Isn't it silly how people pay more for rent than mortgage?

Discussion in 'Off Topic' started by Tommy2000GT, May 11, 2012.

  1. Bignate603

    Bignate603 Lifer

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    So steady growth doesn't equal an increase in prices? :rolleyes:

    Go back and read my posts, I've always said this was a change in cheaper properties. A 10-20% increase is still a 10-20% increase.
     
  2. alkemyst

    alkemyst No Lifer

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    It's a more complicated topic that this. Like I mentioned those value increases just look like a 1-2% increase over a long period.

    It's easy to say the property went for a 150% increase yet not mention that was from it's prior sale 8 years prior and before the zoning went from single to multi-family and the sale price as all of $75k.

    There is nothing in Phoenix/Mesa recently that most people would want to live in that has jumped 20% in the last 6 months other than onesy-twosies.

    It's going to take a while before that area recovers from it's over-build out.

    Cheaper properties should have been qualified. I was thinking $150k-350k. Not Detroit homes.
     
  3. Bignate603

    Bignate603 Lifer

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    Whether an increase of 15% happens over years or 6 months it's still an increase of 15%.

    That's why I was comparing comps of sales that closed within the last 6 months. Also, all those houses were single family.

    I said cheaper homes that made good rentals and in Phoenix these are the kind of homes that investors are buying for that purpose. Investors aren't buying the kind of homes they want to live in themselves, they're buying the kind of home that gives them the best return. They'd much rather buy 2 or 3 of these rather than 1 more expensive house because they get a better return on their investment.
     
  4. chin311

    chin311 Diamond Member

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    I rent because:

    I don't plan on living in the same area in 3-5 years...

    and most importantly, I'm self-employed so mortgage approval wouldn't be my friend ;P
     
  5. ReefaMadness

    ReefaMadness Golden Member

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    Somewhat ironic that a self-employed...someone not dependent on another for his job, is viewed as a less desirable borrower than an employee.

    I understand a lender's logic about the stability of the income of an employee vs the fluctuations inherent in a self-employed individual's income, but I've always found it sorta odd. A self employed may have fluctuations...but he's seldom going to get laid-off, you know? :)
     
  6. DixyCrat

    DixyCrat Lifer

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    It isn't complex to create a s-corp and pay yourself a regular salary from the s-corp. Now instead of being self-employed you are CEO and you are protected from personal liability.

    And if the company suffers losses you can pass them through :).
     
  7. Born2bwire

    Born2bwire Diamond Member

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    http://www.youtube.com/watch?v=_n5E7feJHw0
     
  8. KentState

    KentState Diamond Member

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    I rent because I don't want to be tied to a house if a job opens up that requires me to move. I did that once and had to pay roughly 18k to sell the house. That was after putting money down and living in the house for 6 years. I know houses won't devalue like that now, but it takes many years to recover the 20% down plus 5-6% you pay to the realtor.
     
  9. alkemyst

    alkemyst No Lifer

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    no shit, but that is not the same as saying that value increase that took place over years happened in 6 months. This is how real estate agents spin that though.

    Investors are snatching up <$70k homes regularly in most of the bigger markets, Phoenix/Mesa, parts of California, Florida, and the other 'boom' states.

    It's hard to go wrong with property at this level esp. since most was worth more previous to 2004/05.
     
  10. Bignate603

    Bignate603 Lifer

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    Apparently in alky's world home values are different than home prices. Sorry, but a home is only worth what someone will pay for it.

    Yes, as more people figure that out there is more competition and prices rise. That's been my point all along. The competition for cheap rentals is driving up prices for stuff in that area and price range while the rest of the market hasn't changed much.
     
  11. BlahBlahYouToo

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    I pity all the poor ppl in this thread.
     
  12. SP33Demon

    SP33Demon Lifer

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    The 2 years of not living with parents is worth the 30K or w/e I paid in rent alone. * that, paying for home repairs, and property taxes/hoa fees. Esp if you're in an area where the rent ratio (look it up if you don't know what that is) makes it a better value to rent.
     
  13. PricklyPete

    PricklyPete Lifer

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    There are lots of reasons to rent over buying a house...

    1) Buying a house is not an automatic investment, historically prices go up over time, but with no guarantee in the short term...and really no guarantee in the long term that it will outpace inflation based on location and upkeep.

    2) A house is a non-liquid investment to store your money.

    3) Upkeep can be potentially expensive...especially if you want to retain the value of your home.

    4) By owning a home, you could potentially add an additional variable to your future career choices.

    Should any of these keep you from owning a home...no. But they are all considerations. Renting also has a lot of benefits:

    1) You are much less likely to put as much money into furniture and home accessories as this is not "your place".

    2) You will spend very little time on the "upkeep" of the property providing much more time for you to pursue other interests.

    3) Within reason, you can get up and go where life takes you with little concern.

    I am a home owner...but luckily I have been able to rent the place out easily (thank god for good location) as my life has taken me many other places than where I bought the house. It is likely that we will never move back into that house...but will just keep it as an investment property in the long haul.
     
  14. JS80

    JS80 Lifer

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    That's what they said when rates were 4.5% and look it dropped another 100bps
     
  15. alkemyst

    alkemyst No Lifer

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    now you are going off on tangents.

    You have been brain-washed by a realtor on what value increases are and how they really are computed.

    There is no property in Phoenix that is rising 20% in 6 months except as a fluke. Those exist EVERYWHERE.
     
  16. Bignate603

    Bignate603 Lifer

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    The data on closed sales says different. I'll trust data over some self proclaimed expert on the internet any day.
     
  17. alkemyst

    alkemyst No Lifer

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    You don't understand the data you are reading. If property was growing at 20% every 6 months there it would be national news.
     
  18. JeffreyLebowski

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    I lived with my mom for 18 years. Once I graduated High School I as out. You can tell people to be frugal and how to be good with money, but in reality for most people to appreciate it, they have to live in the crap ghetto apartment, drive shitty cars and make the decision of eating Ramen noodles so you can save money to do other things, before they start to understand or it starts to make sense.
    As far as rent vs mortgage, there is a huge failure in logic in the comparrisons people are making here. just because you rent doesn't mean you aren't paying taxes or for insurance or maintenance. All that is figured into the price of your rent, plus profit for the landlord.

    While renting may give you the feeling of not being tied down, it also leaves you in a position toget royally screwed when the property owner hasn't been paying his mortgage and the bank forcloses on the the property and kicks your ass out on the curb.
     
  19. SillyOReilly

    SillyOReilly Golden Member

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    Why do any of this, when you can be female and birth a child, say baby daddy isn't around, get section 8, have baby daddy live in with a salary unknown to government and get food stamps and welfare too?
     
  20. Bignate603

    Bignate603 Lifer

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    I never said it was doing it in the past and never said it would continue doing it in the future. All I said was that the prices have shifted 10 to 20% in the last 6 months for a specific type of home in a specific area. How can you argue that the prices did not go up like that?
     
  21. DaveSimmons

    DaveSimmons Elite Member

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    I made much more than 20% on the mutual fund shares I bought after the housing bubble popped, but I'd never point to that recovery "growth" as normal or expected. (About a 65% increase on the S&P 500 shares over 3 years, plus dividends.)

    A one-time +10% total increase over 6+ months in a single section of one market is plausible, but doesn't offer any reason to want to invest in a mortgage.
     
    #196 DaveSimmons, May 17, 2012
    Last edited: May 17, 2012
  22. Bignate603

    Bignate603 Lifer

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    The topic was started in relation to certain markets "hitting bottom" and not as a return on investment year over year. Alky seems to be denying that comp prices rising 15% over 6 month period doesn't mean that prices rose 10 to 20% over 6 months like I originally stated.

    In other words, alky is just being alky.
     
  23. DaveSimmons

    DaveSimmons Elite Member

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    ^ my bad, I haven't read every page. Of course there can be jumps like that as a local market recovers. Especially if the supply of foreclosures dries up and there isn't enough new construction.

    10-20% total (not monthly) could certainly happen.
     
  24. sao123

    sao123 Lifer

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    absolutely this...
    Though i much prefer a 3 story victorian in the countryside for about the same.
     
  25. Bignate603

    Bignate603 Lifer

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    My point exactly, especially because the market and I was referring to has experienced an influx of investors paying cash in that price range. That's pushing prices up faster than the appraisals for mortgages (banks won't let the appraisals rise too quickly above the comps, especially in areas thought to be high risk for decline) which were previously preventing prices from rising.