Renting forever

[Radiance]

Radiance, it sounds like you know what you want. The title implied that you were set on renting forever, but your last post reflects your flexibility in the matter. Renting and buying is not pure numbers, there is a large emotional component involved. Sounds like both the numbers and personal preference are in favor of renting in your case, go for it!

Thank you, you are right, I am just trying to double check I a not missing something on my logic...

So, let me address this answer by QueenOphelia

Where are you going to invest the money you aren't using for a down payment/monthly mortgage payment? Unless you do high risk stocks...I don't see how you can possibly get the same ROI as when you eventually sell a 25-40 year old house.

I want to retire at 65, meaning not having a 8-5 job at 65. I know ss will kick out after 70 or so, but women on my family usually don't live much linger than 65. Although I plan to break the records!

THis is 25 years from now, so I can not wait much more than that to 'cash' out on my investment. Being that I will be renting soon after the shortsale, if I buy with plans of investment, it will have to be a 25 year mortgage.

Also, how much will you have left to invest each month after you pay rent? Will it be as much as what you pay in rent?

After I pay rent, I would have minimum 800 extra, more as I continue to pay down non cc debt

Buying real estate historically is a sound investment if you plan on staying in your home for a long period of time. Anyone who bought a home prior to 2000 has certainly made a nice return.

I am reading about this in the newyorktimes and such and that is an speculation statement, maybe real state is a good investment, maybe not.
Read the articles I sent. very interesting

At its best I think real state should not be more than 30% of ones retirement plan.. It you can get 6% compound from investments, that is better than any real state investment, don't you think?

Going forward...I think it will eventually be a solid investment again...you just need to ride out this economic downturn.

How do you know that? Some experts say this was just a downturn, other say this is a complete change on real state market, now and for the next decades. I don't think anybody can bet on real state being a solid investment. Depending on which numbers you look at, the return seems to be 7% or less.

The risk is, for families to rent but not allocate a sufficient amount for savings and investment. Unfortunatelly the temptation is too much not to do so. A vacation now sounds better than money for retirement later.

I am comfident on my ability to assign moneys for retirement and not touch them even if there is a $45 weekend deal to Sea World.

All that plus my need to move and my bruise finances after the real state lead me to rent.
Plus, I was not counting on separating, if I buy again I want to ensure I can pay for that asset on my own.

[LivingAlmostLarge]

As always it really depends. In a LCOLA area, I know people whose mortgage is $120k. The rent is something like $700/month and so buying really isn't that much more expensive.

But in other areas rent is very cheap comparable to owing. Like everything Real Estate is location dependent.

It's impossible for someone else to judge your situation because they really don't live where you live.

[MonkeyMama]

Um, it highly depends on the area. Each specific area.

It is better to buy in the HCOLA I live in. Area will always be desirable, and rents will always go up with inflation (historically, WAY faster than inflation).

Reasons I would not rent where I live: High competition for rentals, landlords sell in the boom and foreclose in the downturn. I've said many times around here, renting is a ticket to constant moving. High competition for rentals mean tenants tend to pay for more upkeep/maintenance on rentals than renters in most areas seem to. Since renting is also more expensive here, there really is no financial incentive to rent. Except when you are broke and saving up for a home.

In other areas people seem to talk about low rent prices, no maintenance expenses, and though renting isn't exactly "stable," seems like landlords don't sell quite as often in most other areas of the country. In those situations, not sure why you wouldn't just rent.

I won't try to talk you out of it.

Let's put it this way - if rents are very high - by owning you will eventually pay off your mortgage. (Property taxes and insurance and maintenance are a drop in the bucket compared to rents, where I live. Pennies vs. dollars). BUT, if renting is cheaper, you have more opportunity to save your money and invest. The difference will eventually build to an amount to offset your rental costs (income earned on investments should eventually pay rent).

I think most people are in the middle, and it's hard to know what is best.

[Seeker]

Thank you, you are right, I am just trying to double check I a not missing something on my logic...

So, let me address this answer by QueenOphelia



I want to retire at 65, meaning not having a 8-5 job at 65. I know ss will kick out after 70 or so, but women on my family usually don't live much linger than 65. Although I plan to break the records!

THis is 25 years from now, so I can not wait much more than that to 'cash' out on my investment. Being that I will be renting soon after the shortsale, if I buy with plans of investment, it will have to be a 25 year mortgage.



After I pay rent, I would have minimum 800 extra, more as I continue to pay down non cc debt



I am reading about this in the newyorktimes and such and that is an speculation statement, maybe real state is a good investment, maybe not.
Read the articles I sent. very interesting

At its best I think real state should not be more than 30% of ones retirement plan.. It you can get 6% compound from investments, that is better than any real state investment, don't you think?



How do you know that? Some experts say this was just a downturn, other say this is a complete change on real state market, now and for the next decades. I don't think anybody can bet on real state being a solid investment. Depending on which numbers you look at, the return seems to be 7% or less.

The risk is, for families to rent but not allocate a sufficient amount for savings and investment. Unfortunatelly the temptation is too much not to do so. A vacation now sounds better than money for retirement later.

I am comfident on my ability to assign moneys for retirement and not touch them even if there is a $45 weekend deal to Sea World.

All that plus my need to move and my bruise finances after the real state lead me to rent.
Plus, I was not counting on separating, if I buy again I want to ensure I can pay for that asset on my own.

Radiance, QueenOphelia is probably correct. I bought in the early 90's and even if my home is destroyed, I would have paid more in renting over the twenty years that I have lived in the condo that I currently do. HOA fees included. Taxes included. Maintenance repairs and painting inside included. Of course, renting in LA, Orange County or anywhere in California is huge. There's just a lot of people with housing needs and not enough space.

If you want to be mobile, then why keep asking these same questions?

Buying is NOT for anyone who does not desire to remain in the area long term. Others may suggest otherwise, but you already know the facts. Buying is not and was never meant to be for everyone.

You have a toddler and you plan to retire in 25 years. What happens if your son wants to go to medical school? Save your money. Don't buy a house because someone is making you feel like you "need" to... you don't. Nobody does need to buy unless the rents are outrageous, the location is perfectly fine for you long term and the price of a place is affordable and lower than rents.

You've already stated that rents in your location are affordable; so why do anything else?

[wincrasher]

Well it depends, doesn't it? Currently rents are very affordable. That pendulum will swing back in a few years and buying will be the better deal and so forth.

Freedom, as you describe it, is a bit of an illusion. We are all restricted by our credit scores, kids, relationships, obligations and jobs. But I get what you mean.

In my situation, I can take a job anywhere in North America and keep my home base. But I couldn't do that if I had kids, well I wouldn't really want to anyway.

Buying is always smart if done right. The right house, the right price, the right financing. If your mortgage had been at 4.5% or so, you might have been singing another tune now. If you had the money, buying a foreclosure could be a good opportunity right now - especially in South Florida - there are lots of properties selling at ridiculously low prices down there.

[Radiance]

I am clearly tilting towards renting and I appretiate all the feedback, it helps me validate I am not missing something critical or I am not fooling myself.

This is all forecasted, I am in the middle of short selling my house. I am looking into the future. At least when I move from the house when it sells I know I'll be renting.

I'll keep on watching what is happening both in the real state market and on my savings fund. My life have changed dramatically in the last 10 months. I've learned that life does turn in a dime and that felxibility and adaptability are essential for survival and for happiness.

I had originally bought the house at 156, unfortunatelly refi at 270. Now I am lucky if I can sell at 170.

I could indeed buy a house, I could buy my house if it was at the price I am selling it for. But since I am looking at places to live from outside of the box, I'd better wait and save before I get myself on a mortgage again.

For now it will be about save, save, save and pay off debt and save some more. In three months, will see.

I plan to review my strategy every 3 months.
Thank you everybody!

[LivingAlmostLarge]

is part of it that people make you feel bad for renting? I think renting is great when you aren't ready to buy. And for some people and areas it never makes sense to buy.

[littlehousevalley]

Determining to rent rather than own is, perhaps, a location based decision. In the long run, it is probably more advantageous to own than to rent. For instance, I live in Southern California. The housing market has greatly decreased, so those that purchased their homes during the upswing are feeling a little burned right now.

However, there were a lot of older homeowners that made huge profits by selling their homes during this same time. So, if you are willing to stay in one place for a long time, and the housing history in your area shows long-term homeowner DO profit, it is probably better to buy.

My husband and I are currently saving money to become first time buyers by next year. We have been renters for close to 18 years and feel that buying is a better option for us. Also, data shows that home owners are usually financially better off than renters (I want to say I read this in a Liz Pulliam Weston, MSN article).

[QueenOphelia]

I
I had originally bought the house at 156, unfortunatelly refi at 270. Now I am lucky if I can sell at 170.

I assume your refi was to pull cash out? A poor decision as you discovered.

Real estate is a great investment ...if you don't treat your house like an ATM machine.

[QueenOphelia]

However, there were a lot of older homeowners that made huge profits by selling their homes during this same time. So, if you are willing to stay in one place for a long time, and the housing history in your area shows long-term homeowner DO profit, it is probably better to buy.

Exactly. If you can afford to buy...do it. Mortage rates are still ridiculously low.

[Alex_Adviser]

In general, i'd like to say that the problem with rent-to-own is that it ties you down to that property. Why not just rent, and keep ALL of your options open? RTO is rarely a better deal than buying a home & it's often more expensive than renting.