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Buying vs. renting your domicile
Posts
And also, hey I don't have to drive for an hour to do stuff, which really gets old after a while.
I came to agree with everything Druhim said. As a homeowner and landlord of 4 houses and 7 department units (yes credentials), I can say that no house or apartment unit will ever be an asset until it's completely paid off. Thinking otherwise is foolish and if you don't think so, stop paying your mortgage and see what happens. Having positive cashflow is great and one of the reasons we get into this business for, but it's not everything there is to it. Somehow it got ingrained on the minds of the populace that by dropping $5k and opening a mortgage on their new shiny house, they somehow became homeowners of a $250k asset. Not true.
Most people entering the homeowning market are doing it out of pure misguided optimism. Most people will not work their mortgage like the HUUUUGE debt it is, not paying against capital and instead increasing their personal CC debt when their income situation change for the better, which not always happens.
"Yeah I can rent my houses and they'll pay themselves off!"
Renting is time consuming and requires a very special dedication that most people don't have. Renting is also very volatile and fickle and without a nice business model it can fall flat on its butt. My father's renting business is a testament for that. You also have to be on the top of the game with amenities, upgrades and maintenance. Bad tenants are malaria and you have to evict them, sometimes causing you months of court troubles and fees.
People need to realize that when "buying" a house, in the end, they still own a fuckton of money that they might never profit or even pay in their lifetime
Buying a house is just the start of another job
"Well, our lender is a professional, and he does this for a living. We've been approved for a $375,000 mortgage, so if that's what he says we can afford, then I think we should trust him."
No. Bad. Silly Americans. That's what got you folks into this in the first place. Your lender is not your friend. Your lender isn't looking out for your best interests. It is up to you to decide whether or not you can afford what you are buying.
Use mortgage calculators, add utilities, add taxes, add insurance, add maintenance, add everything. Then, see if that still fits into your monthly budget. Don't have a monthly budget? That's ok, but you have no business buying a house in that case.
God, yes.
Getting approved for a loan does not necessarily mean you can afford the loan. While lenders are generally averse to high risk, the fact remains that they also get to foreclose if you default and so they're better able to recover some of that loan in the event you default, while you can lose everything.
Yeah, that's certainly not a situation to be in.
I know somebody who commutes from downtown Seattle to Bremerton, but that's primarily because their ferry fares are paid by their employer, their job is walking distance from the terminal, and they like being in the city on evenings and weekends. But that's definitely an outlier case.
Again, depends what value you place on your time. Honestly, I'm more than willing to pay a couple/few hundred extra dollars a month to save myself thirty or even forty hours of commuting. That's gained sleep, gained time with my wife, etc. Being closer to the city on weekends for leisure activities is just gravy.
And they also know jack shit about your monthly budgeting skills, your spending habits, your actual job security, etc.
You might have X income and Y debt, but there are so many other factors involved in deciding what you can afford (when it comes to anything, really) that your lender is not there to give you advice.
Stop being so self-centered. Is it really too hard for you to understand that different people value things differently than you?
And in what income bracket are we talking that it's going to take you a fucking lifetime to make up the difference between a country home and a city home? A lifetime to make $200,000, minus the cost of commuting?
Edit: Christ, off the top of my head it would cost me $600/mo to commute from where I live to Toronto. (Gas, parking, car maintenance) That's $7,200 a year to commute.
I think anyone that spends any amount of money to live in the "country" is a silly goose. There are no benefits that can be justified by any costs imo. Especially when commuting along interstate highways makes teh commute hell. Unless of course you live where people also live.
But opinions you know...we all have them, and they're all different, and yours just happens to be the less popular one based on how many people live like you do.
That's still twenty years to break even. These calculations are also ignoring interest on the homes, which would obviously be even more greatly in favor of commuting.
Like what? A human being rather than a silly goose stuck in a cage?
Well, there are undoubtedly more BDSM clubs in a city.
Some people like living in the city, some people like living in the country, some people like living in a tent in the woods. What the fuck is your problem with people choosing where they live? Some people hate the out doors.
Is you want to slavishly hold to definitions of accounting terms then have at it. But if you want to be honest about it, on a balance sheet the value of the house will be an asset, and the obligations to pay for the house will be a liability. Simple arithmetic will determine if it's a net asset or liability. Just cause there's a lien on it doesn't mean it's not an asset.
Saying "it's a lot of debt," and "you don't really own it til you've paid it off," while true, doesn't seem to add much to the analysis, since these things are self-evident if you bother to read the paperwork at closing. OK, so for those of you who don't know, if you don't make your mortgage payment the bank will evict you and seize your property. If you don't pay your taxes the state will evict you and seize your property. Man, what a newsflash that was.
I think you're living in the media world of a few years ago. Lending has tightened up enough so that only people with good credit who can come up with a downpayment has any chance of qualifying for a loan. Also just cause I say cashflow positive in my post doesn't mean I'm shilling some Tony Robbins bullshit.
DiscoZombie wanted discussion on the relative merits of buying vs renting from a financial perspective. Ownership is most definitely financially relevent in the analysis. Though as an owner of rental properties, you already know that.
I'm not telling people to buy properties and then rent them out, but once you've bought a house, renting it out is an option (yes even if there's a lien on it). You have no such option when you rent.
I wonder what the median, mean and distribution is on time of homeowners renting out their houses while also inhabiting said house.
I'm sorry you don't value cultural enrichment and experience, the essence of being human.
No brainer to me.
Indianapolis is an hour away and culturally void to boot. You probably think The Olive Garden is fine italian dining.
This.
I actually live in the outskirts of the suburbs where rent is MUCH cheaper and we're looking to move inner-city as soon as possible.
I totally consider the higher cost of rent ($3-400 a month) worth the convenience of living within walking distance of a shopping centre, a beautiful bike path, several theatres and dozens of restaurants.
Also, some of us do like to be green and use our car as little as possible. Having to drive to pick up basic groceries grows very tiresome after a while.
The difference in rent may be greater than the cost of gas, but you have to remember you're also saving time.
I walk to and from work to downtown Seattle and it's literally 15 minutes. I have an extra 45 minutes to enjoy everything each day. I can buy fresh and varied produce every day at the Pike Place Market and walk home with it and start preparing a fresh salad before the person who commutes home is even halfway home.
No, we all agree he should shut up for thinking he's a genius simply for having an opinion. I mean, how dare anyone make a choice different than he, lest they become a silly goose.
No one is saying that. Oddly, Sky is the only one that's insisting that everyone else is stupid for having different values than him. This whole idiotic argument started over the simple truth that areas with low property values reflect the simple fact that there's less demand for those properties. And from that Sky decided to try and prove us all wrong for wanting an urban lifestyle.
It takes me two minutes to walk to the grocery store. Or did you think small towns don't have grocery stores?
Funny how you only quote the bits that make you seem like you're not talking bullshit Sky.
What's in season right now?
I didn't feel like listing all the places I have access to. We have a theater, we have a bike path, we have a pool and park, we have a small shopping center, and plenty of restaurants with enough variety to suit my needs.
Do you know what good northern indian food tastes like? or southern?