Do you rent or own your home?

[NorCalAthlete]

As I shop for a house I'm meeting more and more people who swear they'll never buy a house because their investments pull more than a house would appreciate, or because it's just too much of a hassle, whatever.

I'm pretty set on having an asset I can rent out if need be, that is highly likely to appreciate by a 6-figure amount, in a desirable area, so I can have my own garage for my car and do what I want with the place without worrying about losing a deposit or whatever.

How about the rest of you? Do you own? Rent? Rent for now but plan to own when able?

[325bim]

Tough call in your area for real estate, where 1 bed condos go for 1 million, 200k to lockup on a down payment may be better served invested. However, some other things to consider, interest and property tax deductions. Here in mesa, I bought my house 4yrs ago at 400k(80k down), its worth over 500 now, so that’s a better rate of return, than I could do in the market as a casual investor.

[NorCalAthlete]

Originally Posted by 325bim

Tough call in your area for real estate, where 1 bed condos go for 1 million, 200k to lockup on a down payment may be better served invested. However, some other things to consider, interest and property tax deductions. Here in mesa, I bought my house 4yrs ago at 400k(80k down), its worth over 500 now, so that’s a better rate of return, than I could do in the market as a casual investor.

"Casual" investor being the key word there I think. Fire and forget vs wire guided so to speak. I'm looking at dropping ~$150k down for a (hopefully) ~$800k-$850k 3 bed, 2 bath townhouse with a 2 car garage and low HOA - and I'd consider that a steal for the area. But, in all likelihood, that'll be worth $1,200,000+ in the next 5-10 years.

[Giggler]

I think a pro-rent stance is a self-justifying argument told by people who don't have their money straight to buy a home. For sure it's tough to get into a home in the Bay Area. You have to SACRIFICE to make it happen.

One of the easiest way to get into a nice home is to start with what is commonly referred to as a "starter home" through a process called "Moving Up". Here's an example:

Step 1. Buy a 500K condo (a 400K mortgage after 20% down payment) - live in it for 5-10 years - sell it for 700K.

step2. now take all your 300K profit (down payment plus equity) from selling your house and buy a 1M property. (700K loan with 30% down). Now you've got a million dollar house with a 700K loan.

Yeah, you potentially could have pulled that same 300K profit from yoru starter home by buying FANG stocks, but I can assure you that the money you pay into a mortgage is not that much more, and probably less in most cases, than the money you put into rent, so a home owner is just as likely to be able to participate in the markets as a renter.

Here's another thing to consider (a gray area that people don't often talk about): People who pay rent will always be stuck in a rental market. You're always going to have limited and inferior choices of housing. Not to mention there's a world of difference between living in a community full of fellow home owners versus a community full of tenants. Generally speaking, tenants are fair weathered people who come and go, and who have no pride in their homes and little respect for their neighbors. There's also tax advantage and HELOC's and other ways of using your house for financial gain, but it gets to be a rabbit hole.

[NorCalAthlete]

That rabbit hole is one of my drivers for buying vs renting lol.

[ShopVac]

14 more payments...will truly own

[zx10guy]

Originally Posted by ShopVac

14 more payments...will truly own

Exactly. As unless you own the house free and clear of a mortgage, you really don't "own" the house. Technically, you never do as you have to pay property taxes in perpetuity. Watch what happens if you don't pay your taxes.

[M_Six]

Have owned outright for a few years. Just upkeep (new a/c compressor this week) and property taxes/insurance now.

That humble-brag out of the way, we live in a very low cost area. There are definitely trade-offs. I couldn't imagine trying to buy a house in any major metropolitan area these days.

[zx10guy]

I feel having some real estate is just another part of having a balanced portfolio.

But I don't view either of my properties as investments. They're places I live in first and foremost. I attempt to buy in a location which wouldn't want to cause me to want to sell in the short term to get away from any problems. I also try to buy at the right time where I'm not over paying for the home in price or in mortgage interest. So far I've been lucky with my home purchases.

I say if you're willing to take on the responsibilities of home ownership and it fits into your lifestyle, go for it. If there are any doubts, I would hold back until you're 100% sure. It's a big commitment and if you decide you bought the wrong house or in the wrong location, it's going to take time and additional money to fix that mistake. This investment isn't the same as a stock investment where you can call your broker and issue a sell order expecting the proceeds in a few days.

[dinonz]

Originally Posted by NorCalAthlete

As I shop for a house I'm meeting more and more people who swear they'll never buy a house because their investments pull more than a house would appreciate, or because it's just too much of a hassle, whatever.

I'm pretty set on having an asset I can rent out if need be, that is highly likely to appreciate by a 6-figure amount, in a desirable area, so I can have my own garage for my car and do what I want with the place without worrying about losing a deposit or whatever.

How about the rest of you? Do you own? Rent? Rent for now but plan to own when able?

Depending on your circumstances, they are right - for me, owning a house was a "bad" investment. I could have made 10x as much if I left it in the investment I had.

However, there are intangible benefits that you cannot get with renting. A degree of permanence for starters. Replacing the garage doors with high lift versions to install a 4 post lift. Putting in a pool at the back. Things you wont get unless you search for the "perfect" rental.

[AlpineWhite_SJ]

Originally Posted by NorCalAthlete

As I shop for a house I'm meeting more and more people who swear they'll never buy a house because their investments pull more than a house would appreciate, or because it's just too much of a hassle, whatever.

I'm pretty set on having an asset I can rent out if need be, that is highly likely to appreciate by a 6-figure amount, in a desirable area, so I can have my own garage for my car and do what I want with the place without worrying about losing a deposit or whatever.

How about the rest of you? Do you own? Rent? Rent for now but plan to own when able?

You don't live in the real world, so you shouldn't survey it for decisions on what to do where you live. In the Bay Area, over the past several decades, you could bank on making good appreciation on a house. But with the whole Covid WFH thing, that truth is going to be tested in the next few years.

Don't know what area you're looking in, but there are some areas which seem recession and downturn proof, but they're eye-wateringly expensive. Look at neighborhoods, schools, lot sizes and other things that aren't likely to change with a general outflow of people.

We bought in 2010 and sold in 2018 for 500k higher than we bought it for (almost 100% return) and it wasn't even a great neighborhood. Soild location, but average schools and small-ish houses.

[bayarea328xit]

Originally Posted by AlpineWhite_SJ

...

provided some good advice.

We purchased back in 2011 when we were at the last local minimum.

I'd never buy a house in the bay area now. Prices are too high, and there is too much pressure for people to move elsewhere. Something's got to give.

If COVID-19 ends up being with us in the long run, a lot of people will move to less crowded (cheaper for now) areas and work remotely.

[AlpineWhite_SJ]

Originally Posted by bayarea328xit

provided some good advice.

We purchased back in 2011 when we were at the last local minimum.

I'd never buy a house in the bay area now. Prices are too high, and there is too much pressure for people to move elsewhere. Something's got to give.

If COVID-19 ends up being with us in the long run, a lot of people will move to less crowded (cheaper for now) areas and work remotely.

Yup, I'm one of them. Looking to get the hell out of here the minute some of our house issues get fixed and wife's work confirms it's ok long term.

[zx10guy]

Originally Posted by bayarea328xit

provided some good advice.

We purchased back in 2011 when we were at the last local minimum.

I'd never buy a house in the bay area now. Prices are too high, and there is too much pressure for people to move elsewhere. Something's got to give.

If COVID-19 ends up being with us in the long run, a lot of people will move to less crowded (cheaper for now) areas and work remotely.

That's assuming one can make the shift to work remotely if they're not already doing so. And because everyone else is going to have the same idea, you're going to have competition in getting these coveted remote work jobs. I've been able to work from home since 2011. I'm glad I made the shift to my current employer last year or I'd be really screwed. While that job was work from home too, the company is undergoing some major management challenges which started well before this whole COVID thing. I've spoken to a former coworker there. He said the whole situation has gotten worse from when I left. Massive numbers of RIFs, shake ups with management, increased work load, and a forced 10% pay cut over 2 months. I told the ones that had the ability to start looking when I got the heck out of there. But they decided to stay. All the ones that could see the writing on the wall bailed. I'm now watching the musical chairs thing play out and the number of available chairs is quickly disappearing. And the field I'm in is IT sales.

[AlpineWhite_SJ]

Originally Posted by zx10guy

That's assuming one can make the shift to work remotely if they're not already doing so. And because everyone else is going to have the same idea, you're going to have competition in getting these coveted remote work jobs. I've been able to work from home since 2011. I'm glad I made the shift to my current employer last year or I'd be really screwed. While that job was work from home too, the company is undergoing some major management challenges which started well before this whole COVID thing. I've spoken to a former coworker there. He said the whole situation has gotten worse from when I left. Massive numbers of RIFs, shake ups with management, increased work load, and a forced 10% pay cut over 2 months. I told the ones that had the ability to start looking when I got the heck out of there. But they decided to stay. All the ones that could see the writing on the wall bailed. I'm now watching the musical chairs thing play out and the number of available chairs is quickly disappearing. And the field I'm in is IT sales.

IT sales can be rough and extremely political based on who is leadership. I did sales/marketing/channel ops for most of my post-college career and it's extremely company dependent on how they handle remote workers. Always good to have some HQ people you trust keep a pulse on how things are going at the factory.

PS - In the Bay Area where a lot of firms are located, the move to remote is largely viewed as necessary and sustainable for the next 1-2 years. Some companies have done work from home indefinitely, others have said definitely through calendar year or two. Just so you have a feel for things around here if your company is based here.

[Germanauto]

I think it really depends on location. People have gotten rich over the years through real estate. The home I grew up in in a large metro in the Midwest has not appreciated a dime in over 25 yrs. Yes the COL in such regions is low, but home ownership isn't a great investment. This home been paid off for years and is now just a stable source of additional income for my folks, but it's a massive headache to upkeep and find renters for.

We moved to the west coast 15 yrs ago and real estate has exploded in value over that time. These west coast metros are basically recession-proof. The downside is that these locations have become so expensive that even some of the highest educated and earning members of society have trouble getting into the market.

[vreihen16]

Originally Posted by ShopVac

14 more payments...will truly own

We have about 53 payments left on our house, and I can't wait until the day that note is retired.....

[King Rudi]

I bought my home 6 years ago in May. I do enjoy living in my home, but if I had to do it over again; I would have bought a condo. Although I do have a girlfriend and it seems as if it's more work than a marriage most days, I live alone and work 50-55 hours/week. Add gym time, girlfriend time and work that needs to be done around the house just to maintain....there simply aren't enough hours in the day for it all. I'm seriously considering selling my home and getting a condo. I despise only having 2 days off a week and those 2 days are spent doing home repairs, gardening, landscaping etc. Would be different if I spent more time at home to actually enjoy my home; but technically it's nothing more than a box to keep my stuff and where I go to sleep, shower and change clothes. In order to be in the place I am, it requires sacrifice; that sacrifice is sleep and constantly rushing from one thing to the next just to get it all done everyday. There is no time for relaxation or to even sit down for a bit. My friends and I have all agreed for years, home ownership is not what it's cracked up to be. I did pay cash for my home. If I had to finance, I would just rent and let the owner deal with the headaches. I still feel like the "American Dream" (go to school, make good grades, go to college, get a degree, get married, buy a house, have kids, etc.) we were sold years ago is bullshit. In my experience, the grass is greener on the other side, but once you see how much dedication goes into making said lawn as green as possible, unless you have the time to devote, it doesn't stay green long.....and if you work and have a personal life, you don't have the time.

Originally Posted by zx10guy

Exactly. As unless you own the house free and clear of a mortgage, you really don't "own" the house. Technically, you never do as you have to pay property taxes in perpetuity. Watch what happens if you don't pay your taxes.

This.

[Murf993]

We bought 5 years ago for $500K, just had an appraisal and we're at $1.1M, still have a small mortgage but carrying cost is very reasonable. (so me and the bank own it).

This mind you is in Canadian money so about 70% USD. I can see the argument for renting vs buying but we like owning the house.

My biggest concern right now is how the lockdowns impact all things financial moving forward, I'm hopeful real estate doesn't take a pounding as my wife is close to retirement and and we may want the option of downsizing.

[JustinHEMI]

I own my home but I hate being a homeowner. I hate maintenance, lawn care, etc. But I also hate the idea of a condo. I'll probably buy again in the future with a lot less outdoor space to maintain.

[9M71]

Own a condo, but considering renting in the suburbs to feel it out before committing.

[Hawkeye]

I will never not own a house again. I enjoy customizing stuff and I actually enjoy yard work as well. I don't plan on seeing even 10% appreciation on my house as my area doesn't really have that dumb shit happen here, houses are still really affordable, probably because land is also plentiful.