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January 09, 2007
Bubble Sitters and Bitter Renters - how much a month are you saving by renting vs. going out and 'buying' a place today?
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My husband and I pay $700 a month in rent. We make > 100K.
645$ a month in rent!
I'm Lov'n It!
Put the proceeds from my Cali home sale last year in a tx free mm fund. Earn 1300/mo. Renting for much less. Waiting for right opportunity to buy.
This is very hard to judge because prices on the condos in the community where I rent are dropping very fast and the association fees have shot up severely (lots of FBs here). If I judge the savings by the day I moved in, we are saving about $1800 a month. After selling our house, we are saving about $1600 a month from our previous mortgage.
My rent is $245 a month and includes water, sewage and garbage pickup. To give you perspective, typical rent in my area is $550-650 per month.
After ALL of my expenses, I'm saving 60% of my net pay. Been doing so since May of 1997.
I put the taters of the sale of my DC condo due the buy/sell of my Wilmington Delawhere luxury riverfront ghetto townhome in the bank (~70k). I make about 130k & have excellent credit and could afford a nice condo or modest townhome here in Metro DC but because I know prices are still bloated I am waiting. I rent a 2 bd 2 bh apt w/ laundry for 1250/month plus electric(that is cheap for this area). To own an equivalent condo would result in a 2k+ monthly mortgage payment plus a condo fee in the 200-500 range + utilities!!
Approximate savings: 1k or more. Even relative to my old DC condo that I bought pre-bubble I would be saving several hundred dollars because the property taxes and condo fees have skyrocketed. I just scan sale listings and see downward trends in prices and upward trends of inventory and desparation (short sales, motivated seller, price reduced, closing costs, moving allowance etc, etc, etc.) And I do not represent pent-up demand, I can rent for years until the cost-benefit analysis tips to owning over renting when the right deal comes along, period!
I pay $ 600 a month rent for a 900 sq. ft 2bdr/2ba in a triplex near an A+ elementary school near a popular lakefront here in Central Florida.
I bank approx $ 1000 per month into savings. I make $ 45,000 per year and by renting I have lots of money left over every month.
To purchase a similiar condo would cost me ~ $ 1300/ month with mortgage and COA fees.
figure I'm saving around $5,000 a month in depreciation that I'd be seeing if I still owned my home!
We are "buying" our house...total monthly payment including PT and Insurance...$600/month....called buying a fixer-upper and refi @ 15yr/4.75%....house worth $150,000. Hard to understand those who want to spend 40% or 50% of their income to pay the bankerman
I own my house outright. I pay $2100 a year in property tax and $950 in H.O. insurance. Maint.is about $1,000 a year now that I have everything dialed in.
My place was worth about $850k a year ago. Can't say now since nothing is selling. No comps.
As an all cash buyer who has been renting for the past two years,have been banking a bit over 5K per month on a after tax basis.
In 2007, monthly savings will surpass 7K, as in process of finalizing transaction for higher yield jumbos.
So, renting all the way to the bank as never had so much "free" cash flow.
Example of what it does to you and how it feels:
Years ago, reached the point that could buy virtually any high-end consumer items or cars, (I did), and pay in cash with absolutely no impact on finances and lifestyle. And do it again and again.
Housing was still a challenge as wanted a no-mortgage scenario for my 1.2ml residence, which finally was achieved. Now, have same attitude towards homes as to consumer products...can buy virtually any house for cash but finding out,as with consumer goods, once you can , it doesn't mean much in my situation.
Renting is my cash home which provides the freedom from the grind of work, commuting and home ownership.
Here in the NYC area, rents are high - we are paying 2400. But to move up into a better apartment or house where we are would easily be anywhere between 4500 and 6000 per month, including taxes, etc. Right now we bank 4K a month into savings, and will be making that 5K soon.
Let's see - we are renting a $400K house (about 3500sq ft) with fully finished basement here in GA. Pay $1800 rent. Landlord pays $50/month HOA - we get the benefits. Write off 20% or $360 for use of basement for office. Save $50/month for difference between renters and homeowners insurance. Save about $300/month on property tax. So that leaves:
$1800.00
-$ 50.00
-$ 360.00
-$ 50.00
-$ 300.00
------------
$1040.00 effective rent.
Oh yeah - no maintenance either - no telling how much we save there.
But it gets better. The $400K we got from selling our house in Dec of 2005 is in 4 week treasury bills - with no GA income tax on interest.
Earning approx $1750 a month there - so we are living for free and pocketting a profit. WOW what a deal!!!
Previous mortgage(insurance, taxes, etc.)1595.00. Current rent 900.00 (plus 175.00 for storage unit)=520.00. Plus I save on house maintenance andd not to mention losing depreciation(10% easily) total amount saved over one year 70,000.00 (priceless)
Rent a 1BR in NW DC for $1600. To own would have cost $350K last year (more like $315-325K now) PLUS $400 a month condo fee. So we bank about $1200 a month, not including 401k.
I make $170,000 per year and I pay $1,000 per month rent. To buy a similarly sized condo in the same location I reckon my expenses would be AT LEAST $3000 per month with condo fees and all that.
Needless to say, I have a great deal of disposable income. I have so much money I don't know what to do with it!! Hahahaaha
I calculated I save about $250,000 a year from loss saved monthly on depreciating home (homes we are watching are falling $10K a month), taxes, insurance and maintenance. It use to be renting was foolish years ago. After selling 3 homes during the bubble and puting money in the bank...no doubt renting is cheap compared to ownership at least in S. FLA.
I pay $535 for a one bedroom apartment in the midwest. A small starter home would probably cost 25% to 50% more a month, all things considered. It would be nice to have a house but it's nicer to have money leftover each month to invest, spend, etc. I probably save about 30% of my take home pay each month after making double payments on the student and car loans.
Don't know what I might save, because I own outright. I do know that I could not afford to buy the house that I live in. Sad.
well, first off i cant sell my stucco shoebox. however, i have driven past homes in my 1700 home subdivision which have 5 and 6 bedrooms, 3 and 4 baths and 3 car garages renting for $1800 a month. these same homes are listed for sale by the builder for $760,000 - after his $100,000 incentive.
not that i would want to rent one, i would hate to cool the freaking place.
-bubblesitter, trying to escape
I own my home (paid in full) my buddy down the street bought 2 houses and told me to sell my house and step up, this was in 2005. Now he's having money trouble (looking for renters) and I went car shopping. By the way the car dealer's were dead on Sat. afternoon in my area (High Desert CA)might be a sign of the times and boy were those car salesmen were just crawling over each other to get the wife and I in the office SUCKERS !! My wife and I are going to buy another house but I'm thinking 2008 or later
We are moving to Coral Springs, Fl. in three months. We are going to be renting a brand new, just completed, house for $2000/month. Similiar homes in the same development currently list for $1,100,000. Heated pool, 3200 square ft., marble floors, granite countertops, top of the line appliances, 2 clubhouses with free fitness, tennis, pool, park trails.
About a third of the houses in this new sub division are brand new and vacant. The builder is giving huge incentives to realtors to get them sold or rented. The house listed on realtor.com as a $3500/monh rental....they quickly accepted a much lower amount.
In addition to the mortgage, property taxes would be $8000/year and hurricane insurance $4000/year.
So we figure it would cost $7000/month to purchase, more if you don't put in much downpayment. I kind of like our $2000/rental!!
$180. Flipped a couple houses up north and bought a cheap fixer townhouse in Dallas with my winnings. I pay $180 per month for taxes and HOA combined.
I have no mortgage and don't plan to get one. I'm not lining the pockets of banker or landlord. Close enough to true ownership for me.
Until the revolution.
near UCLA. household income $130,000. rent $1000. comparable condo is asking 475,000+.
slightly better than break even here since my annual rent costs are slightly below the year over year declines in the asking prices of real estate in my price range - BUT the actual price paid probably makes my position even better because the asking price is MUCH softer than it was a year ago.
$660 a month (with a detached garage), they do all the maintenance and my renter's insurance costs around $170 for an entire year of significant coverage.
Scottsale 750/mo rent 100,000s in the bank
my rent is $245 a month and includes water, sewage and garbage pickup. To give you perspective, typical rent in my area is $550-650 per month.
**********
I can imagine your life. First you're single, probaly earn $10 an hour and couldn't afford a home if you wanted. Sorry but the rent amount you describe is lower than many on Section 8 or living in ghetto pay. It is lower than a lot of people pay in Mexico or Iraq!
No knocking you as there are times and places when living without have a purpose. I rented a small garage apartment in the ghetto while renovating a boarded up house I bought for $20,000 in 1989 in Tampa and paid $250 a month but even that place in 2006 is renting for $600 so hard to believe you've lived in such a place for ten years with no rent increase.
Renting a 4 bed, 2 bath home with new kitchen, (one of the baths is totally new) with a sweet yard. The home is in a great location, and I look at similar houses for sale for $400-550k. Buying one would end up (with a 20% down) costing us $2,200-2900 a month, not including taxes, homeowners insurance (we have a rental policy which is considerably cheaper) and other homeowning costs. So guess we are saving $700-$1400 a month depending on what we would like to buy.
Monthly payment $1450 PITI + HOA for 3185 sq ft home on 1/4 acre lot with a pool.
2006 income combined $142K. Deduction from interest/tax $14K at 28% makes the actial monthly payment $1124 a month.
So let's see $1124 a month for a 3185 sq ft home, huge yard and a pool or $650 for a 1 bedroom apartment.
Yea....tough call that one.
$245 a month...no way. I don't care if you live in middle of nowhere Iowa in 2007 it is not possible to rent an apartment for $245 a month.
Unless $245 is a room in a flop house I call bullshit on this one. If it is a room in a flop house I feel very sad for you.
after a few years of having nothing to do on weekends but hike, boat, ski, camp, travel etc I'm starting to wonder if I want to get back into house maintainance. When I had a house there was ALWAYS something that needed to be done.
Uhm yeah it's called illegal aliens my friend. $50 a week and it's like the house takes care of itself...yard, pool, leaky faucet, even installing new flooring is practically free with help from the amigos who hang outside Home Depot.
Doing your own home maintenance is so 1980s...
Don't buy in California the P/E ratio of rent vs. mortgage is way too high. If it comes down to P//E of 17 maybe, but not at 30!
I have a 2b/2b apartment for $735. My utilities total roughly $100, so that comes out at $835/mo for total living expenses.
My sister pays $600 for property taxes, $600 for utilities, and $1700 for PITI.
So their family of 3 pays $2900 for living expenses. Mine pays $835. They do, however, get a backyard.
sold a house due to transer and ended up renting in south florida, rent is 2000K per month, owning the same house would be at least 5000K with taxes and insurance, not including depreciation, I do want to own again, but we will wait until prices come down.
You don't understand the point I was making brokersleaveyoubroke.
The renters here for the most part assume anyone who owns a home is in a bad situation. You assume everyone is stuck in some option negative arm with a payment that's doubling every month. Those people are few and far in between, despite what you may think by reading blogs like this which highlight them.
My situation is the norm for home owners. Bought either pre-bubble to early enough in the bubble to be OK with a longe term fixed rate with a low payment that in most cases is still cheaper than renting.
The only people who are getting hurt now are those who bought in 2005 and maybe late 2004 depending on location and bought too much using toxic loans. Yeah they're fucked no doubt about it. But as a % of ALL home owners, they're a small group.
1260/mo. split with a roommate in a 2bed/2bath apartment in Culver City, CA. Comp. condo would cost me approx. 450k or $2,275/mo (after a traditional 20% downpayment of 90k) Hmmmm... $630/mo or $2,275/mo in a depreciating assest. My savings and portfolio are quite happy with renting.
I share an apartment with my girlfriend in Mountain View, California which is right dead center in Silicon Valley. I make $102,000/yr and my share of the monthly bills(rent + electricity + water + garbage pickup +cable TV) is $645/month. I save/invest around $3700/month.
Mayfair, Chicago IL 60630
4 yr old condo conver, 2 bed 1 bath 1 gar spot, sep storage wash-dry, stone, granate, big cabinets, safe hood.
rent $1000 flat.
==============================
Same unit sold last fall for 205,000 @ 6.2 for 30yrs = 1,255 + 273 taxes + 180 assments
= 1,708 / mo.
He then got a nasty surprise. He was punching holes in the ceiling for recess lights when he discovered that the roof wasn't properly secured to support joyces. And a support wall was taken out by the conversion, thus causing his floor to buckle.
He was since ripped his unit to the studs to make all the fixes. These are things that all the unit will have to do at some point.
Very bad situation, glad I'm just renting.
foxwoodlief said...
my rent is $245 a month and includes water, sewage and garbage pickup. To give you perspective, typical rent in my area is $550-650 per month.
**********
I can imagine your life.
Foxdork sounds jealous.....
Rent is 650/mo. Comparable home (size-wise) in my area would cost $1,300- after putting 20% down.
Without the 20% I suppose it'd cost more. Although who knows with those new whacky lending "standards"! Do you get a break now on your mortgage if you go "no down"?
Anon 1:50-
little condescending to assume that "most of the renters here think that anyone who owns a house has a bad deal"- don't you think?
Really doubt that you need to explain to people that those who bought pre-bubble are fine.
And that those who paid off their mortgage and own free and clear are doing the best of anyone.
I think most here can do the math and figure out that if you bought a home for 180K 8 years ago, you got a better deal and are more financially solvent than the sucker who paid 1.2 million for the same house last year.
The point is, the reason people are renting now is they are waiting for things to equalize in the market before they buy again.
Common sense, really. Plus some basic math skills.
I'm renting for $750 a month. The latest sale (09/2006) on the same size unit was $144,000 with a $289 a month HOA fee. I'm guessing that I'm paying roughly half of the cost of ownership.
-Dragasoni-
As a full time RV'er I pay as little as $210 a month in Arizona and NEVER more than $350 a month everywhere else using RV clubs and discount camping like Passport America. It's a great life :)
this blog is mostly for people who never intend nor can afford to buy in the first place.
so all your questions are hypothetical.
why don't you ask what type of house these "Bubble Sitters" or "Bitter Sitters" would buy if they could afford one or better yet what type of house would they buy if they win the lottery
My monthly nut dropped 40% when I started renting. I live in OC with a family of four, so it is still expensive. But the neighborhood is better. Buying makes sense if you have a big tax liability.
You guys are trolls.
I am a US expat living in Bangkok. I bought a condo here for $175K USD last year... it's in the central business district and great location but small, 900 sq feet. I liquidated my savings and paid it 100% in cash.
I am running a factory making $230K per year plus a housing allowance of about $3500 per month. My condo fees are $100 per month and utilities are another $200 per month. So my biggest expense is tax. I am saving all my salary less tax (about $11,000 per month) and living on less than my housing allowance.
Meaning saving another $1500 a month in country for random fun expenses. If I look at my housing allowance, my payback on the condo is about 6 years before tax, 8 years on an after tax basis.
So it's not so bad to buy in this case.
In the meantime I'm accumulating a USD cash reserve to buy a nice place 100% cash if a bargain comes up. My biggest fear is the USD crashing further in a major way... I am considering loading up on some commodities.
My net savings (AFTER tax deduction) is about 1400 dollars per month. 2400 not counting deductions.
When I leave this area, I will be living on 1.5 acres w/ 120 feet of lakefront, brand new contruction. The square footage will be 25% more than I have now. The commute will be 35 minutes down beautiful country roads. My property taxes and insurance will be 30% of what I would be paying here. I will have saved another 300$ per month by not paying PMI. Appreciation potential will be much greater. The cost of the property and structure will be 40% of what my current rental would cost to buy. My wife (or myself) could quit our job to raise kids or start our own company. Crime will be lower. People will be nicer.
You do the math.
This is great:
http://dinkytown.net/java/MortgageRentvsBuy.html
The full report shows that much depends on what inflation (on rent) and investment returns (on what would be your downpayment/ money saved by renting) and appreciation (on the potential purchase dwelling) will actually be down the line. Playing with these 3 values while leaving the others fixed is very interesting in developing scenerios.
own it/don't rent fr/bank said...
Anon 1:50-
little condescending to assume that "most of the renters here think that anyone who owns a house has a bad deal"- don't you think?
...think most here can do the math and figure out that if you bought a home for 180K 8 years ago, you got a better deal and are more
I am that anon.
No it is not condescending at all. I didn't buy 8 years ago I bought 5 years ago and for a lot mor than $180. Many of the stories here start off with "I've been renting for 5 years and ....". The title subtitle of this thread is "Rub it in".
Well if you have been renting for 5 years you made a big mistake. You should have bought 5 years ago like me. Had you done so you could have the same house I have for the same low monthly payment. My FIXED payment after tax is $1124. My house today would cost about $3000 give or take to buy and $2000 to rent.
So I am rubbing it in to all of you who thought you were oh so smart not buying 5 years ago and are now stuck in a decrepid apartmemt hoping for crash that so far has not materialized.
Happy now?
saved $45,000 this year.
I think most here can do the math and figure out that if you bought a home for 180K 8 years ago, you got a better deal and are more financially solvent than the sucker who paid 1.2 million for the same house last year.
The point is, the reason people are renting now is they are waiting for things to equalize in the market before they buy again.
---------------------------------
Hey, that's me!
Got a forclosure in the early 90's housing bust. It was previously advertised at $250,000. Bought it from the 1st trust deed bank at $175,000. B of A ate the second at $60,000. (The guy must have wanted a second for granite counters and such.)
Did a 15 year fixed and paid extra payments when I could afford them. It only took 10 years to pay it off. I think I made average of 45k per year during that time frame.
There were some left over papers in the garage when we moved in. The husband had worked managing a fast food resterant. The wife had just become a... yes, you guessed it
A REALTOR.
Some things never change.
I currently rent and am not sure that I am really "saving" anything as rents are extraordinarily high here in DC- 2,500/month for a townhouse.
The point is, I am not "saving" anything by renting, I just will not, and cannot, buy at these prices (I make 130K).
Anonymous said...
This blog is mostly for people who never intend nor can afford to buy in the first place.
So all your questions are hypothetical.
why don't you ask what type of house these "Bubble Sitters" or "Bitter Sitters" would buy if they could afford one or better yet what type of house would they buy if they win the lottery
I own a home outright and can buy anything I want without a mortgage. Why do you suppose I am on this blog? Could it be that I am in this position because I have been successful at market timing?
"So I am rubbing it in to all of you who thought you were oh so smart not buying 5 years ago and are now stuck in a decrepid apartmemt hoping for crash that so far has not materialized."
OUCH!!!!
But ya know what? I like this guy. I come her most of the time to support you guys. I own a pre-bubble home so why should I care... but many people I like are shut out of owning a home. I want them to won also so I want this bubble to pop ASAP. But when I see stuff like 'rub it in' I have to side with the guy who posted this.
Anyone who did not graduate from college by 2001 and buy a house immediately has been priced out forever. Too freakin bad.
You trolls are all losers who cannot afford to buy a house. I will sell my starter home to one of you losers who got priced out forever for $8 million and retire soon. HAHAHAHAHAHAHA
My wife and I rent in Toronto, Canada for about $800 / month. The rent includes everything but the cable, hydro (about $35/month) and telephone connection. The area is near "The Briddle Path" and "Hoggs Hollow" (both of which I walk to), quite nice parts of Toronto actually. The place is small and most of us tenants have lived here a long time. Houses around us go for several million each so I can't see a better deal in this area that what we currently pay.
With our savings my wife and I purchased land and a house in Asia when prices hit bottom in 1997 due to the Asian financial crises. IMO, commodity exports to places like China, Taiwan, Japan, ASEAN and India is rapidly becoming "the next thing" as the world is running short on resources and energy. Basically as Jim Puplava would say, the world is transitioning from that of fiat currencies back into "things".
With the money saved by renting we now have over 900 acres of land and a house all paid outright with cash. We have assets such as 500,000 hardwood trees, water rights (and a water bottling plant), all manor of livestock including several hundred head of cattle and many agricultural products such as rice, mangos and oranges. All bought and built for less MUCH less than one house plus interest in Toronto.
For us, living in Canada and "investing" in a house simply doesn't make financial sense. Most jobs in Toronto for average people pay $ 8 - 15 / hour while a starter home goes for over $400,000 not including interest -- in "B" class neighborhood. With China entering the automotive market (including parts) you'll soon see a major outsourcing of automotive manufacturing jobs to China.
Not to mention the house is just a money pit...it doesn't PRODUCE anything. The action, wealth and future, IMO, is in Asia. It's also better for people like myself who love to innovate, develop and run businesses - Canada - is more of a socialist state.
Ironically, as a "white" person I get no racist attitudes towards me in Asia like I do in Canada.
you are full of shit Toronto renter
$800 a month near the Bridle Path, I can only imagine how you live. Nothing but $8-15 an hour jobs in Toronto...LOL!!! Do you people make this shit up as you go along? Toronto's economy is booming and the r/e market is still holding up after a 10 year run.
I moved from Toronto to the US in 1998. Sold my house in Richmond Hill for $429,000. I still keep in touch with my former neighbor and she told me houses on the sreet are now going for $700,000. And on top of it the dollar has gone from $0.65 to $0.90. Meaning my $429K was only worth $309K in today's exchange rate.
I was a fool for selling then and regret it dearly. I don't understand how you are happy having missed out on that runup by renting all this time.
$800 near Bridle Path...no really stop, it hurts to laugh so hard.
To the US ex-pat in Thailand... dude, you're living in the biggest boom region in the world that's friendly towards foreigners (in other words, the opposite attitude of what's around in Seoul or Shanghai).
If anything, after 1998, RE has been a great buy in Thailand/BKK and will probably be for another decade. And if you're on a budget, there are quite a number of units at less than a million and half bahts.
Yes, about $ 800 and it is NEAR the Briddle Path / Hoggs Hollow area. I can walk to Hoggs Hollow in about 5+ miinutes, Briddle Path takes somewhat longer. Incidently, when I moved in here 16 years ago the cost was a mere $ 422 / month.
It's a simple 1 bedroom, not bad, and I do not mind living here. I use it while in Canada and then lock it up and turn off the lights when I head overseas. What more do I need? As for how we live when here, very simply, which is OK by us.
I wouldn't want a house here in Canada and quite frankly I hate the weather here 8 months of the year. The weather in the tropics is by far, much nicer and we own horses...not something I can have in Toronto.
My friend downstairs does the same thing, they have places in various nations due to their business. They have a 2 bedroom unit here, which doubles as thier Canadian office. I think they pay $840 / month. I'll ask him when he heads up in a few weeks time (he's in Philly right now).
As for my wife and I, I find jobs in Canada much less rewarding than in Asia. And with 300,000 new immigrants coming into Canada each year - 200,000+ coming to the Toronto area - the job market is saturated. No big deal, as the real fun is in places like Shanghai these days. So I made far, far, FAR more in Asia than I could have ever made staying in Canada - or the US.
I did not miss out on anything by renting in Canada all these years. The run-up in prices with a house here would have netted me FAR, FAR less than the investments I made overseas.
I think the problem is that Canada's legal immigration isn't really coupled with the needs of business very well. It's almost as if Cn is a place for people, like the Hong Kong-ers in the 90s, to get a second passport as a political backup to communism/fascism at home or as a travel document, for let's say Soviet emigres, who want to travel internationally but don't want to inform Putin of their whereabouts whereas non-illegals in the US (like former Soviets w/ green cards) actually want to be American and integrate into the culture (at least their children do). I think that's stark contrast between the two countries.
Renting 1000sqft condo (prob worth $550K) on the sand in Long Beach, CA for $1500/mon. Household income ~300K. Targeting to buy 1.5-2M house in socal when the "time" is right. Been saving for the past couple of years so between money in the bank, continued saving and dropping property prices our future mortage amount is dropping by the day.
Like many bubble sitter we can afford to buy anytime, it's a matter of which is the quicker way to build up our equity. For the price range we're looking at home prices have drop back down to 2004 levels so our renting strategy has increase our equity compared to buying. It also increased our purchasing power.
Anon 4:35:
If you're so happy and self-satisfied, it kind of begs the question:
What in the world motivated you to visit a bubble blog on the internet? Little scared? Little concerned?
Shouldn't you be painting your house or something? Surely you have better, more pressing ways to occupy your time?
Why are you interested in what us cracked up bubble seers are talking about? I mean, if you think housing's going to be fine, why are you here?
Why do give a d#mn what we say?
Pleasant dreams!
Live in Honolulu and pay just under $1600 a month for a 3/2 SFR. Can't touch one here for under $550,000, and thats single wall construction, approx. 1200SF on a postage stamp lot, with a carport . All my co-workers thought I was insane for not buying. Who's laughing now!
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