3 ms·

Probably want to allow for the possibility of rent rises over time. One thing that I think this actually shows pretty well is the notion that part of the answe

Probably want to allow for the possibility of rent rises over time. One thing that I think this actually shows pretty well is the notion that part of the answer depends on how long you intend to stay in a place. If you expect to move in two or three years, it's probably not worth the hassle/expense of buying. If you intend to stay 5+ years in one place, it makes more sense to buy.

kylestlb 5y ago
This all depends on geography though. Buying in the bay area and only staying for 2.01 years could get you a pretty hefty ROR assuming you don't remodel anything, considering the supply constraints. Maybe covid & remote work will change that.
- Finnucane 5y ago
  Maybe. Flipping is a risky business. Returns are not guaranteed. If you're just looking for a place to live, you should really evaluate it on that basis.
  - plank_time 5y ago
    I know something who went bankrupt and got a divorce after flipping condos in chicsgo just before the housing bust. It works until it doesn’t and it’s usually catastrophic.
HideousKojima 5y ago
>Probably want to allow for the possibility of rent rises over time. Most definitely, my apartment before buying a home was ~$100/month less than my current mortgage, now (3 years later) the rent for the exact same apartment is ~$300/month more than my mortgage.
pessimizer 5y ago
> Probably want to allow for the possibility of rent rises over time. Isn't that counting inflation twice?
- stonemetal12 5y ago
  No, rents go up and down for reasons other than inflation.
  - rory 5y ago
    That is another type of inflation, but it's an interesting point that you may care about both the general consumer inflation rate (for its interaction with the mortgage interest rate) and the rent price inflation rate.
    - stonemetal12 5y ago
      I just assumed the inflation rate was applied to both rent and house price, as a general change in the value of a dollar. While they mostly move in line together, rent prices and home prices don't always move together so a change in value term that effects one and not the other might be useful.
- extortionist 5y ago
  Rents are only a part of inflation measurements and can easily outpace the general rate. California's recent rent control laws caps rent increases at 10% or 5% + the yearly CPI increase (whichever is less) every year, for example, explicitly allowing rent increases to outpace the general inflation rate. Personally, the rent I pay has gone up 9% this year. Rents can change based on whether an area becomes more or less desirable, as insurance or other costs for landlords change, as ownership of rental units consolidates, etc.--that is, for many reasons that might be only tangentially connected or even completely divorced from the reasons that the costs of other goods and services are changing.

kylestlb 5y ago

This all depends on geography though. Buying in the bay area and only staying for 2.01 years could get you a pretty hefty ROR assuming you don't remodel anything, considering the supply constraints. Maybe covid & remote work will change that.

Finnucane 5y ago
Maybe. Flipping is a risky business. Returns are not guaranteed. If you're just looking for a place to live, you should really evaluate it on that basis.
- plank_time 5y ago
  I know something who went bankrupt and got a divorce after flipping condos in chicsgo just before the housing bust. It works until it doesn’t and it’s usually catastrophic.

HideousKojima 5y ago

>Probably want to allow for the possibility of rent rises over time. Most definitely, my apartment before buying a home was ~$100/month less than my current mortgage, now (3 years later) the rent for the exact same apartment is ~$300/month more than my mortgage.

pessimizer 5y ago

> Probably want to allow for the possibility of rent rises over time. Isn't that counting inflation twice?

stonemetal12 5y ago
No, rents go up and down for reasons other than inflation.
- rory 5y ago
  That is another type of inflation, but it's an interesting point that you may care about both the general consumer inflation rate (for its interaction with the mortgage interest rate) and the rent price inflation rate.
  - stonemetal12 5y ago
    I just assumed the inflation rate was applied to both rent and house price, as a general change in the value of a dollar. While they mostly move in line together, rent prices and home prices don't always move together so a change in value term that effects one and not the other might be useful.
extortionist 5y ago
Rents are only a part of inflation measurements and can easily outpace the general rate. California's recent rent control laws caps rent increases at 10% or 5% + the yearly CPI increase (whichever is less) every year, for example, explicitly allowing rent increases to outpace the general inflation rate. Personally, the rent I pay has gone up 9% this year. Rents can change based on whether an area becomes more or less desirable, as insurance or other costs for landlords change, as ownership of rental units consolidates, etc.--that is, for many reasons that might be only tangentially connected or even completely divorced from the reasons that the costs of other goods and services are changing.