4 ms·

Why buy in SF when you can rent? I don't see the point and honestly it depends on the size of the property.

pdx6 12y ago
Renting in SF is a strong value if you plan to live here for a while, but the property needs to be protected by rent control, otherwise you'll get wiped out during the booms and busts this city has. Owning is also a strong value over the long term, but it is more complicated between taxes, mortgages, and city ordinances; it also comes with a lot more risk and way more upfront costs. For people just moving to the city and haven't established any roots, don't rent or own: be a roommate. It is the best deal possible and you'll be own your way to making this place your home, if you want it to be.
- htormey 12y ago
  "For people just moving to the city and haven't established any roots, don't rent or own: be a roommate. It is the best deal possible and you'll be own your way to making this place your home, if you want it to be." Solid advise. I have been living in SF for the past six years and this is what I did initially. I now live in a rent controlled aparment and I have no intention of moving. If you are going to be working in SF another viable option to consider is getting a place near a BART station in Oakland/Berkeley. Both are much cheaper places to live in than SF or the South Bay.
yid 12y ago
Renting in SF comes with its own set of strings and scams/opportunism, for example a lot of condos set out an attractive initial rent, but then either (a) tack on ridiculous extras like paying for water, and/or (b) raise your rent by a ridiculous amount after your first year.
- eshvk 12y ago
  > (a) tack on ridiculous extras like paying for water Umm..If your lease says you don't pay for water, you don't. We had a lease that said we didn't pay for it. > b) raise your rent by a ridiculous amount after your first year. An overwhelming majority of the apartments in San Francisco have stringent rules on how high the rent can go up every year for a tenant who is renewing their lease. Mine was 4% or so IIRC.
aaronblohowiak 12y ago
http://www.law.cornell.edu/uscode/text/26/163 http://www.law.cornell.edu/uscode/text/26/163
bicknergseng 12y ago
I don't really think throwing away $3k+/month for a small 1 bedroom is a better option. At least have that money go towards a mortgage and get the tax deductions on interest...
- winterchil 12y ago
  If you're buying something comparable it's not $3k/month, it's $5k/month + $900/month in property taxes + all maintenance and expenses + the lost opportunity cost of investing all that money in diversified assets.
  - mikeryan 12y ago
    I have to call bullshit on that. You're not renting in SF what's equivalent to a $1.5M home (which is roughly what 6k a month in mortgage + taxes + etc will get you) for 3k a month. This excess for investing doesn't exist. Its in fact cheaper to buy in SF every month then it is to rent. Trulia has a really cool tool where you can mess with the numbers yourself http://www.trulia.com/rent_vs_buy/ http://www.trulia.com/rent_vs_buy/
    - winterchil 12y ago
      You're welcome to call bullshit but it's not and here's why. First $6k/month will not get you a $1.5MM home unless you had a down payment of $500k and even then it would not cover your taxes and other expenses. A general rule of thumb for someone with good credit is a monthly payment of $3k will let you borrow $500k on a 30-year fixed mortgage. You can check this yourself here: http://www.mortgagecalculator.org/ http://www.mortgagecalculator.org/ (or use Trulia's). The problem with Trulia's "really cool tool" is unless you use the advanced version all the inputs are wrong. For example, its tax assumptions are less than half of real cost for SF. A more sophisticated tool is available from the NY Times (http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0 http://www.nytimes.com/interactive/business/buy-rent-calcula...). Of course getting an apples to apples comparison is pretty hard unless you're talking about buying a condo vs. renting a condo in the same building. Yes, it would be cheaper to buy a 1 bedroom in Bayview then rent a 3 bedroom in Pacific Heights. If you're looking at starter homes in a decent area, say, Noe Valley and compare those costs to renting something similar in the same area renting is generally cheaper. The "excess for investing" DOES exist, at a minimum in the form of the down payment you did not spend. The good news for home buyers is that you get leverage on that return if the market keeps going up. The bad news is that it's illiquid and we don't know whether that's a better investment than the stock market or one of the companies we see on the front page everyday. In short, if you're never moving again buying is likely cheaper. Otherwise, it's complicated. TLDR: It's complicated, and most calculations downplay other buyer costs and ignore other renter opportunities.
mikeryan 12y ago
Why rent if you can buy? Buying in SF is currently cheaper then Renting[1] not to mention its one of the best investments out there (better then apple stock over the past 2 years) [2] [1] http://www.trulia.com/trends/category/rent-vs-buy-index/ http://www.trulia.com/trends/category/rent-vs-buy-index/ [2] http://www.businessinsider.com/apple-stock-gold-or-bay-area-home-2014-5 http://www.businessinsider.com/apple-stock-gold-or-bay-area-...
- the_watcher 12y ago
  Coming from Austin (high property tax, no state income tax), a decent number of very successful people I spoke to there told me they planned on possibly moving to CA to retire simply because of the flipped property/income tax ratio (and them wanting CA weather over the other low property tax states).
- r00fus 12y ago
  > better then apple stock over the past 2 years) That's extrapolating based on current conditions. It's a bet that a) nothing meaningful is done about housing supply, b) the overall market doesn't turn south and c) the US cheap-dollar policy of low prime rates doesn't change. I'd be suspicious about 2&3, though I'd probably agree about (1) - never underestimate municipal incompetence when that incompetence means tax coffers fill faster.
justizin 12y ago
what depends on the size of the property? right now rent in SF averages about $2k per bedroom for units available on the market.
fallinghawks 12y ago
When renting is about the same as mortgage payments, why rent? The question to me is why anyone feels they have to live in SF.

pdx6 12y ago

Renting in SF is a strong value if you plan to live here for a while, but the property needs to be protected by rent control, otherwise you'll get wiped out during the booms and busts this city has. Owning is also a strong value over the long term, but it is more complicated between taxes, mortgages, and city ordinances; it also comes with a lot more risk and way more upfront costs. For people just moving to the city and haven't established any roots, don't rent or own: be a roommate. It is the best deal possible and you'll be own your way to making this place your home, if you want it to be.

htormey 12y ago
"For people just moving to the city and haven't established any roots, don't rent or own: be a roommate. It is the best deal possible and you'll be own your way to making this place your home, if you want it to be." Solid advise. I have been living in SF for the past six years and this is what I did initially. I now live in a rent controlled aparment and I have no intention of moving. If you are going to be working in SF another viable option to consider is getting a place near a BART station in Oakland/Berkeley. Both are much cheaper places to live in than SF or the South Bay.

yid 12y ago

Renting in SF comes with its own set of strings and scams/opportunism, for example a lot of condos set out an attractive initial rent, but then either (a) tack on ridiculous extras like paying for water, and/or (b) raise your rent by a ridiculous amount after your first year.

eshvk 12y ago
> (a) tack on ridiculous extras like paying for water Umm..If your lease says you don't pay for water, you don't. We had a lease that said we didn't pay for it. > b) raise your rent by a ridiculous amount after your first year. An overwhelming majority of the apartments in San Francisco have stringent rules on how high the rent can go up every year for a tenant who is renewing their lease. Mine was 4% or so IIRC.

aaronblohowiak 12y ago

http://www.law.cornell.edu/uscode/text/26/163 http://www.law.cornell.edu/uscode/text/26/163

bicknergseng 12y ago

I don't really think throwing away $3k+/month for a small 1 bedroom is a better option. At least have that money go towards a mortgage and get the tax deductions on interest...

winterchil 12y ago
If you're buying something comparable it's not $3k/month, it's $5k/month + $900/month in property taxes + all maintenance and expenses + the lost opportunity cost of investing all that money in diversified assets.
- mikeryan 12y ago
  I have to call bullshit on that. You're not renting in SF what's equivalent to a $1.5M home (which is roughly what 6k a month in mortgage + taxes + etc will get you) for 3k a month. This excess for investing doesn't exist. Its in fact cheaper to buy in SF every month then it is to rent. Trulia has a really cool tool where you can mess with the numbers yourself http://www.trulia.com/rent_vs_buy/ http://www.trulia.com/rent_vs_buy/
  - winterchil 12y ago
    You're welcome to call bullshit but it's not and here's why. First $6k/month will not get you a $1.5MM home unless you had a down payment of $500k and even then it would not cover your taxes and other expenses. A general rule of thumb for someone with good credit is a monthly payment of $3k will let you borrow $500k on a 30-year fixed mortgage. You can check this yourself here: http://www.mortgagecalculator.org/ http://www.mortgagecalculator.org/ (or use Trulia's). The problem with Trulia's "really cool tool" is unless you use the advanced version all the inputs are wrong. For example, its tax assumptions are less than half of real cost for SF. A more sophisticated tool is available from the NY Times (http://www.nytimes.com/interactive/business/buy-rent-calculator.html?_r=0 http://www.nytimes.com/interactive/business/buy-rent-calcula...). Of course getting an apples to apples comparison is pretty hard unless you're talking about buying a condo vs. renting a condo in the same building. Yes, it would be cheaper to buy a 1 bedroom in Bayview then rent a 3 bedroom in Pacific Heights. If you're looking at starter homes in a decent area, say, Noe Valley and compare those costs to renting something similar in the same area renting is generally cheaper. The "excess for investing" DOES exist, at a minimum in the form of the down payment you did not spend. The good news for home buyers is that you get leverage on that return if the market keeps going up. The bad news is that it's illiquid and we don't know whether that's a better investment than the stock market or one of the companies we see on the front page everyday. In short, if you're never moving again buying is likely cheaper. Otherwise, it's complicated. TLDR: It's complicated, and most calculations downplay other buyer costs and ignore other renter opportunities.

mikeryan 12y ago

Why rent if you can buy? Buying in SF is currently cheaper then Renting[1] not to mention its one of the best investments out there (better then apple stock over the past 2 years) [2] [1] http://www.trulia.com/trends/category/rent-vs-buy-index/ http://www.trulia.com/trends/category/rent-vs-buy-index/ [2] http://www.businessinsider.com/apple-stock-gold-or-bay-area-home-2014-5 http://www.businessinsider.com/apple-stock-gold-or-bay-area-...

the_watcher 12y ago
Coming from Austin (high property tax, no state income tax), a decent number of very successful people I spoke to there told me they planned on possibly moving to CA to retire simply because of the flipped property/income tax ratio (and them wanting CA weather over the other low property tax states).
r00fus 12y ago
> better then apple stock over the past 2 years) That's extrapolating based on current conditions. It's a bet that a) nothing meaningful is done about housing supply, b) the overall market doesn't turn south and c) the US cheap-dollar policy of low prime rates doesn't change. I'd be suspicious about 2&3, though I'd probably agree about (1) - never underestimate municipal incompetence when that incompetence means tax coffers fill faster.

justizin 12y ago

what depends on the size of the property? right now rent in SF averages about $2k per bedroom for units available on the market.

fallinghawks 12y ago

When renting is about the same as mortgage payments, why rent? The question to me is why anyone feels they have to live in SF.