Rent or buy?

[BeExcellent]

Haha @jnMissouri I feel you.

But if you bought 10 years ago? You’re good.

 

[Apone]

What about interest rates? They're pretty high in the U.S., but not sure about Mexico. That's a big variable if you buy or not.

 

[EyeBRollin]

Rent. Buying is not worth the trouble, it's not a sound investment, and nothing to leave your children (who won't want to live in your house anyway). Plus you don't just buy a home, but you are responsible for the upkeep and if you don't have the proper insurance, you will have to have to have money set aside for (emergency) repairs.

Buying is certainly worth the trouble. The wealthiest make their money in real estate.

OP, have you considered a multi-unit house?

 

[EyeBRollin]

My tenants don't realize it's actually cheaper for them to rent my houses from me than for me to own. They pay half of what it costs me to own them, when you factor in opportunity costs.

Yikes. @RickTheToad what say you?

Not by buying a house and living in it.

Primary residence yes, not good. However, there are some decent owner occupied programs right now.

 

[jnMissouri]

Haha @jnMissouri I feel you.

But if you bought 10 years ago? You’re good.

Been a landlord 15 years with a deca million dollar portfolio in RE alone. Doesn't count my other stuff. I'm good, lol. Though not all of my houses were bought long ago, I bought four more houses for a tad over 2 mil in 2021. Was going to buy more in 2022 and 2023 but I skipped it.

 

[jnMissouri]

Buying is certainly worth the trouble. The wealthiest make their money in real estate.

OP, have you considered a multi-unit house?

If you have a tolerance for risk and choose wisely, the stock market would BLOW away real estate. If I had put my money into stocks 15 years ago, the right stocks, I'd be worth 100+ million now. RE is SLOW money, but safer...much safer and I'm risk averse. And being a landlord is NOT for everyone. I've met TONS of people who tried it and went bankrupt. One of my tenants actually tried to make it as a landlord and lost everything. This is not a game for the faint of heart. You're taking on a lot of debt, need to manage legal issues and liars, idiots, and other problems like eviction moratoriums that are unjust.

 

[jnMissouri]

Oh, one clarification on an earlier post about having to leave my gf at the time to go make sure pipes didn't freeze...that was on Christmas night!!! She was not a fan...called me 30 minutes after I left asking when I'd be back, called me while I was going from house to house asking for an ETA. It took me a while to get back, she was in bed when I got back. Awake but in bed.

 

[EyeBRollin]

If you have a tolerance for risk and choose wisely, the stock market would BLOW away real estate. If I had put my money into stocks 15 years ago, the right stocks, I'd be worth 100+ million now.

The fvck? No way. RE is more profitable by a mile.

 

[radha]

The fvck? No way. RE is more profitable by a mile.

Most RE investors are highly leveraged. If they had invested in the stock market with that same amount of leverage and had the balls to not sell during a drawdown then they would be wealthier from stocks and would have spent far less time earning the money.

 

[EyeBRollin]

Most RE investors are highly leveraged. If they had invested in the stock market with that same amount of leverage and had the balls to not sell during a drawdown then they would be wealthier from stocks and would have spent far less time earning the money.

No way. Stock market out-earning the market indices are the exception not the norm.

 

[BackInTheGame78]

With the way rent prices are now in many places, I'm not sure how anyone can afford to rent at all.

 

[Mike32ct]

With the way rent prices are now in many places, I'm not sure how anyone can afford to rent at all.

This.

Or if they later want to buy, the high rent could keep them trapped because it would make it difficult to save for a down payment. That’s all by design.

 

[jnMissouri]

With the way rent prices are now in many places, I'm not sure how anyone can afford to rent at all.

Most of my houses rent for less than it costs me to own them. The rent barely covers the mortgage unless I bought them long ago and never took money out. Then I have to factor in vacancy, repairs, capex, etc. Add to that that I have hundreds of thousands of dollars of down payment money sitting in each of them that could be making me much more money in the stock market, in the short term it's not worth it. As I said before though, it's much less risky than the stock market and over time the tables turn in the landlords favor.

 

[SW15]

Most houses (at least in the most of North America) exist in soulless cookie cutter surburban dystopias with single family zoning. Just a sea of homes in the exact same socioeconomic class, and literally nothing of interest for miles. I walk through these neighborhoods and it's usually completely dead. There's no liveliness, no vibrance, zero, none. Even most kids aren't seen outside because it's "unsafe". Sure, there are houses that exist in vibrant communities but these are typically in the more dense "historic" regions where these absurd zoning laws didn't exist, and are generally more expensive.

This is all true and these are good points. Additionally, people who live in these neighborhoods are rarely unmarried and childless people. Single moms do live in these neighborhoods at times.

In some ways, home ownership does not make sense for the man who lives alone and is childless.

Nice thing about apartments is that many of them exist in mixed-use walkable neighborhoods with considerably more vibrance and soul. I've lived in places like this before without even owning a car because I could just walk everywhere. Great for pulling women too if your place is within walking distance of bars, restaurants, venues, etc. I had a FWB last year who could literally walk over to my place in 10 min through our small downtown district.

Agree with this and that it is good.

Or if they later want to buy, the high rent could keep them trapped because it would make it difficult to save for a down payment. That’s all by design.

This has been a common experience in the Millennial generation in the USA.

 

[SpartanWarrior77]

I rent where I live and rent out what I own. Like what @FlexpertHamilton said. That way I’m not tied down. The issue with that of course is that rents go up over time.

If I buy I buy in an affluent area in a midsize (for the area) house, where the values are most stable due to demand for the area.

Frankly before my daughters came to live with me a couple of years ago I did a roomshare situation. I liked that a lot. I had a bedroom with en suite and a garage for my car, big walk-in closet and private entrance from the pool. This in a 2M house in a prestigious area (for a fraction of the cost to own), and it was all bills paid.

I’d do it again in a heartbeat if I didn’t have a high schooler or all my stuff out here now.

I could leave for weeks without consequence, something you cannot do easily with a house & yard.

Hmm that's a cool idea about renting a room in a nice big house! Currently renting a 2 br with one roommate and pay less than $800 per month which is unheard of in my area.

 

[SpartanWarrior77]

I hear ya on the frozen pipes. Been there, done that. 15K repair to re-pipe with PEX. Couple years ago we had -6 degree F weather and I left my gf to go to four of my vacant rentals to open the faucets to drip, open the cabinets under the sinks and make sure the heaters were on...

For some reason I thought you were in Cali but with frozen pipes now I know you're not. But I echo what you said, as a landlord with a portfolio of single family houses myself, being a landlord sucks. Homeownership seems great at first, but I remember all the people I ran into who sold and rented and were happier for it since they had to do NO maintenance. After 15 years of being a landlord, I understand where they are coming from. To top it off, I'd have left the state (one of the most expensive housing markets in the country, top 6) if I didn't have all this property here to manage. And before anyone says "just hire a pm!" they don't understand I'd be paying six figures for what is part time work with their ridiculous fees. But I did find a company that does it cheaply and am trying them out before hiring them for all of them and bouncing out of this state.

This is why they say to get into multifamily if you can I suppose. There's easier ways to manage it apparently. Im guessing because it would make sense to hire PM companies. For single fam homes, profit margins don't seem to make sense when it comes to PMs. I think there are also government incentives for owning multifam.

 

[BeExcellent]

Some food for thought:

I wish (if wishes were horses, dreamers would ride), that I had held onto the residence I had with my first husband in TX. We bought in 2005 for 245K on his VA benefit, which meant only 10K down. That house is now worth 1M 18 years later. That is quadruple in value. Could I have expected that to occur in stocks? Only with far greater risk exposure. And I wouldn’t buy a primary residence for that price now. Nope. Ties up too much money.

I’ve done well with my strategy of buying in safe/stable working class areas in the small town Midwest. That is what I could afford to acquire rapidly, and at one time I had 54 units. I trimmed my portfolio starting in 2019 and now own 24 units. I bought for cash flow, not appreciation and although I had front end deferred maint to do on most, those are non-recurring costs and if I provide some nice amenities other rent houses don’t have (granite counters, central HVAC), then I get higher rents and better renters. Because appreciation has occurred on top of cash flow, my net worth is higher than it was at 54 units. I’m about 70% free & clear across the whole portfolio too and the portfolio runs in the black and has for years.

But it has not been for the faint of heart. I’ve dealt with every imaginable issue from the property manager embezzling to tenants dying in a unit, to criminal activity to evictions to the major and minor repairs that always come up. One reason I chose small towns is that I could get to know city and county officials there and they could understand the value responsible ownership confers to the area. I can pick up the phone and call the mayor, the prosecutor, the city attorney or the chief of police. They all know me. My renters know they all know me too, and that influence is helpful.

The other reason I do rental property is as a creative outlet. When I get ready to sell I design the property and create curb appeal and interior design that maxes the value and provides something beautiful for the new owners. That benefits everyone and ups property values for the area. I enjoy that. It’s like a full size art project.

 

[EyeBRollin]

Some food for thought:

I wish (if wishes were horses, dreamers would ride), that I had held onto the residence I had with my first husband in TX. We bought in 2005 for 245K on his VA benefit, which meant only 10K down. That house is now worth 1M 18 years later. That is quadruple in value. Could I have expected that to occur in stocks? Only with far greater risk exposure. And I wouldn’t buy a primary residence for that price now. Nope. Ties up too much money.

I’ve done well with my strategy of buying in safe/stable working class areas in the small town Midwest. That is what I could afford to acquire rapidly, and at one time I had 54 units. I trimmed my portfolio starting in 2019 and now own 24 units. I bought for cash flow, not appreciation and although I had front end deferred maint to do on most, those are non-recurring costs and if I provide some nice amenities other rent houses don’t have (granite counters, central HVAC), then I get higher rents and better renters. Because appreciation has occurred on top of cash flow, my net worth is higher than it was at 54 units. I’m about 70% free & clear across the whole portfolio too and the portfolio runs in the black and has for years.

But it has not been for the faint of heart. I’ve dealt with every imaginable issue from the property manager embezzling to tenants dying in a unit, to criminal activity to evictions to the major and minor repairs that always come up. One reason I chose small towns is that I could get to know city and county officials there and they could understand the value responsible ownership confers to the area. I can pick up the phone and call the mayor, the prosecutor, the city attorney or the chief of police. They all know me. My renters know they all know me too, and that influence is helpful.

The other reason I do rental property is as a creative outlet. When I get ready to sell I design the property and create curb appeal and interior design that maxes the value and provides something beautiful for the new owners. That benefits everyone and ups property values for the area. I enjoy that. It’s like a full size art project.

Thanks for the insight!

 

[sangheilios]

Here's my input on this.

The biggest issue with rent today is that the prices are comparable to a mortgage AND are subject to change. It's not unusual to see rent prices at 1k+ for some apartment complex that isn't even all that great either. A ton of places will label themselves as "luxury apartments" when they have amenities like a fenced in dog park, pool, etc. Since the pandemic I've also seen rent prices increase on a regular basis as well, which is the biggest issue you may have for your budget. You might be paying saying $1400 this year only for it to go up to $1500 next year, and I've heard of many people complaining about this issue in fact.

If you are planning on being in your area for the longer term buying a home is a good idea, especially if the rent prices are comparable to a mortgage or perhaps even more expensive. Granted, you have to factor in things like maintenance, taxes, etc. I believe the main benefits of owning though are that you are essentially "rent" controlled with your mortgage, assuming you get a fixed rate, and that you are building up equity over time. The reality is that most people are honestly terrible with saving and investing, so having a mortgage forces you to do this. The other benefit to consider is that the value of your home could and very likely will increase in value over time, or the very least maintain it's value.

The benefit of renting in my opinion is that you basically can come and go and you aren't responsible for anything. If you are young and single this can be a good thing if for some reason you don't like the area you are in, your job, etc. It provides a degree of flexibility that owning a home does not come with. If you own a home and want to move you have to have your home listed for sale and go through that entire process, which could possibly take months depending upon the market conditions of your area. Then you also have to pay realtor fees, etc.

 

[BeExcellent]

Where we are it is actually cheaper to rent than to buy. By over $1000 per month for the house we are in. That is 12K cheaper annually compared to the new homeowner up the street. Now if the owners of our house bought several years ago before the recent run up in prices, then they are still making $.

But someone buying (especially at current rising interest rates) would never make money now. They’d be upside down even with a fixed rate.

Add to that institutional investor loans always float and are never fixed. In a rising interest rate environment like we have now? That means over time your payment rises with the index your interest rate is indexed against. Bad idea to buy unless you can buy all cash. THAT is why Reits are buying. They need a place to park investor capital and aren’t paying high debt service but benefit from higher rent.

All RE markets are local. Know your market, know costs to buy & costs (market) to rent. Only then can you make a smart decision.