Owning vs. Renting

[bkrich83]

Re: Owning vs. Renting

I work in the mortgage industry and I'm so glad I'm a renter right now. The homeowners that I come in contact everyday, I feel so sorry for them. We considered buying a house during the summer but decided to wait another year for the market to turn around.

Why? I wouldn't change places with a renter for all the money in the world.

Tax break alone saves us an incredible amount of money.

[Pared]

Re: Owning vs. Renting

He's high.

What is your ROI when you rent? ZERO. You're paying every month; what are you getting financially in return?

What is your ROI when you buy? Could be plenty. Besides equity and larger annual tax refunds, you probably could sell the property for more than you paid for it -- much more in some cases -- in just a few years.

Then again, if your friend is so financially naive that he thinks renting has a greater ROI than buying, then maybe he should continue to rent. It doesn't sound like he's the sharpest tool in the shed when it comes to money.

Take care,
PK

I know; I just want verification of my sanity.

[KG]

Re: Owning vs. Renting

Why? I wouldn't change places with a renter for all the money in the world.

Tax break alone saves us an incredible amount of money.

It's all about where you live at. You guys have to realize the local market your in. Some of us live in places where unless you're making really good money on ur own or your a 2 income family then owning isnt really an option because of the prices. Yeah, some lender can probably get you into a place with a no interest loan and little down payment but that's part of the reason why the foreclosure rates are sky high around here.

Honestly, if you want to get into a place for a lot cheaper take a look at foreclosures in your area. They require more research but if you find the right place you could save urself alot of money.

[jmw1137]

Re: Owning vs. Renting

I skimmed the posts and saw PMI brought up. My wife and I bought a $200k home with $0 down. We have 2 loans...one for 80% and one for 20%. We did not have to pay PMI and our interest on the 2nd loan isn't even that high (maybe 6.5%?). I had a friend who bought a condo and paid something like $150 a month in PMI. If we had done that we would've tossed about $5000 out the window already for PMI. Find a mortgage company who knows that they're doing and will get around PMI.

The best advice for this situation is..."buy what appreciates....rent/lease/don't buy what depreciates"...it's from "Rich Dad, Poor Dad" which I highly recommend. It's an easy read (not just boring advice on how to be wealthy) and has a ton of great info like that.

So, if you're paying the amount equal to a mortgage payment every month with your rent you should buy. In my case, before I got married I was paying $625 a month and was saving some cash. We stayed in the apartment for a few months then got a house. However, if my rent were $1k or more I would've gotten a condo since my payment probably would've been similar.

Just remember that line...buy what appreciates, rent/lease/don't buy what depreciates. Now I buy a ton of stuff that depreciates (computers, cell phones, tech stuff, etc) but I also lay off a lot of other stuff that depreciates...I've bought 1 DVD in 5 years and I've bought maybe 20 video games in those same 5 years. The rest I've rented and have saved a ton in the long run.

[pk500]

Re: Owning vs. Renting

I work in the mortgage industry and I'm so glad I'm a renter right now. The homeowners that I come in contact everyday, I feel so sorry for them.

Why? Because they lied out their azzes about their income on their sub-prime mortgage application and the bank gave them a mortgage anyways, and now they're paying the piper?

Seriously, I have sympathy if job loss or huge unexpected medical bills cause someone to foreclose.

But I have ZERO sympathy for someone who bought way over their heads through a sub-prime mortgage. They're the same morons who ring up a $10,000 balance on a credit card and think the balance eventually will go away or that they can declare Chapter 11 and have the whole little mess cleaned up in a year or two.

Well, the price of poker is just a touch steeper when you have a $300,000 mortgage, and some of these people are finding out the hard way. And it's completely their fault.

Take care,
PK

[SoMiss2000]

Re: Owning vs. Renting

Why? Because they lied out their azzes about their income on their sub-prime mortgage application and the bank gave them a mortgage anyways, and now they're paying the piper?

Seriously, I have sympathy if job loss or huge unexpected medical bills cause someone to foreclose.

But I have ZERO sympathy for someone who bought way over their heads through a sub-prime mortgage. They're the same morons who ring up a $10,000 balance on a credit card and think the balance eventually will go away or that they can declare Chapter 11 and have the whole little mess cleaned up in a year or two.

Well, the price of poker is just a touch steeper when you have a $300,000 mortgage, and some of these people are finding out the hard way. And it's completely their fault.

Take care,
PK

PK, the problem is not only that people lied about their income. The issue is predatory lenders didn't bother to verify these people's income. It's not all on the homeowners. There is accountability on both sides. These lenders had no business giving these people these home loans. Don't get me wrong, I aspire to be a homeowner in the near future. I signed my last lease last month. I will be buying at the end of this year

[mjb2124]

Re: Owning vs. Renting

It's all about where you live at. You guys have to realize the local market your in. Some of us live in places where unless you're making really good money on ur own or your a 2 income family then owning isnt really an option because of the prices.

I'm sure that's part of it, but I know many single people in expensive areas that are able to afford a house/townhouse. My area is one of the more expensive in the Pittsburgh region (which admittedly doesn't have a high cost of living), but I was able to do it with room to spare. I think sometimes the problem is people want to spend money on other things instead of making an investment into a house.

In the end, the cost of living should even things out. If the housing market is more expensive in one area (ie: San Diego) then the pay is going to be much higher. If the housing market is cheaper, the pay will be less.

[fishepa]

Re: Owning vs. Renting

PMI is such a ripoff. The way to get around it is to take 2 mortgages out. The normal 30 year mortgage and then a short 10 year mortgage with higher interest rate (of course, pay off this one in 5 or less years). One of my good friends was told to do this because he couldn't afford to put down 20% on the house he bought.

Yep, you also get to write off the interest paid on the short mortgage as well, but not with PMI.

[Pared]

Re: Owning vs. Renting

I have to look into PMI... no idea what that is.

So... what would be the best way to check out the market on foreclosures? The newspaper? Get a real estate agent?

When my lease is up I'm going to look into buying a condo. What's the typical rate of payback on these sort of things? 20 years?

[bkrich83]

Re: Owning vs. Renting

It's all about where you live at. You guys have to realize the local market your in. Some of us live in places where unless you're making really good money on ur own or your a 2 income family then owning isnt really an option because of the prices. Yeah, some lender can probably get you into a place with a no interest loan and little down payment but that's part of the reason why the foreclosure rates are sky high around here.

Honestly, if you want to get into a place for a lot cheaper take a look at foreclosures in your area. They require more research but if you find the right place you could save urself alot of money.

I actually live in one of those places. I know what you are saying. Our current house was in the low 7 figures.

That being said, I still got a mortgage, with great options. 30 year fixed, no prepayment penalty, good rate, etc.

Now of course, we made good money on our first house that allowed us to put a sizeable down payment on it. And we get some good tax breaks on the property tax and interest we pay on it. So some of it evens out.

Point being, if you can get in to a mortgage, with somewhat favorable returns, you're pissing money away by renting.

[bkrich83]

Re: Owning vs. Renting

I have to look into PMI... no idea what that is.

So... what would be the best way to check out the market on foreclosures? The newspaper? Get a real estate agent?

When my lease is up I'm going to look into buying a condo. What's the typical rate of payback on these sort of things? 20 years?

I think to get a clue on foreclosures you need to go through an agent. I believe there's some sort of semi-confidential list of foreclosures or something.

I really don't know how that works. If you find out, let us know.. I'd be interested in to looking in to that for investment properties.

[SLAYER]

Re: Owning vs. Renting

I have to look into PMI... no idea what that is.

So... what would be the best way to check out the market on foreclosures? The newspaper? Get a real estate agent?

For casual browsing, here's a link to get you (or whoever) started:

http://www.countrywide.com/purchase/f_reo.asp

[KG]

Re: Owning vs. Renting

I think to get a clue on foreclosures you need to go through an agent. I believe there's some sort of semi-confidential list of foreclosures or something.

I really don't know how that works. If you find out, let us know.. I'd be interested in to looking in to that for investment properties.

No. Foreclosures are public records. Certian websites charge you to look at foreclosures but if you want to you can go to public records and get a copy of the latest foreclosures in your area. Some people would just rather pay to see them online without going through the hassle. I don't see a problem with either route. Also some realtors find people who are just in the begining of the foreclosure process and offer to help them out (mostly for their own benefit though).

One night I woke up in the middle of the night and couldnt sleep. Ending up watching this informercial on foreclosures and even ordered the book. A pretty good read if anyone is interested PM me and I'll send you the title (not trying to pimp it, i have no connection with the author or book).

If you can get into a house/condo/townhouse for around the same price you are paying for rent then you are indeed throwing your money away. As cliche as it sounds, everything is relative to location. If you live in a place where real estate prices are high then chances are your income is probably a little big higher to compensate for the cost of living in that area. Very similar to what mjb said.

[pk500]

Re: Owning vs. Renting

PK, the problem is not only that people lied about their income. The issue is predatory lenders didn't bother to verify these people's income. It's not all on the homeowners. There is accountability on both sides. These lenders had no business giving these people these home loans. Don't get me wrong, I aspire to be a homeowner in the near future. I signed my last lease last month. I will be buying at the end of this year

No doubt, man. There is culpability for the predators who loaned money to people who had no business receiving loans that large.

But the stupidity started with the prospective buyer lying out of their posterior to even get into a position to qualify for the loan.

Take care,
PK

[pk500]

Re: Owning vs. Renting

For casual browsing, here's a link to get you (or whoever) started:

http://www.countrywide.com/purchase/f_reo.asp

I wouldn't work with Countrywide if you paid me $10,000. It was the leader of the sub-prime mortgage leeches and teetered on the verge of collapse late this summer when its predatory lending practices came back to nearly bite off its buttocks.

Only a $2 billion bailout investment by Bank of America kept Countrywide afloat. Remember, Countrywide is the firm that was in such deep feces that it stopped loaning any funds for a while earlier this summer.

Caveat emptor.

Take care,
PK