6 ms·

Is it really necessary to own a home if your mortgage is going to be 20 years long? I get that renting is like throwing money in a hole, but people are so much

Is it really necessary to own a home if your mortgage is going to be 20 years long? I get that renting is like throwing money in a hole, but people are so much more nomadic these days. What's the big deal in moving once every 10 years once rent gets unbearable?

sp332 9y ago
The ability to repaint and punch holes in your walls. Having a lawn and some privacy from the neighbors. Not everyone is nomadic.
- toomuchtodo 9y ago
  Or having certain pets. I had to buy in Tampa because no one would rent to me and my Great Dane, regardless of amount I was willing to part with as a pet fee (I offered extra insurance and $1000 and was still declined).
- nasalgoat 9y ago
  Also, don't forget outbuildings like garages or workrooms for all the maker hobbies.
- umanwizard 9y ago
  There are plenty of houses for rent. Rent doesn't imply apartment.
  - MrFoof 9y ago
    Moreover, talk to the person managing your apartment. In my apartment (managed by a property management company at that), they allowed me to repaint some walls, bring in three appliances of my own (washer/dryer and dishwasher), completely customize a closet, and replace a light fixture. Took a week for the business manager and corporate to sign off on the modifications, but they felt the requests were entirely reasonable. This happened because of two reasons: 1) I asked. 2) I agreed to pay a very modest additional deposit for the modifications ($400 total), and used suitably insured vendors of their choosing to have the appliances and light installed (they let me do the closet myself, as the paint with just a $100 deposit to cover changing it back), at a total cost of about $300. To get this stuff elsewhere I would've paid FAR, FAR more in rent (+$1000-1500/mo, easily). Though I asked, was very reasonable, and made it clear that I wasn't looking to half-ass anything. At the end of the day the new apartment was a tactical downgrade ($700/mo savings) from where I came from. With the new stuff I got approved I have "broken even" on my changes after 7 months. Now for the next 4-5 years that $700/mo savings just goes in my pocket, the apartment is now barely a downgrade from where I was prior, and I have top-notch appliances that most luxury rentals in the city don't even offer. Moreover, when I move out those appliances come with me -- I should get a good 15-20 total years out of them with proper care.
pjc50 9y ago
Do you want to have pets? Do you want to redecorate to your own taste? Can you even find anywhere to rent? Not everywhere has a liquid rental market. Moving only once every 10 years sounds great. Renting means maybe having to move on notice as short as one month. Back when I was renting I moved about every 3 years, although that was also house-sharing with other young professionals. Rent is usually more expensive than mortgage payments, and house price appreciation is your only chance to make a leveraged investment that pays roughly 7% annually. Edit: also, obviously, after 20 years you have no more payments. Frees up a whole lot of cashflow. Would you really want to go into retirement on a fixed income with a variable rent payment? Note that a "20 year mortgage" just sets the amortisation rate of the payments; you can accelerate it, and usually will end up re-mortgaging every 3-5 years to get better rates.
- FLUX-YOU 9y ago
  > also, obviously, after 20 years you have no more payments. You have maintenance. And if something bad happens with the foundation, that's very expensive to fix. Unless you just plan to die and have the house demolished and the property sold (which is honestly preferable in some cases of inheritance). I had to pay $25k to have supports installed in the crawlspace and other mitigation to avoid foundation work. I might have gotten ripped off, and the annoying thing is that I can't know for sure because I'm not informed about foundation work, structural engineering, or other principles. Simply inheriting a house and trying to sell it turned me off from owning a home in the near future due to the arduous process of paperwork, red tape, maintenance, and a low-liquid market. I'll take a comfortable living van/RV over dealing with real estate again if it means I can reduce the risk of dealing with those things to zero.
  - bluedino 9y ago
    Don't forget the roof that needs replacing every 15 or 20 years. Appliances. Furnace. Plumbing. Septic tank. Water lines on your property. Tree removal. Re-decorating and re-modeling. Replacing windows.
    - sliverstorm 9y ago
deleted 9y ago
[deleted]
jdavis703 9y ago
Rent gets unbearable way faster than every 10 years. My first place in the Bay Area had rent jump from $1800 (uncomfortable but doable), to $2300 per month. This was after just one year of being there, and since then I've noticed that 4 years later rents in that neighborhood are now at $3300 a month for a one bedroom.
- rconti 9y ago
  And if it gets unbearable after 10 years, it's because the market went up, not because your unit went up. You can't just move to a different property in the same area and start back where you were from a rent perspective. OTOH, I lived in Belmont CA on $2000 rent for a whole house blocks from caltrain for over 3 years, no adjustments.
sbenitoj 9y ago
Rent is NOT throwing money away, it is HIGHLY dependent on where you're living. There are MANY sunk one-time costs you have to pay when buying a home, including: --realtor commission (averages 6% of home price, or approximately 1.5 years of 30 year mortgage payments) --title fees (frequently 1% of purchase price) --other legal and bank fees The NYT has a buy vs rent calculator that helps make decisions like these: https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0 https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...
- prklmn 9y ago
  The one time costs involved in buying a house do not refute the idea that renting is throwing money away.
  - pjc50 9y ago
    A mortgage is just renting the money instead of the house. In both cases you're paying for the time value of money. It's just that in many (but not all!) cases you can get a much better deal renting the money than renting the house.
  - throwaway30yo 9y ago
    You are not throwing it away. You are exchanging money for a place to live.
    - monocasa 9y ago
      As opposed to exchanging it for a place to live, and getting some of that money back when you sell.
  - sbenitoj 9y ago
    Technically correct, but my point is that these costs are frequently ignored and in order to make home ownership more profitable than renting these costs must be amortized over a very long period of time.
  - refurb 9y ago
eloff 9y ago
I'm going to offer an alternative idea on the rent-vs-buy discussion that I never hear. In most sane countries (not the US) you can achieve non-resident status and not have to pay taxes. In Canada this is possible if you rent, but not as a home-owner. You have to be out of the country at least six months a year and you lose your health coverage. What you gain is not having to pay taxes. If you're working remotely on a software engineer's salary, that can free up over $50K a year. That's enough to pay your rent, and likely also your food, for a small family even in Canada's most expensive cities. Taxes are also throwing money in a hole. I think most people couldn't do it because they have kids (and don't want to homeschool), or one or both spouses have jobs in a physical location, or they just don't like nomadic living. But it's an interesting idea.
dagw 9y ago
I guess it depends on where you live and what you're looking for. When we where looking for a house there simply wasn't anything to rent long term that matched our requirements. So the option simply wasn't there. It was buy or nothing.
djrogers 9y ago
> people are so much more nomadic these days I think you have a bit of a skewed view of reality there - people in the US are far less likely to move for work than in past generations. You may be surrounded by a bubble of digital nomads, but it’s far from common.

sp332 9y ago

The ability to repaint and punch holes in your walls. Having a lawn and some privacy from the neighbors. Not everyone is nomadic.

toomuchtodo 9y ago
Or having certain pets. I had to buy in Tampa because no one would rent to me and my Great Dane, regardless of amount I was willing to part with as a pet fee (I offered extra insurance and $1000 and was still declined).
nasalgoat 9y ago
Also, don't forget outbuildings like garages or workrooms for all the maker hobbies.
umanwizard 9y ago
There are plenty of houses for rent. Rent doesn't imply apartment.
- MrFoof 9y ago
  Moreover, talk to the person managing your apartment. In my apartment (managed by a property management company at that), they allowed me to repaint some walls, bring in three appliances of my own (washer/dryer and dishwasher), completely customize a closet, and replace a light fixture. Took a week for the business manager and corporate to sign off on the modifications, but they felt the requests were entirely reasonable. This happened because of two reasons: 1) I asked. 2) I agreed to pay a very modest additional deposit for the modifications ($400 total), and used suitably insured vendors of their choosing to have the appliances and light installed (they let me do the closet myself, as the paint with just a $100 deposit to cover changing it back), at a total cost of about $300. To get this stuff elsewhere I would've paid FAR, FAR more in rent (+$1000-1500/mo, easily). Though I asked, was very reasonable, and made it clear that I wasn't looking to half-ass anything. At the end of the day the new apartment was a tactical downgrade ($700/mo savings) from where I came from. With the new stuff I got approved I have "broken even" on my changes after 7 months. Now for the next 4-5 years that $700/mo savings just goes in my pocket, the apartment is now barely a downgrade from where I was prior, and I have top-notch appliances that most luxury rentals in the city don't even offer. Moreover, when I move out those appliances come with me -- I should get a good 15-20 total years out of them with proper care.

pjc50 9y ago

Do you want to have pets? Do you want to redecorate to your own taste? Can you even find anywhere to rent? Not everywhere has a liquid rental market. Moving only once every 10 years sounds great. Renting means maybe having to move on notice as short as one month. Back when I was renting I moved about every 3 years, although that was also house-sharing with other young professionals. Rent is usually more expensive than mortgage payments, and house price appreciation is your only chance to make a leveraged investment that pays roughly 7% annually. Edit: also, obviously, after 20 years you have no more payments. Frees up a whole lot of cashflow. Would you really want to go into retirement on a fixed income with a variable rent payment? Note that a "20 year mortgage" just sets the amortisation rate of the payments; you can accelerate it, and usually will end up re-mortgaging every 3-5 years to get better rates.

FLUX-YOU 9y ago
> also, obviously, after 20 years you have no more payments. You have maintenance. And if something bad happens with the foundation, that's very expensive to fix. Unless you just plan to die and have the house demolished and the property sold (which is honestly preferable in some cases of inheritance). I had to pay $25k to have supports installed in the crawlspace and other mitigation to avoid foundation work. I might have gotten ripped off, and the annoying thing is that I can't know for sure because I'm not informed about foundation work, structural engineering, or other principles. Simply inheriting a house and trying to sell it turned me off from owning a home in the near future due to the arduous process of paperwork, red tape, maintenance, and a low-liquid market. I'll take a comfortable living van/RV over dealing with real estate again if it means I can reduce the risk of dealing with those things to zero.
- bluedino 9y ago
  Don't forget the roof that needs replacing every 15 or 20 years. Appliances. Furnace. Plumbing. Septic tank. Water lines on your property. Tree removal. Re-decorating and re-modeling. Replacing windows.
  - sliverstorm 9y ago

deleted 9y ago

[deleted]

jdavis703 9y ago

Rent gets unbearable way faster than every 10 years. My first place in the Bay Area had rent jump from $1800 (uncomfortable but doable), to $2300 per month. This was after just one year of being there, and since then I've noticed that 4 years later rents in that neighborhood are now at $3300 a month for a one bedroom.

rconti 9y ago
And if it gets unbearable after 10 years, it's because the market went up, not because your unit went up. You can't just move to a different property in the same area and start back where you were from a rent perspective. OTOH, I lived in Belmont CA on $2000 rent for a whole house blocks from caltrain for over 3 years, no adjustments.

sbenitoj 9y ago

Rent is NOT throwing money away, it is HIGHLY dependent on where you're living. There are MANY sunk one-time costs you have to pay when buying a home, including: --realtor commission (averages 6% of home price, or approximately 1.5 years of 30 year mortgage payments) --title fees (frequently 1% of purchase price) --other legal and bank fees The NYT has a buy vs rent calculator that helps make decisions like these: https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0 https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...

prklmn 9y ago
The one time costs involved in buying a house do not refute the idea that renting is throwing money away.
- pjc50 9y ago
  A mortgage is just renting the money instead of the house. In both cases you're paying for the time value of money. It's just that in many (but not all!) cases you can get a much better deal renting the money than renting the house.
- throwaway30yo 9y ago
  You are not throwing it away. You are exchanging money for a place to live.
  - monocasa 9y ago
    As opposed to exchanging it for a place to live, and getting some of that money back when you sell.
- sbenitoj 9y ago
  Technically correct, but my point is that these costs are frequently ignored and in order to make home ownership more profitable than renting these costs must be amortized over a very long period of time.
- refurb 9y ago

eloff 9y ago

I'm going to offer an alternative idea on the rent-vs-buy discussion that I never hear. In most sane countries (not the US) you can achieve non-resident status and not have to pay taxes. In Canada this is possible if you rent, but not as a home-owner. You have to be out of the country at least six months a year and you lose your health coverage. What you gain is not having to pay taxes. If you're working remotely on a software engineer's salary, that can free up over $50K a year. That's enough to pay your rent, and likely also your food, for a small family even in Canada's most expensive cities. Taxes are also throwing money in a hole. I think most people couldn't do it because they have kids (and don't want to homeschool), or one or both spouses have jobs in a physical location, or they just don't like nomadic living. But it's an interesting idea.

dagw 9y ago

I guess it depends on where you live and what you're looking for. When we where looking for a house there simply wasn't anything to rent long term that matched our requirements. So the option simply wasn't there. It was buy or nothing.

djrogers 9y ago

> people are so much more nomadic these days I think you have a bit of a skewed view of reality there - people in the US are far less likely to move for work than in past generations. You may be surrounded by a bubble of digital nomads, but it’s far from common.