Renting v House ownership: what are the perks?

[poido123]

Renting you don't have rate costs, mortgage, stress of interest rates.

Ownership has the big plus of owning your own home and building equity.

Why do you guys choose one way or another? Or are you like most where you are forced to out of financial position...

[KobesFinger]

I want to skip renting and go straight to a mortgage. It sounds very ambitious but for the time being I'll pay rent to my parents

[BlackWhiteGreen]

ID had enough of living with my parents so I'm renting, but given the option Id buy a house over renting every day of the week

[NZStreetBaller]

they're actually pretty even in terms of pros and cons I recon.

Im literally doing both. I own a house in NZ (which is now being rented out)

And im currently renting in aus.

The hard part about owning and the good part about renting is the commitment side of things.

It comes down to personal motive and reason you want to buy IMO.

In my experiences i bought a house back in new zealand because i thought i dont want to be paying some other nikkas rent for their home i want my own pad that i can do up blah blah blah.

But about 6 months i realised man I just dont have ANY money to do anything. I was living off 50 a fortnight !!! after my bills had been paid that 25 dollars a week. and then once rates and power bill and stuff popped up i was screwed!!!

Hense why i wanted to move to aus (where all the money is:rockon: ) now im renting my house in NZ is being rented out to someone (which doesnt cover my full mortgage payments but enough) and im rocking in the cash !!!

[sundizz]

It really depends on your life goals and what satisfies you. They just released a study about how big houses are versus how much of that actually gets used. Something like 1000 square feet gets used and the average size is something like 2800.

In my opinion, having a nice small, well furnished, modern (e.g., granite.countertops) apartment is much better. It really depends a lot on your end goal. Being tied down to one location when you are under 40 really limits the risks you can take with your career.

The wifey and I are trying to stack 700k saved up by the time im 40...renting until then. We r going to live in sf area until then so that we can progress the quickest through our careers.

Best advice: if you have a good investment plan/make enough to save at least 1.5k a month after expenses then you probably would end up better off renting. If you dont then building long term wealth through a home is your best bet.

Why you thinking about this?

[DCL]

When you rent, you are giving money to your landlord to finance his mortgage. this rent money may or may not change, but most likely, it will go up overtime. Also, if you rent at the same place for 30 years, after paying 30 years of rent, you will still not own that property. It is not yours.

When you buy with a mortgage, you have to pay money every month too, but you are mostly paying to yourself (in principal form) for a property that will be yours at the end of the term. Monthly payments can be fixed for the entire duration (30years or so) if you have locked into interest rates. And unlike the renter who might have to pay a higher rent every 2, 3, 5 , or 10 years from now, etc, a mortgage payment can stay the same forever until paid off. If you took out a fixed mortgage for monthly payments of $1000 in 2014, the mortage payment will be $1000 as well in 2044. If you rent a place for $1000 in 2014, you can bet the farm that your rent would be a lot higher in 2044.

As for taxes, insurance, upkeep and maintenance costs, etc. when you add everything up long term, you should likely still come out ahead than renting. I dont know your property and i dont know what price u got it for. But you can usually do all this math on a single piece of paper or with excel. It's not rocket science.

[NZStreetBaller]

When you rent, you are giving money to your landlord to finance his mortgage. this rent money may or may not change, but most likely, it will go up overtime. Also, if you rent at the same place for 30 years, after paying 30 years of rent, you will still not own that property. It is not yours.

When you buy with a mortgage, you have to pay money every month too, but you are mostly paying to yourself (in principal form) for a property that will be yours at the end of the term. Monthly payments can be fixed for the entire duration (30years or so) if you have locked into interest rates. And unlike the renter who might have to pay a higher rent every 2, 3, 5 , or 10 years from now, etc, a mortgage payment can stay the same forever until paid off. If you took out a fixed mortgage for monthly payments of $1000 in 2014, the mortage payment will be $1000 as well in 2044. If you rent a place for $1000 in 2014, you can bet the farm that your rent would be a lot higher in 2044.

As for taxes, insurance, upkeep and maintenance costs, etc. when you add everything up long term, you should likely still come out ahead than renting. I dont know your property and i dont know what price u got it for. But you can usually do all this math on a single piece of paper or with excel. It's not rocket science.

Where the hell did u get that from ??? You do realise when you buy a house over a 30 year duration you end up paying double the principal overall. example 250,000 dollar house. in 30 years you'll pay 500,000 dollars and half of it goes to a bank.

Why in the world do you think they're so helpful in trying to get you a mortgage and try and sell the idea with taking off a percentage of the interest rates. not alot of people who buy houses ACTUALLY know how interest rates work. its the duration of the home loan that kills you not that actual rate.

[Kblaze8855]

The insurance and upkeep isn't even that bad for me. I have 2 homes and 3 cars on my insurance and I have homeowner and multi policy discounts to spare.

Owning just feels better to me. I don't like a wall....ill knock it out.

I enjoy the freedom.

[DCL]

Where the hell did u get that from ??? You do realise when you buy a house over a 30 year duration you end up paying double the principal overall. example 250,000 dollar house. in 30 years you'll pay 500,000 dollars and half of it goes to a bank.

Why in the world do you think they're so helpful in trying to get you a mortgage and try and sell the idea with taking off a percentage of the interest rates. not alot of people who buy houses ACTUALLY know how interest rates work. its the duration of the home loan that kills you not that actual rate.

No, principal does not go up unless it's an under monthly scheme for the sub prime folks. But what you're referring to is compounding interest. On a fixed rate, the monthly payment is the same for the entire term.

[DCL]

Where the hell did u get that from ??? You do realise when you buy a house over a 30 year duration you end up paying double the principal overall. example 250,000 dollar house. in 30 years you'll pay 500,000 dollars and half of it goes to a bank.

Why in the world do you think they're so helpful in trying to get you a mortgage and try and sell the idea with taking off a percentage of the interest rates. not alot of people who buy houses ACTUALLY know how interest rates work. its the duration of the home loan that kills you not that actual rate.

Lol If you have a fixed mortgage for $1000 that remains as $1000 for 30 years until 2044, how is that payment killing you in the later years? Do you know there's a thing called inflation?

[NZStreetBaller]

No, principal does not go up unless it's an under monthly scheme for the sub prime folks. But what you're referring to is compounding interest. On a fixed rate, the monthly payment is the same for the entire term. If you are still so confused, i can help you with any other questions.

Yes i was talking about interest. But you just said that most of your monthly payments go to the principal. which isnt true. untill you reach like the 15 year mark

it looks like this ...http://www.mathworks.com/products/demos/fixedincome/mbscf/image006.jpg

[NumberSix]

This is not rocket science.

Owning = recouping the money you've spent plus a possible profit.

Renting = your money is just gone.

[robert de niro]

there are absolutely no perks about renting, unless you like to throw your money away and delay your quality of life

[NZStreetBaller]

Lol If you have a fixed mortgage for $1000 that remains as $1000 for 30 years until 2044, how is that payment killing you in the later years? Do you know there's a thing called inflation?

Like i advised you before, work it on a spreadsheet. Do you even know how to work on excel?

What i am trying to say is that you end up paying double for your house and half of that goes to the bank. im not even talking fixed or floating rates or inflation or any of that stuff.

[DCL]

Yes i was talking about interest. But you just said that most of your monthly payments go to the principal. which isnt true. untill you reach like the 15 year mark

it looks like this ...http://www.monsterpiggybank.com/wp-content/uploads/2013/04/Debt-Repayment-Frequency.png

Dont know about rates in nz, but theyve been dirt low in the states. each monthly payment consists of interest AND principal,but it's mostly principal even now. and it will only become more principal-dominated over time. The interest obviously makes you pay more for the house than it closed for, but more often than not, this additional costs still beats renting over the same period if the rate was low enough to begin with, like how it is now: dirt cheap lockable low rates. Rent is not stagnant. Fixed payments on a fixed mortgage are. The benefits would clearly be noticeable after inflation and we live in a society that generally pushes prices up, not down over time. When you see everybody needing to pay $4-5000 to rent a similar house that you only need to pay $1000 for mortgage, you should appreciate the joy of totally fixed payments while all other prices rise.

[NZStreetBaller]

so where people see renting as throwing money away technically half the money your putting on your house over the 30 years is going to a bank. plus during the boom of the property cycle (which i wont go into) its a hell of alot cheaper to rent.

[DCL]

Yes i was talking about interest. But you just said that most of your monthly payments go to the principal. which isnt true. untill you reach like the 15 year mark

it looks like this ...http://www.mathworks.com/products/demos/fixedincome/mbscf/image006.jpg

It's not always 15 years. depends on the interest rate. You'd get a steeper or less steep graph with different plug in variables. and yes, i play around with this shit all the time.

[NZStreetBaller]

Dont know about rates in nz, but theyve been dirt low in the states. each monthly payment consists of interest AND principal,but it's mostly principal even now. and it will only become more principal-dominated over time. The interest obviously makes you pay more for the house than it closed for, but more often than not, this additional costs still beats renting over the same period if the rate was low enough to begin with, like how it is now: dirt cheap lockable low rates. Rent is not stagnant. Fixed payments on a fixed mortgage are. The benefits would clearly be noticeable after inflation and we live in a society that generally pushes prices up, not down over time.

the interest rates fixed or not are per annum though.

example: 500 000 dollar loan 5% rate which mean for the first year you'll have to pay the bank 5 % of 500000 which is 25000 thats 480 a week.

480 a week just to the bank. but lets just say you pay 550 a week (2200) a mont) only 70 dollars a week will be taken off your mortgage.

So in your first year your payments will add up to 550 x 52 weeks = 28,600dollars

25000 will all go to the bank. and you will only pay 3,600 dollars off your mortgage in an entire year.

Im sorry if you already knew that im sure it'll help someone to understand.

FYI the interest rates in NZ are anywhere in between 4 - 5%

[NZStreetBaller]

It's not always 15 years. depends on the interest rate. You'd get a steeper or less steep graph with different plug in variables. and yes, i play around with this shit all the time.

lol so do I bro :cheers:
All im saying is that people believe that renting is shit and pointless and the most misunderstood thing about buying is that all your money goes to you. which is a load of crap.

[NZStreetBaller]

this is what most people who want to buy think when they talk to me.

Im going to buy a house worth 300,000 dollars and the interest rate is (lets say) 7% which means 7% of 300,000 is only 21,000 so all up ill pay 321,000 over 30 years

so 300,000/30 years = 10,000 a year/52 weeks = 192 dollars a week!! i can afford that !! uuugh wrong nikka.

[DCL]

the interest rates fixed or not are per annum though.

example: 500 000 dollar loan 5% rate which mean for the first year you'll have to pay the bank 5 % of 500000 which is 25000 thats 480 a week.

480 a week just to the bank. but lets just say you pay 550 a week (2200) a mont) only 70 dollars a week will be taken off your mortgage.

So in your first year your payments will add up to 550 x 52 weeks = 28,600dollars

25000 will all go to the bank. and you will only pay 3,600 dollars off your mortgage in an entire year.

Im sorry if you already knew that im sure it'll help someone to understand.

FYI the interest rates in NZ are anywhere in between 4 - 5%

i get you.

yeah, the effects may not be that appreciable in the very beginning. you pay all that money at first, the principal is still there in a chuncky size.

but over time, man, if you look at the entire picture like 30 years or whatever your term is, i think you'd come up pretty up top.

by year 28 or 29, shit, practically the entire monthly mortgage is almost ALL principal... which is basically like just transferring money back to yourself. and if your mortgage is $1000, and everybody else has to pay trip, quadruple, or even quintiple that cost for the rent, you win.

only real downside risk is that you don't lose a job so you can continue to survive if there are dramatic economic downturns. the worst is to buy high and be forced to foreclose at bottom prices. i saw quite a few folks get screwed like that during the financial crisis. but the the ones who made it through are sitting pretty again, and their payments are way lower than what rent would be now already.

[poido123]

Houses are cheaper in the US I've heard.

A 200,000 house in the states will get you a half decent house in a half decent area. In Australia, 200,000 will get you a pretty shitty small house in a bad area.

If I'm to buy a house, I want to get one in the states or Canada one day.

[embersyc]

I did a fifteen year mortgage on my place with 3.5 fixed rate.

The interest isn't bad at all. In a little over 2.5 years I've taken 30k off the principal. On track to pay off 2 years early.

Thank you housing market collapse!

[Godzuki]

renting is a complete waste of money imo. you're at least paying to own something and getting something out of it buying. renting is all wasted. it'd be one thing if rent was a lot lower than what it tends to be, but rent costs are like 3/4's of a note.

granted u don't have to worry about upkeep so much and property taxes which is a killer imo to own a house these days without their value going up much. but still, a $1k~ wasted each month getting no ownership in return is a waste imo.

[NZStreetBaller]

Houses are cheaper in the US I've heard.

A 200,000 house in the states will get you a half decent house in a half decent area. In Australia, 200,000 will get you a pretty shitty small house in a bad area.

If I'm to buy a house, I want to get one in the states or Canada one day.

yeh thats because their economy aint flash.
Aus house prices are like double what NZ is.
plenty of jobs with good pay = more buyers (demand) which means higher prices. brisbane is the cheapest at the moment or west melbourne. darwin is way too dare up here because of the new gas plant :facepalm

[poido123]

yeh thats because their economy aint flash.
Aus house prices are like double what NZ is.
plenty of jobs with good pay = more buyers (demand) which means higher prices. brisbane is the cheapest at the moment or west melbourne. darwin is way too dare up here because of the new gas plant :facepalm


Darwin is expensive also because of the army presence up there. Then you Have mining too? So yeah, its a unique area.

[Take Your Lumps]

Khan Academy did a great series of videos on this topic:

https://www.khanacademy.org/economics-finance-domain/core-finance/housing/renting-v-buying/v/renting-vs-buying-a-home

[NumberSix]

Houses are cheaper in the US I've heard.

A 200,000 house in the states will get you a half decent house in a half decent area. In Australia, 200,000 will get you a pretty shitty small house in a bad area.

If I'm to buy a house, I want to get one in the states or Canada one day.
It depends where you go. A mansion in Atlanta will cost less than shitty apartment in San Francisco. It's all about supply and demand. In places where lots of people want to live, houses costs more. Houses out in the middle of nowhere are dirt cheap.

[DCL]

the interest rates fixed or not are per annum though.

example: 500 000 dollar loan 5% rate which mean for the first year you'll have to pay the bank 5 % of 500000 which is 25000 thats 480 a week.

480 a week just to the bank. but lets just say you pay 550 a week (2200) a mont) only 70 dollars a week will be taken off your mortgage.

So in your first year your payments will add up to 550 x 52 weeks = 28,600dollars

25000 will all go to the bank. and you will only pay 3,600 dollars off your mortgage in an entire year.

Im sorry if you already knew that im sure it'll help someone to understand.

FYI the interest rates in NZ are anywhere in between 4 - 5%


anyway, i am playing around with the numbers you proposed.

i'll ask this: what is the rental yield of the area, or what is the rent required for the same type of property? also, what is the LTV ratio of the purchased home?

if you get a 500,000 loan with 80% LTV, then the house got appraised at 625,000 by the bank, and if the 30-year-mortgage is at 5%, it would come out to be monthly payments of $2,684 or $32,208 per annum. but the true cost is really interest, which is around 25k for the first year.

if the annual yield is 5.44% in NZ (i dont know, i got these numbers from http://www.globalpropertyguide.com/Pacific/Australia/rent-yields), then annual rent is $34,000.

$34,000 of rent is obviously higher than $25,000 of annual interests. throw in taxes, insurance, and all that, and it could still be higher or break even. i don't know the rates for that area, so i don't know what to plug in.

and this is only for year 1.

but as you know, when you calculate for future years, your true payment gets even less since principal takes a bigger share of the mortgage. and in future years, when inflation takes over, it might not cost $34,000 annually to rent that same property, but $40,000, $45,000, $50,000, whatever...

however, if you own with the mortgage, your true costs (the interest payments) keep going down every year. it might be around $25,000 in year 1, but $24XXX in year 2, $23XXX in year 3, etc... until it's basically very little to almost nothing in year 28, 29, and 30.

so you see the benefits over the long run. if you decide to rent forever, all that rent, which keeps rising, will never go back to you.

[poido123]

It depends where you go. A mansion in Atlanta will cost less than shitty apartment in San Francisco. It's all about supply and demand. In places where lots of people want to live, houses costs more. Houses out in the middle of nowhere are dirt cheap.


Where would you suggest?

I'd like to live in Chicago(you should know why), but the crime does kind of concern me. I'm sure there are good areas there, even if it has some bad parts.

I'm assuming that's mainly the poorer areas where gangs like the crips and bloods and ethnic gangs run rampant.

I'd say a suburbia, I'm assuming that will cost more too.

[thefatmiral]

they're actually pretty even in terms of pros and cons I recon.

Im literally doing both. I own a house in NZ (which is now being rented out)

And im currently renting in aus.

The hard part about owning and the good part about renting is the commitment side of things.

It comes down to personal motive and reason you want to buy IMO.

In my experiences i bought a house back in new zealand because i thought i dont want to be paying some other nikkas rent for their home i want my own pad that i can do up blah blah blah.

But about 6 months i realised man I just dont have ANY money to do anything. I was living off 50 a fortnight !!! after my bills had been paid that 25 dollars a week. and then once rates and power bill and stuff popped up i was screwed!!!

Hense why i wanted to move to aus (where all the money is:rockon: ) now im renting my house in NZ is being rented out to someone (which doesnt cover my full mortgage payments but enough) and im rocking in the cash !!!

this is exactly what I want to do. rent my owned house. live in nice apt. saves on bills. cable electric water. and someone else pays my mortgage. if you can afford to buy a house you should.

[Jailblazers7]

Renting makes more sense for me right now for a lot of reasons. I don't want to deal with maintenance costs/activities, don't want to be rooted to a single location, not even 25 yet so I don't want a 15-30yr mortgage on my plate, etc. I like the fact that I can live downtown and have the option of moving to a different area every year.

[sixerfan82]

Having rented an apartment for 2 years and now owned a home for 6 months, I have noticed immediate differences.

For starters, you're going to have a few extra hundred in expenses, such as interest and utilities. Then you'll need lawn maintenance tools such as a shovel and lawnmower.

You are financially responsible for most damage to the house if you own, but you can also change anything you want.

Renting leaves you with much less responsibility, but you're also extremely limited in what you can do.

I wish the 2 years I had an apt I was putting towards a house, I literally threw away $25,000 and have nothing to show for it.

[DCL]

here's a simple comparison between renting and owning. the numbers are hypothetical but around ball park ranges.

Year 1
if you rent, it might cost $2000/month
if you buy, mortgage might be $2000. principal might be $500, interest $1500 and additional total costs might average $200-500 a month (depending on so many things like age of house, what kind of repairs, etc).

but at worst, renting vs. owning might break even for year 1. ($2000 rent vs. $1500 interest + $500 for other shit)


Year 2
if you rent, landlord might jack up $60 to $2060/month (which is 3% inflation).
if you own, mortgage is still $2000, but principal might be like $525, and interest drops to $1475.

include all the fees, and owning comes out ahead a little bit.


Year 3
rent is now $2120.
but mortgage remains at $2000. (principal might be like $550, interest at $1450.)

again, owning might come out a ahead a little bit

Year 4
rent is $2180
mortgage remains at $2000. (principal might be like $575, interest at $1425)

but maybe some random shit out of the blue happens in year 4, and the repairs are expensive, so year 4 isn't an up year for owning.

year 5
rent is $2250
mortgage remains at $2000 (principal is $600, interest at $1400)
all other shit remain kinda the same, so it's another up year for owning

....
....
....

Year 30
do all this shit up to year 30 and the advantage of having bought a home should trump renting.
rent might be like $5000 (modest) to $10000 (extreme) by that time
however, the mortgage remains the same as year 1 ($2000). but by year 30, pretty much all of that mortgage payment is principal. interest is peanuts.
all other shit like taxes, insurance, maintenance probably have also shot up too. but would you rather pay $50 for interest payments + all homeowning costs OR.... $5000-$10000 in rent in year 30?

i think it's pretty obvious.

if you add up every single cost of both sides for all the years, owning usually beats renting by a landslide.

Also, in 30 years time, one can probably realistically expect to see home values appreciate, so there's another component of money making.

is it so easy? is there no downside? of course not. maybe you lost a job and had to foreclose when the mortgage was worth more than the value of your home. maybe you got f--ked by some random event which the insurance company won't cover and it had to come out of your pocket. maybe you had shitty tenants that destroyed your place, or maybe a war happens, and everybody moves out of the country. maybe you live in a small town where everybody decided to all move away one day. maybe rental yields fall to 1% and there's no cash flow to pay the mortgage. you can sit down and think of extreme cases all day.

but under normal circumstances, owning >>>>> renting in the long run.

keyword: long run.

so don't just calculate for year 1. do the entire math up to year 30.

[rufuspaul]

In the past 2 months I've had to replace a refrigerator and hot water heater at my main house and a dishwasher at my mountain house. Last year I had air conditioning and furnace issues with both houses. Ownership is the way to go in the long run but it can be a pain in the ass sometimes.

[SCdac]

I turn 29 in a couple months and been in and out of apartments for a long time. Recently bought a house for the first time in early september. still feels surreal, in a great way. Was priced at 129 but whittled it down to 122. saved up enough over the years to put a significant % down, 4.375 interest rate, 30 year mortgage. 2 bedrooms, 2.5 bath, 2 car garage. Roughly 1400 square footage w/ high ceilings. Great part of SA. Living alone so got lots of space and already its kinda becoming a chick magnet. It's dope and I have no regrets so far. Pouring money into renting houses/apartments was frustrating, gained way more ground (financially) living with parents, when it was an option. Renting has it's perks though. If gonna rent, definitely rent a house. Apartment staff and neighbors can be frustrating to Nth degree some times.

[netsfan549]

How much ppl actually deposit? I'm thinking about buying a house as well. 50k?

[~primetime~]

Texas has "Property Tax" instead of State Tax which REALLY makes this a difficult choice.


Owning should be seen as an investment. My home's value has gone up over $50k in the past 2 years...NO LIE

I don't plan on selling but it is very comforting to know that if I did sell I would make out good...


You can also lose value...which is what many had to struggle with over the recession. Buy a home that loses $50k in value, when you have to sell you are still in debt and paying for a home that you don't even own any more.

[BigBoss]

Renting is basically throwing money away.

[~primetime~]

Renting is basically throwing money away.
no...you're purchasing shelter each month

Is buying a meal "just throwing money away"?...you own nothing after

is going on a vacation "just throwing money away"?...again, you come back owning nothing




sometimes renting/leasing makes more sense than buying...all depends on the situation

[edb33]

I honestly don't understand the argument. I have several rent houses and every single one of them I make a minimum of $200 a month profit off rent AFTER I pay for the mortgage, taxes, insurance, and maintenance costs. This is on cheap properties too, the better the property the more profit I make. I actually teach my renters to become owners so I can sell them a house to better their lives because renting is just making someone else a profit with you having nothing to show for it.

I'm also not a fan of paying 30 years interest on a home. Paying off a home like this you lose money in the end. The smart route is to purchase a home, live in it 5 to 10 years then sale for profit. Rinse and repeat until you make enough profit to buy your final home in cash

[sixerfan82]

How much ppl actually deposit? I'm thinking about buying a house as well. 50k?

Based on my experienced with buying a home, if you put less than 20% of the value of the home down as a down payment(deposit), you must pay a 'penalty' in the form of a mortgage insurance until you have paid 20% of the value of the house. The cost of that insurance in my case is about $65 a month.

I put 5% down at closing.

[netsfan549]

Based on my experienced with buying a home, if you put less than 20% of the value of the home down as a down payment(deposit), you must pay a 'penalty' in the form of a mortgage insurance until you have paid 20% of the value of the house. The cost of that insurance in my case is about $65 a month.

I put 5% down at closing.


I'm looking to buy 250000 condo. Most likely, I'll deposit 50000. I hope that's enough..

[KyrieTheFuture]

Where would you suggest?

I'd like to live in Chicago(you should know why), but the crime does kind of concern me. I'm sure there are good areas there, even if it has some bad parts.

I'm assuming that's mainly the poorer areas where gangs like the crips and bloods and ethnic gangs run rampant.

I'd say a suburbia, I'm assuming that will cost more too.
If you can afford to choose where you want to live, you don't have to worry about crime

[DCL]

I'm looking to buy 250000 condo. Most likely, I'll deposit 50000. I hope that's enough..

50,000/250,000 = 20%

but 250k is just for the house alone. total costs will be higher when you include:

commission
appraisal fees
other kinds of inspections
escrow
loan origination fees
etc

in some countries, you even have to fork over heavy stamp duty

[netsfan549]

50,000/250,000 = 20%

but 250k is just for the house alone. total costs will be higher when you include:

commission
appraisal fees
other kinds of inspections
escrow
loan origination fees
etc

in some countries, you even have to fork over heavy stamp duty

My next question will be, is it true you get a good amount of money back when you own a house?

[Bosnian Sajo]

Houses are cheaper in the US I've heard.

A 200,000 house in the states will get you a half decent house in a half decent area. In Australia, 200,000 will get you a pretty shitty small house in a bad area.

If I'm to buy a house, I want to get one in the states or Canada one day.

Depends which state you're living in too. 200g's will get you a decent 3/4 bed 2 bath house in Florida, with a small front/backyard while 200g's in Kentucky gets you a big house with a huge plot of land.

For those of you looking to go into buying houses and renting them out, definitely look into Arkansas. Watch this video for more info: https://www.youtube.com/watch?v=9G2Pk2JZP-E

Not a good place to be a renter, but it's heaven to be a landlord there, at least that's the perception I got from watching that video.

[DCL]

My next question will be, is it true you get a good amount of money back when you own a house?


pretty vague question, dude. lol

but it's not rocket science, man. the basic idea you should grasp is analyzing if you will end up getting more than you put in. if you do, you make money. if the appreciation of your property plus income (rent) is more than all the costs you put out, you make money. it's like any business. if you end up paying more than everything you get in return, you lose money. you have to figure out your own market to determine if that's possible or likely.

[~primetime~]

pretty vague question, dude. lol

but it's not rocket science, man. the basic idea you should grasp is analyzing if you will end up getting more than you put in. if you do, you make money. if the appreciation of your property plus income (rent) is more than all the costs you put out, you make money. it's like any business. if you end up paying more than everything you get in return, you lose money. you have to figure out your own market to determine if that's possible or likely.
If you're doing a 30 year mortgage it is very difficult to get back more than you put in.

for a $250k 30 year fixed you'll be paying around $500k total...half your money going to the bank for interest.

unless you are paying the entire cost of the home up front in all likelihood you are going to lose money.

[DCL]

If you're doing a 30 year mortgage it is very difficult to get back more than you put in.

for a $250k 30 year fixed you'll be paying around $500k total...half your money going to the bank for interest.

unless you are paying the entire cost of the home up front in all likelihood you are going to lose money.


depends on inflation and appreciation.

and most importantly, in my case, it depends on if the property is a rental. if so, then the tenant could pay all that for you.

i have more than one property. i may be the one who is directly paying for those rental home mortgages, but it's my tenants and their rent who are indirectly paying for them. ;)

[~primetime~]

depends on inflation and appreciation.

and most importantly, in my case, it depends on if the property is a rental. if so, then the tenant could pay all that for you.

i have more than one property. i may be the one who is directly paying for those rental home mortgages, but it's my tenants and their rent who are indirectly paying for them. ;)
good points...

you're right, inflation is a very big deal on a 30 year fixed mortgage.

In 20 years my mortgage payment will be the same as it is right now...which could be pennies compared to what it is today

[SunsN07BookIt]

If you're doing a 30 year mortgage it is very difficult to get back more than you put in.


And all the interest is frontloaded. You basically pay for 75%+ of the house not until the last 15 years, if you kept for the entire 30 year duration.

On my rental property I bought 4 years ago, I originally had a 30 year but refinanced to 15 year when interest rates were hit 3.125% for the 15. The rent check I get is enough to cover my impounded mortgage payment(put 20% down, no PMI) plus almost $200 more which I put towards the principal every month. So I am expecting to have the house paid in much less than 10 years. Even so, there were probably a lot wiser ways to invest my money. Lucky for me, home prices have risen well over 30% since I bought the home.

[DCL]

And all the interest is frontloaded. You basically pay for 75%+ of the house in the last 10 years if you kept for the entire 30 year duration.

On my rental property I bought 4 years ago, I originally had a 30 year but refinanced to 15 year when interest rates were hit 3.125% for the 15. The rent check I get is enough to cover my impounded mortgage payment(put 20% down, no PMI) plus almost $200 more which I put towards the principal every month. So I am expecting to have the house paid in much less than 10 years. Even so, there were probably a lot wiser ways to invest my money. Lucky for me, home prices have risen well over 30% since I bought the home.

sounds good.

i can't opt for 15 years because i'm playing it safe to have more monthly cash flow. yeah, i will end up paying way more interest at the end, but as you know, the tenants are taking care of that, so i'm cool.

[SunsN07BookIt]

sounds good.

i can't opt for 15 years because i'm playing it safe to have more monthly cash flow. yeah, i will end up paying way more interest at the end, but as you know, the tenants are taking care of that, so i'm cool.


I have a question. Do you have a home appliance warranty for your rental property and how old is your rental house(s). I pay $450 a year for mine, so to date I have paid almost $2k and I have only used it once for the AC, which was like a $400 job. The house was built in 1998, so I thought it was a good idea to purchase a home warranty since the home was 10+ years old, now I'm not so sure. I'm afraid the whole AC unit may go down, and I'll be stuck with a $3000 bill but IF I have 3 more trouble free years, I will have saved enough to buy a new one.

[DCL]

no warranty, but i got friends who specialize in appliances, so if i need repairs or replacements for anything, I get decent rates from them. i try to limit costs to a reasonable level. so far, no big stuff. been lucky. *knock on wood*

[fsvr54]

Buy straight cash from foreclosure auctions.

[netsfan549]

Should I beware with something like this?

http://www.zillow.com/homedetails/245-Passaic-Ave-APT-E22-Passaic-NJ-07055/2105130533_zpid/

[MavsSuperFan]

Almost always I would recommend buying.

I am a landlord, I rent out 31 units and 1 house

Any amount a landlord charges you in rent, is enough to cover all of his costs, (water, sewage, plumbing, garbage, property taxes, maintenance, interest on possible mortgages/loans, etc) and earn a profit.

Almost by definition you are getting ripped off if you rent a house.
Unless you are going to only live in the area for a very short time, imo it would be better to buy a house. Money spent on a house is not an expense, it is an investment, you can resell the house later, likely at a profit.

If can acquire the funds to buy a house at a reasonable interest rate, you should buy a house imo

[netsfan549]

Almost always I would recommend buying.

I am a landlord, I rent out 31 units and 1 house

Any amount a landlord charges you in rent, is enough to cover all of his costs, (water, sewage, plumbing, garbage, property taxes, maintenance, interest on possible mortgages/loans, etc) and earn a profit.

Almost by definition you are getting ripped off if you rent a house.
Unless you are going to only live in the area for a very short time, imo it would be better to buy a house. Money spent on a house is not an expense, it is an investment, you can resell the house later, likely at a profit.

If can acquire the funds to buy a house at a reasonable interest rate, you should buy a house imo

how much is a monthly mortage? I am trying to see if I can afford it.

[MavsSuperFan]

how much is a monthly mortage? I am trying to see if I can afford it.
that amount varies widely depending on how much you borrow, and your borrowing costs.

Eg. do you have good credit or not, gainfully employed or not, do you have any collateral to pledge

[netsfan549]

found a calculator I dont know how accurate this is

http://www.mlcalc.com/#mortgage-200000-20-15-3.25-3000-1500-0.52-11-2014-month

[SunsN07BookIt]

Almost always I would recommend buying.

I am a landlord, I rent out 31 units and 1 house

Any amount a landlord charges you in rent, is enough to cover all of his costs, (water, sewage, plumbing, garbage, property taxes, maintenance, interest on possible mortgages/loans, etc) and earn a profit.

Almost by definition you are getting ripped off if you rent a house.
Unless you are going to only live in the area for a very short time, imo it would be better to buy a house. Money spent on a house is not an expense, it is an investment, you can resell the house later, likely at a profit.

If can acquire the funds to buy a house at a reasonable interest rate, you should buy a house imo


In a lot of areas, we are approaching home prices that carry a mortgage where it doesn't offer the huge advantage to own vs rent that it did 2-5 years ago. Especially, if you are in a 30 year 3.5% down FHA loan. Very little of your payments go towards the principal the first 10 years of ownership, home prices have pretty much leveled off in most of the US, and mortgage insurance for FHA loans is insane! And no matter what people say, the average homeowner only stays in his or her house 5-10 years depending who's stats you believe.

I have a friend, who just bought house. He now pays slightly more, in his total impounded payment than he did renting a similar home. Even before he bought, he asked my opinion and I told him if you like the home and can afford it,then buy it but don't expect the home to be a profitable venture any time soon. I pointed out he was paying $200 a month in PMI alone. He says, "yeah I talked to my loan hack(what he calls his loan officer) about that and he says that's coming off in 2-3 years when home prices rise and I have 20% equity". I pointed out to him that home prices have cooled down dramatically and that it is unlikely that homes in this area will see a 20% jump soon. He seemed skeptical at what I was telling him, so I switched the subject. The thing is I was telling him to buy all through 2010-2012 and he seemed unsure, but now when prices have risen like crazy it's like blood in the water for him, and millions of others.

2010-2012 was the time to buy if you had the means. Now people should slow their roll and be very selective about buying a home, especially if they think they are going to make a profit out of it, like by renting it out or flipping it.

[DCL]

i agree valuations aren't as attractive as 2010. but by 2011, it was like a poker game because we weren't guessing anymore but knew exactly what cards the Fed had in their hands. they won't ever admit it, but i believe they simply won't let the stock or property market fall by too much, so i believe there's some kind of "safety net" in place. if all hell breaks lose again like 2008, they will probably return to old ways like massive stimulus packages and slamming down interest rates and keeping it there for a long time. it won't necessarily help the average poor american, but it will have some impact for property and capital investments and probably push inequality even further apart. stock market is at a high time high now, and the Fed probably had a huge hand in making that possible in this environment. how much more can they squeeze though? who knows. but as long as the Fed is there, i think there will be mechanisms to "artificially" inflate the heck out of everything...

but i agree there are legitimate concerns for fundamentals. if there was no fed, no stimulus, no entity controlling interest rates, we probably should be a bit more worried. one-third of americans do not even have $1,000 in retirement savings but they got over $10,000 in credit card debt. baby boomers are fading out. most millennials probably lost a decade of potential earnings. so who's going to have money to keep buying properties? and we are also seeing some sub-prime borrowers get into the game again. we kinda saw how that turned out...

with that all said, i'm not too worried at this point because i'm in the game for the long run. not flipping nor speculating for the quick buck, i'm just trying to acquire and then let the tenant help me finance it the whole way. all my mortgages are fixed to low rates that won't ever reset, so i know exactly what my finance costs will be -- they will be exactly the same in the last term as the first term. market may go up and down, and maybe rents won't cover everything at some point, but i'm prepared for the cycles. in the long run, i think, as long as you can maintain the cashflow to never foreclose at detrimental prices, you have a pretty good chance to do alright at the end.


Very little of your payments go towards the principal the first 10 years of ownership

i hear you. i'm sure every owner looks at that every month and think, damn, still owe this much? but how fast or slow the outstanding balance slides down shouldn't really be a concern because the tenants are covering that payment until it becomes zero. well, at least that's the game plan! lol