Renting Vs Owning

[chatterweb]

We are seriously considering selling our home for a profit and renting, we want to be free of taxes and insurance, and already have a home out of state we have that we own and is rented...

We are so sick of maintenance, a pool and spa and the grounds, and the upkeep.

Any insight or advice is apprreciated~

We may net around 140-180K and no cp gains as we have lived here 2+ years.

We also put 100K down when we bought it...

[DabsandTroy]

Well, in our situation, we dont ever see a need to buy. My husband and I pay $500 in rent for our condo. And for living in Northern California, that's unheard of. So, we wont buy until the owner of our condo decides to sell.

 

And then, in that case . . . we might consider moving. lol

[54regcab]

Are you going to downsize if you decide to rent?

[hegemony]

renting sucks. my home is not my primary investment. it is a place to live and call home. the appreciation experienced is on paper. don't let it go to your head.

[TxQuiltGirl]

I've owned and rented. I much prefer owning. As hegemony said, the profit is all on paper, and when you go to renting, it will eat up that profit very quickly. It irritates me every month when I have to send that blasted rent check to my landlord when I know I could pay the same for a house of my own.

 

If you don't want to have the outside upkeep, consider moving into a townhouse or condo, but don't fool yourself into thinking you won't have to do maintenance inside. I have never lived anywhere that I could just pick up the phone and they'd fix whatever the problem is ... more often I have taken care of problems myself.

[hlburi]

renting sucks. my home is not my primary investment. it is a place to live and call home. the appreciation experienced is on paper. don't let it go to your head.

 

Exactly. It scares me when I hear people say that their home is their biggest investment. It shouldn't be. And when I say this, I'm not advocating NOT buying a home. But the bottom line is, (unless you are paying cash up front for the home) it is still a liability and should be viewed as such. Yeah, it does typically appreciate in value and it has some great tax write-off potential AND the interest paid on a mortgage CAN be justified if you can beat that rate in the Market or through other investments with available cash.

 

Just things to keep in mind when house shopping.

 

I'm not ANTI home-ownership, I'm just pro "being smart about your assets and investments".

[TJ Girl]

I can't see ever going back to renting.

Not only because of the typical answers (throwing away money every month, etc), although those apply to me, too.

But also because my home is MY place. I have 2 cats and a dog, I don't want someone telling me I can't get another pet if I so choose. I don't want someone telling me I can't paint the walls, replace the dishwasher, plant a garden the way I want, or whatever. When I'm in my home, I want to make my decisions.

An apartment is even worse, because even in the nicest complexes you still have days the neighbor throws a party, or the person above you accidentally drops something on the kitchen floor at midnight, or whatever (and for same reasons couldn't see living in a condo)...

 

If I were in your place, for example sick of pool and spa maintenance, I'd consider buying a house that didn't have those items, but I wouldn't rent.

 

Those are my personal thoughts. Maybe I'm just too independent, though

Edited July 6, 2006 by TJ Girl

[allstarjr]

I live in the NorthEast. It doesn't make sense to buy a house here. At least not now.

[Kaysei]

I've been renting for a year after foreclosure on a home I lived in for 18 years. It's a nice little place - little being the key word, about 1/2 the size of where I lived before. The rent is $500/month, which is way too high, but it was very hard to even find this. I haven't even seen my landlord in person since he put a new roof on several months ago. I have to mow the yard myself. I can't stand it really. It's just the thought of it not being MINE that kills me. Actually, I've never had a home that was strictly mine, all mine. I really want a place of my own, and even though I could pay $400-$600/month, I have nothing to put down and my credit sucks, so I won't be looking for awhile.

[odudave]

This is a tough one. I owned homes for the last 18 years, but some recent problems with a relocation forced me to rent while the home in the town I moved from is being forclosed (If we had only rented THERE, I wouldn't even be in this mess!)

 

Because of the credit issues that are going to follow the forclosure, I doublt I'll be able to own for a while. That really bothered me at first, but after renting for the last 4 months, I must say it's not as bad as I thought. Granted, I am renting a home in a really nice neighborhood so I don't have the issues that go along with apartment living. This is an older, renovated home that I live in now. In 4 months, the garbage disposal died, the garage door opener died, there were carpenter ants in the attic, and a pipe broke under the house (slab foundation in Texas). These things in total would have killed me in my current financial state, but they were all fixed with a phone call to the landlord. Luckily, he's a nice guy and this is his only rental property. I did my part by installing the disposal and garage door opener myself.

 

In addition, the housing market where I live is pretty flat, so there is almost zero apreciation in real estate. Real Estate Tax is also VERY high because we have no state income tax. My rent on this home is about $500 less a month than it would be if I owned it. Now, there's no tax writeoff of the interest for me, but it pretty much evens out with the monthly savings in rent AND msintenance/repairs.

 

In a perfect world, I would probably own, but it's been pretty liberating renting, too. It's kind of nice having the freedom to look at other neighborhoods for next year and decide if we wnat to try something else. If nothing else, we can "try out" a couple of neighborhoods and have a good feeling for where we want to buy when things settle down financially.

Edited July 7, 2006 by odudave

[TeeSharice]

http://www.washingtonpost.com/wp-dyn/conte...av=rss_business

 

Rents Rise as Apartment Market Is Squeezed

 

By Kirstin Downey

Washington Post Staff Writer

Wednesday, July 5, 2006; A01

 

 

 

The apartment market in the Washington area has become one of the tightest in the country, and rents are rising briskly as some affluent residents decide to rent rather than buy in what they fear is an inflated real estate market.

 

The surge of well-to-do new renters is attracting developers, and at least 4,000 units that had been planned as condos will instead be leased as rentals over the next two years, according to a new analysis by Delta Associates, an Alexandria real estate information company.

 

Among the renters is Randell Rogers, 40, a systems engineer who earns $127,000 a year and recently sold a house. The housing-sale slowdown and sky-high prices have made him wary of buying again, and he is renting a two-bedroom townhouse in Herndon for $1,400 a month, about half of what he thinks he would pay each month if he bought a similar townhouse for about $450,000.

 

"It makes more sense to rent this year while values keep going down," Rogers said. "Even with the tax break, it doesn't make sense for me. It's just not reasonable to buy."

 

Other affluent families are doing the same. Laura Holliday, 33, and her husband, Jason, 34, both analysts for the federal government, tired of the chores associated with homeownership, the heavy mortgage payments and the hassle of commuting each day to the District from the Mount Vernon area of Alexandria. They sold their house in July 2005 and moved to a townhouse in the Clarendon area of Arlington, where they can commute to work by Metro and have more time to spend with their two young children.

 

"We probably won't rent forever," Holliday said, "but for now, we are definitely enjoying renting."

 

As they and others lease instead of buy, rents have risen 7 percent in the past year, according to a new analysis by Delta Associates. In suburban Maryland, rents for luxury high-rise apartments rose 11 percent.

 

About 6,500 additional renters leased units in the past year, up from about 4,400 in the previous year, according to Delta Associates. The Washington area has one of the lowest apartment vacancy rates in the nation, down to 1.7 from 2.4 percent a year ago, compared with a national average of 5.7 percent.

 

The rent increases are confounding industry expectations that rents would fall because of the huge number of new condominiums, many of which were sold to investors who have put them up for rent. Experts say prices would rise even faster without the additional condos.

 

Even so, rents are expected to rise 5 to 9 percent annually over the next few years, said economist Gregory H. Leisch, chief executive of Delta Associates.

 

More than a half-dozen projects have recently shifted from proposed condo complexes to rental apartments. Delta Associates projects about 2,000 units are being shifted or will remain as rentals this year, with another 2,000 going that route next year.

 

"Every large developer I know is working on a project that was expected to be condo -- and that they are now taking back to apartments," said Mark Coletta, regional partner of Fairfield Residential LLC, which is building about a dozen projects in the Washington area. "That's what everyone is doing."

 

Among the projects that have recently made the switch to rental or will remain rental are a 19-unit building at 1325 N. Pierce St. in Arlington; the 1901 West building in Annapolis, with 282 units; the Park Center complex in Alexandria, with 574 units; the Bristol at Fair Chase in Fair Oaks, with 392 units; and a 415-unit complex in Baileys Crossroads scheduled to break ground in the fall.

 

The going-rental option is under consideration by the developers of a 183-unit complex at the site of the old National Institute of Dry Cleaning, and a 325-unit project called Cameron House, both in Silver Spring.

 

Stephen Muller, president of Union Realty Partners Inc., which is building the 183-unit project, said he began considering the shift after a well-heeled family rented a single-family house he owns, saying they did not think it was a wise time to buy. "I think it's frankly smart," he said.

 

Coletta said he was influenced by the performance of Fairfield's condo projects in Fair Oaks, Herndon and Germantown.

 

"All are doing fine, but we've clearly see fatigue on the part of the consumer," Coletta said. "Traffic has dropped off, contracts have slowly declined. You see the writing on the wall at the same time apartment fundamentals are improving. It makes the business decision a pretty easy one."

 

Instead of converting the Virginia Commons complex in Dumfries into condos, its owners have decided to spend "several million dollars" upgrading the place and renting it to people who make $70,000 to $90,000 a year -- too much to qualify for housing assistance but too little to be able to afford to buy a home.

 

"Every owner nowadays goes through the thinking, 'Should I go condo, cash out and call it a day?' " said Kenneth Shiu, manager of Realco Millennium LLC, which owns Virginia Commons. "We started thinking, 'Why not make ourselves nicer and reposition the place?' "

 

Developers who proceed with condo plans face a flood of competitors. There are some 26,600 condo units being marketed in the Washington region, according to Delta Associates, up from about 23,100 in the same month last year. But there are some 48,000 units moving toward construction in a market where prices, though not falling, have already gone flat.

 

Leisch said that condo developers increase the base price of units so existing owners and new buyers feel confident they are buying into a rising market, but that then they offer concessions -- better appliances and upgrades, picking up part of the closing cost -- so new buyers think they are getting a good deal.

 

"It's the old shell game," Leisch said. "You increase the price to reduce the price so after all that nonsense, the price is unchanged. Car dealers do it all the time."

 

© 2006 The Washington Post Company

[odudave]

Interesting article! That's exactly why I COULDN'T rent my house out in Maryland. We purchased at the peak of the inflated market becuase of the timing of our move there. When we left, we looked into renting the house out until it sells, but it would only bring in about HALF of what the mortgage payment was!

 

 

We're in almost the opposite situation here in Dallas. I just read an article that said June apartmental rentals are near an all-time low. THe vacancy rate in rentals is extremely high - probably because real estate is relatively cheap around here so a lot of folks are buying. I guess it's a good location to be in a "renter's market" for now. Apartments have all kinds of crazy incentives going recently, too.

Edited July 7, 2006 by odudave

[squirrelgirl]

I've actually thought about it. We bought our house over 3 years ago, but when we bought, it was just for me and DH. We weren't planning on having kids. We were only going to stay for 3-5 years. The house is kind of small... and of course the market has gotten so bad, we may not even be able to sell for what we bought it for! Three houses on my street are for sale right now, they are not out of line for the neighborhood/community in regards to asking price... however, no offers. Kind of scary.

 

Really, we are hoping to move back to TX. The property taxes are outrageous, but we could buy a house much bigger for a LOT less.

[bee bee]

This is a HUGE question for me as I am nearing the EOL. The rent is at $500 + utilities. I have no qualms versus owning a home and prefer homes ofer the atypical aparment complexes, BUT it is hard to find a home with comparable rent.

 

I'm located in the suburbs but this area is growning as it is relative close to the city center (15-30 min drive depending location). I'm fixed at a budget in order to fulfill some budgeting needs and so forth... I just don't want to buy a home to have one or taken any house that would yield a low mortgage payment if the house is in shambles.

 

What do do? what to do?

[preezie]

It depends on where you live. I live in MD, right outside of DC, and I cannot afford to buy right now. A mortgage for me would be more than double my rent right now, not to mention taxes, upkeep, association fees (because everthing is part of a subdivision these days). My entire montly income would go to trying have a roof over my head and I'm just not comfortable with being house poor.

[bee bee]

Seriously, what I fear most is being house poor. I have seen others fall in that situation just for the sake of home ownership. I may just get a wild hair and give a realtor a call just to get an idea of the costs of renting vs owning.

 

For quite some time I had considered trying to acquire a duplex and rent out the other half. The plan was to become vested in the property in a someone in that I knew as a bit of a security blanket. manner where I could eventually move out and rent the entire unit. Landlording can be complicated (I know); my intentions were to bring

 

I'm babbling at this point. Every time the first of the month comes around, I just feel like it is more money thrown down the toilet.

[preezie]

Seriously, what I fear most is being house poor. I have seen others fall in that situation just for the sake of home ownership. I may just get a wild hair and give a realtor a call just to get an idea of the costs of renting vs owning.

 

For quite some time I had considered trying to acquire a duplex and rent out the other half. The plan was to become vested in the property in a someone in that I knew as a bit of a security blanket. manner where I could eventually move out and rent the entire unit. Landlording can be complicated (I know); my intentions were to bring

 

I'm babbling at this point. Every time the first of the month comes around, I just feel like it is more money thrown down the toilet.

 

 

Yeah, that's exactly how I know. I just talked to a realtor about 3 weeks ago and when he told me what townhouses were going for in the areas I was interested in, I said "No thank you." I'm very okay where I am now.

[CargoJon]

We are seriously considering selling our home for a profit and renting, we want to be free of taxes and insurance, and already have a home out of state we have that we own and is rented...

We are so sick of maintenance, a pool and spa and the grounds, and the upkeep.

Any insight or advice is apprreciated~

We may net around 140-180K and no cp gains as we have lived here 2+ years.

We also put 100K down when we bought it...

 

I thought that cap gains was avoided was if you used the proceeds to buy another house?

 

Plus, if you put 100k down - is your 140K including that or in addition to it?

 

Renting sucks.

[cotterpin]

Ultimately the decision to buy vs rent is a personal choice.

 

For QUilty, it's about the same on a rent vs buy scenario

 

For me, it's a matter of buying being at a minimum 3X more than my rent, plus having to pay the taxes, upkeep and maintenance as well.

 

I'm in the Northeast also, and right now is NOT the time to buy up here. Even new construction isn't selling well around ehre, and there are "for sale" signs popping up over and over, but the prices are still too high for most to consider.

[TJ Girl]

I thought that cap gains was avoided was if you used the proceeds to buy another house?

That was the law up until 1997. Since then you avoid capital gains up to a certain $ amount as long as you've lived in the home 2 years.

($250K for singles, $500K for married couples)

[TxQuiltGirl]

Ultimately the decision to buy vs rent is a personal choice.

 

For QUilty, it's about the same on a rent vs buy scenario

 

For me, it's a matter of buying being at a minimum 3X more than my rent, plus having to pay the taxes, upkeep and maintenance as well.

 

I'm in the Northeast also, and right now is NOT the time to buy up here. Even new construction isn't selling well around ehre, and there are "for sale" signs popping up over and over, but the prices are still too high for most to consider.

 

 

 

This is mostly true. Because of the high property taxes here, I have to be very careful ... and the fact that some areas have REALLY high property taxes ... well that's even worse. Find something in a MUD and you might as well throw money out of a window while going down the highway.

 

MUD = Municipal Utility District for those who don't know. The taxes are outrageous.

[crankySNH]

I relocated to New Hampshire from NYC in January. I sold my NYC apartment (closed in May), but am currently renting and plan to do so for a while. I paid off all of my debts with the profits from my apartment (and I still have plenty left to put 20% down on real estate) and now I'm just trying to improve my credit a bit and maybe save some more money (so I can put as much down as possible). Also, since I'm new to the area, I'm still trying to get the lay of the land, figure out what I want and where exactly I want to be (I seem to change my mind every week). The apartment that I'm living in is very comfortable, central air, balcony, huge closets, washer/dryer, etc. (far more comfortable than the apartment I owned in NYC) and my dog is welcome here, so I'm not really feeling a huge amount of motivation to move (again) any time soon. I do, however, want to own again someday. I just have to get my ducks in a row and figure out what I want. At least this time I'll be starting off as a home owner debt free, well, except for the mortgage I get.

[Marilie]

This is a good discussion! I was just thinking about this the other day. Thinking about delving into the world of ownership. I have ALWAYS rented, since leaving NY. Atlanta is a crazy market, though. I'm not big on the outside upkeep so if I did do it, I'd probably have to go for a townhouse. I've just now gotten my credit back to the point where I could realistically try ownership (thanks to CB!). It's such a big debate and I will probably be debating with myself for a while.

[Mudfence]

I thought that cap gains was avoided was if you used the proceeds to buy another house?

That was the law up until 1997. Since then you avoid capital gains up to a certain $ amount as long as you've lived in the home 2 years.

($250K for singles, $500K for married couples)

 

What you're thinking of is called a "1031" or "like-kind" exchange. Typically its for investors and has some hard and fast rules; Money deposited in escrow, New property determined in 3 months settled in 6 months and the like.

[reanea32]

I live in South Florida and our rent is now $1500 per month, therefore home ownership is much more feasible for us. If we renewed our lease for another year, my rent would have increased to $1575 per month.