4 ms·

I've rented for my entire adult like (I'm currently 31 living in Somerville/Boston). While my sister bought her first house in Pittsburgh when she was 23, and m

by tibbon 13y ago

I've rented for my entire adult like (I'm currently 31 living in Somerville/Boston). While my sister bought her first house in Pittsburgh when she was 23, and my parents had moved between several houses they purchased by my age... I've been happy renting. I didn't want to buy a house until recently, but now I want to buy one around here. Why? For one thing, in the major cities the rents keep going up at a rate faster than what the government reports national inflation to be. Your (fix rate) mortgage shouldn't change over 30 years, but your rent will likely triple or more in that time in a city like Boston. But the biggest thing? Customization. I like building and changing things. I'm so tired of landlords that won't let me rip down walls, replace sinks, get a new fridge, repaint everything, etc... not that they should, but I still want to change things. Buying my own place will enable me to do this. Another thing I can do around here, is buy a place that has 5 bedrooms, and rent out the other 4. I've had several friends that do this, and it essentially pays for their mortgage by having roommates. Not a bad deal.

dominotw 13y ago
I am 31, looking to buy a home in next 6 months for the same exact reasons in Chicago. The rents are insane and they just seem to keep going up and you have to deal with douchy landlords who just dont give a fuck because the demand is so high in downtown area.
- tibbon 13y ago
  Right, even if my monthly outlay now seems high... in even 5 years I'm guessing it will seem reasonable. The apartment I lived in Back Bay 5 years ago was $900 before, and now its $1350.
gdilla 13y ago
There are other costs to owning - maintenance, property taxes, closing costs, and your agents fee (when you eventually sell - unless you keep forever). I bought a condo at age 24 in LA in 2002. I hated that the HOA could do things like, we need to fix the roofs, so pay up. We voted on it. Ditto re-paving the parkinglot ever x years. Damn if my first year in the condo was somehow fix everything year. Ugh.
- snowwrestler 13y ago
  Renters pay all these costs too; they are just hidden in the rental payment.
  - waitwhat123 13y ago
    Yes, but those are included in the rent price. Whereas, in a buying situation it would be on top of the price you think you'd be paying.
dsr_ 13y ago
More to the point, your 30 year mortgage has an effective rate cap. If rates go down during the time you owe it, you can almost certainly refinance. But you never have to refinance at a higher rate. You can also lower the rate by reducing the term. So far, my mortgage has been refinanced four times, each time reducing the interest rate (due to market conditions) and twice reducing the interest rate by reducing the term (20, 15, and now 10 years). Being a landlord is a whole different proposition, and I would strongly recommend that you talk to current landlords before you go into that business. MA has excellent renter protection laws... which are not so great for landlords.
mrfowler 13y ago
I did this in Somerville. I bought a two family in 2010. Rent from the bottom unit and one roommate back then covered the mortgage entirely. Of course, with Boston rents rising so much, and a few new carpets and appliances I've been able to raise my original rent close to 40% the last few years. Now that I've moved on and fully rented it, it's generating close to 2k a month in profit. Not bad since I got a FHA loan and only put 5% down. Dealing with tenants can be a pain, but I have no regrets. Home ownership has certainly been a path to wealth for me, though I suspect most people who buy single families or condos with no rental income won't get any real returns.
VLM 13y ago
"..but your rent will likely triple or more in that time in a city like Boston." Is after tax take-home pay increasing at that rate? If not, or if its declining like in most areas, you can ask for whatever you want, but that doesn't mean anyone will line up to pay it... This is why as an international discussion on the internet, the topic doesn't make much sense. Nationwide, of course, rents will be declining because nationwide the line item on the budget for rent is in long term permanent decline. Also be on the outlook for "grass is greener..." syndrome. I remember the glory days of the bachelor apartment and no matter how big the problem, the labor never exceeded a phone call to the onsite manager and the cost never exceeded one phone call. Someone else had the headache of the new hydronic heater unit for the whole building, replacing the garage door, upgrading the garage door opener to keyless from keypad, fixing the leaky water pipe, unclogging the storm drain, fixing the broken snowblower and the broken lawnmower, steam cleaning the hallway carpet, fixing the broken front door window, fixing the leaky roof, obviously not all at the same time, but I'd gladly trade all that away for "unable to paint the walls" Also note you can do all that remodeling you're planning; it will never cost more than your security deposit. In practice the LL doesn't care as long as he doesn't find out and the work looks as good or better than he could do. So, sure, I painted.
deleted 13y ago
[deleted]
ig1 13y ago
Rent is largely a function of house prices and house prices haven't been going up constantly, in most US cities house prices are still below-2006 prices. S&P House Price index: http://us.spindices.com/indices/real-estate/sp-case-shiller-20-city-composite-home-price-index http://us.spindices.com/indices/real-estate/sp-case-shiller-... Investing in a house is a gamble on house prices going up, which if you're going to make it you should do with a full understanding that historically there have been many house price crashes (typically caused by broader economic downturns), prices in an individual city can also collapse because of the local job market (Detroit) or natural disasters (New Orleans).
- clavalle 13y ago
  I think most people in this thread are not talking about buying a house as an investment, but rather, as a value store compared to rent.
  - ig1 13y ago
    The two are inseparable, buying a house to avoid variable rent prices doesn't reduce your exposure to the housing market, it actually increases it because you're leveraging against it (because you're borrowing money to do it). If house prices drop you can be stuck in negative equity whereby you owe more money on your house than it's worth which can easily bankrupt you. If you're renting that's obviously a problem you're not exposed to and you actually benefit from a declining market as your rent decreases.
    - clavalle 13y ago
      Of course they are separable. If you are buying a home to live in rather than an investment you can ride out the odd declining market. Seems like people have a lot of 'once bitten, twice shy' syndrome when it comes to housing. Market corrections like 2008 are exceedingly rare. I am not saying prices go up forever like so many idiots did around that time, but if you buy in a non-volatile market, it is a pretty safe bet that your home price will at least retain much of its value.

by tibbon 13y ago

dominotw 13y ago

I am 31, looking to buy a home in next 6 months for the same exact reasons in Chicago. The rents are insane and they just seem to keep going up and you have to deal with douchy landlords who just dont give a fuck because the demand is so high in downtown area.

tibbon 13y ago
Right, even if my monthly outlay now seems high... in even 5 years I'm guessing it will seem reasonable. The apartment I lived in Back Bay 5 years ago was $900 before, and now its $1350.

gdilla 13y ago

There are other costs to owning - maintenance, property taxes, closing costs, and your agents fee (when you eventually sell - unless you keep forever). I bought a condo at age 24 in LA in 2002. I hated that the HOA could do things like, we need to fix the roofs, so pay up. We voted on it. Ditto re-paving the parkinglot ever x years. Damn if my first year in the condo was somehow fix everything year. Ugh.

snowwrestler 13y ago
Renters pay all these costs too; they are just hidden in the rental payment.
- waitwhat123 13y ago
  Yes, but those are included in the rent price. Whereas, in a buying situation it would be on top of the price you think you'd be paying.

dsr_ 13y ago

More to the point, your 30 year mortgage has an effective rate cap. If rates go down during the time you owe it, you can almost certainly refinance. But you never have to refinance at a higher rate. You can also lower the rate by reducing the term. So far, my mortgage has been refinanced four times, each time reducing the interest rate (due to market conditions) and twice reducing the interest rate by reducing the term (20, 15, and now 10 years). Being a landlord is a whole different proposition, and I would strongly recommend that you talk to current landlords before you go into that business. MA has excellent renter protection laws... which are not so great for landlords.

mrfowler 13y ago

I did this in Somerville. I bought a two family in 2010. Rent from the bottom unit and one roommate back then covered the mortgage entirely. Of course, with Boston rents rising so much, and a few new carpets and appliances I've been able to raise my original rent close to 40% the last few years. Now that I've moved on and fully rented it, it's generating close to 2k a month in profit. Not bad since I got a FHA loan and only put 5% down. Dealing with tenants can be a pain, but I have no regrets. Home ownership has certainly been a path to wealth for me, though I suspect most people who buy single families or condos with no rental income won't get any real returns.

VLM 13y ago

"..but your rent will likely triple or more in that time in a city like Boston." Is after tax take-home pay increasing at that rate? If not, or if its declining like in most areas, you can ask for whatever you want, but that doesn't mean anyone will line up to pay it... This is why as an international discussion on the internet, the topic doesn't make much sense. Nationwide, of course, rents will be declining because nationwide the line item on the budget for rent is in long term permanent decline. Also be on the outlook for "grass is greener..." syndrome. I remember the glory days of the bachelor apartment and no matter how big the problem, the labor never exceeded a phone call to the onsite manager and the cost never exceeded one phone call. Someone else had the headache of the new hydronic heater unit for the whole building, replacing the garage door, upgrading the garage door opener to keyless from keypad, fixing the leaky water pipe, unclogging the storm drain, fixing the broken snowblower and the broken lawnmower, steam cleaning the hallway carpet, fixing the broken front door window, fixing the leaky roof, obviously not all at the same time, but I'd gladly trade all that away for "unable to paint the walls" Also note you can do all that remodeling you're planning; it will never cost more than your security deposit. In practice the LL doesn't care as long as he doesn't find out and the work looks as good or better than he could do. So, sure, I painted.

deleted 13y ago

[deleted]

ig1 13y ago

Rent is largely a function of house prices and house prices haven't been going up constantly, in most US cities house prices are still below-2006 prices. S&P House Price index: http://us.spindices.com/indices/real-estate/sp-case-shiller-20-city-composite-home-price-index http://us.spindices.com/indices/real-estate/sp-case-shiller-... Investing in a house is a gamble on house prices going up, which if you're going to make it you should do with a full understanding that historically there have been many house price crashes (typically caused by broader economic downturns), prices in an individual city can also collapse because of the local job market (Detroit) or natural disasters (New Orleans).

clavalle 13y ago
I think most people in this thread are not talking about buying a house as an investment, but rather, as a value store compared to rent.
- ig1 13y ago
  The two are inseparable, buying a house to avoid variable rent prices doesn't reduce your exposure to the housing market, it actually increases it because you're leveraging against it (because you're borrowing money to do it). If house prices drop you can be stuck in negative equity whereby you owe more money on your house than it's worth which can easily bankrupt you. If you're renting that's obviously a problem you're not exposed to and you actually benefit from a declining market as your rent decreases.
  - clavalle 13y ago
    Of course they are separable. If you are buying a home to live in rather than an investment you can ride out the odd declining market. Seems like people have a lot of 'once bitten, twice shy' syndrome when it comes to housing. Market corrections like 2008 are exceedingly rare. I am not saying prices go up forever like so many idiots did around that time, but if you buy in a non-volatile market, it is a pretty safe bet that your home price will at least retain much of its value.