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The real cost of owning a home

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Re: The real cost of owning a home

#81

Post by sowbug »

elicash wrote: post #16
cosmic_cheese wrote: post #12

On the other hand, renting comes with hidden (and some not so hidden) costs too. The main one for me is the inherent precariousness that comes with renting. You don’t know how much longer you’re going to be able to stay in your apartment, whether that be due to rent hikes or the landlord deciding that they want to give the apartment to their nephew or any number of other things. The constant low level stress of knowi…

Most folks rent before they buy, and so they are aware of the hazards of renting.

An important qualification: if you rented as a kid, and now your kids are old enough to rent, your maybe-not-horrible experience is dated and probably no longer applicable. Apartments have largely gone corporate, and I assume also been taken over by private equity. Even cell-phone companies could learn a thing or two from their tactics.

Re: The real cost of owning a home

#82

Post by happytoexplain »

francisofascii wrote: post #50
relium wrote: post #15

I think 1% per year is insufficient for repairs. Even a paint job will cost more than that these days. There's also a potential HOA fee, even in many neighborhoods with freestanding homes. But there are tax benefits of home ownership too. The interest deduction used to very significant, although less now since they raised the standard deduction. There's also a $250K/500K non-taxable capital gains benefit when you sel…

Painting is one of the home improvment tasks that most people can do without hiring out, especially since it is typically a discretionary.

It sounds like the parent is referring to exterior, and you're referring to interior?

Re: The real cost of owning a home

#83

Post by tetha »

com2kid wrote: post #9

It is suggested to set aside 1%-3% of your home's overall value for repairs every year. Most people do not do this, and many homes thus slowly degrade in value. It is a fast track way to destroy potential generational wealth. Home repair issues also tend to be bursty (rule of three...). You'll have a few years of nothing that'll lull you into a false sense of security, then suddenly three major issues will come up. S…

A friend of mine had an interesting point there. It was more on a personal note that either of us had a hard time spending money on nice things for ourselves. Like, do you need better headphones, do you need this, do you really need that? Better not buy anything nice or fun.

A fairly unintuitive resolution to this is to setup a "fun and nonsense" budget and force yourself to spend it every half year, or to make a conscious plan on how to spend it over the year. If you plan the budget right, it won't hurt you, but it will force you to make your life better.

Maintenance, especially of owned property, seems similar to me. You should be saving up for the real "oh shit" situations, and you should accumulate a budget to just do things continuously. 6 months of routine maintenance budget saved up, what do we spend it on actively, before it becomes a mess?

Re: The real cost of owning a home

#84

Post by quantified »

cosmic_cheese wrote: post #12

On the other hand, renting comes with hidden (and some not so hidden) costs too. The main one for me is the inherent precariousness that comes with renting. You don’t know how much longer you’re going to be able to stay in your apartment, whether that be due to rent hikes or the landlord deciding that they want to give the apartment to their nephew or any number of other things. The constant low level stress of knowi…

Being forced to move in the middle of the school year because the owner want to sell the house kind of sucks, though 5 years of a month-to-month was a bad idea. More landlords are asswipes than not, being able to control your own destiny has advantages. After all, you are paying all of the costs plus a premium for the rental, and you don't even get the paint or floor covering you want, let alone nice things.

Re: The real cost of owning a home

#85

Post by hypeatei »

com2kid wrote: post #9

It is suggested to set aside 1%-3% of your home's overall value for repairs every year. Most people do not do this, and many homes thus slowly degrade in value. It is a fast track way to destroy potential generational wealth. Home repair issues also tend to be bursty (rule of three...). You'll have a few years of nothing that'll lull you into a false sense of security, then suddenly three major issues will come up. S…

> Most people do not do this, and many homes thus slowly degrade in value

I agree with the first part, people absolutely do shoddy work or none at all but the value doesn't seem to go down. My mother bought a house had it inspected beforehand but massive issues with the foundation and the roof showed up the following spring when there was heavy rain. Sure, all that can be fought with attorneys and insurance (both cost time and money) but it doesn't feel very good psychologically or physically to be dealing with so much paperwork and house repairs.

Sorry to rant, I think your comment is spot on... owning a house is expensive.

Re: The real cost of owning a home

#86

Post by FireBeyond »

malfist wrote: post #63
horsawlarway wrote: post #44

Earlier quoted context omitted.

I agree, this is a pretty terrible article that basically boils down to (to quote the article...) > I bought this house new, and didn't live there very long End of story.

Exactly, the even say: >I bought my home in Auburn, WA for $321k, and sold it a few years later for $333k. After all the costs to buy and sell it, I probably lost more money on it than I would have spent renting an apartment. Home ownership isn't a net positive from day one. Otherwise, everyone would always do it. Home ownership is net positive in the long run. It's a long term position. You don't day trade houses.

Right. And he notes that the home he bought after that, with ten years ownership, appreciated from $420K to $770K.

Re: The real cost of owning a home

#87

Post by bigstrat2003 »

RIMR wrote: post #20

>You've probably heard someone say something to the effect of "renting is just throwing your money away". Don't believe it. It's a glib statement that simply isn't true. If you take literally anything away from this article, this opening line is it. People who say this bought their house decades ago and have no clue what the present situation is.

I say that, and I bought my house less than a decade ago. So you're making a generalization that isn't true.

Re: The real cost of owning a home

#88

Post by qwerpy »

hypeatei wrote: post #67

I'm firmly in the renting camp and I'll only own a home if I can buy some land and build it, probably. From a US perspective, I see too many people buy a house because that's what they're "supposed" to do since that's the American Dream. They end up with projects every weekend, stressing about repairs, and dealing with random BS from the local government and Karens. I also despise the culture around owning a home and…

I've been through this cycle a few times.

Rent (because I'm a college student or in my 20s)

Buy (because American Dream and FOMO)

Buy a few rental properties (diversify income)

Buy a vacation home (seemed like a good idea at the time)

Sell everything and rent a house (move to an area better for my kids) Buy one primary home and stay there forever Renting a house is a great financial decision for my current market but the landlord is erratic (will he raise the rent? sell the house? move in?), I still have to deal with a HOA, and there are several big upgrades/changes I want to make and I can't: double the solar/battery, add some covered storage, put in wired cameras, put in a high quality RO water filter, devote most of the backyard to an orchard/garden, etc. And the rent will keep going up, whereas insurance/property tax will go up much slower because I plan to buy in cash.

Re: The real cost of owning a home

#89

Post by RIMR »

whywhywhywhy wrote: post #46
RIMR wrote: post #20

>You've probably heard someone say something to the effect of "renting is just throwing your money away". Don't believe it. It's a glib statement that simply isn't true. If you take literally anything away from this article, this opening line is it. People who say this bought their house decades ago and have no clue what the present situation is.

You're still paying a mortgage if you rent it's just someone else's mortgage.

Someone else's risk. Someone else's liability. I can end my lease and walk away without penalties or obligations. If anything happens to the property, it isn't my problem. I just need I can move on a whim, and the worst-case costs will be a modest lease termination fee and literal moving costs.

Re: The real cost of owning a home

#90

Post by FireBeyond »

jandrese wrote: post #42
bell-cot wrote: post #2

> You can save a lot of money in maintenance and repairs by doing your own work whenever possible. True. But even if you have the physical ability, skills, tools, and equipment handy - you can spend a lot of time on maintenance & repairs. Just ask anyone who's done yard work for a few years, or has repainted a house, or ...

That maintenance has to happen one way or another, hiring someone to do it can add quite a multiplier to the price. For example, I was recently looking at water heaters and called 4 different plumbers to get a quote. All of them came in around $5,000 for the job. The water heater they quoted costs $1,000 retail at Lowes. If you know what you are doing it isn't even difficult to install. That said a layperson probably…

Hah, although, admittedly, when my AC died here I was looking at quotes for $17K for replacement (although I did also do the furnace at the same time, since both were early 1980s and basic models even then). "Why? I could buy the AC for $4K".

"Surely it wouldn't be too hard to undo/redo piping etc." But yeah, different refrigerant, different code requirements for vents and exhausts and drains. 4 people working for 16 hours, I saw where the money went.

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