Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

My thoughts on renting versus buying

milesbarr.me

Post reply on HN
Print view View original

311–318 of 318 posts

Re: My thoughts on renting versus buying

#311

Post by jjav »

dbish wrote: post #291
cramsession wrote: post #274

Earlier quoted context omitted.

Rents in New York are notoriously high.

Yes and they’re still much lower than buying an equivalent place. I’ve looked. Almost twice as much for a mortgage of a similar space for what I rent right now after putting 20% down. Only reason it makes sense to buy is if you really plan to keep the place for decades.

> Yes and they’re still much lower than buying an equivalent place.

Of course renting will be cheaper than buying an equivalent place. Most of the time in most places that's the case.

My point was this is true in the year of purchase and for a few years later. Over time (and you'll need to live somewhere your whole life) it will become cheaper. And then a lot cheaper. Rent will only ever go up.

Re: My thoughts on renting versus buying

#312

Post by mleonarde-opv »

jjav wrote: post #311
dbish wrote: post #291

Earlier quoted context omitted.

Yes and they’re still much lower than buying an equivalent place. I’ve looked. Almost twice as much for a mortgage of a similar space for what I rent right now after putting 20% down. Only reason it makes sense to buy is if you really plan to keep the place for decades.

> Yes and they’re still much lower than buying an equivalent place. Of course renting will be cheaper than buying an equivalent place. Most of the time in most places that's the case. My point was this is true in the year of purchase and for a few years later. Over time (and you'll need to live somewhere your whole life) it will become cheaper. And then a lot cheaper. Rent will only ever go up.

To each their own: https://www.militaryonesource.mil/moving-pcs/housing/renting...

Re: My thoughts on renting versus buying

#313

Post by zeroq »

phil21 wrote: post #225
estimator7292 wrote: post #109

Earlier quoted context omitted.

When renting a 1br costs as much as my mortgage on a 3br, I don't think that really tracks.

Sure, but this is not universal. I could have bought 15 years before I did. But because rent was less than half a mortgage (not even including maintenance), I was able to put that extra money into the market and save enough for more than a down payment on a forever home vs starter home when I was ready. It’s certainly not like for like, but it would have been a poor financial decision to buy vs rent. Where I live now…

I've ran this simulation a number of times through my head:

When I left my parents I could have bought a small, sordid 40sqm for 80k in my home town. Before I left my home town few years later a friend of mine bought an absolutely awesome 70sqm for 200k. Then I moved to the capitol city and I was looking at either somehow decent 70sqm for 550k or absolutely stunning 70sqm 850k. Precovid we were looking at the best apt I've ever seen, 85sqm for 950k. But the offer was shortly taken down. It came back few months later at 1.2M and owners called us back. I should have took it on the spot, but I decided play slow only to learn that the price went up to 1.5M. At that time it seemed too much. Post covid gets me a sordid place in suburbs.

Point is - if I was told when I was a kid that "investing" in real estate is the best thing you could do and mortgage is nothing you should be afraid of I could have 7 to 9 apts by now without streching too much. I'm fully aware of multiverse - if I got that first apt my life would probably went slightly differrent route, but still.

I'd get that first apt when I was earning 5k/mth in 20y mortgage and just in few years I'd be earning 20k/mth.

EDIT: I've rent a number of places and went out to see a countless ones. Here it's pretty standard that when you go out to check a place for rent and speak to landlord it turns out he has ten more. If you don't like this one he may have another one that suits your needs better.

I have a friend of mine with which we spoke about investing in real estate from time to time but he was hesitant - too much hustle, legal uncertainty (we leave in communist EU mind you), etc. But once his mother died and left him an apt he decided to rent it. He felt too attached to sell it and it needed a renovation anyway. So he decided to rent it as it was, just to keep it and not having to think too much about it. Fast forward two years later he has two more apts he's renting.

And his thought process is really simple - I have savings so I can afford to buy these places, random people will pay for the mortgage, I will get some extra cash in the process, and when all is done his daugher will inherit all this apts and be able to live of it.

Re: My thoughts on renting versus buying

#314

Post by zeroq »

const_cast wrote: post #299
carlosjobim wrote: post #297

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…

Here in EU rent is much higher than mortgage.

We have less space, cities are clutered, and many people live in apts that are smaller than your garages. The main reason why everyone is not buying is 20% down payment on your mortgage. Plus auxilairy costs. And in most cases you have to finish/renovate/furnish the place, so it's more like 30-35% of the sticker price.

When you're young or not working in IT, and avg price for sqm is 12k while you're getting 6k/mth and you can barely save anything buying a house sounds like having holidays on a moon.

How much is the premium I have no concrete data, but I have an anecdote. I once found a lovely 65sqm apt with great layout but it was abondonded in the middle of renovation - the bathroom had two sinks, but only one was installed, the other was in the cardbox, shower had no walls, the living room was full of cables sticking out of the walls where lights should be, etc.

I went twice to see that place that's how much I loved it, and I told the landlord I'd be willing to finish the place if we split the cost between. We sign a deal that I pay for the renovation out of my own pocket, and she'll pay half of it by lowering her price for the next three years. If she'd break the contract before three years she would have to give my money back.

I thought it was very clever and just deal. Landlord gets their apartement done, a tenant that will stay there for long time, and everyone will be happy.

Instead she thought about it for a while and told me "look, the offer was for 4k, if we go your way I'd have to lower the price by 300, that means I'd be only getting like 500 above what I'm paying for mortgage, and that's not enough for me".

You may say that's an anecdote about stupid landlord/tenant but I've been renting a lot and I've seen that sentiment a lot: I've bought this place so I could rent it for profit and if I have to pay the mortgage that means I'm losing money.

Which is stupid, because at the end of the day she'll pay the morgage and can sell the whole thing.

Re: My thoughts on renting versus buying

#315

Post by kkfx »

When living with inflationary currencies, over-buying is logical: you buy more today than tomorrow for the same amount of money. With deflationary currencies, it's the inverse.

When you buy, you transfer money into an asset that will be resalable one day. It might be worth more or less money than the original, like any investment. It might be that having bought something else (e.g. financial instruments) and rented a house, after deducting rent, taxes (in both cases) etc., you end up with more money than if you had bought, but it's relative and by no means guaranteed, also because those who rent out generally are better off financially than those who rent, so, as they say... When you rent you just consumed money over a certain period. No resale.

The current narrative, the push for Agenda 2030 where "you will own nothing", clearly shows this contradiction, because if it's so advantageous not to own, how is it that all the wealthy individuals do the exact opposite as much as they can?

Re: My thoughts on renting versus buying

#316

Post by foxglacier »

carlosjobim wrote: post #305
foxglacier wrote: post #304

Earlier quoted context omitted.

https://homes.co.nz/address/auckland/mangere-east/16-fleming... Estimated rent: $600/week Estimated mortgage repayment: $1000/week If you get a 30 year mortgage, more than $600 of that will be interest near the start. I didn't cherry pick this. I just clicked randomly on a big city until I found one with both estimates available.

That's an estimate from a third party with nothing to say on the matter. Now show me a real offer, where the rent is less than the mortgage for the same unit.

No. Too much hard work for something that's going to give the obvious result.

You show me your source of information saying that it's never the case.

Re: My thoughts on renting versus buying

#317

Post by foxglacier »

bluefirebrand wrote: post #242
foxglacier wrote: post #226

Earlier quoted context omitted.

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

No you don't own something at the end of it. Interest is the cost of having use of the house. If you sell the house and settle your mortgage, the bank won't give your interest back. It's lost for good.

Re: My thoughts on renting versus buying

#318

Post by jjav »

projectazorian wrote: post #287
jjav wrote: post #261

Earlier quoted context omitted.

> If you buy a house and your mortgage payment is > rent. Overtime it will naturally flip. This is so often missed by those who compare rent today vs. mortgage today. Of course the mortgage will be higher. Today . Look into the future. Rent will only ever go up. Mortgage will only ever go down, both in absolute terms (due to opportunistic refinancing), and due to inflation, and proportionally due to your earnings inc…

> Mortgage will only ever go down, both in absolute terms (due to opportunistic refinancing) If you bought a home during ZIRP, this doesn't apply. Even now, you're looking at cutting your rate by what, 2-3% max? And if rates drop by that much, the economy is probably bad. Hope you're still employed. > and due to inflation, and proportionally due to your earnings increasing over your career. These three factors will e…

> If you bought a home during ZIRP, this doesn't apply.

No, but if you're holding a 2% or slightly less mortgage, that's a nice place to be.

But of course it's not only the mortgage interest. Over the years your income goes up also, and inflation eats away at the real cost of that mortgage even if the monthly bill is exactly the same for 30 years.

> Smaller landlords will often eat the tax increase given the cost and risk inherent in switching tenants.

This can be true sometimes but not in the long run. Unless you're exceptionally lucky, you're not going to find a lifelong rental where the owner perpetually takes a loss.

Post reply on HN