From: Rod Speed on
Vic Smith wrote
> Les Cargill <lcargill99(a)comcast.net> wrote
>> SoCalMike wrote:
>>> Les Cargill wrote:

>>>> Bollocks. That's the fairy story. Do the math yourself - if and
>>>> only if you can *actually afford it* - the TCO of ownership is
>>>> strictly less than renting - is it more frugal. What people do
>>>> is chase the tax break and pretend it's making them money. Well,
>>>> the marginal rate is still far less than 100%, no matter what.

>>>> This does not mean there are no strategies where home ownership
>>>> is more frugal - just that one must prepare for it properly.

>>>> Right now, the way prices are plummeting - it's a good
>>>> time to transition to owning, assuming you have stable income.
>>>> But what most people forget is all the peripheral cost of ownership.

>>> all depends. if you can get a fixed rate mortgage for less than what
>>> your rent payments are, and are willing to fix most things on your
>>> own its probably worth it.

>> I expect most people woefully underestimate just how much
>> maintainence costs for a home. All I can tell you is that
>> I've always been able to rent much more cheaply than buy,
>> to the tune of thousands per year.

> A lot depends on the construction of the house, age of stuff that has to be maintained, etc.

Yes.

> Real estate taxes are the killer for some.

Those are irrelevant, they're included in the rent if you rent.

> Mine run about $400 a month now.

> In 12 years here I've spent maybe $15k on maintenance, including all new
> windows, roof, new furnace and central air, new appliances, tree cutting, etc.

I wouldnt have spent more than $1.5K, and that was just the
hot water service and a couple of the big patio glass doors.

> Taxes have been over $40k.

See above.

> Maintenance costs could have been lower if I did
> more of the work myself or went with cheaper stuff.

> Can't avoid the taxes though.

See above.

> That's the first thing to look at when house hunting.
> A lot also hinges on how much space you're getting. To get an
> equivalent sized apartment would have cost many times what I've paid.
> If you live spartan and don't care about collecting junk, or having a
> garage, or having neighbors on the other side of the wall, an
> apartment could well be cheaper, but it depends on the time frame
> you're talking about.

> Then there's the RE market itself - home costs - location, interest rates, etc.
> Lots goes into getting any sense from a calculation.
> But it's pretty hard to make a financial case for an apartment if the
> time frame is 10 years or longer. Maybe less.
> I'm assuming you don't get foolish and buy a home at an inflated
> price, as many have done.
> Too bad for some youngsters that they fell into that trap.


From: Les Cargill on
Vic Smith wrote:
> On Sun, 15 Nov 2009 00:09:25 -0500, Les Cargill
> <lcargill99(a)comcast.net> wrote:
>
>> SoCalMike wrote:
>>> Les Cargill wrote:
>>>> Bollocks. That's the fairy story. Do the math yourself - if and
>>>> only if you can *actually afford it* - the TCO of ownership is
>>>> strictly less than renting - is it more frugal. What people do
>>>> is chase the tax break and pretend it's making them money. Well,
>>>> the marginal rate is still far less than 100%, no matter what.
>>>>
>>>> This does not mean there are no strategies where home ownership is
>>>> more frugal - just that one must prepare for it properly.
>>>>
>>>> Right now, the way prices are plummeting - it's a good
>>>> time to transition to owning, assuming you have stable income.
>>>> But what most people forget is all the peripheral cost of
>>>> ownership.
>>> all depends. if you can get a fixed rate mortgage for less than what
>>> your rent payments are, and are willing to fix most things on your own
>>> its probably worth it.
>>
>> I expect most people woefully underestimate just how much
>> maintainence costs for a home. All I can tell you is that
>> I've always been able to rent much more cheaply than buy,
>> to the tune of thousands per year.
>
> A lot depends on the construction of the house, age of stuff that has
> to be maintained, etc.
> Real estate taxes are the killer for some. Mine run about $400 a
> month now.

Ouch.

> In 12 years here I've spent maybe $15k on maintenance, including all
> new windows, roof, new furnace and central air, new appliances, tree
> cutting, etc.
> Taxes have been over $40k.
> Maintenance costs could have been lower if I did more of the work
> myself or went with cheaper stuff.
> Can't avoid the taxes though.
> That's the first thing to look at when house hunting.
> A lot also hinges on how much space you're getting. To get an
> equivalent sized apartment would have cost many times what I've paid.

I've mostly rented houses. And what I found, through sampling
error or whatever, is that the simple monthly costs of rental were
usually lower. I've also seen several tales of woe from
wannabe landlords who ended up bankrupt over leveraged rent
houses.

My point is that since about 1980, wages ( as opposed to total
compensation ) have been pretty flat, and "what the traffic will bear"
in the rental market hasn't kept up with cost.

> If you live spartan and don't care about collecting junk, or having a
> garage, or having neighbors on the other side of the wall, an
> apartment could well be cheaper, but it depends on the time frame
> you're talking about.
> Then there's the RE market itself - home costs - location, interest
> rates, etc.
> Lots goes into getting any sense from a calculation.

Absolutely.

> But it's pretty hard to make a financial case for an apartment if the
> time frame is 10 years or longer. Maybe less.

Agreed. I managed 9 years in *one* house I bought. The rest,
I gotta go chase a job. That one was shocking - that area had
effectively negative unemployment for 25 years before the bottom
fell out.

> I'm assuming you don't get foolish and buy a home at an inflated
> price, as many have done.

Oh, I did. Once. It all came out fine, though. I about broke
even on it, didn't lose that much of the upfront. Dummy me. It
was, at least a modest home. Although really, what I paid for it
was pretty much the original price plus inflation. It's now
worth about 75% of what it *originally* sold for in 1983, so
the guy who bought it from me....

> Too bad for some youngsters that they fell into that trap.
>

The real problem there is credit cards. Bad craziness, credit cards.
Been there, too, to a modest amount. Not going back. Technically,
the charges were business finance ( contract travel expenses ), but
still... that took me about a year off plan.

> --Vic
>
>

--
Les Cargill
From: krw on
On Sun, 15 Nov 2009 00:09:25 -0500, Les Cargill
<lcargill99(a)comcast.net> wrote:

>SoCalMike wrote:
>> Les Cargill wrote:
>>> Bollocks. That's the fairy story. Do the math yourself - if and
>>> only if you can *actually afford it* - the TCO of ownership is
>>> strictly less than renting - is it more frugal. What people do
>>> is chase the tax break and pretend it's making them money. Well,
>>> the marginal rate is still far less than 100%, no matter what.
>>>
>>> This does not mean there are no strategies where home ownership is
>>> more frugal - just that one must prepare for it properly.
>>>
>>> Right now, the way prices are plummeting - it's a good
>>> time to transition to owning, assuming you have stable income.
>>> But what most people forget is all the peripheral cost of
>>> ownership.
>>
>> all depends. if you can get a fixed rate mortgage for less than what
>> your rent payments are, and are willing to fix most things on your own
>> its probably worth it.
>
>
>I expect most people woefully underestimate just how much
>maintainence costs for a home. All I can tell you is that
>I've always been able to rent much more cheaply than buy,
>to the tune of thousands per year.

Not true over the long term, given everything else being equal. Were
that true no one would rent property. Using the same reasoning you
must least your cars.
From: h on

"Vic Smith" <thismailautodeleted(a)comcast.net> wrote in message
news:2o3vf55ek6ok763ki7gfo6hfhnf7icnr2p(a)4ax.com...
> On Sun, 15 Nov 2009 00:09:25 -0500, Les Cargill
> <lcargill99(a)comcast.net> wrote:
>
>>SoCalMike wrote:
>>> Les Cargill wrote:
>>>> Bollocks. That's the fairy story. Do the math yourself - if and
>>>> only if you can *actually afford it* - the TCO of ownership is
>>>> strictly less than renting - is it more frugal. What people do
>>>> is chase the tax break and pretend it's making them money. Well,
>>>> the marginal rate is still far less than 100%, no matter what.
>>>>
>>>> This does not mean there are no strategies where home ownership is
>>>> more frugal - just that one must prepare for it properly.
>>>>
>>>> Right now, the way prices are plummeting - it's a good
>>>> time to transition to owning, assuming you have stable income.
>>>> But what most people forget is all the peripheral cost of
>>>> ownership.
>>>
>>> all depends. if you can get a fixed rate mortgage for less than what
>>> your rent payments are, and are willing to fix most things on your own
>>> its probably worth it.
>>
>>
>>I expect most people woefully underestimate just how much
>>maintainence costs for a home. All I can tell you is that
>>I've always been able to rent much more cheaply than buy,
>>to the tune of thousands per year.
>

Maybe, but even including taxes my mortgage payment the FIRST year I owned
my house was only $25/month more than renting. Now, 25 years later, it's
about 30% of what I would have to pay for even a tiny 2-bedroom apartment.
Plus, even in this lousy economy I could sell the house tomorrow for at
least twice what I paid. Since I've only spent 30% of the purchase price in
maintenance and improvements (I built a garage and upgraded the kitchen),
it's been a HELL OF A LOT less expensive than renting. Plus, it's the only
investment I have that is currently worth more than I put into it.
Everything else, especially IRAs, have lost so much money I would actually
have been ahead if I'd put it in a passbook savings or even under the
mattress. Renting is almost always a losing proposition, as long as you buy
a house you can actually afford. If you make $25k a year you cannot afford a
$500k house. If you do that, you're really just renting, since you'll most
likely lose the house long before you have any equity.


From: clams_casino on
h wrote:

>"Vic Smith" <thismailautodeleted(a)comcast.net> wrote in message
>news:2o3vf55ek6ok763ki7gfo6hfhnf7icnr2p(a)4ax.com...
>
>
>>On Sun, 15 Nov 2009 00:09:25 -0500, Les Cargill
>><lcargill99(a)comcast.net> wrote:
>>
>>
>>
>>>SoCalMike wrote:
>>>
>>>
>>>>Les Cargill wrote:
>>>>
>>>>
>>>>>Bollocks. That's the fairy story. Do the math yourself - if and
>>>>>only if you can *actually afford it* - the TCO of ownership is
>>>>>strictly less than renting - is it more frugal. What people do
>>>>>is chase the tax break and pretend it's making them money. Well,
>>>>>the marginal rate is still far less than 100%, no matter what.
>>>>>
>>>>>This does not mean there are no strategies where home ownership is
>>>>>more frugal - just that one must prepare for it properly.
>>>>>
>>>>>Right now, the way prices are plummeting - it's a good
>>>>>time to transition to owning, assuming you have stable income.
>>>>>But what most people forget is all the peripheral cost of
>>>>>ownership.
>>>>>
>>>>>
>>>>all depends. if you can get a fixed rate mortgage for less than what
>>>>your rent payments are, and are willing to fix most things on your own
>>>>its probably worth it.
>>>>
>>>>
>>>I expect most people woefully underestimate just how much
>>>maintainence costs for a home. All I can tell you is that
>>>I've always been able to rent much more cheaply than buy,
>>>to the tune of thousands per year.
>>>
>>>
>
>Maybe, but even including taxes my mortgage payment the FIRST year I owned
>my house was only $25/month more than renting. Now, 25 years later, it's
>about 30% of what I would have to pay for even a tiny 2-bedroom apartment.
>Plus, even in this lousy economy I could sell the house tomorrow for at
>least twice what I paid. Since I've only spent 30% of the purchase price in
>maintenance and improvements (I built a garage and upgraded the kitchen),
>it's been a HELL OF A LOT less expensive than renting. Plus, it's the only
>investment I have that is currently worth more than I put into it.
>Everything else, especially IRAs, have lost so much money I would actually
>have been ahead if I'd put it in a passbook savings or even under the
>mattress. Renting is almost always a losing proposition, as long as you buy
>a house you can actually afford. If you make $25k a year you cannot afford a
>$500k house. If you do that, you're really just renting, since you'll most
>likely lose the house long before you have any equity.
>
>
>
>
A lot actually depends on timing. Most any home purchased within the
past 4-5 years has most likely been a money losing proposition. Any
purchase before about 2002 is likely making some return and probably
costs less than renting, providing one itemizes to make use of the
government tax / interest subsidies. For those using a standard
deduction, the advantages to own vs. rent gets quite debatable. For
most, one can / will likely rent a lot smaller residence than they
purchase so renting can be cheaper since it's typically difficult to buy
decent housing comparable in size to a typical apartment. .