Home ownership or rent?

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schugg
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Home ownership or rent?

Post by schugg »

Watcha think?
http://realestate.yahoo.com/promo/renti ... JldHRlcg--


I have something un-American to confess: I rent an apartment, despite having enough money to buy a house. I plan to keep renting for as long as I can. I'm not just holding out for better prices. Renting will make me richer.

I normally write about stocks for SmartMoney.com, but the boss asked me to explain to readers my reason for renting. Here goes: Businesses are great investments while houses are poor ones, so I'd rather rent the latter and own the former.
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Re: Home ownership or rent?

Post by brian89gp »

I think he has a point in certain markets where home ownership is much more expensive in relationship to renting then it is here in KC.

For me though, I pay exactly the same for my mortgage as I would pay for rent.  Since there is no difference in the cost I wouldn't have anything extra to invest while renting for a better return that I also couldn't invest being a home owner.
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Re: Home ownership or rent?

Post by KCMax »

schugg wrote: Businesses are great investments while houses are poor ones, so I'd rather rent the latter and own the former.
Really? I always thought something like half of all businesses fail. On the other hand, houses over the long term will almost certainly go up in value, even with the temporary hiccup in the real estate market. That seems like poor advice. Am I wrong?

I think one problem many potential homeowners got into was thinking that since their rent was exactly the same as their anticipated mortgage payment, they could afford to be a homeowner. However, this ignores many of the extra costs involved in being a homeowner, including property taxes, homeowner's insurance, higher energy costs, and routine maintenance.
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Re: Home ownership or rent?

Post by jlbomega »

It depends upon your situation.  Unless you have a very strong feeling that you will be living in a certain area for at least five years then I would buy, at least in a market like KC.  However, if you are not sure about where you want to live or if you think your job may take you elsewhere at some point it is probably best to just rent. 
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Re: Home ownership or rent?

Post by Maitre D »

This article is a re-print, it's at least 1-2 years old and it's silly anyway b/c he doens't factor leverage.



I can get a 200K home at 5% down.  That's 10K.  If the 200K home goes up 5% year year, it makes 10K per.    That means, 10K down for 10K per year.  That's 100% cash on cash.



In the stock market, you can't get 5% down for 200K of stock position.  Crazy.  So his point already fails here.
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Re: Home ownership or rent?

Post by lock+load »

Maitre D wrote: I can get a 200K home at 5% down.   That's 10K.   If the 200K home goes up 5% year year, it makes 10K per.    That means, 10K down for 10K per year.   That's 100% cash on cash.
And a 5% decrease and your equity is gone.
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Re: Home ownership or rent?

Post by jlbomega »

Maitre D wrote: This article is a re-print, it's at least 1-2 years old and it's silly anyway b/c he doens't factor leverage.



I can get a 200K home at 5% down.   That's 10K.   If the 200K home goes up 5% year year, it makes 10K per.    That means, 10K down for 10K per year.   That's 100% cash on cash.



In the stock market, you can't get 5% down for 200K of stock position.   Crazy.   So his point already fails here.
Plus you do not account for maintainance, fees, etc.
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Re: Home ownership or rent?

Post by LindseyLohan »

I have yet to find a house that provides me a comparable comfort of living that would have a mortgage payment as low as my rent.

Plus I'm going to be paying much more for utilities, taxes, and insurance...

I would expect some deals right now, but I can't find any and the banks want to sit on their foreclosures....
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Re: Home ownership or rent?

Post by brian89gp »

LindseyLohan wrote: I have yet to find a house that provides me a comparable comfort of living that would have a mortgage payment as low as my rent.

Plus I'm going to be paying much more for utilities, taxes, and insurance...

I would expect some deals right now, but I can't find any and the banks want to sit on their foreclosures....
Typically when you are renting anything but an apartment your rent money is paying the mortgage, taxes, and insurance.  Sure there are landlords out there who will charge less in rent then the mortgage is for them, but generally it is close to a 1-to-1 relationship.
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Re: Home ownership or rent?

Post by LindseyLohan »

brian89gp wrote: Typically when you are renting anything but an apartment your rent money is paying the mortgage, taxes, and insurance.  Sure there are landlords out there who will charge less in rent then the mortgage is for them, but generally it is close to a 1-to-1 relationship.
Yeah, I know that. I couldn't buy the place I am living in now and expect what I pay in rent to cover the mortgage, tax, and insurance. Even if I put 20% down...

I pay $800 in rent. A condo of similar size and quality within a few blocks of here would cost me $200k easy. With 5% down, taxes, and PMI it would cost me double each month to own. I hope my landlord doesn't read this...
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Re: Home ownership or rent?

Post by hoghead »

Why would anyone want to throw money away on rent if you can own? That just doesn't make since........
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Re: Home ownership or rent?

Post by lock+load »

hoghead wrote: Why would anyone want to throw money away on rent if you can own? That just doesn't make since........
Try asking someone this to someone whose home value has dropped by 30%.
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Re: Home ownership or rent?

Post by schugg »

I bought my house in 2005 for 160k and I don't see anyone willing to dish that out for it now.
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Re: Home ownership or rent?

Post by hoghead »

You know the housing market will come back,at least when you own you have something.That's better than throwing 900 a month away for nothing.
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Re: Home ownership or rent?

Post by lock+load »

hoghead wrote: You know the housing market will come back,at least when you own you have something.That's better than throwing 900 a month away for nothing.
It isn't for nothing, it is for a place to live.  While the value "may come back" after it decreases, for now, that value is gone, and you are no better (and maybe worse) off than renting. 
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Re: Home ownership or rent?

Post by alpha_glamourina »

"maybe worse" may be right.  Key word: maybe 

If you're only viewing where you reside after work and on weekends as a place to rest your head (merely functional), then perhaps renting is best, especially in these tough financial times.  But if you're interested in creating a totally customized living space- an artistic expression and extension of who you are and what you're about- buying is the only way to go.  You can't knock down walls or add custom built ins to most rentals.  A lot of times you can't even paint your walls any other color than white or tepid oatmeal if you're renting. 

The housing market will come back.  It always does.  So my vote is for a colorful, customized personal zone in the present.  One that will give me the opportunity to look back from the future and say I made a wise investment during difficult economic times. 
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Re: Home ownership or rent?

Post by Maitre D »

I wish I'd have rented on the Plaza my first 4 years out of college, rather than buying a house in OP.  I made maybe 10K off it, and put a lot of work into it.  Plus, apartments are cheap.  And you can up & leave em, when your lease is up.
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Re: Home ownership or rent?

Post by lock+load »

Maitre D wrote: I wish I'd have rented on the Plaza my first 4 years out of college, rather than buying a house in OP.   I made maybe 10K off it, and put a lot of work into it.  Plus, apartments are cheap.  And you can up & leave em, when your lease is up.
Exactly.  And every rental I've ever been in has allowed me to paint the walls however I want, as long as I'm willing to paint them white again when I leave.

Buying a place straight out of college is rarely the best choice.  You don't really know what you want, and there is no worse way to figure it out than tying yourself down to a house.
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Re: Home ownership or rent?

Post by chrizow »

while it is debateable whether it is a smarter financial decision to own vs. rent right now, i think it's important to note that there are other factors involved aside from financial concerns. 

owning a home is awesome.  sure, it takes work and time and money, but it's great to have a place to call your own.  you're responsible for it, for better or worse.  there is definitely a certain joy to knowing that this piece of land and house (or condo) is yours to do with what you wish.  you feel like a part of the neighborhood, instead of a visitor, because you are invested in it financially and emotionally. 

i think it's sort of like being in a relationship with another person.  it takes effort, patience, time, etc., but when it works out it's great.  some people are not at a place where they are ready for that kind of commitment (relationships and/or homes), but if you are emotionally ready to purchase a home, i say go for it.  long-term, the financial aspect of it will be fine, and the psychic value of owning your own piece of the city/world is amazing.
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Re: Home ownership or rent?

Post by warwickland »

chrizow wrote: while it is debateable whether it is a smarter financial decision to own vs. rent right now, i think it's important to note that there are other factors involved aside from financial concerns. 

owning a home is awesome.  sure, it takes work and time and money, but it's great to have a place to call your own.  you're responsible for it, for better or worse.  there is definitely a certain joy to knowing that this piece of land and house (or condo) is yours to do with what you wish.  you feel like a part of the neighborhood, instead of a visitor, because you are invested in it financially and emotionally. 

i think it's sort of like being in a relationship with another person.  it takes effort, patience, time, etc., but when it works out it's great.  some people are not at a place where they are ready for that kind of commitment (relationships and/or homes), but if you are emotionally ready to purchase a home, i say go for it.  long-term, the financial aspect of it will be fine, and the psychic value of owning your own piece of the city/world is amazing.
good post. in addition, i like piddling around outside, sitting on the stoop, wandering around the back with beerz "keeping an eye on things." it's a great feeling to be so fully invested in a place.
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