is there any real reason to buy instead of rent other than ego
Is there any real reason to buy instead of rent other than ego
do the math, it depends
Because if no one bought then there'd be no places for you to rent.
The only time I'm going to buy instead of rent is when I'm going to rent it out.
I've done the math a few years back and calculated different scenarios. For me it only makes sense if I'm going to rent it out.
Don't know if it would be different if I've lived in a different country. Germany here.
In theory you don't lose money if you buy. Because you can just sell the house again.
While when you rent you buys someone elses house for him. Which he can sell again.
It's like you fags want to be poor.
That sweet tax break money
Statistically renters have lower net worths than home owners across all income levels at least in the US.
But let's say someone has $500,000. Is it better for them to spend a portion of that on a house, or invest that money and rent?
in texas rents are around 1200 for a shitty apartment 2 rooms 1 bath mexican-nigger neighborhood. 2500 for renting a house in a decent neighborhood.
I bought a house 3 rooms 2 bath in a white neighborhood near the country club for 980 a month and in three years the house value increased 30k.
The best way to go is to do both: buy with a mortgage and invest the remaining.
Let's say the house is $500k. 20% down is 100k at say 4%. That's 16k in interest on the first year. This will go down each year because you're paying the loan down.
Put that remaining $400k to work, getting 8% in an index fund with a DRIP. After the first year, you're up by 32k. Net after interest is 16k.
Or if you really want to go hog wild, use that $400k and get a few rental properties on a mortgage. You'll be rolling in it in no time.
>live in in for five years
>buy another house and rent out the first house
>rinse and repeat
as long as you have fixed rate mortgages and refinance when rates are low, you're going to find your profit margin will continue to go up since your mortgage payment is fixed and you can raise the rents. your property taxes and insurance will go up, but the rent you can charge will go up more.
What happens when your tenant doesn't pay rent for 6 months and wrecks the place up? Not only that, but after 20 years, you need a new roof, new deck (for safety), and new siding because it was a stucco base.
No one ever got rich renting to poor people. Just remember that.
because those stats decide to factor in the value of the fucking primary residence into the net worth of homeowners
how many six figure jobs go to home owners in silicon valley and nyc
depending on where you choose to buy it can be a sound investment
>No one ever got rich renting to poor people.
This is true. My only rental property is in a nice neighborhood, so fortunately I haven't had to deal with bad tenants, but they can be costly. Major repairs/maintenance are an expense, but for something like a new roof, you can capitalize it and depreciate it, so you at least get a tax break for doing it.
Because when you've paid it off you save a ton of money every month, its cheaper than renting per month, and when you've paid it up it open investment opportunities to you. Use the money saved for another house to rent out, sell it and use the money to pay 50% deposit on 2 or 25% deposit on 4 houses and rent out the ones you aren't living in. Why would you want to pay another mans mortgage?
Meanwhile, in states that aren't complete fucking garbage, I pay $700/mo for a 1 bed 1 bath 810 sq ft with utilities included in a nice part of time
is renting out a house really that lucrative, investment-wise? I can get between 8-12% on vanguard index funds. if I were to plop down 100k on a house and keep a few hundred a month after paying the mortgage for that month, I can only imagine getting something under 6-7% without upkeep and maintenance like soiled carpets, mistreated fixtures, leaking roof, termite damage, etc. That's without taking the time you spend managing the property as well. You can hire a property management company, but then they take a hefty cut of your profits.
I just can't see how that is more profitable than other existing investment ventures. Anecdotal I admit, but I have met several people who owned properties and while most still worked, the ones that didn't lived very frugal lifestyles and did not seem like they had the financial independence so many seem to claim you can achieve by renting out a property. I really don't know what I'm missing here. Percentage-wise it just doesn't seem worth the hassle. I really wish I could study robust data on what the average percentage return on your typical rental property is.
>> No one ever got rich renting to poor people. Just remember that.
Ha, go tell that to Joe Lieber or any of the other sub-50 folks. They are making out crazy good, but, like all REI, you have to know how to work it.
I posted a quick guide on a Veeky Forums sticky. That sticky fell into obscurity.
Bought my first house in 2014.
1450sq ft on a 1/3 acre lot in a very nice neighborhood.
Mortgage 128k, taxes 2200yr insurance 640yr. My payments all total add up around $860mo.
145k. Had it appraised last month and it's now up to 178k.
Renting is for suckers. If you can't rent because your neighborhood is too expensive....Then move your dumb ass.
>8-12% on vanguard index funds
Seems high, but maybe you can right now. But this is in no way a long-term sustainable percentage. You have to account for the years where your funds make -40% as well.
Rental properties are stable as fuck, have loads of cashflow (in sweet sweet monthly intervals) and provide great leverage.
Sure, they may on average not have the same growth potential as ETFs do, but why not do both? A well balanced portfolio can use both real estate and ETFs to combine the best of both worlds.
>what the average percentage return on your typical rental property is.
The problem is, there is no such thing as an "typical" property. Most RE investors specialise on one of the many ways to run rental properties: Stacking low-income tenants into moldy rooms, high-class downtown lofts, suburban housing, student housing, accessible homes for senior citzens, renting out rooms in shared appartments, premium mansions, etc. They're all quite different in terms of target demographic, proper ways to handle tenants and especially in fixing up your properties to match the desired standard. It's way too much work to keep several crews of contractors on call, hence why most people focus on a narrow aspect only.
Buy if you know where you want to set up your life and are happy to stay there indefinitely
For example: You're 35, newly married with a kid on the way and you both make 200k in the bay area - the only logical choice is to buy because you're not going to downgrade your standard of living to go somewhere else.
If you're 25 working I'm some shithole in UK or wherever then rent - the flexibility it affords for both movement and life experience far outweighs the financial benefit. It's only money after all.
It all depends on your personal circumstances. I would recommend anyone in their 20s not to touch a house until they've lived in a few different places. Find out what you want from your life and work towards living in a place that facilitates that. Do not settle for anything less. And remember, if you don't ever sell your house you are not solidifying your profits and are indirectly shoeboxing yourself.
T. 43 year old who bought when he was 22 and has spent the last 23 years with the same company because it's so comfortable.
The general rule is if you plan to live in the same spot for 10 years or more, then buying a home is a good idea. Otherwise, you are losing money on PMI, closing costs, and opportunity costs on down payment.
Usually it is a good idea for families and married couples to buy because there is dual income and their children will need stability.
Renting makes more sense if there is less income stability. You can always rent a cheaper place, but a mortgage is constant no if you are making less money.
>lose it all since your dead anyway
Is there any reason you have to let them live there for half a year before kicking them out?
Buy a 100K house for 20% down. Invest 400K into rental properties/stocks/starting a business.
>what is opportunity cost
Rent and pour every single penny into stocks, the single best performing asset class you idiots.
When you rent, you're paying for the cost to own PLUS the management/owner salaries. Remember that.
I would never rent an iPod. I use it all day long.
So what? A home is still an asset. Sure, it's not used to determine accredited status, but let's be honest, home equity is still wealth.
I'm not sure what six-figure jobs in SF have to do with this discussion, though. I know lots of people who own in SF with six-figure jobs
It's a no fucking brainer. Rent expense never comes back to you. Mortgage payments don't even effect your net worth (except for interest obviously). buy if you can ffs
the math works out this way: if monthly rent is less than 0.5% of buying price you are retarded to buy. if it's above 1% you are retarded to rent (unless your stay is temporary we assume you want to live a couple of decades there).
in between it really all depends on what you buy how is your mortgage and stuff like that but it's a gray area of win some lose some.
the equity meme needs a reality check. you pay about 2.5 to 3.5 times of asking price on a home if you buy it on mortgage all costs considered and that usually means you would have been better off renting if you end up moving out and selling the place and slightly better off if you buy and stay altho you take more risks with ownership so that offsets your gains.
so basically if your rent is 450 and your area has mostly 100k housing units then you should rent.
Laws in most states are cucked and you cannot give them the boot.
Jo hier bei uns kostet ne 3Z Wohnung 270k. Niederbayern. Verdiene 50k brutto. Lohnt sich nicht..
In DE erbt man entweder, oder man wird nie Eigentum in einer Großstadt haben. Selbst als Gutverdiener. Richtig Scheiße.
you get the same place for less net loss
somewhat less like 10% (altho insurance will cut into that) but you have a lot more exposure to damages resulting from change of market trends.
see if you rent and prices go down you will rent cheaper if you buy and prices go down you lose equity you are literally bleeding money. if some random niggers or whatever move in next door and drag down the neighborhood with their drug selling and drive-bys you will wish you rented. of course this is an extreme example but not as extreme as you think.
here there are people that do the following. they buy a crappy house in a nice neighborhood. then they rent it out to the worst kind of scum and gypsies they can find for very cheap or even free. overnight the value of every home in a mile radius drops and keeps dropping as news travel. then someone breaks and sells the house and the guy is the only one that buys it but now he moves in an other bunch of no goods and the hood goes to shit. then when people lost all their fortune in their homes and desperately flee he brings in some thugs and unloads the niggers and tears down the houses and suddenly the hood is a nice project with good new apartments and nice view and he makes a landslide selling it years later.
but when you had a home there you will curse the day you decided to buy at all.
not having a landlord that can kick you out whenever. no worries about your place selling out from under you. you decide what to do with the thing. Don't like a wall or a room? take it out.
other than that there's the whole throwing money away on rent.
>there's the whole throwing money away on rent.
but that's bullshit living expenses are roughly the same if you buy or rent at most places. yes you save some money with buying but you don't trow money out by renting. you pay a premium for freedom and low risk.
Mobility, and if you think there's a bubble in your local market.
I bought my house for 130k, and remodeled it for cheap to my liking (~4-5k remodel). The previous owner bought it for an inflation adjusted ~105k about 20 years ago. So I know there isn't a bubble in my area.
Rent + renters insurance on a house of my size and new amenities would be ~1400-1500 a month in my area. I pay ~1000 in insurance + tax + mortgage interest + upkeep a month. So I save about 500 a month for what I get.
and one more thing having 100% of your wealth tied up in a house is insane.
having 10% in a home especially if you save money because you are not paying mortgage you bought out off pocket and you are in no hurry to sell even if you move out is a totally different deal. one i would probably go for in the right circumstance.
you can't even compare the two.
saving 33% is not bad.
1.1% rent well shit user, sure that's a different deal, i got 0.43% rent right now.
Yeah, where I live (Omaha), rent on homes is crazy high compared to getting a mortgage.
Granted, I live in constant fear of my 20 year old furnace or my 15 year old A/C unit going out, because there's no one in my family that does HVAC. Oh well, I have 10k stashed away just in case. Otherwise, I just call up a relative and pay way less for plumbing and electrical work.
1.) Buying means your place is your shit, you have a lot more freedom to make it to your liking even with the most jackass homeowner associations & residential zone restrictions
2.) Builds equity over time. Renting is not an investment, buying a house is.
3.) Buying means your living place won't be sold out from under you by a landlord
4.) Don't have to deal with potentially shitty landlords
5.) If you decide you don't like the house anymore, congratulations, since you own it you can either sell or rent it out to someone else
>buying a house
oh jesus fuck please don't hurt my brain!
buying a house is consumption not investment no matter how you look at it.
i agree on most points freedom to spend even more money on your place and no landlord to deal with could be nice.
>since you own it you can either sell or rent it out to someone else
and this is the part i hear the most whining about. i haven't really met more than 1 person who came out of it well. all of my retarded relatives lost money on real estate.
Renting might cost 700-1K a month, where you could get a loan on a 100K house and only have $233 interest payments for Mr. Goldstein. The rest goes towards equity/property taxes, and you don't have to deal with a shitty landlord.
That being said, 30 year loan at 3-4% on a 100K home is superior. The trick is to realize all that matters is sqft and location. You can fix up a shitty house and only burn 300-400$ a month instead of living in a shitty apartment with loud neighbors for double or triple the price.
one of the recurring themes is as follows:
>guy meets girl
>they fall in love
>want a cozy little nest and children
>put all their money in said nest and even go into a great deal of debt
>hey paid a huge premium for the perfect place for their lovebird nest
>sent some more on pimping it out or renovating
>along the way they suddenly realize they fucking hate each other after all
>all their money is tied up in the home they can't fucking sell because of reasons (this vary wildly)
>their nerves are shot their eyes haunted they know they will lose money no matter what they do
stuff like that. it's usually a nice cold shower when you realize you will never ever fucking get the money you put into a home out of it. it's just not happening.
Property taxes eat up most of any gains you would've otherwise realized in many parts of the country. That part is usually break even, so it's a shitty investment in that sense.
The real benefit comes from the imputed income realized by essentially locking in a price you pay for housing every month; the only thing that goes up in price is taxes and upkeep when you own, the rise of which is slower than the rise of rent prices. I save $500 a month now, and I'm only going to save more as rent prices increase.
i can't follow your math.
in 30 years you will spend about $75k on your home as maintenance alone and it will end up over $200k paid to the bank and you still only get $100k equity (assuming you don't skip on maintenance)
you paid somewhere $275k (more or less depending on your mortgage rate and stuff) in total for a $100k home and this is somehow a fucking good deal as opposed to renting which would have cost you $306k (more or less depending on exact rent trends)?
you just saved 10% woah! and you don't have a landlord altho you don't have a house either until you paid back every penny.
You do get money out of it from imputed income. If I spend less over all on my housing situation than someone renting a comparable home, I can take that saved money and dump it into retirement or investments in general. Which realistically only serves to lower the price of your living situation.
Appreciation in capital on your home isn't where the gains are had, user. It's the few hundred leftover you can invest with.
dude you earned 10% on ownership in 30 years that's 0.33% per year. just buy government bonds! they are way better investment! over inflation your home will of course yield a valuation of around 1% so make it 1.33% overall. what a fucking shit investment. jesus christ.
which pajeet cutie is this, i see her pics on /g/ all the time now
it's a man, baby!
Did you even understand what I just typed? The appreciation on the home price is not where the money is coming from. That in itself is a shitty investment. It's from the extra $500 I can dump into an IRA or just an Individual account and get 7% returns a year investing in stocks, ETFs, etc.
Hell, I even get to enjoy returns on years and months that I don't have to pay upkeep because I'm lucky the furnace didn't break, or the roof didn't need replacing. That upkeep cost is smoothed into your rent payment, so you get gypped out of those returns too. If take the 31K and the money that exists between expensive upkeep cycles (roof, HVAC, etc.) that happen once every 5-20 years and invest it, you're looking at more like at least 72k saved overall on your living situation assuming 5% annual returns on your imputed income.
Do you know what imputed income is, user? THAT is where the money comes from owning vs. renting if you know what you're doing.
20% down, 3.5% interest is only $233/mo to interest. In my area, apartments cost 800-1.2K. Apartments might be worth getting if you live in the city, but in the suburbs they're hardly worth buying.
Just buy cheap fire insurance and find a place with low property taxes and you win.
I would only rent an apartment if I plan on moving in less than a year.
Hardly worth renting**
>It's from the extra $500 I can dump into an IRA or just an Individual account and get 7% returns a year investing in stocks, ETFs, etc.
now that a very special case like i said. read this: >if it's above 1% you are retarded to rent
yes its true, but most places don't have anywhere near 1%. yeah you can save $500 a month sure that's good, for most people this would be around $25 to a $100. you get $420 as interest, they would get $21 lol.
which pajeet tranny cutie is this, i see her (male) pics on /g/ all the time now
not everything has a penis
btw i think i mixed the ids up a bit sorry about that.
happened to me and my family, shit tier. effects you for far too long
Depends what kind of return they could realistically see on the house vs the cash.
If you could realistically do better than the house appreciation, then renting makes sense.
Canada is pretty expensive (GTA area)
Should I look at buying a condo or is that useless? Personally I'd rather buy a house but I'm a millenial without any inheritance
If you are gonna stay there for 7-10 years it would probably be best to take out a 10yr mortage if you can handle paying it down.
By the end you should still have a house in decent shape that you can rent out or sell off and move.
Try to earn at least 40x yearly what your place would cost a month.
>If you are gonna stay there for 7-10 years it would probably be best to take out a 10yr mortage if you can handle paying it down.
well i pushed this into a calculator that compares banks offers.
what came out of it is this: it would be 130% more expensive than rent the monthly down payment alone. and you would have to pay various taxes and fees when buying a home then you probably gonna spend some on settling in.
your amortization at 10 years would be 25% i don't know how that show up in the selling price tho. then you have a yearly valuation adds up to 10%. so let's say 145% is your total cost over equity.
this needs to be less then 100% for it to be worth it consider it. and it entirely depends on the rents as alternatives.
no sorry amortization in a decade can be up to 50% i slipped there.
it's a fools game really. now 30 year mortgage can actually come out under 100% on the down payment. but, you will have 150% amortization.
paying 110% extra for a house over renting and these are actually variable rate offers that are looking good right now. fix payments are way worse.
Nice for your kids
are you retarded
they're not low net worth because they rent, they rent because they're low net worth
it's true people probably buy homes when they can afford them. the more you pay out of your pocket and less mortgage you take on the better off you are compared to renting (assuming the math works out at all, see my other posts).
there is only one participant that makes money on buying homes on mortgage for sure and that is the bank. the house always wins.
one more interesting thing
in 30 years your expected gains (whatever you put in from your pocket mortgage is a different story) above inflation from home valuation are 34.7% roughly your expenses are 150%
in 30 years if you put your money into gov bonds they yield around 2-3% above inflation and have little to no cost so you have about 200% gain.
in 30 years if you invest in index funds you get about 7% above inflation 761% gains and the costs are 30% tops probably less.
now you may or may not have to pay taxes on these gains depending on the configuration and may or may not have higher fees.
but people saying shit like homeowners have much greater net worth or you lose money on rent as you don't gain equity just don't make a single fucking sense to me.
also both options are vastly inferior to moving back in with your parents
that true trippy trips
I would love to have you rent my house for 30 years. I literally get a free house and you think you're the one making all the money? Deal.
lol you think you get a free house? do you not read anything? you pay for that houses upkeep. out of your pocket. you buy a house and rent it to me for 30 years you lose about 110% give or take. meanwhile i invested the same sum into the market and gained 700%. yes it's a deal user!
plenty of rich people that rent, not everyone lives in the same town forever these days
yeah sorry i have to deduct the money i pay you from the yield of my choice as a "fee" but i guarantee it will be still above 500%.
You realize that your typical rent is going to factor all that shit in correct?
>is it better to give your money away to a random guy every month for as long as you live or give it to a bank and eventually you wont nerd to pay anything
Really causes one to ponder
yes that is the deciding factor like i have been telling it over and over and over in this thread.
the breaking point is 0.7% of rent/buy under that buying is a losing game no matter what you do, but you can consider it luxury spending if you are well of. above 1% buying can start to worth it.
so if you offer me a rent under 0.7% i will take it if not i will rent from someone else there are always poor saps that bought a house and only rent it out not to lose that much money pressing the prices down.
building your own house is something interesting tho, you can manage from half the cost of buying if you are lucky and if no mortgage... it might just worth it. i don't know.
>and eventually you wont nerd to pay anything
here lies the problem there are retards out there that actually believe this. i hate kiyosaki i think he is a crook and gives shit advice but he said "your home is not an asset it's a liability" which is the usual kiyosaki nonsense butt in this case it's true your house costs you money about 50% of it's value per decade.
you will not live long enough to be worth it financially to buy on mortgage compared to rent. unless rents are insanely high. this allowance must be made, then again you can always move to where renting is cheap. sometimes in the next district it's half.
>your house costs you money about 50% of it's value per decade
or if you skimp on it it starts losing value either way you lose.
i just read a long blog and looked at a detailed calculator about buying vs renting.
two interesting conclusions popped up. most people as it turns out from the comments weight subjective values much more greatly than objective benefits or gains. the second it looks like it's more worth it to buy small apartmans and more worth it to rent large houses.
because there is a disparity at least in my country to how much people are willing to pay in rent compared to the homes size and value. basically the rent/buy ratio seriously depends on the size statistically.
Here's your real answer
In both cases, your objective is to own the place. In the case of renting, you're paying a premium to the price for the luxury of having ZERO risk associated with holding the equity. You're technically purchasing the property for X, signing a contract with the owner that you will sell it immediately for exactly X after leaving regardless of what happens, meanwhile paying a monthly fee to him. There is no need in over-complicating the process with pointless money transfer in the hundreds of thousands, so he directly asks you only for the fee and just a small portion of the price (as a safety deposit).
Now, the price of real estate suddenly drops due to your government being couped by communists. You can hand out his final fee and give him back the property he sold you for X as was the promise for zero risk for your side. The owner pays for the risk of holding the property by its value dropping by a half, while your investment of X in it comes out untouched. He lost 50% X while you lost a minor monthly rent. It's like a reverse version of holding a stock - you hold the stock but don't pay its price (and the risk of its fluctuations), rather, you pay the company its dividend instead of them paying it to you.
>When is it smart to rent?
When the Real Estate sector is about to crash, resulting in a net gain for your side
>When is it retarded to rent?
When the Real Estate sector is about to boom, resulting in a net loss for your side
It takes about 7 years to break even. If you plan on staying in the same place for 7+ years, then buy. If you plan on staying for less than 7 years, then rent.
Don't forget you need to pay property taxes, anywhere from 1% - 2% of the property's value every year in maintenance and upkeep and the big one: real estate agent commissions and closing costs when you buy/sell.
>In both cases, your objective is to own the place.
actually the objective is exclusive use.
if you look at buying a home without the equity just the expenses the mortgage interest you pay the fees and costs and compare it to rent then you have some idea which one is worth it more.
if you try to muck the home equity into it it just fucks everything up.
also i disagree on the market cycle thing, the change in rent prices will closely follow the change in home prices. up and down.
>It takes about 7 years to break even.
how the fuck would that possibly happen? could you post some numbers?
>Don't forget you need to pay property taxes, anywhere from 1% - 2% of the property's value every year in maintenance and upkeep
if it was only 2%... i think maintenance will cost you much much more, but that depend on the type of real estate. if you have to replace a roof on a house it will set you back for 30-50% of the value of the home at least my boss swears to this. you can expect that in 20 years to come.
>also i disagree on the market cycle thing
nah i get it now i guess you mean you can fix in the "low rent" prices if you buy in a bust right?
yeah but mortgage must be out of the picture or be fixed rate for this to work.
I don't know where you guys are getting these maintenance estimates but they seem outrageously high to me.
well i guess it all depends on how inflated the housing market is. house prices are pretty low around here but the maintenance is very high in percentage. for example you can get a 100k euro two story family home and when you realize you have to repair the roofing replace tiles and insulation and rebuild the frames it will set you back around 26k euros.
and if you bought a 50k single story home it will set you back the same 26k btw.