the problem with renting

[Peace]

Even though I am (ah-hum) well beyond my college years, and have owned a couple of really nice houses, whenever I find myself looking for a place to rent, I seem to revert back to a poverty mentality and really lower my standards.
I just can’t bring myself to spend any more money than absolutely necessary on a rental.
I wouldn’t buy the place I’m renting now unless I was planning to demolish it.
And speaking of friendships (another forum topic), I am not comfortable having guests because this is not my house, and quite frankly, it is crappy and there is not much I can do about it.
But I just can’t bring myself to spend what it would cost to rent a house in a neighborhood where I would buy. It just feels like throwing money away.

[PerryChase]

Humm… but buying a house and paying twice the amount of rent in interest to the bank is not throwing money away?

It shows how the real estate industry has brain-washed us into thinking that renting is wasting whereas buying is “investing.”

I would say, regardless of buy or rent, make up your shelter budget and go for the best house for that budget.

[LA_Renter]

I agree with PerryChase. It’s not your fault that you got caught up in a mania. I guess I’m on the opposite end of the spectrum, we have a condo on the beach with a spectacular view. My thinking is if you have to be on the sideline be in a place you want to live in. Trust me it makes it much more tolerable. I would like to admit that we were very fortunate to find the rental we did. The landlord bought this place over 20 years ago and owns outright along with four other properties in the area. Our rent for what we have is extremely low but it is all profit for him. We have had one small increase in three years, primarily because we treat the place like we own it pay rent like clock work and give him suggestions on upgrades. He’s almost afraid of losing us as tenants.

I know we all know this equation of renting verses owning and this is the barometer I use. We have an additional savings of approximately $12K a year by renting versus owning (factoring in tax breaks). We will probably buy when we can break even. Our quality of life is better renting. I like to compare ourselves to couples of equal circumstances and income (apples to apples) that decided to take out these insane mortgages to attain ownership (we’ve been in the market i.e could have bought since 2004). We just came back from a 2 week vacation in Europe, what did the couple that bought in the last couple of years do? If we were to own right now, that would be the extent of what we could do. I’d rather go to Europe.

[no_such_reality]

You’re between need and want.

That’s the crux of your problem. You’re much like me. And in effect, much like many renters. What you need is pretty much a 1 bedroom place to sleep, make a few meals and come back to after working or a night out.

What you want is a place where you can have space, throw parties and have al sorts of friends over to socialize and be impressed with the place.

And for the cherry on top of that sundae, you’d like the place to be good enough to support whatever future direction your life takes.

It’s like LA-renter said, find yourself a great place to rent. You’ll be amazed at how jealous people get when they realize you have such a great place and it’s only costing you 1/3rd of their mortgage payment.

The more time I spent looking around for a place last time, the more apparent it became to me that the difference between a virtual slumlord rental and a nice place was $100 and difference between slum and a great place was only $300.

[powayseller]

Rent in San Diego is very high, but as no_such_reality pointed out, there is a basic cost for renting even the smallest studio, and the incremental cost for something larger or nicer is not too much. So you can pay $1500 for a crappy studio, or $2000 for a nice condo on the beach. And if you are single, you can even upgrade to the $3000 rental just by getting a roommate.

[SD Realtor]

Peace I am a realtor and I would advice you to rent. Unless you plan on staying in the place you want to buy long enough to ride out the downturn and then back the upturn, to simply break even then it would not be wise to buy.

Don’t drink the lemonade Peace… run the numbers yourself of renting a year verses buying a year. To make it honest run a sample turbotax return for each case and see for yourself. I think you will be surprised by the results. My total guess here is that you would see the following:

1 – Your monthly expenses if you owned would be MUCH higher then if you rented.

2 – The tax refund you received would most likely NOT cover the monthly expense.

3 – If you rented, and took the money you saved verses owning and saved it, then by the time the market bottomed out you would some cash for a downpayment.

[BradPitt]

As some of the others have pointed out, you are not throwing money away. Generally, unless you are paying all cash for houses, you have to pay for interests which is the same as renting. And now, since the market is possibly crashing, even if you put all cash into a house, you stand to lose a lot more than renting or buying with little down anyway. So you must remember that it is always relative. Given the circumstances, renting IS the best option. So you are preserving and saving money by doing what you do.

Now that you hopefully have no more guilt with renting, you can with your other issue of wanting a nice looking place to show your friends and dates. There is nothing wrong with buying a nicer place if you enjoy it and can live with your means. Just leave enough to save up enough to invest with and support yourself in the future.

Rent cheaper if you say no to these questions.
Are your friends the type that really care about what your place looks like? Why do you care what they think? Do you care what the place looks like? These relationships with friends and yourself are deeper and don’t require showing off of status. They only help your ego. Maybe you are better off renting an “okay” place so your friends at least don’t think you are running from the mafia. Spend that extra $200/mth.

Rent more expensive if you say yes to these questions.
Are you bringing back dates? Are you bringing back business clients/partners? These relationships can be helped by showing off status. Business partners/clients and women need to know that you can succeed and be financially supportive upon first impression. Not necessary, but it gives you a boost initially. Are you worried about crime? Are you in a better mood around nicer looking surroundings? Are you rich as hell but stingy for no good reasons? What else?

Good luck,

Brad Pitt

Ps. Should I do an action or romance film next?

[Anonymous]

How about the sequel to Broke Back Mountain?

[speedingpullet]

Or “The Money Pit II: Now its Getting Ugly”…😉

[powayseller]

If you’re going to be someone else, why not call yourself someone important, like RichToscano or NourielRoubini? I’d love to see Roubini on the cover of Vanity Fair!

[Author]

Posts