11 ms·

I moved to Colorado from the SF Bay Area. I'm near Boulder and Denver, and can walk to a dozen restaurants, a grocery store, a bar, multiple cafes, and a big li

I moved to Colorado from the SF Bay Area. I'm near Boulder and Denver, and can walk to a dozen restaurants, a grocery store, a bar, multiple cafes, and a big library with free Internet access (oddly enough, almost ALL of the above have free Internet access, now that I think of it -- even the grocery store). And if you like public transit, I'm really close to multiple bus lines, but the city I live in is also very bike friendly. And I don't have a mortgage on my 2500 sq. ft. house. No living "in the country" necessary. ;) Similar house prices can be had in Denver proper as well, though I'm in more of a suburb. Programmers can make a lot of money. If you don't waste it all, it's not hard to save up a lot. I only do paid work about half the time now; the other half I work on my own projects.

franklovecchio 13y ago
But you're renting, right? Isn't part of the point not to be wasting capital on rent? (I'm a CO man myself)
- agilebyte 13y ago
  Why is rent wasting money? I am not entirely sold on that idea. If you have a lot of cash that you do not need to access in a foreseeable future then maybe.
  - franklovecchio 13y ago
    It's a waste in capital _relative_ to what this chap's doing. Now, in terms of _experiences_ or _ease_, it's not necessarily a waste. Plus, rent usually comes with deposits. I've had the experience of rarely getting back deposits. So, there's some overhead right there.
  - flatline 13y ago
    Rent is generally quite cheap in Colorado, at least it was when I lived around Boulder. I remember seeing this interactive map, but now I can't read it on my phone to justify my claim: http://www.nytimes.com/interactive/business/buy-rent-calculator.html http://www.nytimes.com/interactive/business/buy-rent-calcula... At some point, buying is definitely the best investment, often times if you rent, you are basically paying the mortgage without any of the incentives of owning.
    - bdcs 13y ago
      Buying vs renting is definitely not the best investment. You must consider that the down payment put into, e.g., stocks can earn a serious return (perhaps enough to pay the rent), while you avoid property taxes, maintenance, etc. From Shiller himself: http://www.nytimes.com/2013/07/14/business/owning-a-home-isnt-always-a-virtue.html?_r=0 http://www.nytimes.com/2013/07/14/business/owning-a-home-isn... In fact, a study (I can dig up the source if requested) found that owning a house vs renting has very, VERY rarely made financial sense in the last 50 years in the USA. Yes, real estate exploded, but so did many other investment vehicles. Keep in mind you can rent a ranch-style home in the suburbs, not just metropolitan apartments.
  - onebaddude 13y ago
    >Why is rent wasting money? It's isn't. The idea that it's wasting money, or that you're paying someone else's mortgage, or whatever other argument is thrown out there are part of one of the biggest financial misconceptions going. Do the cost/benefit of renting vs ownership, accounting for maintenance, taxes, interest rates, macro-economic conditions and whatever else and the costs should be very similar. Of course, it ebbs and flows with the markets, but at the margins is where the decision should be made. Owning is never a clear winner in all circumstances. That said, with the drastic drop in house prices since 2007 and historically low interest rates, buying has been (in the US at least) a financial gift from the heavens for the past few years. Unfortunately, that ship has sailed.
    - franklovecchio 13y ago
      > The idea that it's wasting money, or that you're paying someone else's mortgage, or whatever other argument is thrown out there are part of one of the biggest financial misconceptions going. That I believed this was assumed, and that I was comparing _renting to purchasing a house_ was also assumed (but probably not so clear!). I was comparing renting to what the dome-builder was doing. With that said, renting vs. ownership is obviously situational. To live 2 miles (walking distance) from downtown Denver: ~650 for rent ~150 for a garage w/ electricity ~100 for utilities $900 month. When I looked into buying in Denver anywhere in the same distance, I was looking at $1250 month w/ no garage, unless I lived in the Arts District (a bit rougher), and most of those houses needed to be torn down.
      - zecho 13y ago
        Sure, if you're looking at the final dollar amount. Other factors need to come into play when you own a home. My rent was about $1000/month with utilities for about 1000 sq. feet. I now pay a mortgage of $1375/month + about $75 in average monthly utilities. But with that I get a home with 1600 sq. feet living space, not including the finished attic or the unfinished basement and the 7500 sq. foot lot I now have to mow, minus the garage and house space. Per sq. foot of space, you're likely to do really well, if space is what you need. There are three main reasons I bought: 1) I have a young daughter and I thought she might like a yard. 2) I'm tired of the noise from apartments and 3) the interest rates were about as close to free as I think they'll get for a long time and I plan to stick around here for at least the next decade or so. In your case, you might not need the space or want the hassle of maintenance. Personally I think making the rent vs. buy argument into an investment argument is ultimately worthless. There are better investments out there, like your time. Shelter is not an investment, it's a basic human need. Buy/rent exactly what you need and nothing more. It's a lifestyle choice. Put your money to work in real markets. Living in a geodesic dome will probably ruin your social life, but if you don't need a social life, great!
  - ars_technician 13y ago
    You are not building equity when renting. If you plan to be in a location for more than a year, it's worth buying a home. Mortgage payments (minus interest) are then just going back into your own pocket vs. rent which is going into your landlord's pocket. Even if you never want to do your own maintenance, you can pay a handyman and still be far ahead in cash.
    - dredmorbius 13y ago
      You are not building equity when renting. If the net cost of renting is lower than the net cost of renting money to own a mortgage, then you've still got the option of investing in other assets which may appreciate over time. Say, a business. Which represents real net economic growth, not merely asset inflation. If you plan to be in a location for more than a year, it's worth buying a home. Stating that as a blanket recommendation is so false it's not even wrong. A buy-vs-rent decision depends on a great many factors, including transaction costs (high for real estate sales), moving costs, appreciation risks, etc. There are many areas where even a 10-15 year tenancy may favor renting over buying. Mortgage payments (minus interest) are then just going back into your own pocket. Not if your property's under water. Haven't we learned anything?
      - chii 13y ago
        wait, is under water here to mean literally under water - as in sinking into the ocean?! Or is that jargon for something?
        anoncowherd 13y ago
        It's a figure of speech. The idea is that your apartment's current market value is lower than your outstanding debt (or perhaps the total price you paid for the apartment).
    - markkanof 13y ago
      This is extremely optimistic. It's usually more like if you are going to stay in a place for 3-5 years then maybe it's worth buying. The first few years you are paying almost all interest and not much principle. In addition you need to factor in transaction costs (realtor fees, lending fees, etc.). Plus it can often take close to a year to go through the full cycle of buying and then selling a home. Using your one year rule just isn't realistic.
- gefh 13y ago
  I think the implication is it's paid off.
  - franklovecchio 13y ago
    I missed that.
  - SomeCallMeTim 13y ago
    Bingo.
- saidajigumi 13y ago
  "Wasting capital on rent" may be the worst nonsense in our financial folklore. Always run the numbers. Rent vs. mortgage calculators and spreadsheets are readily available. Understand the factors they use, and perhaps tweak for your own needs and priorities. I'm glad that I did, as I completely dodged the disaster that was the housing bubble as a result -- my rent always looked like a killer deal compared to nutso house prices. On the other hand, I know those who "had to have a house" who are now seriously underwater on their mortgages. But good thing they weren't "wasting capital on rent!"
  - anigbrowl 13y ago
    I also sat out the housing bubble and its insane prices, but now we have a house we love and very small mortgage. Of course capital invested during a bubble is wasted, but that doesn't mean all investment in that asset class is a bad idea.
    - cwp 13y ago
      But saidajigumi didn't say that buying is always a bad idea. He said "always run the numbers."
      - vidarh 13y ago
        As long as you know how to factor in the costs if it turns out you were nowhere near the peak of the bubble, and you factor in the "lost" capital from paying rent rather than paying down on a mortgage. It can turn out to be extremely costly to wait out a bubble even if the alternative is buying a property that is guaranteed to drop in value at some point.
  - mistermann 13y ago
    The downside to this is if you live in a place where the bubble didn't pop and are (seemingly) locked out of the housing market forever, or at least until the bubble does pop.
  - sologoub 13y ago
    Bubbles happen in many more things than just housing. It just happened to hit way more people than any of the previous bubbles. I don't know much about the market conditions outside of SoCal, but here the housing seems to have recovered to 2005-2006 levels. It doesn't look like it has much fuel to go up for a long time, but those who bought 2009-2012 are definitely comfortably in the black. Some could be up as much as 50-60% from especially distressed properties. Doesn't sound bad to me... Factor in ridiculously cheap borrowing costs (even a couple months ago, there were 30 yr. mortgages for around 4%), and you have pretty decent investment opportunities. In an unbalanced market, one can always find ways to realize short-term gain. Trick is to not get suckered in and overplay the hand.
- skriticos2 13y ago
  European here! Here in Germany a great deal of people are renting instead of buying houses including me and I never felt it harming. To the contrary, I could freely relocate within the country several times in the past years without hassle. Owning properly in my mind seems like a chain holding me down which would have been very restrictive in my early adult years. I also see people that did buy a house and now have 3-4 hour commutes every day as their job is at a different location that their house. Buying just seems so inflexible. Are renting conditions here in Europe that much different that in the States?
  - moconnor 13y ago
    Yes, renting in Germany is very different to the USA or UK. In Germany, if you pay your rent the landlord pretty much can't legally get rid of you. Similarly, the amount they can increase your rent is legally capped. It's very much set up to encourage long-term rental and your rights while renting are extremely strong and well-protected. In the UK (and I assume the USA) the landlord can (with a few months warning in most cases) throw you out, raise the rent arbitrarily, pretty much whatever they want. It's their property, after all! When I moved to Germany there was significant cognitive dissonance when I was asked to provide a copy of my work contract to prospective landlords, to prove I was worthy enough to pay them money. It turns out even if you stop paying them it's extremely difficult for them to legally evict you, hence the caution.
    - chii 13y ago
      wow that's interesting - didnt know that its different in germany. The rental policies there must then suppress house prices because its much more cost effective to rent than to buy, especially if you can put the extra money you didn't spend (on purchase of a house) into another form of investment. I wonder if that system is better long term than the ups and downs of the market like the US/UK's.
      - vidarh 13y ago
        > The rental policies there must then suppress house prices because its much more cost effective to rent than to buy It's not that straightforward: Someone have to buy the units that goes onto the rental market as well, so it depends on how attractive property investment is vs. other investment opportunities. In the UK, cheap access to "buy to let" mortgages coupled with high returns as people were unable to afford to purchase and thus bid up the rental market certainly helped push prices up during the bubble (thus pricing more people out of the market).
- SomeCallMeTim 13y ago
  No, I own the house outright. There's an argument to be had over whether my money should be in investments rather than in home equity, but it's hard to argue with the fact that I'm only paying taxes & insurance on the house, which seriously reduces the burn rate.

franklovecchio 13y ago

But you're renting, right? Isn't part of the point not to be wasting capital on rent? (I'm a CO man myself)

agilebyte 13y ago
Why is rent wasting money? I am not entirely sold on that idea. If you have a lot of cash that you do not need to access in a foreseeable future then maybe.
- franklovecchio 13y ago
  It's a waste in capital _relative_ to what this chap's doing. Now, in terms of _experiences_ or _ease_, it's not necessarily a waste. Plus, rent usually comes with deposits. I've had the experience of rarely getting back deposits. So, there's some overhead right there.
- flatline 13y ago
  Rent is generally quite cheap in Colorado, at least it was when I lived around Boulder. I remember seeing this interactive map, but now I can't read it on my phone to justify my claim: http://www.nytimes.com/interactive/business/buy-rent-calculator.html http://www.nytimes.com/interactive/business/buy-rent-calcula... At some point, buying is definitely the best investment, often times if you rent, you are basically paying the mortgage without any of the incentives of owning.
  - bdcs 13y ago
    Buying vs renting is definitely not the best investment. You must consider that the down payment put into, e.g., stocks can earn a serious return (perhaps enough to pay the rent), while you avoid property taxes, maintenance, etc. From Shiller himself: http://www.nytimes.com/2013/07/14/business/owning-a-home-isnt-always-a-virtue.html?_r=0 http://www.nytimes.com/2013/07/14/business/owning-a-home-isn... In fact, a study (I can dig up the source if requested) found that owning a house vs renting has very, VERY rarely made financial sense in the last 50 years in the USA. Yes, real estate exploded, but so did many other investment vehicles. Keep in mind you can rent a ranch-style home in the suburbs, not just metropolitan apartments.
- onebaddude 13y ago
  >Why is rent wasting money? It's isn't. The idea that it's wasting money, or that you're paying someone else's mortgage, or whatever other argument is thrown out there are part of one of the biggest financial misconceptions going. Do the cost/benefit of renting vs ownership, accounting for maintenance, taxes, interest rates, macro-economic conditions and whatever else and the costs should be very similar. Of course, it ebbs and flows with the markets, but at the margins is where the decision should be made. Owning is never a clear winner in all circumstances. That said, with the drastic drop in house prices since 2007 and historically low interest rates, buying has been (in the US at least) a financial gift from the heavens for the past few years. Unfortunately, that ship has sailed.
  - franklovecchio 13y ago
    > The idea that it's wasting money, or that you're paying someone else's mortgage, or whatever other argument is thrown out there are part of one of the biggest financial misconceptions going. That I believed this was assumed, and that I was comparing _renting to purchasing a house_ was also assumed (but probably not so clear!). I was comparing renting to what the dome-builder was doing. With that said, renting vs. ownership is obviously situational. To live 2 miles (walking distance) from downtown Denver: ~650 for rent ~150 for a garage w/ electricity ~100 for utilities $900 month. When I looked into buying in Denver anywhere in the same distance, I was looking at $1250 month w/ no garage, unless I lived in the Arts District (a bit rougher), and most of those houses needed to be torn down.
    - zecho 13y ago
      Sure, if you're looking at the final dollar amount. Other factors need to come into play when you own a home. My rent was about $1000/month with utilities for about 1000 sq. feet. I now pay a mortgage of $1375/month + about $75 in average monthly utilities. But with that I get a home with 1600 sq. feet living space, not including the finished attic or the unfinished basement and the 7500 sq. foot lot I now have to mow, minus the garage and house space. Per sq. foot of space, you're likely to do really well, if space is what you need. There are three main reasons I bought: 1) I have a young daughter and I thought she might like a yard. 2) I'm tired of the noise from apartments and 3) the interest rates were about as close to free as I think they'll get for a long time and I plan to stick around here for at least the next decade or so. In your case, you might not need the space or want the hassle of maintenance. Personally I think making the rent vs. buy argument into an investment argument is ultimately worthless. There are better investments out there, like your time. Shelter is not an investment, it's a basic human need. Buy/rent exactly what you need and nothing more. It's a lifestyle choice. Put your money to work in real markets. Living in a geodesic dome will probably ruin your social life, but if you don't need a social life, great!
- ars_technician 13y ago
  You are not building equity when renting. If you plan to be in a location for more than a year, it's worth buying a home. Mortgage payments (minus interest) are then just going back into your own pocket vs. rent which is going into your landlord's pocket. Even if you never want to do your own maintenance, you can pay a handyman and still be far ahead in cash.
  - dredmorbius 13y ago
    You are not building equity when renting. If the net cost of renting is lower than the net cost of renting money to own a mortgage, then you've still got the option of investing in other assets which may appreciate over time. Say, a business. Which represents real net economic growth, not merely asset inflation. If you plan to be in a location for more than a year, it's worth buying a home. Stating that as a blanket recommendation is so false it's not even wrong. A buy-vs-rent decision depends on a great many factors, including transaction costs (high for real estate sales), moving costs, appreciation risks, etc. There are many areas where even a 10-15 year tenancy may favor renting over buying. Mortgage payments (minus interest) are then just going back into your own pocket. Not if your property's under water. Haven't we learned anything?
    - chii 13y ago
      wait, is under water here to mean literally under water - as in sinking into the ocean?! Or is that jargon for something?
      - anoncowherd 13y ago
        It's a figure of speech. The idea is that your apartment's current market value is lower than your outstanding debt (or perhaps the total price you paid for the apartment).
  - markkanof 13y ago
    This is extremely optimistic. It's usually more like if you are going to stay in a place for 3-5 years then maybe it's worth buying. The first few years you are paying almost all interest and not much principle. In addition you need to factor in transaction costs (realtor fees, lending fees, etc.). Plus it can often take close to a year to go through the full cycle of buying and then selling a home. Using your one year rule just isn't realistic.
gefh 13y ago
I think the implication is it's paid off.
- franklovecchio 13y ago
  I missed that.
- SomeCallMeTim 13y ago
  Bingo.
saidajigumi 13y ago
"Wasting capital on rent" may be the worst nonsense in our financial folklore. Always run the numbers. Rent vs. mortgage calculators and spreadsheets are readily available. Understand the factors they use, and perhaps tweak for your own needs and priorities. I'm glad that I did, as I completely dodged the disaster that was the housing bubble as a result -- my rent always looked like a killer deal compared to nutso house prices. On the other hand, I know those who "had to have a house" who are now seriously underwater on their mortgages. But good thing they weren't "wasting capital on rent!"
- anigbrowl 13y ago
  I also sat out the housing bubble and its insane prices, but now we have a house we love and very small mortgage. Of course capital invested during a bubble is wasted, but that doesn't mean all investment in that asset class is a bad idea.
  - cwp 13y ago
    But saidajigumi didn't say that buying is always a bad idea. He said "always run the numbers."
    - vidarh 13y ago
      As long as you know how to factor in the costs if it turns out you were nowhere near the peak of the bubble, and you factor in the "lost" capital from paying rent rather than paying down on a mortgage. It can turn out to be extremely costly to wait out a bubble even if the alternative is buying a property that is guaranteed to drop in value at some point.
- mistermann 13y ago
  The downside to this is if you live in a place where the bubble didn't pop and are (seemingly) locked out of the housing market forever, or at least until the bubble does pop.
- sologoub 13y ago
  Bubbles happen in many more things than just housing. It just happened to hit way more people than any of the previous bubbles. I don't know much about the market conditions outside of SoCal, but here the housing seems to have recovered to 2005-2006 levels. It doesn't look like it has much fuel to go up for a long time, but those who bought 2009-2012 are definitely comfortably in the black. Some could be up as much as 50-60% from especially distressed properties. Doesn't sound bad to me... Factor in ridiculously cheap borrowing costs (even a couple months ago, there were 30 yr. mortgages for around 4%), and you have pretty decent investment opportunities. In an unbalanced market, one can always find ways to realize short-term gain. Trick is to not get suckered in and overplay the hand.
skriticos2 13y ago
European here! Here in Germany a great deal of people are renting instead of buying houses including me and I never felt it harming. To the contrary, I could freely relocate within the country several times in the past years without hassle. Owning properly in my mind seems like a chain holding me down which would have been very restrictive in my early adult years. I also see people that did buy a house and now have 3-4 hour commutes every day as their job is at a different location that their house. Buying just seems so inflexible. Are renting conditions here in Europe that much different that in the States?
- moconnor 13y ago
  Yes, renting in Germany is very different to the USA or UK. In Germany, if you pay your rent the landlord pretty much can't legally get rid of you. Similarly, the amount they can increase your rent is legally capped. It's very much set up to encourage long-term rental and your rights while renting are extremely strong and well-protected. In the UK (and I assume the USA) the landlord can (with a few months warning in most cases) throw you out, raise the rent arbitrarily, pretty much whatever they want. It's their property, after all! When I moved to Germany there was significant cognitive dissonance when I was asked to provide a copy of my work contract to prospective landlords, to prove I was worthy enough to pay them money. It turns out even if you stop paying them it's extremely difficult for them to legally evict you, hence the caution.
  - chii 13y ago
    wow that's interesting - didnt know that its different in germany. The rental policies there must then suppress house prices because its much more cost effective to rent than to buy, especially if you can put the extra money you didn't spend (on purchase of a house) into another form of investment. I wonder if that system is better long term than the ups and downs of the market like the US/UK's.
    - vidarh 13y ago
      > The rental policies there must then suppress house prices because its much more cost effective to rent than to buy It's not that straightforward: Someone have to buy the units that goes onto the rental market as well, so it depends on how attractive property investment is vs. other investment opportunities. In the UK, cheap access to "buy to let" mortgages coupled with high returns as people were unable to afford to purchase and thus bid up the rental market certainly helped push prices up during the bubble (thus pricing more people out of the market).
SomeCallMeTim 13y ago
No, I own the house outright. There's an argument to be had over whether my money should be in investments rather than in home equity, but it's hard to argue with the fact that I'm only paying taxes & insurance on the house, which seriously reduces the burn rate.