patrick.net

edvard2, Have you ever looked up the property taxes on your place? I'm assuming you're in a heavily subsidized Prop 13 rental.

I have no idea what the taxes are on it. I know it was bought a long time ago for not a lot of money. Our situation is pretty unusual because most houses like ours rent for a lot more than what we're paying. All I know is that its a good situation for us, we take care of the place, and so its a good deal for the landlord too.

My first rental was two years @ $90/week in some old lady's house in Westwood. She was great, even though I didn't have a kitchen and the laundromat was a mile down the hill on Santa Monica Boulevard.

Then I rented in a couple of places in Westwood. $400/mo for a loft in a condo and $700/mo for a 1B in West LA. Today (had I not moved in 20 years) rent control would give me the latter at $1300/mo while market price is $1600 or so.

My last 5 years in Japan were rented at Y110,000 a month, roughly $1000/mo.

Then I rented $700/mo in Santa Cruz, at a childhood friend's home. Then I rented 5 years in Sunnyvale at $1320 - $1750/mo.

So over the past 25 years I've paid $250,000 in rent, easily the dominant life expense (after taxes, LOL)

Funny how something so significant has so little attention paid to it.

We're all like fish in water -- so immersed in it we don't really see it.

It would be interesting for you to run some numbers as to where you would be if you had bought a similar house 9 years ago vs renting.

Although it could never be accurate because you could have 'gone crazy' remodelling (or not) and you could have sold at the peak and then become a renter with a huge cash pile (or not).

I have never ever meet anyone, in person, who actually sold at the peak and has been renting ever since (i did it). I only read people claiming to have done it on the net. I think this demographic is 1% of the 'renter pool' (sold at peak and can now pay cash for any home but choose instead to rent).

To answer your question I have been renting 5 years now, only 2 in same place.

PockyClipsNow says

It would be interesting for you to run some numbers as to where you would be if you had bought a similar house 9 years ago vs renting.

Well... starter houses in our 'hood' were going for around 350k or so in 2002-2003 and then peaked at around 600k in 2005-2006. Starter homes are now sitting at the 400k-500k mark. So had we bought in 2002 for 350k, the monthly bill would have been around $2,000 a month minus taxes and maintenance. So we would be sitting on anywhere from 50k-100k in equity if we were still in that house.

On the other hand our rent works out to be around $1,300 a month ( we have a housemate) so over time we paid $700 less per month over paying for a $350k house, or around $8,500 less per year not including taxes for the purchased home. That works out to be around $75,000 in total savings over the course of nine years over the cost of buying in 2002. So comparing the two, if equity is considered that works out to be an almost dead-even in comparison. But then again that is assuming we had bought at the bottom. Back then we could not have done that because we didn't make near as much as we do now.

If on the other hand we had bought say in 2004-2006 or 2007, that equation becomes grossly lop-sided in favor of renting.

I rented for 11 years before I bought last September.
I rented the house in the spring of 09. The ideas was to save about 10K-20K after a few years and put it down on a 90K house. (the going rate for your average non descript 3 br rancher in south Florida)

Well that 90K house didn't happen...

My rent started out at $700 a month. The orignal land lord that bought the pace for 180K, sold it in 2003 for 300K, then that and my rent was raised to 1000 a month. Then that guy sold it to a Columbian woman for 695 in 2006 eventually raised my rent to 1400 by 2010. She by the way hadn't paid her mortgage since February '09, we found out from the banks lawyers before we left. She's still owns the property.

My mortgage is cheaper than rent I bailed on.

edvard2 says

Well... starter houses in our 'hood' were going for around 350k or so in 2002-2003 and then peaked at around 600k in 2005-2006. Starter homes are now sitting at the 400k-500k mark. So had we bought in 2002 for 350k, the monthly bill would have been around $2,000 a month minus taxes and maintenance

You could have financed your way down from 6% to 5.25 in 2004 to 4.75% in 2009 to 4% in 2011. That $2000 would have gone , $1,900 in 2004 to $1500 by now. Within the 2,000 or 1,500 now are about 400 in principle. You could have also secured a prime - 1.25% HELOC in 2005 which effectively would be around 1.5% now. Lot's of what if's but that mortgage would have trend down for the last 9 years.

edvard2 says

On the other hand our rent works out to be around $1,300 a month ( we have a housemate) so over time we paid $700 less per month over paying for a $350k house,

Nothing would have stopped you from having a housemate owning as well and for the sake of A-A comparasion.

edvard2 says

not including taxes for the purchased home.

You mentioned you are dink's making 100K each, your tax writeoff would have 1.5X - doubled what you paid in property tax.edvard2 says

had bought say in 2004-2006 or 2007, that equation becomes grossly lop-sided in favor of renting.

True

SFace says

You could have financed your way down from 6% to 5.25 in 2004 to 4.75% in 2009 to 4% in 2011. That $2000 would have gone , $1,900 in 2004 to $1500 by now. Within the 2,000 or...

I have no doubt that via some sort of financial finagling we could have done this or that and would've maybe be better off -but ONLY if we had bought at the bottom in 2002-2003, but as mentioned, at that time we made about 1/4 of what we currently make thus buying was out of he question. Sure- we could have also written stuff off. But I would counter with that by saying that we have also been heavily investing in various retirement funds, which throughout that period and even today has done pretty well. Had we tied that money down on a house we wouldn't have that.

In reality we were in a position to buy probably in 2004-2006, at the height of the boom. Indeed if we had bought then, comparatively speaking we would be paying out the nose for a depreciating/depreciated asset and losing money each and every month.