Validate my view that long-term renting is a valid lifestyle choice

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm a renter by necessity since I've moved around so much for work, now staying in the DC area for the long term and wondering this myself. I'm happy enough renting and can't really afford a townhome or SFH with the commute I want here currently, suspicious of condos as not much of an improvement on renting financially or in quality of life terms, but concerned that rents are going to rise faster over time than my salary while home prices also rise faster than my savings ability. I'm really not aure what the right answer is, keep renting for the lifestyle or buy somewhere far out and hate it for the sake of security.

Here’s the problem - you’re living in an area you can’t afford. You say you can’t afford to own with the commute you want. But farther out is where you should probably be living given your financials. Yes, rents will keep going up over time and eventually you’ll be a renter FOR LIFE. If you want to be financially responsible, you should rent a cheaper place farther out and sock away money.

I'm living in an area where I can afford to rent perfectly well; my rent is around $1k less a month than the mortgage would be on the townhouses selling down the street. But going from a 1 hour to 2 hour commute when you have little kids...well, financial costs are not the only ones to consider, that's a huge amount of time to lose for the sake of (if I'm reading you right) renting somewhere cheaper to save more to buy slightly sooner. Rents don't get that low within public transit commuting distance, I doubt I could save more than $500/month at the absolute max end-of-the-commuter-line, and that's not going to make the difference between buying and renting in the DC area.

I get what you're saying, I just think that for some of us it's not quite that simple a calculation.

You don’t get it. To save money while renting you have to live in a smaller place than you’d own or live farther out then where you’d buy. You can’t rent the same property you’d buy. That’s why you’re only 1k per month less than buying and why you can’t save enough money. Yes, it’s 1k cheaper, but they are probably paying 1k less per month in federal taxes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:In the same boat. 37 and haven't bought yet. Lived in NYC for 10 yrs -- where renting esp in midtown Manhattan is super common. Moved here 2 yrs ago and started renting bc I didn't know the area enough to buy right away. Now I'm like -- eh should I buy, I don't want to live here really??

But I feel like people here look down on renters A LOT more than in NYC. I get plenty of "poor you" type of comments along with "oh but I'm sure you saved up a down payment in all those yrs in private practice, why not buy?" along with snide insinuations that I can't afford it.

IDK -- I've maxed out the 401k to 18k (or whatever the yearly IRS max was each yr) since age 25; and have built up an almost similar amount non retirement investments. So I don't get why people assume every renter is paycheck to paycheck and can't scramble together a down payment.

Because most renters DO live paycheck to paycheck. Most people who have money own property. NYC is a little different. My friends living in NY spend all of their money on travel, clothing, alcohol, private schools, outsourcing every task, etc. They will say that renting is a better deal and it is in NY, but that’s not why they are renting. They are renting because they make 500k but haven’t saved up the 500k necessary to buy a $2.0 mm apartment. So they stay in their 6k per month rental and keep spending. That’s wise you’ve been socking away your money, but most renters aren’t doing that. Most renters are spending a significant portion of their paycheck on rent.

I get what you're saying. While I had a nice place in NYC -- corner apartment; midtown; doorman -- by no means was it a new luxury building that everyone prefers; I dealt with central/shared laundry etc.in a building built in the 80s. If I had dropped 6k/month on rent, I wouldn't have left NYC with a maxed out 401k and a few hundred k in hand otherwise. Same thing here -- I went with a luxury building (after all the non luxury yrs in NYC) BUT NOT the nicest or newest luxury building with all glass and all granite everything. Those are renting for about $900/month more than what I'm paying -- and $900/month over 2 yrs is over 21k right there that can go into savings, investments, whatever. And here I feel like it's pretty easy to rent a step or even a 1/2 step below your means bc there are SOOO many apartments out there -- the competition isn't as fierce as in NYC where you can lose apartments within a day if you don't act.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm a renter by necessity since I've moved around so much for work, now staying in the DC area for the long term and wondering this myself. I'm happy enough renting and can't really afford a townhome or SFH with the commute I want here currently, suspicious of condos as not much of an improvement on renting financially or in quality of life terms, but concerned that rents are going to rise faster over time than my salary while home prices also rise faster than my savings ability. I'm really not aure what the right answer is, keep renting for the lifestyle or buy somewhere far out and hate it for the sake of security.

Here’s the problem - you’re living in an area you can’t afford. You say you can’t afford to own with the commute you want. But farther out is where you should probably be living given your financials. Yes, rents will keep going up over time and eventually you’ll be a renter FOR LIFE. If you want to be financially responsible, you should rent a cheaper place farther out and sock away money.

NP.

I strongly disagree with your premise.

I live in a super-HCOL city and we choose to rent towards the center since we can't afford the down payment to own. Plus we move around a lot. We ARE saving and arguably more so as we don't have to worry about expensive repairs or renovations. Obviously we could save more if we accepted longer commutes, but we have young kids and our time with them is precious. We also value walkability and don't currently own a car.

We are approaching 40 and have never owned and have no plans to move to a cheaper city because that's where the lucrative job opportunities are. We talk about buying a "dream home" at some point once we decide where that would be.

So you’re leasing the more expensive car because you can’t afford to buy it. You can’t afford to buy because you are spending too much on rent to save up a downpayment! If you can’t save up a downpayment, you aren’t really saving by renting. You’re living beyond your means. I did the same thing for three years - rented a nice apartment. Looking back I realize I couldn’t really afford it. I should have been living in a smaller apartment or less expensive neighborhood. If the only way you can live in a neighborhood is to rent - you can’t afford it! Just like if the only way you can buy a 5 series is to lease it...you can’t afford it.

Fwiw I also don’t drive a car around and value walkabikity.

[Anonymous]

Anonymous wrote:

Anonymous wrote:In the same boat. 37 and haven't bought yet. Lived in NYC for 10 yrs -- where renting esp in midtown Manhattan is super common. Moved here 2 yrs ago and started renting bc I didn't know the area enough to buy right away. Now I'm like -- eh should I buy, I don't want to live here really??

But I feel like people here look down on renters A LOT more than in NYC. I get plenty of "poor you" type of comments along with "oh but I'm sure you saved up a down payment in all those yrs in private practice, why not buy?" along with snide insinuations that I can't afford it.

IDK -- I've maxed out the 401k to 18k (or whatever the yearly IRS max was each yr) since age 25; and have built up an almost similar amount non retirement investments. So I don't get why people assume every renter is paycheck to paycheck and can't scramble together a down payment.

Because most renters DO live paycheck to paycheck. Most people who have money own property. NYC is a little different. My friends living in NY spend all of their money on travel, clothing, alcohol, private schools, outsourcing every task, etc. They will say that renting is a better deal and it is in NY, but that’s not why they are renting. They are renting because they make 500k but haven’t saved up the 500k necessary to buy a $2.0 mm apartment. So they stay in their 6k per month rental and keep spending. That’s wise you’ve been socking away your money, but most renters aren’t doing that. Most renters are spending a significant portion of their paycheck on rent.

OT, but I think most of the $2mm apts in NYC are bought with cash. In my building where we bought our 2 mm coop (cash), none of the new purchasers have mortgages. The less expensive apts in outer boroughs or way uptown can be had with financing. The renters who do really well in NYC are those with rent controlled or stabilized apts, who’ve inherited them from family. My friends have one of these, a 2 bed for about $2k. It’s been so good for them as their income has risen that they’ve been able to buy a rental unit in NJ and can afford for the mom to SAH. The downside is that everything in their rent stabilized home is old and run down and anything comparable would cost 3-4K so they can’t move. The landlord will keep it up to code and not one bit more.

[Anonymous]

When you rent all the upside on the the investment goes to the property owner. That's the way it should be since the owner is taking all the risk. If the market is hot you'll see your rents go up. If it is cool you won't see rent go down nearly as quickly because it is costly to you to move out of the unit. By renting you're leaving yourself unhedged against changes and property prices including in your ultimate next home, whether here or elsewhere. You seem happy with what you're doing so keep it up but just be aware of the risk you're taking regards future housing prices and the fact that by renting your dodging the forced Savings of a mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:In the same boat. 37 and haven't bought yet. Lived in NYC for 10 yrs -- where renting esp in midtown Manhattan is super common. Moved here 2 yrs ago and started renting bc I didn't know the area enough to buy right away. Now I'm like -- eh should I buy, I don't want to live here really??

But I feel like people here look down on renters A LOT more than in NYC. I get plenty of "poor you" type of comments along with "oh but I'm sure you saved up a down payment in all those yrs in private practice, why not buy?" along with snide insinuations that I can't afford it.

IDK -- I've maxed out the 401k to 18k (or whatever the yearly IRS max was each yr) since age 25; and have built up an almost similar amount non retirement investments. So I don't get why people assume every renter is paycheck to paycheck and can't scramble together a down payment.

Because most renters DO live paycheck to paycheck. Most people who have money own property. NYC is a little different. My friends living in NY spend all of their money on travel, clothing, alcohol, private schools, outsourcing every task, etc. They will say that renting is a better deal and it is in NY, but that’s not why they are renting. They are renting because they make 500k but haven’t saved up the 500k necessary to buy a $2.0 mm apartment. So they stay in their 6k per month rental and keep spending. That’s wise you’ve been socking away your money, but most renters aren’t doing that. Most renters are spending a significant portion of their paycheck on rent.

OT, but I think most of the $2mm apts in NYC are bought with cash. In my building where we bought our 2 mm coop (cash), none of the new purchasers have mortgages. The less expensive apts in outer boroughs or way uptown can be had with financing. The renters who do really well in NYC are those with rent controlled or stabilized apts, who’ve inherited them from family. My friends have one of these, a 2 bed for about $2k. It’s been so good for them as their income has risen that they’ve been able to buy a rental unit in NJ and can afford for the mom to SAH. The downside is that everything in their rent stabilized home is old and run down and anything comparable would cost 3-4K so they can’t move. The landlord will keep it up to code and not one bit more.

In the 2m+ space, sure few mortgages. But there are a LOT of mortgages in Manhattan in the 800k-2m space; don't kid yourself -- mortgages aren't just for the outer boroughs or Harlem.

[Anonymous]

Anonymous wrote:In the same boat. 37 and haven't bought yet. Lived in NYC for 10 yrs -- where renting esp in midtown Manhattan is super common. Moved here 2 yrs ago and started renting bc I didn't know the area enough to buy right away. Now I'm like -- eh should I buy, I don't want to live here really??

But I feel like people here look down on renters A LOT more than in NYC. I get plenty of "poor you" type of comments along with "oh but I'm sure you saved up a down payment in all those yrs in private practice, why not buy?" along with snide insinuations that I can't afford it.

IDK -- I've maxed out the 401k to 18k (or whatever the yearly IRS max was each yr) since age 25; and have built up an almost similar amount non retirement investments. So I don't get why people assume every renter is paycheck to paycheck and can't scramble together a down payment.

Almost identical story here. Honestly I'm seriously considering continuing renting for my own conveniences, flexibility to move back to NYC etc. While also buying myself an investment property that I'd rent out. Not sure about it yet but it seems like it could work -- equity would be built, just not by my commitment of having to live there/commute from there etc. (and yes I'd be willing to pay a % to a property manager bc I surely can't come fix your leaky faucet etc. -- so while I'd be limiting my return to an extent, there would still be an equity build up). Anyone done this?

[Anonymous]

I'm with you OP. I love renting and have no intention of giving it up for the foreseeable future. Every 7 or 8 years or so I like to move to a brand new building and it's great. I do use the amenities- I get free coffee from the lobby at least twice a day, use the dry cleaning available through the building, attend resident events, use the fitness center instead of a gym membership. And the best for me is to never have to fix anything. Just go online, put in a request and maintenance is there in less than 24 hours. I don't do total top of the line, I pay $200 for a one bedroom near metro and there is nothing I could buy in this area and have that low of a mortgage. Right now, it's working great for me.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm a renter by necessity since I've moved around so much for work, now staying in the DC area for the long term and wondering this myself. I'm happy enough renting and can't really afford a townhome or SFH with the commute I want here currently, suspicious of condos as not much of an improvement on renting financially or in quality of life terms, but concerned that rents are going to rise faster over time than my salary while home prices also rise faster than my savings ability. I'm really not aure what the right answer is, keep renting for the lifestyle or buy somewhere far out and hate it for the sake of security.

Here’s the problem - you’re living in an area you can’t afford. You say you can’t afford to own with the commute you want. But farther out is where you should probably be living given your financials. Yes, rents will keep going up over time and eventually you’ll be a renter FOR LIFE. If you want to be financially responsible, you should rent a cheaper place farther out and sock away money.

I'm living in an area where I can afford to rent perfectly well; my rent is around $1k less a month than the mortgage would be on the townhouses selling down the street. But going from a 1 hour to 2 hour commute when you have little kids...well, financial costs are not the only ones to consider, that's a huge amount of time to lose for the sake of (if I'm reading you right) renting somewhere cheaper to save more to buy slightly sooner. Rents don't get that low within public transit commuting distance, I doubt I could save more than $500/month at the absolute max end-of-the-commuter-line, and that's not going to make the difference between buying and renting in the DC area.

I get what you're saying, I just think that for some of us it's not quite that simple a calculation.

You don’t get it. To save money while renting you have to live in a smaller place than you’d own or live farther out then where you’d buy. You can’t rent the same property you’d buy. That’s why you’re only 1k per month less than buying and why you can’t save enough money. Yes, it’s 1k cheaper, but they are probably paying 1k less per month in federal taxes.

I'm saving money while renting by living in an older apartment building with no dishwasher or in unit w/d, so its pretty small, different than the OP situation, why do you assume I'm renting a big townhouse or SFH? Many people trade off space and amenities for location! The equivalent purchase would be a condo and I don't see that as much of an upgrade, they cost more and a large fraction of the cost is HOA fees rather than equity.

[Anonymous]

OP, you might want to look for older buildings in DC (Kennedy-Warren, etc.). If it's rent-controlled it will never go up more than your Social Security once you're older!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm a renter by necessity since I've moved around so much for work, now staying in the DC area for the long term and wondering this myself. I'm happy enough renting and can't really afford a townhome or SFH with the commute I want here currently, suspicious of condos as not much of an improvement on renting financially or in quality of life terms, but concerned that rents are going to rise faster over time than my salary while home prices also rise faster than my savings ability. I'm really not aure what the right answer is, keep renting for the lifestyle or buy somewhere far out and hate it for the sake of security.

Here’s the problem - you’re living in an area you can’t afford. You say you can’t afford to own with the commute you want. But farther out is where you should probably be living given your financials. Yes, rents will keep going up over time and eventually you’ll be a renter FOR LIFE. If you want to be financially responsible, you should rent a cheaper place farther out and sock away money.

I'm living in an area where I can afford to rent perfectly well; my rent is around $1k less a month than the mortgage would be on the townhouses selling down the street. But going from a 1 hour to 2 hour commute when you have little kids...well, financial costs are not the only ones to consider, that's a huge amount of time to lose for the sake of (if I'm reading you right) renting somewhere cheaper to save more to buy slightly sooner. Rents don't get that low within public transit commuting distance, I doubt I could save more than $500/month at the absolute max end-of-the-commuter-line, and that's not going to make the difference between buying and renting in the DC area.

I get what you're saying, I just think that for some of us it's not quite that simple a calculation.

You don’t get it. To save money while renting you have to live in a smaller place than you’d own or live farther out then where you’d buy. You can’t rent the same property you’d buy. That’s why you’re only 1k per month less than buying and why you can’t save enough money. Yes, it’s 1k cheaper, but they are probably paying 1k less per month in federal taxes.

It's absolutely not true where I live. Renting is much cheaper than buying now, and that's counting on property appreciation. I can find a less riskier place for my downpayment than a SFH in a crazy real estate market. If I absolutely loved the area, I would buy, as I would not care if market goes up or down. Given, the area is changing, and not in the direction I like, I don't see the point of buying.

[Anonymous]

I loved renting but there were downsides. The rising rent and needing to move if lease isn’t renewed. I rented SFHs and townhouses that we’re usually owned by individuals so twice was told my lease want being renewed because they were selling. I can’t handle the instability anymore now that I have kids. I need to know that I’ll be staying in my school district and like knowing how much mortgage is.

[Anonymous]

It's what a majority of people do around the world, OP.

[Anonymous]

Anonymous wrote:In the same boat. 37 and haven't bought yet. Lived in NYC for 10 yrs -- where renting esp in midtown Manhattan is super common. Moved here 2 yrs ago and started renting bc I didn't know the area enough to buy right away. Now I'm like -- eh should I buy, I don't want to live here really??

But I feel like people here look down on renters A LOT more than in NYC. I get plenty of "poor you" type of comments along with "oh but I'm sure you saved up a down payment in all those yrs in private practice, why not buy?" along with snide insinuations that I can't afford it.

IDK -- I've maxed out the 401k to 18k (or whatever the yearly IRS max was each yr) since age 25; and have built up an almost similar amount non retirement investments. So I don't get why people assume every renter is paycheck to paycheck and can't scramble together a down payment.

Sounds like you are ready to buy financially but are choosing not to and instead have invested that money. Great - that's not a bad choice. You could buy an investment property; or not buy until retirement in cash/mostly cash when you may move someplace cheaper than NYC or DC (or even if you stayed - you likely wouldn't have to pay a premium for commuter conveniences, school districts etc. and could get something cheaper than what'd you need now). But if my friend/coworker/acquaintance group is any indicator, for every 1-2 people that handle it like this, there are 10 people who will rent the best place they can afford and be spending on the requisite luxury cars/vacations/etc. and aren't in a position to buy at any point and don't have significant investments either; heck most of them don't even put 18.5 in their 401ks despite having the type of income that allows that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:In the same boat. 37 and haven't bought yet. Lived in NYC for 10 yrs -- where renting esp in midtown Manhattan is super common. Moved here 2 yrs ago and started renting bc I didn't know the area enough to buy right away. Now I'm like -- eh should I buy, I don't want to live here really??

But I feel like people here look down on renters A LOT more than in NYC. I get plenty of "poor you" type of comments along with "oh but I'm sure you saved up a down payment in all those yrs in private practice, why not buy?" along with snide insinuations that I can't afford it.

IDK -- I've maxed out the 401k to 18k (or whatever the yearly IRS max was each yr) since age 25; and have built up an almost similar amount non retirement investments. So I don't get why people assume every renter is paycheck to paycheck and can't scramble together a down payment.

Sounds like you are ready to buy financially but are choosing not to and instead have invested that money. Great - that's not a bad choice. You could buy an investment property; or not buy until retirement in cash/mostly cash when you may move someplace cheaper than NYC or DC (or even if you stayed - you likely wouldn't have to pay a premium for commuter conveniences, school districts etc. and could get something cheaper than what'd you need now). But if my friend/coworker/acquaintance group is any indicator, for every 1-2 people that handle it like this, there are 10 people who will rent the best place they can afford and be spending on the requisite luxury cars/vacations/etc. and aren't in a position to buy at any point and don't have significant investments either; heck most of them don't even put 18.5 in their 401ks despite having the type of income that allows that.

This.