Buying vs. renting: money isn't the only factor


By switters   Follow   Wed, 7 Nov 2012, 12:15pm   2,975 views   37 comments
In Berkeley CA 94708   Watch (1)   Share   Quote   Permalink   Like   Dislike (2)  

I've been getting Patrick's emails for a while and I just read his book. I don't disagree with the financial basis of his arguments against buying a home, but I think there are a couple of other factors to consider when deciding whether to rent or buy.

One is energy and food security. With peak cheap oil on the horizon, energy and food costs are extremely likely to increase. It doesn't make much sense to install solar panels, dig a well or put in a grey-water system, or invest in substantial food production as a renter. These things are going to become increasingly important over the next decade.

Another is autonomy. A few years back our landlord decided to sell the house we were renting when my wife was 7 months pregnant. Moving at that point was an absolute nightmare. Our next house got sold just as we were starting to settle in. I'm tired of dealing with landlords and tired of not having control over my own home.

These factors are subjective and can't be easily quantified, but that doesn't make them any less real.

As a side note, I live in the Bay Area and it's not possible to rent a house for 3% of the cost to own in nice areas. It's more like 5-6% in Berkeley, where we live. House prices are starting to go up again, but until very recently it was actually cheaper to own than rent for the first time in a long while.

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  1. ChrisKolmar


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    1   5:40pm Wed 7 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    switters says

    One is energy and food security.

    You are way over estimating how much the cost of food and energy are going to be in the near future. The oil and natural gas found in the midwest is going to sustain us for the next 10+years.

    Doing an analysis of the potential money saved from those two seems pretty easy off the bat. If you prediction was correct somehow, make the your cost 1/2 of everyone else. You'd save maybe $300 a month max?

    Give the probability a world ending increase in food and energy of 1% and factor that into price. $3/mo in a mortgage payment gets you a couple hundred dollars more in the value of a house.

  2. suspiria_2


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    2   7:37pm Wed 7 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    how long are you going to live there? installing solar panels and digging wells is only reasonable if you're planning to live there long enough to enjoy them, or you can recoup their cost.

    what will be the difference between buying in the area you want to live in, and what you would (are?) paying in rent now? how likely will you have to move from there for job/family/whatever reasons? are you willing to pay this difference for that amount of time. if you foresee yourself moving at some point in the future, are you willing to accept that you paid that greater amount simply for whatever ownership satisfaction you were able to get during that term? are you ready to accept that you may not get your money back when you need to move?

    i agree. the people who believe that buying a home to live in is ONLY a financial decision are overstating it. surely, you shouldn't buy if you can't afford to do so, but if you can afford it then you should ask yourself is it worth it financially? but also, is the difference between what i'm renting for and what i'm paying to buy worth whatever conveniences purchasing will give me?

    solar panels are a question of paying up front for something that you would have paid over time for. that you assume that the cost will go up can't really be estimated accurately. how long will you have to soak up energy from those panels to justify their installation? are you willing to live in that house for that long? what if the next buyer doesn't give two hoots about them and won't pay you for them?

  3. Mobi


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    3   8:24am Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    I suspect the unemployment rate will be quite high when food/energy costs become serious issues. If you take a loan buy a house and lose it because you lose you 40 hr/wk job, digging a well and installing solar panels won't help you for long.

  4. switters


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    4   8:37am Thu 8 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    1. I don't have a job. I am self-employed and my income is diversified across several independent sources. The market for my products & services is global and relatively inelastic, and my income has been increasing steadily over the past few years in spite of the high unemployment rate and recession/output gap. Yes, anything could happen but I have much better than average "job security".

    2. We are looking at buying 5 acres with a house on it. I understand that the median period of ownership is 6 years, but that means there are quite a few people that own their homes for longer. We intend to be in that group. We're not buying a chunk of land so we can flip it a couple years later. If we need a larger house, we can always add on or even add another building on the property. The idea is to create a sustainable homestead that can accommodate our changing needs over time.

    3. It is very hard to find the kind of property we're looking for to rent in the area we're interested in. When they do become available, the difference in cost from owning a similar property is not as significant as many of the comparisons on Patrick's blog. The rent is not 3% of the purchase price; it's more like 6%, which according to Patrick is a "borderline case".

    4. I understand the trade-offs. I'm not 100% certain we will buy, but my point was that there are other factors to consider aside from money.

  5. BobbyS


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    5   8:44am Thu 8 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    Also, landlords tend to install energy inefficient crappy appliances. they often install crappy cheap everything that break down easily, which requires constant replacing or fixing. If you landlord is lazy about doing repairs, you'll be out of luck for a while. they'll then deduct from your deposit for the tiny scratch on the cheap easily scratch formic top and for scratching the cheap ass linoleum floor.

  6. Mobi


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    6   11:32am Thu 8 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    switters says

    4. I understand the trade-offs. I'm not 100% certain we will buy, but my point was that there are other factors to consider aside from money.

    I plan to buy a house, too, probably for different reasons. I agree with your reasoning but all I am saying is: when the next disruption comes, which may spike the gas/food cost (inflation adjusted), it will most likely disrupt income, too. With the expetation of income reduction, better make sure you can hold onto your house long enough so it does not defeat the purposes of buying. My strategy would be take the 3.5% FHA loan and transfer all my assests to LLCs (I do not live in a "non-recourse" state.)

  7. Patrick


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    7   11:52am Thu 8 Nov 2012   Share   Quote   Permalink   Like (2)   Dislike   Protected  

    switters says

    One is energy and food security. With peak cheap oil on the horizon, energy and food costs are extremely likely to increase. It doesn't make much sense to install solar panels, dig a well or put in a grey-water system, or invest in substantial food production as a renter. These things are going to become increasingly important over the next decade.

    Energy and food costs are pretty close to zero compared to the cost of owning a house in the Bay Area. Even if they double, they'd still be trivial compared the almighty huge cost of the house.

    switters says

    Our next house got sold just as we were starting to settle in. I'm tired of dealing with landlords and tired of not having control over my own home.

    Sure, that's valid, but what's it worth to you? $1,000 per month, forever? $2,000 per month? Around here, the savings from renting the same quality house in the same location can easily be $2,000 per month.

    Also, most landlords really don't want you to move. It's a huge pain for them.

    Finally, "owning" is not permanent. The median ownership length is only six years. And you've got the huge risk of default if you got into debt to buy.

    switters says

    As a side note, I live in the Bay Area and it's not possible to rent a house for 3% of the cost to own in nice areas. It's more like 5-6% in Berkeley, where we live.

    You're just wrong there. My own rent is clearly below 3% of the cost of owning the same thing. The standard around here is $2500/month for a $1M house. That's 3% on the dot.

  8. rufita11


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    8   11:57am Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    I agree with switters. My husband is a musician and self employed--we need a studio and the ability to be loud. I work in high-tech from home and want a homestead where I can raise my own food.

  9. Patrick


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    9   12:06pm Thu 8 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike   Protected  

    If you own in an expensive place just to raise food, that's $100 per tomato.

    We grow tomatoes and other veggies and keep chickens, while renting.

    Similar for the noise insulation. You can't put up noise insulation in a rental?

    I'm just sayin people routinely vastly underestimate the cost of owning and make themselves financially insecure in an attempt to feel secure.

    One piece of candy now or two pieces later? Your choice.

  10. switters


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    10   12:25pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    I gave many other reasons why someone might choose to buy even if it were slightly more expensive than renting an equivalent house. Of course the ideal is to find a place to buy that can be rented out for less than the total cost of ownership. No argument there. But that may not always be possible in certain areas, and other needs/desires may outweigh the logic of waiting until such a house or property is available.

  11. CDon


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    11   1:06pm Thu 8 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike (1)  

    Patrick says

    If you own in an expensive place just to raise food, that's $100 per tomato.


    We grow tomatoes and other veggies and keep chickens, while renting.


    Similar for the noise insulation. You can't put up noise insulation in a rental?


    I'm just sayin people routinely vastly underestimate the cost of owning and make themselves financially insecure in an attempt to feel secure.


    One piece of candy now or two pieces later? Your choice.

    Respectfully, I think part of the problem is renting is so easy for you. You are paying so little and getting so much from your landlord - it literally sounds like shangri-la. Honestly, If I could get a deal like yours, I would seriously consider selling and renting - possibly forever.

    Unfortunately, for most people, thats just not the reality. Yes if you work really hard you may (and I stress may) find that needle in a haystack landlord who leaves you alone, lets you do what you want, when you want, and how you want and charges you a reasonable to below-market-rent in exchange.

    Unfortunately for many people (again not all), renting is bullshit. If you can find anything remotely cheap, it is a POS, and you have some dipshit landlord who may or may not fix things, or basically fixes them to his standards, not yours.

    Currently, my SIL is in a place where the floor is kinda rotting in the bathroom. A true "fix" would cost 10K which the landlord doesnt want to spend. Instead, he does patch after patch, paying $150 a pop to have one of his "guys" do a crappy job, make it barely workable, and then limp along for another six months til that patch fails and another $150 patch job ensues.

    Yes, she can withhold rent. Yes, she can complain to the city. Yes, she can move... But you know what, what she wants more than anything is not to have to deal with the bullshit - the endless contractors, constant phone calls, constant threats, constant nonsense.

    Sorry to rant but I am in the middle of trying to help her out and I really feel for her & her husband, and I remember that sort of bullshit existence far too well. He is not my landlord, but even I want to wring his neck!

    So again, I think given how near-perfect your situation is, you forget how much constant bullshit that many renters (again not all - or perhaps even most) have go through. Whats the cost of not having to deal with near-constant bullshit? I dont know, but for some people, it is worth alot!

  12. switters


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    12   1:27pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    CDon says

    So again, I think given how near-perfect your situation is, you forget how much constant bullshit that many renters (again not all - or perhaps even most) have go through. Whats the cost of not having to deal with near-constant bullshit? I dont know, but for some people, it is worth alot!

    Damn straight.

    Patrick, I'm not asking this to challenge you, I'm genuinely interested in seeing some examples of $1M houses that rent for $2,500/mo in the Bay Area. Because I can't find any in nice areas of Berkeley or San Francisco or Marin, which are the areas I'm most familiar with (I don't know the South Bay very well).

    I see $1M houses for more like $3,500 at the low end and often $4,000 and up in these areas. If I could find a million dollar house to rent for $2,500 I'd be all over it – regardless of these other factors that I do think are real and worth consideration.

  13. Patrick


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    13   1:43pm Thu 8 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike   Protected  

    Look here:

    http://patrick.net/housing/forsale.php?uaddr=95125

    Data is back from June, but still.

    The houses that rent for $4,000/mo are usually closer to $2M to buy.

  14. rufita11


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    14   1:46pm Thu 8 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    Patrick says

    If you own in an expensive place just to raise food, that's $100 per tomato.

    We grow tomatoes and other veggies and keep chickens, while renting.

    Similar for the noise insulation. You can't put up noise insulation in a rental?

    I'm just sayin people routinely vastly underestimate the cost of owning and make themselves financially insecure in an attempt to feel secure.

    One piece of candy now or two pieces later? Your choice.

    It's not that simple when you have a big dog and want goats. Our dalmatian is on the banned breed list, apparently. We had the ideal situation renting at 1/3 of market for 10 years, but my friend sold her last Berkeley Hills house and we have been on our own in this rental market since. Had two awesome landlords since, one insane landlord and now are in an apartment. Absolutely sucks using up my vacation time to search for a rental and move. Cannot stand it anymore.

  15. switters


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    15   1:55pm Thu 8 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    Patrick says

    Data is back from June, but still.

    The houses that rent for $4,000/mo are usually closer to $2M to buy.

    Those are all in San Jose. Do you have a similar list for Berkeley, San Francisco or Marin?

  16. Patrick


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    16   1:57pm Thu 8 Nov 2012   Share   Quote   Permalink   Like (2)   Dislike   Protected  

    rufita11 says

    Cannot stand it anymore.

    That's exactly their goal.

    Now give up and sign over your entire working life to the banks. Good boy.

    Yes, it is a dilemma. You are being sqeezed by the corruption in our political system that has voters convinced that housing inflation is a good thing somehow. What we really need are politicians who loudly and explicitly state that LOWER prices are a BETTER housing market.

    But because the forces on the other side can contribute unlimited money to campaigns, no politician who promotes lower prices can get elected. Everything ultimately comes back to campaign finance.

  17. Patrick


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    17   1:59pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike   Protected  

    Poke around starting here:

    http://patrick.net/housing/city_data.php

  18. rufita11


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    18   2:03pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    rufita11 says

    Cannot stand it anymore.

    That's exactly their goal.

    Now give up and sign over your entire working life to the banks. Good boy.

    Yes, it is a dilemma. You are being sqeezed by the corruption in our political system that has voters convinced that housing inflation is a good thing somehow. What we really need are politicians who loudly and explicitly state that LOWER prices are a BETTER housing market.

    But because the forces on the other side can contribute unlimited money to campaigns, no politician who promotes lower prices can get elected. Everything ultimately comes back to campaign finance.

    I'm not going to do that. I might just end up buying land for cash and living in a trailer while building a sustainable dwelling.

  19. Patrick


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    19   2:09pm Thu 8 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike   Protected  

    rufita11 says

    I'm not going to do that. I might just end up buying land for cash and living in a trailer while building a sustainable dwelling.

    That sounds like a good alternative to me, if you can get the land for a reasonable amount of money. I met the author of this book and I'm pretty sure you can build for very cheap:

    http://patrick.net/forum/?p=1217153

    But land prices are usually the sticking point in the SF Bay Area.

  20. switters


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    20   2:09pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    You're just wrong there. My own rent is clearly below 3% of the cost of owning the same thing. The standard around here is $2500/month for a $1M house. That's 3% on the dot.

    Maybe that's true where you live, but in Berkeley and San Francisco it isn't – at least in highly desirable areas.

    I'm living in a 6% rental right now, and there are many others that are even higher. For example, look at this house on Craigslist renting for $4,000/month in the North Berkeley Hills.

    http://sfbay.craigslist.org/eby/apa/3389279205.html

    According to Zillow, it would sell for about $760k.

    http://www.zillow.com/homedetails/57-Fairlawn-Dr-Berkeley-CA-94708/24844150_zpid/

    $48,000 a year in rent is about 6.3% of $760k.

    Here's another one in the Cole Valley area:

    http://sfbay.craigslist.org/sfc/apa/3380432298.html

    Renting for $4,500/mo, or $54k a year.

    According to Zillow, it would sell for $865k.

    http://www.zillow.com/homedetails/1999-Van-Ness-Ave-San-Francisco-CA-94109/54854339_zpid/

    That's also about 6.3%.

    There are other examples.

  21. switters


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    21   2:11pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Thanks Patrick. Poking around there, I see that in the Marina in San Francisco the average rent is $4,429. The average home price is $1.1M. That's about 4.8% if those numbers are to be believed.

    But if you search for actual rental listings on Craigslist, you see a different story. Here's a 2br flat renting for $7,000/mo. They don't provide the address, so I can't check the price on Zillow, but I'm 99.9% certain it's not $2.8M, which is what it would have to be for the annual rent to be 3% of the purchase price.

    Here is a larger (3 bedroom, 2 bath) condo selling for $1.35M. If we assume that would also rent for $7,000/mo, annual rent is 6.2% of the purchase price.

    I'm seeing 6% a whole lot more than I'm seeing 3% if we're talking about single-family homes rather than apartments.

  22. Patrick


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    22   2:14pm Thu 8 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike   Protected  

    I'm sure there's a distribution curve.

    But just start adding up the costs. Even at 5% it is not clearly worthwhile to buy. You've got property tax (1.3%?), maintenance (1%), rent on money or loss of use of money (similar things, just take them both into account). Try the calculator:

    http://patrick.net/calculator.php

  23. exflirt


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    23   2:21pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Yeah, there are some real downsides to renting even if you are saving money and live in a decent house.

    My very nice (not extravagant) rental home in Milpitas had never been one before – and I got lucky and got it for slightly below market rent. This was after searching for three months and looking at countless houses like this.

    switters says

    If you can find anything remotely cheap, it is a POS, and you have some dipshit landlord who may or may not fix things, or basically fixes them to his standards, not yours.

    The house, built in 1978, was in a very middle class neighborhood and had only been owned by three people. It was not in default and at least had all the necessary repairs done (new roof) but also had been maintained with a few upgrades (front yard re-landscaped, both baths remodeled, AC added, new hardwood). Still, it was nice but not showy.

    Over my three years there, I had numerous serious problems. It is an aging property, so these are to be expected. I woke up one day to no hot water. My dishwasher went out. Raw sewage backed up in the front yard under my daughter’s bedroom window – on three occasions. The garage door opener melted itself. The refrigerator stopped working. Every situation, while ultimately not costing me anything, resulted in a distressing experience with the local owners.

    The first time the sewage backed up it took the owners two days to both acknowledge the problem and send someone out to take care of the problem. Keep in mind that this affected all water use in the house, a very uncomfortable experience to basically suspend water usage for four people. I understand that they don’t really have a sense of urgency because THEY’RE not affected by the raw sewage in the yard and lack of water, but really!!!! The second time it happened they hemmed and hawed and eventually sent someone out after a few days. They hired a guy with a scope to come figure out what the problem is. Turned out that the concrete pipes from the house had shifted from where they joined the city’s pipe at the street, thereby creating a perfect situation for things to eventually get stopped up. They decided not to fix this – of course, it is an expensive repair. The third time the pipes backed up, I finally called someone out myself after they didn’t respond to my emails, paid the man out of my own funds, and deducted from the next month’s rent.

    When the dishwasher went out they had a repair man come out who advised that due to the advanced age of the unit it would be cheaper to replace it. About a month later they replaced it with the cheapest new dishwasher I have ever seen. I didn’t even know they made units like that and I can only imagine the amount of energy and water it used. It only cleaned the dishes on the bottom shelf.

    When the hot water heater went out in the winter, I was unable to shower before going to work because the water was so cold. In the garage, the water heater had a ring of rusty water around the bottom of it. Two days later when they still hadn’t even called someone out, I told them that I was going to repair/deduct by the end of the next business day unless they took care of it. It seemed like a nice water heater they eventually had installed.

    When the refrigerator/freezer stopped working, I had to unload the contents of the entire thing and bring it to my mother’s house in multiple trips. That was not what I had planned on doing at 10:00 that night, and I was mighty cranky the next day at work. Of course, it was not their top priority to see what happened, so the owner-husband stopped by that weekend to check it out. Turns out a wire in the power cord had rubbed itself on the edge of a piece of metal at the back. He repaired it and then I was able to keep cold food at the house again.

    When the garage door opener went out I took a hardline stance. I have extreme neck, back, shoulder, and arm problems as a result of a high-speed rear-end accident a few years back and I was not going to physically drag that heavy door opened and closed for a month until they decided to fix it. Of course it helped that I had already given my notice and arranged to move out of state in a matter of months, so I didn’t really care if they were upset. I used repair/deduct, got a nice Craftsman unit with an outside keypad to replace the crappy unit they had installed, and then took it off the next month’s rent. They were not happy.

    My property manager was useless, basically just sent my emails or calls on to the local owner who waited a while, then contacted me.

    I live in a very responsive apartment complex now and am really enjoying my stay. When I eventually buy a house, I will be happy to take care of my own repairs in a timely manner, with the materials that I decide on and pay for myself – the expense be damned.

  24. Patrick


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    24   2:24pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike   Protected  

    exflirt says

    raw sewage in the yard

    Yes, that's a big problem in a rental.

    But it's a bigger problem in the long term when you own the house

  25. CDon


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    25   3:16pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Patrick says

    exflirt says



    raw sewage in the yard


    Yes, that's a big problem in a rental.


    But it's a bigger problem in the long term when you own the house

    Is it?

    Like you, I advocate for long term renting in certain situations. An example would be yours where you are in year 13 of what may be a 30+ year tenancy at shangri-la.

    Suppose this were to happen to you, and your benevolent landlord starts acting like a real landlord and sees that instead of paying 20K to fix it permanently, its cheaper to roto-root the problem 2X a year at $300 a pop for the next 20 years (12K) til they sell.

    You really really like your place, and you really really like your rent, and your neighborhood, and your chickens and your tomatoes...and you really, really, REALLY dont want to move... but god the sewage...

    You really going to limp along like that for the next 20 years?

  26. wave9x


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    26   3:16pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Getting a rental for 3% is ludicrous. There is no way a $750k house would rent for $1875 in the Bay Area. Patrick has a sweetheart deal he loves to brag about, but his case is not the norm. Not even close.

  27. EBGuy


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    27   3:30pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    Patrick has a sweetheart deal he loves to brag about, but his case is not the norm. Not even close.
    I don't disagree; however, I could rattle off a list of folks who have also found their own Prop 13 rental bliss. It takes some persistence, but these deals are out there in Piedmont, Lamorinda, Marin and other areas. Are you read to offer a LL one year's rental payments in advance. I hear it works wonders and they usually say just send the checks monthly anyway. You should approach the dream rental search the same way you would approach buying a home (it takes many folks several months).

  28. dublin hillz


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    28   3:43pm Thu 8 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    exflirt says

    because THEY’RE not affected by the raw sewage in the yard

    This along with the rest of the post is fome funny sh!t!

  29. Mobi


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    29   11:43am Fri 9 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    I will definitely rent for 6% (assuming the price will not go back up too fast. That's my crystall ball anyway.) I rent for about 11% and don't feel the urge to buy (but will probably do it b/c of my wife.) I am also a loadlord and rent the houses out for 20%-25%. Maybe you guys should move away from CA.

  30. SOS


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    30   8:07pm Sun 25 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    one concern I have about buying in the Bay Area is how climate change/ natural disaster is going to affect it. Earthquake, sea level rising, drought are all very real potential problems in the next 50 years in the Bay Area (and who knows, maybe even economic collapse, riots etc.) . if I buy a house and continue to invest in self-sufficient technology, i am likely to want to plan to settle there long-term like 20-30 years. But is the bay area one of the better areas to live in in case of any of the things I mentioned happens? If I own a $700K home, and an earthquake happens, and caused a lot of damage to the property, I would be losing a lot of money, or if sea-level rises faster than predicted (16 inches by 2050), as soon as more people become aware of it, housing prices may drop, and it might be difficult to sell a house then. As a month-to-month renter, I have the freedom to just leave and rent another place. In these circumstances, I would likely feel less worried and less burdened. These have psychological benefits too.
    I am renting in a apartment building and another pro is that I don't pay for water, utility bill is $100 less than when I was renting a house, and with sharing resources like washer/ dryer, water boiler with 30+ household, it just uses less resources than most "green" single family houses. Our apartment has big metal gates, and I know most of my neighbors, in case of a collapse and chaos going on, I'd definitely feel less vulnerable than living in a single-family house.

    All these factors gives me a different sense of security compare to house-ownership. how much is the mobility and freedom worth? $5000/year? These are also factor that is hard to quantify.

    It is great that you have diverse sources of income. If you have the means to buy a house and continue to have other form of liquid savings/ investments, great. I think in the next 20-30 years, things will be so volatile that I really hesitate to pour my entire savings into one single property.

    I know it is popular among the peak oil folks to try to want to have enough land for homestead. And I am sure there are other benefits (connection to nature, etc.) other than just food/ energy security, but many homesteading work is hard-labor work. Switters I don't know how old you are, how many kids, but back in the old days, one reasons farmers had lots of kids is so they can help out in the farm. If you don't have many people to help out with the land, what happens when you gets too old to drive or do a lot of hard labor?
    BTW, where in SF or Berkeley would you find a 5-acre land parcel?

    good luck with whatever you decide.

  31. switters


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    31   8:14pm Sun 25 Nov 2012   Share   Quote   Permalink   Like (2)   Dislike  

    Definitely not looking for 5 acres in Berkeley or SF. We're moving to the Sebastopol area. Check out the Sunday Review section of the NY Times today. They had an article showing how much of various cities around the US would be underwater given a 5-12 foot rise in sea levels. Even if sea levels did rise 12 feet, Sebastopol would be safe. Parts of San Francisco, not so much, and Sacramento would be under water (along with lower Manhattan and a lot of Boston).

    We're not planning on homesteading. We just want more control over our water, energy and some part of our food supply. My wife is a permaculture designer and it's not difficult to grow a significant amount of food and raise chickens, rabbits and perhaps a couple of goats.

  32. CaptainShuddup


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    32   8:27pm Sun 25 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    All I know is I'm paying the same thing for Mortgage that I paid for eleven years in rent. Renting for 11 years certainly didn't put money in the bank. Well it did, but that came from me saving money. Which I also do now, so there's no difference.

    Basically if I can't make it here, then I can't make it anywhere.

    The important thing is not over extend your self. There's plenty of people living in luxury rentals, in gated communities, driving new luxury cars. That clearly fits the legal definition of financially over extended.

    That all being said, there's a lot to be said, for the peace of mind.
    A not being having to deal with the housing market any more.
    B having my own place to as I see fit with.

  33. ducsingle5313


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    33   9:28pm Sun 25 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    switters says

    Definitely not looking for 5 acres in Berkeley or SF. We're moving to the Sebastopol area. Check out the Sunday Review section of the NY Times today. They had an article showing how much of various cities around the US would be underwater given a 5-12 foot rise in sea levels. Even if sea levels did rise 12 feet, Sebastopol would be safe. Parts of San Francisco, not so much, and Sacramento would be under water

    You sound like a doomsday prep person. If sea level were to rise that much (which is pretty damn unlikely in our lifetime), a lock would be constructed across the entrance to the SF Bay. Not cheap, but waaay cheaper than the other option.

  34. Kevin


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    34   10:05pm Sun 25 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    If you're worried about an apocalyptic energy-free future, why on earth do you care about what financial decisions you make now?

  35. iwog


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    35   12:50am Mon 26 Nov 2012   Share   Quote   Permalink   Like   Dislike   Protected  

    underwaterman says

    From what I understand, it is illegal in CA to charge more than 2 months rent for a deposit. If they take it, then they can be sued for twice the amount in damages and the landlord will loose.

    Advanced rent is not the same as a deposit. You are correct that a landlord can only charge two months rent as a security deposit on an unfurnished property. However you can charge advanced rent up to the term of the lease if you want without breaking California law. I don't believe you can charge advanced rent on a month to month rental agreement however the tenant can prepay if he/she wants to.

  36. switters


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    36   8:11am Mon 26 Nov 2012   Share   Quote   Permalink   Like (1)   Dislike  

    I'm not the one who brought up rising sea levels, and I didn't write the article in the NY Times either. That's not a major factor in my decision making process. Nor did I say anything about an apocalyptic energy-free future. Those are your words, not mine.

    If you think energy isn't going to get more expensive in the next few years, you're kidding yourself. As energy costs rise, the price of all other consumables goes up as well. Producing my own energy and some amount of food won't make a huge difference, but it's something. It also provides some security in the case of a major weather event like Sandy or power outages, which may become more common in the future.

    In any event, it's a lifestyle choice. I'd probably want to do it anyways regardless of what I thought the future held.

  37. David Losh


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    37   12:53pm Tue 27 Nov 2012   Share   Quote   Permalink   Like   Dislike  

    This is a Zillow link that came acrosss another site. It shows the break even point of rent versus buy,

    http://www.zillow.com/blog/research/2012/11/27/rent-vs-buy-breakeven-horizon-analysis-methodology-updated/

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