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Started By
Message
re: 5 Reasons Renting Still Beats Buying
Posted on 3/9/09 at 10:02 pm to TIGER2
Posted on 3/9/09 at 10:02 pm to TIGER2
I just moved to a place with pretty expensive real estate. I do plan on buying, eventually, but not right now. I think prices are going to continue to fall, and foreclosures are going to increase.
I am enjoying renting right now. Its low stress and low work. When I owned my last home, I spent like every damn weekend working on the house. And it was a new house. It was never ending. Painting, landscaping, swapping out carpet in a room or whatever. Non stop.
I didn't really keep track of everything I spent on that house, but I honestly think I might have broken even with my equity. I know my rent is going out the window, but I just don't think I can commit to a house in this market, unless I am 100% positive I will be in it for the next 10 years.
I am enjoying renting right now. Its low stress and low work. When I owned my last home, I spent like every damn weekend working on the house. And it was a new house. It was never ending. Painting, landscaping, swapping out carpet in a room or whatever. Non stop.
I didn't really keep track of everything I spent on that house, but I honestly think I might have broken even with my equity. I know my rent is going out the window, but I just don't think I can commit to a house in this market, unless I am 100% positive I will be in it for the next 10 years.
Posted on 3/9/09 at 10:09 pm to SlowFlowPro
quote:
i just hate how rent prices in some areas are so out of whack that it makes it more expensive than buying
You have to realize that BR is the extreme exception to the rule.
quote:
BR the past few years has gotten crazy with increasing rent, and the supply of renters is there. i'd like to one day make my mark on BR again, but i'd hate to be paying 1000/month for a 1 BR apartment in a shitty complex
Weird. Powerman was just telling me yesterday how inflated BR prices seemed and that he could rent an awesome place for much less.
Posted on 3/9/09 at 10:09 pm to Tiger JJ
he knows better places to look than me...and he's actually in the market. i left at its height
Posted on 3/9/09 at 10:13 pm to coloradoBengal
quote:
unless I am 100% positive I will be in it for the next 10 years.
Good call. I just bought a home today in Lafayette. While I am concerned of a decrease in home value, I have a little girl on the way and needed to get out of my shitty rent home.
FWIW - I offered $8,000 below asking on a brand new home (249,000 asking) as a take it or leave it offer. My realtor and the builders realtor were shocked that it was accepted.
Something else to consider. My interest rate is 4.625% so that should also weigh pretty heavily on the transaction as well. 3 years ago I was lucky to get 6.25%. This is a substantial savings.
Posted on 3/9/09 at 10:13 pm to TortiousTiger
quote:
Tell me how renting is better.
Buy a house - 250k
5 years later, everything goes wrong (whats going right these days) and market goes down
Sell house - 180k
Lose 70k
plus if you took out a loan, you pay more interest than pricipal
plus maintenance, plus taxes, etc
Rent 1k month for 60 months
Lose 60k
70k sounds like a lot but its not really unrealistic with this economy. i heard a story the other day, guys buys a house for 700k, owes 500k, and it was appraised for 350k.
Posted on 3/9/09 at 10:14 pm to Tiger JJ
quote:
You have to realize that BR is the extreme exception to the rule.
and that will change.
Seems to me BR is more expensive to rent than denver. You can get a house, walking distance the DU for $1200 a month, if not $1000.
Posted on 3/9/09 at 10:16 pm to wizard of smart
quote:
Buy a house - 250k
5 years later, everything goes wrong (whats going right these days) and market goes down
Sell house - 180k
Lose 70k
You forgot to add in closing costs, mortgage payments, insurance, taxes, and maintenance costs.
Posted on 3/9/09 at 10:16 pm to MileHigh
Has Edge posted in this thread and powned you renting fools yet?
Posted on 3/9/09 at 10:20 pm to Chicken
i got my money on math beating edge
math rules
math rules
Posted on 3/9/09 at 10:25 pm to wizard of smart
quote:
Buy a house - 250k
5 years later, everything goes wrong (whats going right these days) and market goes down
Sell house - 180k
Lose 70k
plus if you took out a loan, you pay more interest than pricipal
plus maintenance, plus taxes, etc
Rent 1k month for 60 months
Lose 60k
Your example is WAY too charitable to buying. The amount "lost" on rent would be zero, since you had to pay your house note ON TOP of the 70K loss you posited.
Posted on 3/9/09 at 10:28 pm to wizard of smart
I've been renting a 2bd/2 bath in uptown since 04 at 1200 a month..........that's 5 years and around 72000 I've paid to a landlord.......
Now if I would have bought a 250k house 5 years ago I would have already probably paid more in interest and property taxes at 6.25% interest rate in NOLA..........
Although I didn't gain any equity, somebody mows my grass, pays the water and gas bill, and worries about shite I may break.
Now if I would have bought a 250k house 5 years ago I would have already probably paid more in interest and property taxes at 6.25% interest rate in NOLA..........
Although I didn't gain any equity, somebody mows my grass, pays the water and gas bill, and worries about shite I may break.
Posted on 3/9/09 at 10:30 pm to Cash
quote:
Buy a house - 250k
5 years later, everything goes wrong (whats going right these days) and market goes down
Sell house - 180k
Lose 70k
you're just making those numbers up though.
In my case:
You buy a house: 160k
the market goes down, say you lose 50k (extreme)
you rent for five years: ($1400 a month)
80k loss
Losing the 80k in rent is a 100% certianty, but what are the odds your house value goes down 1/3 in louisiana? Not very good.
This post was edited on 3/9/09 at 10:32 pm
Posted on 3/9/09 at 10:30 pm to Cash
ETA: double post
This post was edited on 3/9/09 at 10:34 pm
Posted on 3/9/09 at 10:33 pm to TortiousTiger
quote:
In my case:
You buy a house: 160k
the market goes down, say you lose 50k (extreme)
you rent for five years: ($1400 a month)
30k loss
Losing the 30k in rent is a 100% certianty, but what are the odds your house value goes down 1/3 in louisiana? Not very good.
And if you buy you have to pay closing cost, mortgage payments, insureance and taxes which using your logic is a loss. Likely a greater than $80k loss.
This post was edited on 3/9/09 at 10:39 pm
Posted on 3/9/09 at 10:35 pm to Cash
quote:
And if you buy you have to pay closing cost, mortgage payments, insureance and taxes which using your logic is a loss. Likely a greater than $30k loss.
I edited it. 1400 a month x 60 months is 80k.
Posted on 3/9/09 at 10:36 pm to TortiousTiger
quote:
Losing the 80k in rent is a 100% certianty, but what are the odds your house value goes down 1/3 in louisiana? Not very good.
You're not "losing" the rent. You have to pay a house note ANYWAY. Is it your belief that 5 years of mortgage payments = 100% of those payments go towards equity?
You are making a very poor case.
Posted on 3/9/09 at 10:38 pm to TortiousTiger
You are missing the point.
You act like the only outflow of money in buying is the potential loss when re-selling.
If you are saying the money spent on rent is a loss, you must add in mortgage payments, closing costs, insureance, and taxes when buying as a loss.
You act like the only outflow of money in buying is the potential loss when re-selling.
If you are saying the money spent on rent is a loss, you must add in mortgage payments, closing costs, insureance, and taxes when buying as a loss.
Posted on 3/9/09 at 10:39 pm to TortiousTiger
banks dont have money or dont want to lend and 1/10 people dont have a job.
how can inflated house prices NOT go down drastically?
how can inflated house prices NOT go down drastically?
Posted on 3/9/09 at 10:45 pm to Cash
quote:
If you are saying the money spent on rent is a loss, you must add in mortgage payments, closing costs, insureance, and taxes when buying as a loss.
Lets add that in. Property tax for 160k home without my homestead was about 1200 last year. -1200. -118 a month for insurance. a one time sunk cost of 3k for closing.
That brings the cost of buying down around 18k for 5 years.
You really think that will be more than 80k over a five year period?
the 100% sunk cost of the rent is a certainty. The risk for loss in the home purchase doesnt even come close to that even without calculating the odds that it actually increases in value...
And lets change the term "loss" to "debit" for the sake of argument.
Sure, the house has a good chance of decresing in value, but it also has a chance of increasing over a five year period.
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