4 ms·

The figures themselves are a bit boring. Basic premise of owning vs renting is enough alone really. Unless you plan to move around often it should be blindingl

The figures themselves are a bit boring. Basic premise of owning vs renting is enough alone really. Unless you plan to move around often it should be blindingly obvious that buying is cheaper. Someone else owns a home and is renting it to you with a profit margin.

ForHackernews 11y ago
> is renting it to you with a profit margin. Not necessarily. Landlords can only charge what the market will bear. If you happen to live in a not in-demand rental market, the landlord will be renting it for whatever they can get.
- UweSchmidt 11y ago
  From what I have observed it seems that in less desirable areas renting could be more expensive than buying as everyone has _some_ money for rent (especially if there is some social security that helps) but no one wants to buy in a bad area. On the other hand there is an upper limit on rent as wages only go so high, and landlords often enjoy the high income and don't see a need to sell. People who have plenty of money and really want a nice place are willing to pay extra, so for high quality real estate buying can be more expensive than renting. Most importantly though there are ways to buy real estate cheap, and if you "buy retail" or believe the numbers you read in listings you may be the sucker in the biggest deal of your life. Chances are everyone you're dealing with in a real estate deal is super professional and extremely experienced. Price is "var", not "CONST".
  - jessaustin 11y ago
    You're right about professionals and suckers. A successful (i.e. he's done it for many decades) real estate investor I know says that he makes all his profit on the day he buys. In other words, a professional will only buy a property for much less than the normally-quoted "price".
themartorana 11y ago
In Philadelphia - mentioned in the article - there is a 2% transfer tax, paid by both parties. Add 6% realtor fees, and you typical need to make 10% profit on a house/condo/apartment just to break even - this, of course, not counting the cost of insurance, home maintenance, taxes, etc. Add those costs in, and it typically needs to be 15-20% appreciation (adjusted for inflation, of course, so add a few more points) to see any profit at all. This makes buying worth while only if you're planning to hang around for at least a decade or more. We bought a 900sq ft 1br condo 7 years ago. Between mortgage, taxes, parking, condo fees, etc., our out of pocket was ~$2600. Seven years later, renting a 2br 1200 sq ft. condo in a more desirable neighborhood with garaged parking is ~$350 less per month. The article is so overly simplistic it's ridiculous. Buying is not by default cheaper, even over the long term. Over 25 years it can be forced savings, but even that privilege is paid for with interest. At the same time I could be investing our savings and it will compound in to a nice chunk of change, that I bet might be around the profit margins of buyers, minus all the expense.

ForHackernews 11y ago

> is renting it to you with a profit margin. Not necessarily. Landlords can only charge what the market will bear. If you happen to live in a not in-demand rental market, the landlord will be renting it for whatever they can get.

UweSchmidt 11y ago
From what I have observed it seems that in less desirable areas renting could be more expensive than buying as everyone has _some_ money for rent (especially if there is some social security that helps) but no one wants to buy in a bad area. On the other hand there is an upper limit on rent as wages only go so high, and landlords often enjoy the high income and don't see a need to sell. People who have plenty of money and really want a nice place are willing to pay extra, so for high quality real estate buying can be more expensive than renting. Most importantly though there are ways to buy real estate cheap, and if you "buy retail" or believe the numbers you read in listings you may be the sucker in the biggest deal of your life. Chances are everyone you're dealing with in a real estate deal is super professional and extremely experienced. Price is "var", not "CONST".
- jessaustin 11y ago
  You're right about professionals and suckers. A successful (i.e. he's done it for many decades) real estate investor I know says that he makes all his profit on the day he buys. In other words, a professional will only buy a property for much less than the normally-quoted "price".

themartorana 11y ago

In Philadelphia - mentioned in the article - there is a 2% transfer tax, paid by both parties. Add 6% realtor fees, and you typical need to make 10% profit on a house/condo/apartment just to break even - this, of course, not counting the cost of insurance, home maintenance, taxes, etc. Add those costs in, and it typically needs to be 15-20% appreciation (adjusted for inflation, of course, so add a few more points) to see any profit at all. This makes buying worth while only if you're planning to hang around for at least a decade or more. We bought a 900sq ft 1br condo 7 years ago. Between mortgage, taxes, parking, condo fees, etc., our out of pocket was ~$2600. Seven years later, renting a 2br 1200 sq ft. condo in a more desirable neighborhood with garaged parking is ~$350 less per month. The article is so overly simplistic it's ridiculous. Buying is not by default cheaper, even over the long term. Over 25 years it can be forced savings, but even that privilege is paid for with interest. At the same time I could be investing our savings and it will compound in to a nice chunk of change, that I bet might be around the profit margins of buyers, minus all the expense.