
Earlier quoted context omitted.
What I'm trying to say is that there is nowhere on the planet where the rent is less than the mortgage. So your situation is impossible, it simply does not happen. If it happened for 10% or 20% of properties, then I agree with your considerations. But it happens for less than 0% of properties.
For most places in the US rent is lower than a mortgage. Primarily because: - multi-unit buildings are significantly more efficient in cost per-unit. The cost of a 1500 sqft apt and 1500 sqft home is not the same, the home is going to cost a few times more. Because it's on its own lot, with its own land, and it's on the ground, and it gets its only municipalities (gas, water, steam, electricity), and then it also has…
What is the rent for a 1500 sqft apartment compared to the mortgage for a 1500 sqft apartment? The rent is always higher.
What is the rent for a 1500 sqft house compared to the mortgage for a 1500 sqft house? The rent is always higher.