Anyone decide to rent instead of buy to maximize other investments ?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Have you determined that the costs of homeownership are too high and decided to rent? Please provide specifics.

Thank you!

Considered it when we were in between houses, but considering how much equity we had in our house we sold and how low our mortgage was going to be, I was SHOCKED at how expensive rent was for a family of 4 plus a dog. Going rent a few years ago FAR exceeded our mortgage. Plus the tax hit. The math didnt work out.

From the quick math I've done on this every time I've considered it, when you are in the stage where you need a 1-2 bedroom, the math can work out favorably to not buy and instead rent and invest the rest. As soon as you need a 3 bedroom+ -- it seems cheaper to just buy than to rent a large apartment or a house. At least that's what I've found in this area.

Yup. We needed a 3 bedroom and 2 parking spaces that allowed dogs and holy hell, I almost fell over at the prices and this was in the burbs! The mortgage on my SFH is half of what I was looking at in rent.

+1. Even for a two bedroom in DC our rent was $3,400 and that was cheap.

Our mortgage is $3,500. We receive at least $900 each month in a tax break and oaydown now around $1,000 each month.

We’d need to find a place to rent for around $2,000 to make it better to rent and that’s not happening.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Have you determined that the costs of homeownership are too high and decided to rent? Please provide specifics.

Thank you!

Considered it when we were in between houses, but considering how much equity we had in our house we sold and how low our mortgage was going to be, I was SHOCKED at how expensive rent was for a family of 4 plus a dog. Going rent a few years ago FAR exceeded our mortgage. Plus the tax hit. The math didnt work out.

From the quick math I've done on this every time I've considered it, when you are in the stage where you need a 1-2 bedroom, the math can work out favorably to not buy and instead rent and invest the rest. As soon as you need a 3 bedroom+ -- it seems cheaper to just buy than to rent a large apartment or a house. At least that's what I've found in this area.

Yup. We needed a 3 bedroom and 2 parking spaces that allowed dogs and holy hell, I almost fell over at the prices and this was in the burbs! The mortgage on my SFH is half of what I was looking at in rent.

+1. Even for a two bedroom in DC our rent was $3,400 and that was cheap.

Our mortgage is $3,500. We receive at least $900 each month in a tax break and oaydown now around $1,000 each month.

We’d need to find a place to rent for around $2,000 to make it better to rent and that’s not happening.

Ditto. With 3 kids renting isn't an option. The price jump to a 3BD apartment in this area is staggering. And let's face it, almost every new apartment built in the last 10 years is geared toward young single people - skydecks, dog spas, etc. They're not made with families in mind.

[Anonymous]

Anonymous wrote:One thing to keep in mind is your home purchase is usually leveraged, so even though my house has not quite doubled in value my equity has more than tripled in value. Of course in theory you can invest borrowed money in the stock market but it's harder/riskier/more expensive.

That's a fair point, but how typical is it to triple your house equity, and in what timeframe? The friends i know have perhaps doubled it in 15-20 years, which equals a not that spectacular annual return.

(Plus, they rarely factor in costs like property taxes, insurance, repairs...)

The NYT had a great rent vs buy calculator, it's very helpful to actually compare the numbers.

[Anonymous]

Renting is not cheaper in the long run. For now it might be but give it a few years and buying will be cheaper.

[Anonymous]

I'm single and live in an area where I can rent a 1000sqft+ 2 bd apartment with garage parking in a luxury building across from the metro for around $2200/mo. To purchase something similar in this area would be north of $550k plus an additional $500+ per month in condo fees. I just cannot make the math work out to find that buying is a better deal for someone like me, ESPECIALLY with the condo fees, which are ridiculous around these parts.

I've lived in the area for almost 10 years and property values on these places have not increased enough to consider it a wise decision. I've even seen several listed at least $10k below purchase price from 5-6 years ago.

If you were looking at a SFH and planning to stay for 10+ years I could see where the math might work out. For everything else, it just doesn't make sense.

[Anonymous]

Anonymous wrote:I'm single and live in an area where I can rent a 1000sqft+ 2 bd apartment with garage parking in a luxury building across from the metro for around $2200/mo. To purchase something similar in this area would be north of $550k plus an additional $500+ per month in condo fees. I just cannot make the math work out to find that buying is a better deal for someone like me, ESPECIALLY with the condo fees, which are ridiculous around these parts.

I've lived in the area for almost 10 years and property values on these places have not increased enough to consider it a wise decision. I've even seen several listed at least $10k below purchase price from 5-6 years ago.

If you were looking at a SFH and planning to stay for 10+ years I could see where the math might work out. For everything else, it just doesn't make sense.

Agree with you and then I rent for a similar price and still invest thousands. But reality is 99% of people out there when they buy they compromise -- they are not across the street from a metro, they aren't in any kind of luxury accommodations etc. For city/metro convenience and luxury, as you say you'd pay a WHOLE lot more to own -- that's why people go further out, get older homes/apartments etc. when they buy.

[Anonymous]

Anonymous wrote:I'm single and live in an area where I can rent a 1000sqft+ 2 bd apartment with garage parking in a luxury building across from the metro for around $2200/mo. To purchase something similar in this area would be north of $550k plus an additional $500+ per month in condo fees. I just cannot make the math work out to find that buying is a better deal for someone like me, ESPECIALLY with the condo fees, which are ridiculous around these parts.

I've lived in the area for almost 10 years and property values on these places have not increased enough to consider it a wise decision. I've even seen several listed at least $10k below purchase price from 5-6 years ago.

If you were looking at a SFH and planning to stay for 10+ years I could see where the math might work out. For everything else, it just doesn't make sense.

I assume you’re saving way more than 2k per month after retirement? Because from what you wrote it makes me think you’re renting too expensive of an apartment.

[Anonymous]

Anonymous wrote:

Anonymous wrote:One thing to keep in mind is your home purchase is usually leveraged, so even though my house has not quite doubled in value my equity has more than tripled in value. Of course in theory you can invest borrowed money in the stock market but it's harder/riskier/more expensive.

That's a fair point, but how typical is it to triple your house equity, and in what timeframe? The friends i know have perhaps doubled it in 15-20 years, which equals a not that spectacular annual return.

(Plus, they rarely factor in costs like property taxes, insurance, repairs...)

The NYT had a great rent vs buy calculator, it's very helpful to actually compare the numbers.

I was just trying to illustrate that often people do better on their houses than stock market investments because they have the ability (or need) to buy and hold for a while and to borrow most of the money that is sunk into the asset. I think even if real estate prices just increase 2% a year (which is basically inflation), and you wait 10 years, you'll probably double your equity.

[Anonymous]

Nice job on this question OP you framed it right to keep the dopey responses to a minimum. That being said here is my dopey 2 cents: I owned 2 homes but got to that point of "are the costs of home ownership too high" on home 2 and came to the conclusion it was time to sell. Sold it rented a home in the same neighborhood. Savings on the rental was immediate but part of it was the built in savings of renting which for me is: I can easily rent something to live in that I would never buy. I.E "its just a rental" Nearly everyone could probably rent adequate housing and save like this if they really thought about it. I literally moved barely 2 streets away and my rent was half my old mortgage. I could've stayed in that house for at least a few years but the wife grew tired of it so we bought again. I do see where renting can work and keep the costs of a new roof, furnace, kitchen remodel etc across the board to make it worth it.,, but just walk into a place some time and say "its just a rental" you save 10% right there

[Anonymous]

Anonymous wrote:I'm single and live in an area where I can rent a 1000sqft+ 2 bd apartment with garage parking in a luxury building across from the metro for around $2200/mo. To purchase something similar in this area would be north of $550k plus an additional $500+ per month in condo fees. I just cannot make the math work out to find that buying is a better deal for someone like me, ESPECIALLY with the condo fees, which are ridiculous around these parts.

I've lived in the area for almost 10 years and property values on these places have not increased enough to consider it a wise decision. I've even seen several listed at least $10k below purchase price from 5-6 years ago.

If you were looking at a SFH and planning to stay for 10+ years I could see where the math might work out. For everything else, it just doesn't make sense.

I think a condo ot a different situation. I dont think you would find many people that would argue that a condo is a good investment.

Home ownership pays off after time. I've been a homeowner in the DC area for 18 years. We've owned a few homes and are 2 years away from having no mortgage at all. We basically have locked in housing prices at 2000 levels. In 2000 buying was more expensive than renting. However we also purchased our first home in Vienna Woods for 245k. A fee houses later we are in s SFH in McLean with a mortgage of 2,000/mo eith 2 years to go. Out home today is worth just around 900k. I'm glad when we move into retirement we can sell our home and walk away with 7 figures in cash.

[Anonymous]

Anonymous wrote:Nice job on this question OP you framed it right to keep the dopey responses to a minimum. That being said here is my dopey 2 cents: I owned 2 homes but got to that point of "are the costs of home ownership too high" on home 2 and came to the conclusion it was time to sell. Sold it rented a home in the same neighborhood. Savings on the rental was immediate but part of it was the built in savings of renting which for me is: I can easily rent something to live in that I would never buy. I.E "its just a rental" Nearly everyone could probably rent adequate housing and save like this if they really thought about it. I literally moved barely 2 streets away and my rent was half my old mortgage. I could've stayed in that house for at least a few years but the wife grew tired of it so we bought again. I do see where renting can work and keep the costs of a new roof, furnace, kitchen remodel etc across the board to make it worth it.,, but just walk into a place some time and say "its just a rental" you save 10% right there

You must not live in dc! Our mortgage for a rowhouse is $3,500.

A dumpy 2 bedroom condo two blocks from us rents for around $2,200. Really dumpy.

We pay down around $1k each month to equity and receive around a $1k tax break.

Our cost is around $1,500 to own our house. I’d estimate we spend $500 each month MAX on maintenance. So 2k total.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Nice job on this question OP you framed it right to keep the dopey responses to a minimum. That being said here is my dopey 2 cents: I owned 2 homes but got to that point of "are the costs of home ownership too high" on home 2 and came to the conclusion it was time to sell. Sold it rented a home in the same neighborhood. Savings on the rental was immediate but part of it was the built in savings of renting which for me is: I can easily rent something to live in that I would never buy. I.E "its just a rental" Nearly everyone could probably rent adequate housing and save like this if they really thought about it. I literally moved barely 2 streets away and my rent was half my old mortgage. I could've stayed in that house for at least a few years but the wife grew tired of it so we bought again. I do see where renting can work and keep the costs of a new roof, furnace, kitchen remodel etc across the board to make it worth it.,, but just walk into a place some time and say "its just a rental" you save 10% right there

You must not live in dc! Our mortgage for a rowhouse is $3,500.

A dumpy 2 bedroom condo two blocks from us rents for around $2,200. Really dumpy.

We pay down around $1k each month to equity and receive around a $1k tax break.

Our cost is around $1,500 to own our house. I’d estimate we spend $500 each month MAX on maintenance. So 2k total.

PP here in DC Burbs

[Anonymous]

Ofcourse a house is a better investment, but DC prices are really high and many of us simply can't afford houses as investments. Heck, we can't afford a house in DC in the neighborhood we want for us.
I did buy a studio near GT and I have no problem renting it out. Many single people in DC who don't want a house or roommates. I've never had problem renting out my place. I rent it to my co-worker. I didn't even have to put it on craigslist. I have others asking if I have more condos all the time. Return in ca 4% a year, I don't expect it to go up. Bought it as a home since I'm too poor to rent and invest the rest. Paying equity is me investing.

[Anonymous]

It comes down to how much money you have left over to spend

2000 invested in the market every month gets you 143k 347k 635k in 5 10 15 years

3000 216k 521k 953k

4000 288k 694k 1.27M

I like those numbers are people really confident their house appreciates between 1 and 1.25 million in 15 years? Still, I think it's much harder to do this married with kids vs single and of course you need the discipline to actually invest the money every month

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:One thing to keep in mind is your home purchase is usually leveraged, so even though my house has not quite doubled in value my equity has more than tripled in value. Of course in theory you can invest borrowed money in the stock market but it's harder/riskier/more expensive.

That's a fair point, but how typical is it to triple your house equity, and in what timeframe? The friends i know have perhaps doubled it in 15-20 years, which equals a not that spectacular annual return.

(Plus, they rarely factor in costs like property taxes, insurance, repairs...)

The NYT had a great rent vs buy calculator, it's very helpful to actually compare the numbers.

I was just trying to illustrate that often people do better on their houses than stock market investments because they have the ability (or need) to buy and hold for a while and to borrow most of the money that is sunk into the asset. I think even if real estate prices just increase 2% a year (which is basically inflation), and you wait 10 years, you'll probably double your equity.

I understand that. It's a fine investment. It just happens that investing in the stock market over 10 years is likely to bring superior returns.

But, both are better that keeping up with the Jones and saving nothing