patrick.net

These essays never take into account, that even when you rent your monthly outlay increases YOY. Before I bought, I rented the same house for 12 years. I started out paying only $700, but by Nov 2010 I was already paying $1400 a month.

Had I bought a house in 1999, my Mortgage would have stayed at $700 a month, provided I didn't do anything stupid.

This is the breakdown of the extra money a year over $700 a month I was paying.

99 -$0 1st year
00 -$600 2nd year $50 month increase
01 -$1200 3rd year $50 a month increase
02 -$1800 4th Year $50 a month increase
03 -$2400 5th year $50 a month increase
04 -$3600 6th year $100 a month increase house was sold to a flipper
05 -$4800 7th year $100 a month increase
06 -$5400 8th year $100 month increase
07 -$6300 9th year $100 increase, house was flipped to a dreamer
08 -$7300 10th year $100 increase
09 -$7900 11th year $100 increase
10 -$8400 last year another increase.

More than enough for a new paint job, a kitchen remodel, even a new roof.

Even if I moved my rent would have gone up more. The only reason we stayed all those years, in spite of the rent increase. Was because I saw my self, we would have paid more a month in rent to live somewhere else, plus had to come up with 1st, last and security all over again.

I don't know how it works in California, but in Florida unless you've got a Civil rights lawyer in the family, getting your deposit back is near impossible, regardless how well you left the place. And by time you tell them you're not paying, and want to take advantage of the last month rent payment. You'll be told there was no first month rent requested. That's what happened to me, both new owners claimed that the original landlord(nice guy) didn't list a deposit on the account. I don't believe them, it's not like they showed me any proof. It was them twisting my he said with my landlord, into a he said/he said with me.

I can't for the life of me, ever recall a joyous experience renting EVER!

I did it, but I was never as free as I am now as a homeowner. And not having to go through the myriad of bullshit I went though with those owners, was a living hell I'll gladly pay a premium to owning a house to avoid again. Even if I thought I were paying more than renting some how. Which I still say I'm NOT.

Are you free to pack up and move without having to swing both a mortgage and a rental payment?

I could rent my place and make $600 to $800 a month.

CaptainShuddup says

provided I didn't do anything stupid.

Tip: Never, ever serve up a hanging curve like that again.

This one's not even a challenge - I'll pass.

4 years later, I'm paying the same in Mortgage I was paying in rent my last year there.

The only thing threatening that, is unjustified insurance hikes, based on one bad once every 50 years, Hurricane season, that happened a decade ago. Oh and tax increases based on artificial fake how assessments,

HydroCabron says

This one's not even a challenge - I'll pass.

I'll drag out the fruit dehydrator while you come up with something.
Short order Jerky anyone?

CaptainShuddup says

Before I bought, I rented the same house for 12 years. I started out paying only $700, but by Nov 2010 I was already paying $1400 a month.

Had I bought a house in 1999, my Mortgage would have stayed at $700 a month

Insurance, plus property taxes, plus maintenance can easily push that $700 mortgage up to $1300 per month.

You did better as a renter: most of the time, it cost less than owning.

Why your house is a terrible investment

Best investment I ever made.

HydroCabron says

Insurance, plus property taxes, plus maintenance can easily push that $700 mortgage up to $1300 per month.

Taxes and insurance isn't pushing my mortgage now over the $1400 I started with.

Had I bought in 1999 when the banks said anyone making only 52K(me at the time) could only swing a mortgage on a $110K house. Also at that time, this house would have gone for $79K. $700 would have been the total Mortgage payment. Provided I didn't refi or tried to leverage the equity in some way.

interestingly he goes into all the negatives of home ownership the greatest being this cult-like affection for ones locale.

"wow the best RESTAURAUNTS IN TEH WORLD ARE HERE!"

"weve got a rainforest bitches!"

"yep best state- fifth largest economy in the world, pls ignore state level bankruptcy"

"trannies, bull dykes, basketball americans, and chinese economic exploiters can live freely here without persecution"

We did not buy based on Patrick's website advice as our jobs kept us in the SFBA. Rent was much less than buying as the houses are way overpriced in SFBA. So we saved and lived in small apartment and no debt. Then we retired before 60, moved to an area where home mortgage is the same as rent, again using Patricks rent vs own calculator, and are very happy owning. It is not an investment, but we all need a place to live. In this case we are getting the best for our money and able to retire and enjoy whatever time we have left. And we hated renting, but our jobs were in SF and renting was smart...I agree and thank you Patrick!!

retire59 says

We did not buy based on Patrick's website advice as our jobs kept us in the SFBA. Rent was much less than buying as the houses are way overpriced in SFBA. So we saved and lived in small apartment and no debt. Then we retired before 60, moved to an area where home mortgage is the same as rent, again using Patricks rent vs own calculator, and are very happy owning. It is not an investment, but we all need a place to live. In this case we are getting the best for our money and able to retire and enjoy whatever time we have left. And we hated renting, but our jobs were in SF and renting was smart...I agree and thank you Patrick!!

I don't understand. had you bought in SF during your saving days, you would have still retired and have three houses now instead of one.

SFace says

retire59 says

We did not buy based on Patrick's website advice as our jobs kept us in the SFBA. Rent was much less than buying as the houses are way overpriced in SFBA. So we saved and lived in small apartment and no debt. Then we retired before 60, moved to an area where home mortgage is the same as rent, again using Patricks rent vs own calculator, and are very happy owning. It is not an investment, but we all need a place to live. In this case we are getting the best for our money and able to retire and enjoy whatever time we have left. And we hated renting, but our jobs were in SF and renting was smart...I agree and thank you Patrick!!

I don't understand. had you bought in SF during your saving days, you would have still retired and have three houses now instead of one.

Or a free and clear one million dollar home in the Bay Area. He could sell it, move to Vegas and still have $750,000 to retire on.
He just does not get it. :(

Fell in love with the calculator that raped you dry. Lol

bgamall4 says

CaptainShuddup says

I could rent my place and make $600 to $800 a month.

And it would be trashed.

What you're saying is that all renters would trash their rental when they left?

retire59 says

We did not buy based on Patrick's website advice as our jobs kept us in the SFBA. Rent was much less than buying as the houses are way overpriced in SFBA. So we saved and lived in small apartment and no debt. Then we retired before 60, moved to an area where home mortgage is the same as rent, again using Patricks rent vs own calculator, and are very happy owning. It is not an investment, but we all need a place to live. In this case we are getting the best for our money and able to retire and enjoy whatever time we have left. And we hated renting, but our jobs were in SF and renting was smart...I agree and thank you Patrick!!

It's interesting that both you and Patrick made a mistake of not buying in the Bay Area and now claiming you're happy. Had you bought in the Bay Area, you would have been much more happy.

Btw, I was able to retire at 36 years of age thanks to owning several handful of properties in the Bay Area. My investment partner retired at 40 years of age in Brazil right now. There's a price to pay when you're making wrong choices. :0)

thunderlips11 says

Are you free to pack up and move without having to swing both a mortgage and a rental payment?

Because of this thinking, I love my renters. One of them just moved out after 2.5 years living at our place. We raised their rent only 3% 1 time during this period. They left the place spotless. We raised the rent another 17% and got it rented immediately to another young couple. Gotta love real estate in the Bay Area.

http://www.latimes.com/business/la-fi-retirement-savings-bankrate-20140818-story.html

Why my house is a terrible investment? Yep, it's a terrible investment. Why own when you can rent and be mobile? After all, real estate in the Bay Area only doubles itself every 10 or 15 years.

Had one bought in the last 2-5 years, some of the properties had more than doubled themselves. But then again, who cares about appreciation and all of these equities. Renting is better, and it gives mobility.

Renters rule. LOL!!!

Here's the thing ... buy a home in the countryside, much cheaper than the bubble cities & their bubble 'burbs. Consult/contract among the various cities, up/down the coastline, renting a studio or a room in someone else's home, while paying off the mortgage.

In the end, you have a place for retirement because you don't want to be a renter during those golden years with variable & increasing monthly costs. Plus, you can then tap the equity in the home for emergencies (and such) but of course, that's a final option if things go awry.

The whole problem with buying in high cost areas is that if one loses that job, all hell can break loose, esp given the fact that re-locating for work is becoming more often these days.

http://www.nbcnews.com/business/real-estate/affordable-homes-frozen-underwater-many-americans-n109906

http://www.nbcnews.com/business/real-estate/nation-renters-fewer-americans-now-own-their-own-homes-n167776

E-man says

Had one bought in the last 2-5 years, some of the properties had more than doubled themselves.

Which great if you want to sell. Not so great if you're looking to raise a family in that house. Moving every 2-5 years isn't supposed to be the point of buying a house.

E-man says

My investment partner retired at 40 years of age in Brazil right now.

Retiring in Brazil is not a strategy that interests everyone.

FunTime says

E-man says

Had one bought in the last 2-5 years, some of the properties had more than doubled themselves.

Which great if you want to sell. Not so great if you're looking to raise a family in that house. Moving every 2-5 years isn't supposed to be the point of buying a house.

Why sell? You can tap 80% of that equity tax free if you want. That's even a better deal than selling and paying the taxes and transaction costs.

FunTime says

E-man says

My investment partner retired at 40 years of age in Brazil right now.

Retiring in Brazil is not a strategy that interests everyone.

Works for him. Had he not invested in real estate, he would have been looking for a JOB in Brazil.

FREEDOM BABY.

Rin says

Here's the thing ... buy a home in the countryside, much cheaper than the bubble cities & their bubble 'burbs. Consult/contract among the various cities, up/down the coastline, renting a studio or a room in someone else's home, while paying off the mortgage.

In the end, you have a place for retirement because you don't want to be a renter during those golden years with variable & increasing monthly costs. Plus, you can then tap the equity in the home for emergencies (and such) but of course, that's a final option if things go awry.

The whole problem with buying in high cost areas is that if one loses that job, all hell can break loose, esp given the fact that re-locating for work is becoming more often these days.

Now you know why you need a wife? Helps you qualify for a loan. You can't do that with Montreal Hookers. If one of you loses a job you might still be able to manage. The idea is to buy in the Bay Area, wait for it to triple, and finally retire in Vegas or Hawaii.

E-man says

Why sell? You can tap 80% of that equity tax free if you want.

If you bought a house that more than doubled itself in the last 2-5 years and are just tapping 80% of the equity that isn't much money. In other words, those houses are barely in the SFBA and cost much less than SFBA houses. I'm not seeing anything close to doubling except occasional massive remodels sold in prime areas to newly made millionaires. Good luck with that strategy too.

E-man says

Works for him. Had he not invested in real estate, he would have been looking for a JOB in Brazil.

Well if you're going to be in Brazil anyway, then sure.

FunTime says

http://www.nbcnews.com/business/real-estate/nation-renters-fewer-americans-now-own-their-own-homes-n167776

The reason less Americans owning homes is because they couldn't afford to buy. Wait until they and their kids are renting from the Chinese and Indians and don't understand why.

The effing politicians have sold us out, and people on this site are still arguing about the Dem & the Rep. Pathetic.

Strategist says

Now you know why you need a wife? Helps you qualify for a loan. You can't do that with Montreal Hookers. If one of you loses a job you might still be able to manage. The idea is to buy in the Bay Area, wait for it to triple, and finally retire in Vegas or Hawaii.

I own my home now. The mortgage was paid off, after the big bonuses started coming in with the hedge fund.

If I so wanted, I can sell and buy myself a retirement pad up in Montreal and continue to bone hoes with the dividend checks.

I bo*nk, therefore I am!

Rin says

Strategist says

Now you know why you need a wife? Helps you qualify for a loan. You can't do that with Montreal Hookers. If one of you loses a job you might still be able to manage. The idea is to buy in the Bay Area, wait for it to triple, and finally retire in Vegas or Hawaii.

I own my home now. The mortgage was paid off, after the big bonuses started coming in with the hedge fund.

If I so wanted, I call sell and buy myself a retirement pad up in Montreal and continue to bone hoes with the dividend checks.

In that case you don't want a wife. If you divorce, the bitch gets it all.

Strategist says

In that case you don't want a wife. If you divorce, the bitch gets it all.

Trust me, many guys over 45 have been telling me this for the past few years.

Rin says

Strategist says

In that case you don't want a wife. If you divorce, the bitch gets it all.

Trust me, many guys over 45 have been telling me this for the past few years.

Well, too late for me. I've been married over 25 years. She won't leave me no matter what I do. I think she is waiting for more money.

E-man says

FunTime says

http://www.nbcnews.com/business/real-estate/nation-renters-fewer-americans-now-own-their-own-homes-n167776

The reason less Americans owning homes is because they couldn't afford to buy. Wait until they and their kids are renting from the Chinese and Indians and don't understand why.

The reason is quite simple.

Homewownership is painful in the first 10 years for everyone who has a mortgage. After the first 10, the home is an asset.

Some take the approach that you have to scrap, work extra jobs, borrow and do what it takes. If my kids need a house at age 25, I'll write them the downpayment check, not have them wait and save for the DP.

Some look at it like I don't want to be tied down to this debt, save cash, rent ratio is not good, income % is too low, the Patrick way.

The US will be more competitive not less, so me thinks there is no choice but to compete or go to South Dakota. Basic demand and supply tells you things people covet will cost more, me thinks people will be even more demanding and pay even more money for things people like. A premium paid today is superpremium tommorow.

Call it Crazy says

Strategist says

Well, too late for me. I've been married over 25 years. She won't leave me no matter what I do. I think she is waiting for more money.

Just make sure she doesn't up your life insurance without telling you...

My term life insurance expires in 3 or 4 years. Shit, I think she's planning something big before that.
If I don't show up one day I want you guys to know......she did it.

We did not have the money to qualify for a down, then when we did we could not afford the monthly mortgage...thus the plan worked for us. Our other friends bought houses and cannot afford anything and say they cannot afford to retire...and some foreclosed too.

I am happy for you that you invested in real estate and did well, retired and your friend moved to Brazil...but for low to middle income folks like us in the SFBA, our renting, saving and buying worked very well.

Patrick's advice worked for us and we are happy ;)

retire59 says

We did not have the money to qualify for a down, then when we did we could not afford the monthly mortgage...thus the plan worked for us.

Respectfully, Im not seeing how being priced out is a "plan". In essence you had no choice - you couldn't afford to buy in 1979, you couldn't afford to buy in 2009. So again why thank Patrick in a rent vs buy thread when in reality, there never was a choice for you to make as you've been priced out for your whole life?

In any event, I see nothing "smart" about (your words) "renting for life and hating every minute of it". The reality is, had you been willing to sacrifice the way most of us did who bought when young, it pays huge dividends later in life. Like Patrick I confronted a rent vs buy calculator in 1999 (rent =2400 /buying =2900) and here in 2014 I thank god every day that I ignored it and bought (comparable rent now =3600).

Fact is your story is more of a teachable moment for the younger posters & lurkers on this site - if you are going to spend your whole life in one area, and if you can sacrifice early to afford it, a house usually pays enormous dividends well down the road. But unless you are able and willing to make that sacrifice, be warned, you later in life may have no choice but to move away.

CDon says

The reality is, had you been willing to sacrifice the way most of us did who bought when young, it pays huge dividends later in life.

Don't assume the renters are saving like crazy and making sacrifices. I'll put my unleveraged gains in the stock market against anyone's gains on a house. It's about net worth. Buying a house takes a lot of years off your ability to gain compound interest so it better gain fast. Like you said, "Ten years." A net worth growing with compound interest for ten years is very difficult to catch even with a leveraged investment. Probably the only way, based on statistics, is to time the market. Good luck with market timing-based investment strategies. On average, they don't work.