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I've known a few families over the years in California who rented detached houses. They rented houses (didn't have the down payment) to get the benefits of more

I've known a few families over the years in California who rented detached houses. They rented houses (didn't have the down payment) to get the benefits of more space (ex: 3-bedroom place), yard (well small yard, this is California), garage, and washer/dryer. Every single one of them had to move out before their kids grew up old enough to go to college. In fact they didn't last more than a few years at each house because every landlord would come around and ask the renters to move out. The excuses given were: - I'm selling the house (turned out it wasn't sold years) - I'm remodeling the house (nope, not true) Pretty much in all cases, the owner of the house was forcing the renter out so that they could raise up the rent much higher with the next, new renters.

lotsofpulp 8y ago
California is obviously an outlier in real estate discussions. Obviously in highly desirable areas, demand will keep going up will cause rents and home prices to keep going up, and of course owning will be better. NYC/AUS/DEN/SEA/PDX are also forecast to be high demand, but who knows when an earthquake or drought or whatnot can come along and destroy home values. But for most other places not posting double digit growth like Midwest towns or the Northeast with its stagnant high tax suburbs, home values don’t see the rise in value that make it a no brainer to buy.
usaar333 8y ago
> They rented houses (didn't have the down payment) to get the benefits of more space This is just a statement that living beyond your means is bad. Even in markets where renting is cheaper (https://medium.com/@usaar33/why-you-shouldnt-buy-a-home-in-the-bay-area-right-now-9eff37da8d6 https://medium.com/@usaar33/why-you-shouldnt-buy-a-home-in-t...), you have to ensure your savings rate is high enough to absorb any reasonable rent appreciation. Realistically, you might be able to get 20% more house than what you can buy - I imagine your friends were pushing more than that.
- dba7dba 8y ago
  But you are assuming they were living beyond their means. They were really not. They were able to find another place near paying similar rent. The point is the house owners were basically getting around a local laws meant to protect renters against unreasonable rent increases. Where I live, there is a law against raising monthly rent substantially on an existing renter. Owner can raise the rent for existing tenant say about 3 - 5%, once a year. I'm not sure about the exact percentage, but it is allowed only once a year for sure, to a specific percentage of the existing rent. So the house owner gets around this law by periodically forcing out the renter with bogus reasons, so that they can rent out the property to the next renter at a substantially higher rate. Instead of being able to increase rent from $2500 to $2700 after the renters lived there for first 2 years, property owner can raise the rent from $2500 to $3000 or even $3500. The property owner is basically getting around the local law to protect renters.
  - usaar333 8y ago
    > They were able to find another place near paying similar rent. I'm a bit confused here. I assume the new place was inferior in some way? Otherwise, I don't see why the landlord would try to force them out if they are paying market rent.
    - dba7dba 8y ago
      Well it seems some owners seem to think they can beat the market and get higher rent by chasing renters out every few years. So they can raise rent by 7- 10% instead of just say 3%.

lotsofpulp 8y ago

California is obviously an outlier in real estate discussions. Obviously in highly desirable areas, demand will keep going up will cause rents and home prices to keep going up, and of course owning will be better. NYC/AUS/DEN/SEA/PDX are also forecast to be high demand, but who knows when an earthquake or drought or whatnot can come along and destroy home values. But for most other places not posting double digit growth like Midwest towns or the Northeast with its stagnant high tax suburbs, home values don’t see the rise in value that make it a no brainer to buy.

usaar333 8y ago

> They rented houses (didn't have the down payment) to get the benefits of more space This is just a statement that living beyond your means is bad. Even in markets where renting is cheaper (https://medium.com/@usaar33/why-you-shouldnt-buy-a-home-in-the-bay-area-right-now-9eff37da8d6 https://medium.com/@usaar33/why-you-shouldnt-buy-a-home-in-t...), you have to ensure your savings rate is high enough to absorb any reasonable rent appreciation. Realistically, you might be able to get 20% more house than what you can buy - I imagine your friends were pushing more than that.

dba7dba 8y ago
But you are assuming they were living beyond their means. They were really not. They were able to find another place near paying similar rent. The point is the house owners were basically getting around a local laws meant to protect renters against unreasonable rent increases. Where I live, there is a law against raising monthly rent substantially on an existing renter. Owner can raise the rent for existing tenant say about 3 - 5%, once a year. I'm not sure about the exact percentage, but it is allowed only once a year for sure, to a specific percentage of the existing rent. So the house owner gets around this law by periodically forcing out the renter with bogus reasons, so that they can rent out the property to the next renter at a substantially higher rate. Instead of being able to increase rent from $2500 to $2700 after the renters lived there for first 2 years, property owner can raise the rent from $2500 to $3000 or even $3500. The property owner is basically getting around the local law to protect renters.
- usaar333 8y ago
  > They were able to find another place near paying similar rent. I'm a bit confused here. I assume the new place was inferior in some way? Otherwise, I don't see why the landlord would try to force them out if they are paying market rent.
  - dba7dba 8y ago
    Well it seems some owners seem to think they can beat the market and get higher rent by chasing renters out every few years. So they can raise rent by 7- 10% instead of just say 3%.