Renting

[moneymaker]

Renting sucks! I’m no longer a renter but grew up in a household that rented housing all through my childhood. Thinking back if I had the same mentality growing up that my son has now I would be a free and clear homeowner already. At an early age my son declared “renting anything is a bad idea”, of course he still rented video games. He is right of course. Renting to others is how people get rich, along with charging interest and selling things at a high mark up. Just thought I’d put that out there for young people starting out that might not yet be aware of it.

[CA renter]

[quote=moneymaker]Renting to others is how people get rich, along with charging interest and selling things at a high mark up. [/quote]

Agree with this part, but not the idea that renting *always* sucks. Sometimes, it’s the smartest thing you can do, like renting a home in the ~2003-2008 period. It really depends on what’s going on in the general economy, as well as what’s happening in that particular market.

[livinincali]

It completely depends on what your renting. Rent to own is a stupid idea but renting a jackhammer to break up some concrete patio in your back yard makes a lot more sense than buying a new jackhammer. Renting a home when you’re on a 12-24 month contract where you’re pretty sure your next work assignment won’t be in that same city makes sense. Renting when the cost of ownership is higher than the cost of renting makes sense.

How many people that get suckered into to owning their vacation (i.e. timeshare) wish they would have just rented their vacations. I.e. pay for them when you take them.

Now certainly people renting items out make money but it isn’t necessarily the person renting that’s taking the hit, it could very well be the manufacturer of the product being rented. If everybody went out and bought a new jackhammer every time they needed one the manufacturers of jackhammers would be doing great. Instead the people renting jackhammers do pretty well and the people that occasionally need a jackhammer save money by not having to buy a new jackhammer.

[UCGal]

I have to agree, in general, with CAR and livingincali. There are exceptions to your generalization that renting is worse than owning.

If your time horizon is less than 5 years- then you REALLY need to do the math – look at risk of falling values, look at transaction costs, look at the whole rent vs buy for the same property, look at lost opportunity of your down payment money. I say 5 years because markets don’t always rise, financing frontloads the interest so you don’t make much of a dent in the debt the first several years, and transaction costs can be hard to recoup if the market is flat or rising slowly. Folks forget about this stuff.

But – if you’re looking at a home long term, it totally makes sense to purchase. I’m within grasp of paying off my mortgage so the only bills I’ll have with housing will be taxes, insurance, and maintenance… That’s HUGE and is part of my early retirement budget. You can’t pay off a rented situation.

[moneymaker]

I agree obviously with all the comments made above. I personally have never said to myself “gee I should have rented that”. I’m sure those that bought during the bubble can say that for sure. Even the nail gun that I bought off craigslist and really only used to build the shed in the back,”I told myself I would sell it when shed was done”, doesn’t bother me, because I got a great nail gun at a great price and could sell it at any time, probably for what I paid for it. I’m just amazed when I see people I consider really smart, leasing vehicles.

[FlyerInHi]

It also depends what and where.

The more expensive house is usually proportionally cheaper to rent, compared to the carrying costs of buying.

I heard that in some states you can rent a $1.2 million house for about $2,800. That’s a good deal. If you owned 2 rental condos in San Diego, you could live in huge house elsewhere.

[livinincali]

[quote=moneymaker]I’m just amazed when I see people I consider really smart, leasing vehicles.[/quote]

Well if they have a small business it can make a lot of sense to lease a vehicle because of the tax treatment. You can actually come out ahead vs buying new depending on the terms of the lease and expected depreciation. You can argue it might be better to buy used but these days you aren’t getting that much of a discount buying lightly used.

[scaredyclassic]

Flexibility is profitable. The rules keep changing.

[moneymaker]

I suppose I’m really renting the money I used to buy my house, even though true, I don’t like to think of it that way.

[scaredyclassic]

[quote=moneymaker]I suppose I’m really renting the money I used to buy my house, even though true, I don’t like to think of it that way.[/quote]

Oh it’s true.

[joec]

[quote=livinincali][quote=moneymaker]I’m just amazed when I see people I consider really smart, leasing vehicles.[/quote]

Well if they have a small business it can make a lot of sense to lease a vehicle because of the tax treatment. You can actually come out ahead vs buying new depending on the terms of the lease and expected depreciation. You can argue it might be better to buy used but these days you aren’t getting that much of a discount buying lightly used.[/quote]

Yeah, we thought about leasing a car for business. I think it makes a ton of sense to lease for business since if you are self employed or even if not (s-corp/c-corp), there are very few ways to lower your fica taxes. A huge car lease for a car you’d like to buy anyways makes a lot of sense since you will now deduct that against your taxable income from the business which just took off 15%+ from fica…Since the payment is monthly, leasing is probably much better than owning a car for the business due to all the ownership rules I’m guessing. Tax on the car is also assessed monthly I think which gives you a bigger deduction also.

Whenever I’ve shopped for used vs. new, especially for things which are Certified Pre-Owned, I rarely saw any great deals personally.

If you shop pretty aggressively and do a lot of price checks online with what people are getting cars for new, I rarely, saw used cars going for much less. You also have limited car options which you might not like and limited colors.

It’s true a private part deal may make sense, but a lot of sellers like to inflate their car price and it’s VERY time consuming IMO to find a “nice” car used…which match all your specs.

Just my own experience at least.

Not to mention on a new car, you can probably get better financing if you needed it (like 0%).

[Cube]

[quote=moneymaker]{snip}
I’m just amazed when I see people I consider really smart, leasing vehicles.[/quote]

I see where you’re going with this, but as with the renting money for the house as you mention below, leasing is really just a financing and depreciation gamble with the dealer / leasing corporation.

In general, I assume that they have to have it stacked in their favor (as is ought to be the case with extended warranties sold by third parties), but they can’t get it right all of the time. If for some reason you think you have an edge in predicting interest rates or depreciation (or you want to lower your variance / lock in your expenses), then it might make sense to lease a car.

I toyed with the idea of a lease assumption if I could find a car whose remaining mileage was good for me, but was too little for the original lessee, and they had to unload it before the end of the lease so that they wouldn’t be shafted with overages.

[Doofrat]

I think leasing makes sense for businesses that don’t want to deal with amortizing/depreciation and I can totally see that, it takes away the accounting hassle. For the average consumer, I feel that leasing leaves a lot of gray area with regards to all the terms added to a lease, and I know that the dealer is surely going to be the one taking advantage of the terms.

[spdrun]

Most leases also have pretty harsh mileage limitations, at least if you want to pay a reasonable price.

This being said: never got the idea of leasing. I can buy a decent used car for under $5000, drive it for a few years then dump it for $4000. Whatever tax savings I get for leasing won’t amount to the difference between $1000 and the cost of a lease.

[FlyerInHi]

spd, show me a car on craigslist that sells for under $5,000, not from a shyster.

I saw somewhere on TV that people are renting out their own cars. I have a car that sits a lot, and I’m wondering if there’s an internet service that will allow me to rent it out. What about liability issue?

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