Yes, that has happened occasionally, and I know admin is working on it. I'll email them and let them know guests are having an issue this week. Thanks for letting us know.
You could deposit the check via ATM but if the check is bad, you'll end up getting the check back and having to collect the money. That the thumbprint banks don't consider the scenario of bad checks is my main gripe.
Good reminder that there's actually a whole continuum shy of being a full-fledged landlord, including having a roommate, taking in a border, or renting out part of a house as an apartment. Of course, some of those options are available to renters as well.
It's also true that home equity has historically been a lot more commonly used as collateral than other assets, although I don't think there's anything fundamental about it: The renter with the hypothetical investment could pledge that, instead of the house. That sort of borrowing, called a margin loan, does have downsides that home equity loans don't have, including getting sold out if the value of the collateral drops.
Inflation is a given. Where we live (on the coast of New England), the cost of renting has gone up dramatically in the last 10 years, along with the prices of houses.
When you buy you lock in your rates. You're going to be paying the same monthly for the rest of the term, and then you can turn around and sell or rent it out.
Yes, taxes do go up, but depending on your area they might not be assessed at the true value of your property or else infrequently.
We've seen friends of ours who have rented for decades with nothing to show for it - no fat bank account, no solid assets, nothing. Human nature is lazy. If you don't save the difference and invest it, there is no savings. For most of us, having to pay the monthly nut on a mortgage is an easy way to save.
Not to mention that you can't even rent the same quality houses here ... as the demand for real estate increases, all the good rentals are being turned into single families. Now our non-homeowning friends are renting places that are less and less desirable every year. So every few years their monthly expenses go up, their options for rentals becomes fewer, and their bank account remains on empty. No thanks.
The average person will NOT invest the difference between rent and mortgage. If they do, MOST will touch all or part of it due to a life change (loss of job, illness, loan to parent or sibling, etc.).
In theory renting can be cheaper as many pointed out. But few renters can say they got 8 percent and left it to gain over 30 years.
To me, when all the other numbers are crunched, mashed together and spat out at the other side, the real hidden cost of home ownership/purchasing is the human egoic need to show off.
This is where every home owner comes out second best over the person who chooses renting. As soon as home owners start renovating, doing-up, re-modeling and supposedly improving the property he/she is going backwards.
I make a living in the home restoration market, and people are just throwing money away left, right and centre on totally unneccessary renovation expenses, all in the attempt to try and impress other people. My work is sanding and polishing timber floors, and much of the work I do is pulling out perfectly good carpet or tiles and then polishing the floors underneath. Unless the tiles and carpet are ruined, doing this is just a total waste of money and has very little, if any, bearing on the eventual re-sale value of the property. In most cases, I find that they are only doing it to try and impress someone else, or to give the impression that they are well off. To make matters worse, is they more often than not use borrowed money to do these unneccessary renovations, which only serves to send them further behind the eight ball. Quite comical really, however I play their game, as it suits me perfectly.
So, at the end of the day, renting verses buying, either way it doesn't matter, as it really is just somewhere to store our stuff and somewhere warm to sleep at night. But when you start spending money, that you have borrowed and must payback with interest, in an attempt to try and make your house look like you are richer than what your paypacket suggests, to me, this is nothing short of maddness.
But, hey, don't tell too many people 'cause it might stop my phone from ringing off the hook each day. (*_~)
It's certainly not a universal law that renting is cheaper--it all depends on what the rent actually is, and on what other costs are included in the rent.
It seems that some of the people are assuming that the monthly rent is cheaper than the monthly payments for a house.
That is not true everywhere, say, for instance, where I live in Pittsburgh. My wife and I rented an apartment when we were first married for $650/month (heat/water/sewer included). It was a "two" bedroom apartment, where I called it a living room and a bedroom, and then a decently sized kitchen/dining room (for a one floor apartment).
We bought a house a year later, and the payment on the mortgage (15 year) was $379. Taxes and insurance brought it up to $479. I'll guess a little on the utilities, but I think our current monthly average is $50/electric, $100/gas and $40/water/sewer. Electricity wasn't included in our rent, so the house payment comes in less than the rent. We haven't had any significant maintenance issues, though we have only been here 5 years. The house is now paid off, so we now pay very little per month.
And if you believe the real estate estimates (and other house sales in the area) the house has gone up quite a bit in value (new hospital in the area).
We aren't planning on sell if/when we move, but will likely rent it out, since renting an entire house should probably provide a decent income.
Talking to a friend in Seattle, she said the rental rates were about the same, but the house costs were 2 to 3 times higher, so I guess it depends on what area of the country you are in.
If my husband and I didn't have pets, we would be in an apt right now. Where we live, there are some very attractive units. Plus, they include amenities such as a pool and an exercise room--things we couldn't afford on our own.
A friend of mine used to move apts every year. She was single, lived in a big city, and there were new apartments being built all the time. So, she'd move to the next new complex and have a brand new space every year. I've seen some apartments offer a month free rent to move into one of their units.
Another point to consider, if you own a home and consider it an asset, is this: many people are acquiring home equity loans to do anything from pay off debt, to make home improvements like putting in a pool. I know people who have done this, and I also know a couple who got such a loan for a (gasp!) big screen tv. If someone is borrowing against their equity, up to the point that they owe 100% of their home's value, they obviously now have a larger house payment. So, I guess what I'm getting at is that yes, the homeowner's payments may not increase--if they don't get another loan. It seems so common to cash out the equity in one's home, or even refinance to get cash. If someone was going to treat their house as an asset, they would need to resist the temptation to borrow against the equity.
I wanted to respond to the comment left by PjEvans. I believe that a home is an asset. If I create a robot that saves me time, it is an asset. I can use that time saved to advance my business. If I lose that robot, my business drops off and I make less money.
A home is very similar. Instead of saving time it saves money, which means I can focus other money on money making ventures, investing and the like. Most directionaries would describe it as an asset as well. They use words like it being "a resource" or "something of value".
If you don't believe that a home is an asset feel free to give me one for free :-).
Overall, I'm thinking this could go either way depending on your priorities and preferred lifestyle. But one more thing you can do with the equity Philip (if you're comfortable with this and are extremely savvy about finding the right opportunities, that is) is leverage it for a hard money lending opportunity and make your money on the point spread. This would definitely put it into the income producing asset category that the other person was commenting on. We've been doing hard money lending a bit in the last couple of years. We're still learning, so we haven't used equity for it yet. However, we can both see a time in the relatively near future when we will feel secure enough with our skill set and range of opportunities to go ahead and do the point spread investment thing.
Not everyone is comfortable with this, and it's far from standard advice, so it's definitely not something you would want to jump into without lots of security, information, and backup. But it is an option.
Also, what about basement, garage and attic apartments as additional income streams for a house / asset? No one has really mentioned that yet. I'm not saying you're wrong about your renting thing, though. If you are not comfortable with certain situations and strategies for home use, than renting can be better for your particular situation. Some people value their independence in decisions more, while other people value the mobility and lack of owner responsibility more. Just depends what you want. Hope these comments are of help to people.
Great choice of topic, as usual. Very interesting conversation going on here. Lots of great points.
A Home is not an Asset; assets generate real income (e.g.,vending machines, businesses,...). If you were to lease it to a tenant, then it would become an asset. My 2 cents.
You are forgetting a key thing which is the inflation rates. Inflation and the values of homes affects the prices of rent.. so you cannot just calculate the rent today multiplied by 20 or 40 years, you have to take into account the average 5% inflation rate... on the contrary when you buy a house your mortgage (unless refinanced) is going to be the same regardless of the value of the house and the inflation rates.
Thus, real estate ownership is an obviously wise investment. Sure there are some drops in values in some areas but in general values of homes go up and you just have to find the right cities to invest, such as growing economies like Phoenix and North Carolina where more and more businesses are moving.
The freedom of mobility when renting is a big plus for me. If I find a different place that suits my needs better, I can just give my notice, clean out and move. I don't have children or a spouse, but I can see those as being potential motivating factors to have a stable, concrete place to become attached to. Moving can be expensive, but it's much more expensive if you have to sell your home rather than just give it a good cleaning. Plus, all this is assuming that the home won't see any major damages during the course of ownership. I bet a lot of people in the midwest recovering from the recent floods are wishing they had put their money into something other than their homes, upon discovering that some insurance policies do not cover damage due to floods or "acts of god".
We just sold a double wide trailer we lived in. Why? Same thing. The costs of owning and maintaining it, in a park no less, were more than renting a one bedroom apartment.
It was only a 25K trailer, that we got more out of then we paid for. It sold in a week, with fighting bidders.
In all, we spent a lot more on upkeep than I would have thought. I had to fix the loose roof tiles, redo the porch stairs. I had to replace the stove, washer, and dryer. I had to replump the back bathroom, when the old pipes gave out.
That doesn't even include the cosmetic upgrades I did.
We found it is so much cheaper, and easier to live in an apartment. No grass to mow, no upkeep. If something breaks, they fix it. I have a lot more play money now.
I love seeing articles like this. It's a take that many people do not want to hear. Of course, like everything, it depends on the individual. But in my case, renting is definitely cheaper.
I rent a 1100sq apartment for $1000, and reside a 10 minute walk from my place of work. If I were to buy a condo of similar size in the Seattle area, I'd be lucky to find one for $400K. By "lucky" I mean, don't even bother. But just for fun, let's run the numbers. My local credit union has a 30yr fixed rate mortgage at 6.4%. For a $400,000 condo, that's monthly payments of $2500 for 30 years. Tack on home owner's fees, insurance, taxes, maintenance, the gas it would take to commute to work, car maintenance, etc, and I'd be looking at at least $3500/mo out of pocket for that condo. I'd end up with a condo that I paid $1,260,000 for. It would have to triple in value to be worth it to me. And only then is it worth anything if I sell it or rent it out.
If I kept my $1000 apartment and invested just HALF of the leftover ($1250) at an average 8% annual return, after 30 years I'd have a tidy $1,863,039.84. Subtract the $360,000 that I pay in rent and I'd have a net of $1,503,039.84.
And I don't want to hear anyone mention the tax deduction on the mortgage interest. You're only saving 25% of the applicable interest costs. You're spending $1 to get back a quarter. Not a good financial move in my opinion.
But like I said, it depends on the individual situation and needs. But for me (childless, married) it's a no-brainer.
Yes, my own experience with unexpected maintenance expenses was an important factor in my calculation. I know people who estimate their maintenance expenses at just a few hundred dollars a year--and in many years that may be accurate. But I think a realistic estimate that covers a period of decades needs to be several times that.
Yes, that has happened occasionally, and I know admin is working on it. I'll email them and let them know guests are having an issue this week. Thanks for letting us know.
I've seen him live many times and trust me, not one of the participants are stooges.
yeah, he does some pretty crazy stuff... but i bet that he wouldnt be able to stop stumbling. haha
Has anyone else experienced lost comments here?
Is anyone else having a problem with comments not posting or disappearing?
anyway to get 3V button batteries from anything?
You could deposit the check via ATM but if the check is bad, you'll end up getting the check back and having to collect the money. That the thumbprint banks don't consider the scenario of bad checks is my main gripe.
@Myscha:
Good reminder that there's actually a whole continuum shy of being a full-fledged landlord, including having a roommate, taking in a border, or renting out part of a house as an apartment. Of course, some of those options are available to renters as well.
It's also true that home equity has historically been a lot more commonly used as collateral than other assets, although I don't think there's anything fundamental about it: The renter with the hypothetical investment could pledge that, instead of the house. That sort of borrowing, called a margin loan, does have downsides that home equity loans don't have, including getting sold out if the value of the collateral drops.
Inflation is a given. Where we live (on the coast of New England), the cost of renting has gone up dramatically in the last 10 years, along with the prices of houses.
When you buy you lock in your rates. You're going to be paying the same monthly for the rest of the term, and then you can turn around and sell or rent it out.
Yes, taxes do go up, but depending on your area they might not be assessed at the true value of your property or else infrequently.
We've seen friends of ours who have rented for decades with nothing to show for it - no fat bank account, no solid assets, nothing. Human nature is lazy. If you don't save the difference and invest it, there is no savings. For most of us, having to pay the monthly nut on a mortgage is an easy way to save.
Not to mention that you can't even rent the same quality houses here ... as the demand for real estate increases, all the good rentals are being turned into single families. Now our non-homeowning friends are renting places that are less and less desirable every year. So every few years their monthly expenses go up, their options for rentals becomes fewer, and their bank account remains on empty. No thanks.
The average person will NOT invest the difference between rent and mortgage. If they do, MOST will touch all or part of it due to a life change (loss of job, illness, loan to parent or sibling, etc.).
In theory renting can be cheaper as many pointed out. But few renters can say they got 8 percent and left it to gain over 30 years.
Dusty
Well, a fascinating discussion.
To me, when all the other numbers are crunched, mashed together and spat out at the other side, the real hidden cost of home ownership/purchasing is the human egoic need to show off.
This is where every home owner comes out second best over the person who chooses renting. As soon as home owners start renovating, doing-up, re-modeling and supposedly improving the property he/she is going backwards.
I make a living in the home restoration market, and people are just throwing money away left, right and centre on totally unneccessary renovation expenses, all in the attempt to try and impress other people. My work is sanding and polishing timber floors, and much of the work I do is pulling out perfectly good carpet or tiles and then polishing the floors underneath. Unless the tiles and carpet are ruined, doing this is just a total waste of money and has very little, if any, bearing on the eventual re-sale value of the property. In most cases, I find that they are only doing it to try and impress someone else, or to give the impression that they are well off. To make matters worse, is they more often than not use borrowed money to do these unneccessary renovations, which only serves to send them further behind the eight ball. Quite comical really, however I play their game, as it suits me perfectly.
So, at the end of the day, renting verses buying, either way it doesn't matter, as it really is just somewhere to store our stuff and somewhere warm to sleep at night. But when you start spending money, that you have borrowed and must payback with interest, in an attempt to try and make your house look like you are richer than what your paypacket suggests, to me, this is nothing short of maddness.
But, hey, don't tell too many people 'cause it might stop my phone from ringing off the hook each day. (*_~)
Take it easy,
Clint
i noticed in the jewellry one as he gave over the money he concluded the subway story with the phrase "take it take it its fine"
i think thats the trick.
It's certainly not a universal law that renting is cheaper--it all depends on what the rent actually is, and on what other costs are included in the rent.
this is silly so you want me to believe the jewelery story guy counted out $4500 of blank bills, because he asked him where the subway was? GTFOH!!!
Of course, you could also just directly deposit the check to one of your bank's ATM's, too.
It seems that some of the people are assuming that the monthly rent is cheaper than the monthly payments for a house.
That is not true everywhere, say, for instance, where I live in Pittsburgh. My wife and I rented an apartment when we were first married for $650/month (heat/water/sewer included). It was a "two" bedroom apartment, where I called it a living room and a bedroom, and then a decently sized kitchen/dining room (for a one floor apartment).
We bought a house a year later, and the payment on the mortgage (15 year) was $379. Taxes and insurance brought it up to $479. I'll guess a little on the utilities, but I think our current monthly average is $50/electric, $100/gas and $40/water/sewer. Electricity wasn't included in our rent, so the house payment comes in less than the rent. We haven't had any significant maintenance issues, though we have only been here 5 years. The house is now paid off, so we now pay very little per month.
And if you believe the real estate estimates (and other house sales in the area) the house has gone up quite a bit in value (new hospital in the area).
We aren't planning on sell if/when we move, but will likely rent it out, since renting an entire house should probably provide a decent income.
Talking to a friend in Seattle, she said the rental rates were about the same, but the house costs were 2 to 3 times higher, so I guess it depends on what area of the country you are in.
If my husband and I didn't have pets, we would be in an apt right now. Where we live, there are some very attractive units. Plus, they include amenities such as a pool and an exercise room--things we couldn't afford on our own.
A friend of mine used to move apts every year. She was single, lived in a big city, and there were new apartments being built all the time. So, she'd move to the next new complex and have a brand new space every year. I've seen some apartments offer a month free rent to move into one of their units.
Another point to consider, if you own a home and consider it an asset, is this: many people are acquiring home equity loans to do anything from pay off debt, to make home improvements like putting in a pool. I know people who have done this, and I also know a couple who got such a loan for a (gasp!) big screen tv. If someone is borrowing against their equity, up to the point that they owe 100% of their home's value, they obviously now have a larger house payment. So, I guess what I'm getting at is that yes, the homeowner's payments may not increase--if they don't get another loan. It seems so common to cash out the equity in one's home, or even refinance to get cash. If someone was going to treat their house as an asset, they would need to resist the temptation to borrow against the equity.
I wanted to respond to the comment left by PjEvans. I believe that a home is an asset. If I create a robot that saves me time, it is an asset. I can use that time saved to advance my business. If I lose that robot, my business drops off and I make less money.
A home is very similar. Instead of saving time it saves money, which means I can focus other money on money making ventures, investing and the like. Most directionaries would describe it as an asset as well. They use words like it being "a resource" or "something of value".
If you don't believe that a home is an asset feel free to give me one for free :-).
Overall, I'm thinking this could go either way depending on your priorities and preferred lifestyle. But one more thing you can do with the equity Philip (if you're comfortable with this and are extremely savvy about finding the right opportunities, that is) is leverage it for a hard money lending opportunity and make your money on the point spread. This would definitely put it into the income producing asset category that the other person was commenting on. We've been doing hard money lending a bit in the last couple of years. We're still learning, so we haven't used equity for it yet. However, we can both see a time in the relatively near future when we will feel secure enough with our skill set and range of opportunities to go ahead and do the point spread investment thing.
Not everyone is comfortable with this, and it's far from standard advice, so it's definitely not something you would want to jump into without lots of security, information, and backup. But it is an option.
Also, what about basement, garage and attic apartments as additional income streams for a house / asset? No one has really mentioned that yet. I'm not saying you're wrong about your renting thing, though. If you are not comfortable with certain situations and strategies for home use, than renting can be better for your particular situation. Some people value their independence in decisions more, while other people value the mobility and lack of owner responsibility more. Just depends what you want. Hope these comments are of help to people.
Great choice of topic, as usual. Very interesting conversation going on here. Lots of great points.
A Home is not an Asset; assets generate real income (e.g.,vending machines, businesses,...). If you were to lease it to a tenant, then it would become an asset. My 2 cents.
You are forgetting a key thing which is the inflation rates. Inflation and the values of homes affects the prices of rent.. so you cannot just calculate the rent today multiplied by 20 or 40 years, you have to take into account the average 5% inflation rate... on the contrary when you buy a house your mortgage (unless refinanced) is going to be the same regardless of the value of the house and the inflation rates.
Thus, real estate ownership is an obviously wise investment. Sure there are some drops in values in some areas but in general values of homes go up and you just have to find the right cities to invest, such as growing economies like Phoenix and North Carolina where more and more businesses are moving.
The freedom of mobility when renting is a big plus for me. If I find a different place that suits my needs better, I can just give my notice, clean out and move. I don't have children or a spouse, but I can see those as being potential motivating factors to have a stable, concrete place to become attached to. Moving can be expensive, but it's much more expensive if you have to sell your home rather than just give it a good cleaning. Plus, all this is assuming that the home won't see any major damages during the course of ownership. I bet a lot of people in the midwest recovering from the recent floods are wishing they had put their money into something other than their homes, upon discovering that some insurance policies do not cover damage due to floods or "acts of god".
We just sold a double wide trailer we lived in. Why? Same thing. The costs of owning and maintaining it, in a park no less, were more than renting a one bedroom apartment.
It was only a 25K trailer, that we got more out of then we paid for. It sold in a week, with fighting bidders.
In all, we spent a lot more on upkeep than I would have thought. I had to fix the loose roof tiles, redo the porch stairs. I had to replace the stove, washer, and dryer. I had to replump the back bathroom, when the old pipes gave out.
That doesn't even include the cosmetic upgrades I did.
We found it is so much cheaper, and easier to live in an apartment. No grass to mow, no upkeep. If something breaks, they fix it. I have a lot more play money now.
I love seeing articles like this. It's a take that many people do not want to hear. Of course, like everything, it depends on the individual. But in my case, renting is definitely cheaper.
I rent a 1100sq apartment for $1000, and reside a 10 minute walk from my place of work. If I were to buy a condo of similar size in the Seattle area, I'd be lucky to find one for $400K. By "lucky" I mean, don't even bother. But just for fun, let's run the numbers. My local credit union has a 30yr fixed rate mortgage at 6.4%. For a $400,000 condo, that's monthly payments of $2500 for 30 years. Tack on home owner's fees, insurance, taxes, maintenance, the gas it would take to commute to work, car maintenance, etc, and I'd be looking at at least $3500/mo out of pocket for that condo. I'd end up with a condo that I paid $1,260,000 for. It would have to triple in value to be worth it to me. And only then is it worth anything if I sell it or rent it out.
If I kept my $1000 apartment and invested just HALF of the leftover ($1250) at an average 8% annual return, after 30 years I'd have a tidy $1,863,039.84. Subtract the $360,000 that I pay in rent and I'd have a net of $1,503,039.84.
And I don't want to hear anyone mention the tax deduction on the mortgage interest. You're only saving 25% of the applicable interest costs. You're spending $1 to get back a quarter. Not a good financial move in my opinion.
But like I said, it depends on the individual situation and needs. But for me (childless, married) it's a no-brainer.
Yes, my own experience with unexpected maintenance expenses was an important factor in my calculation. I know people who estimate their maintenance expenses at just a few hundred dollars a year--and in many years that may be accurate. But I think a realistic estimate that covers a period of decades needs to be several times that.