Comments on: Buying A House Is The Biggest Mistake You Could Make – The Renting Vs Buying Argument

By: w

Mon, 12 Jul 2010 05:32:45 +0000

Each simple rule will have exceptions. But, as a general simpleton-type financial rule for first-time home buyers:

FORMULA:
If (monthly rent) < (monthly mortgage + taxes + upkeep), then rent

If you think you might be moving in a few years to another city or another state, then also rent.

Otherwise, think about buying and look at the other factors. The formula above is meant as a test of undervalue or overvalue — a way to pay attention to the underlying asset.

By: Momo

Momo — Tue, 13 Oct 2009 17:25:12 +0000

Well, we bought a 3-story, 7-bedroom house. Our mortgage is about $1,150. We rent 4 rooms out. Before owning this house we rented a 1-bedroom apartment for $675 (+ utilities).
Was it a bad idea? We don’t think so.

By: Mark

Mark — Tue, 19 May 2009 03:33:10 +0000

It’s amazing how economies revert to the mean over time.

My wife and I moved to AZ 2 years ago. We rented a house in North Scottsdale for $1350 per month, and (smaller)homes in this neighborhood were selling for $375k at the time. A mortgage payment @ 6% would have been $2100+ taxes+ HOA. (around $2300 all in)

Now, two years later, some of these homes have been sold for well below $200k

Rents are about the same as they were two years ago.

The wild card in all of these transactions was the “creative” mortgages that allowed the “owner” to pay $1000 a month on a $400k debt – for a while. Those are the homes that were rented at seemingly crazy low prices. They’re the same homes being sold as foreclosures right now.

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[...] this new economical era, people are beginning to question, “Should I buy a house or rent a house”. Prices are falling, but they don’t appear to be stopping. Many people are scared after [...]

By: mlimberg

mlimberg — Fri, 23 May 2008 22:42:06 +0000

Anyone who insists that “Now is the time to buy a House”, is both an idiot and a real estate agent……

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[...] seeing this more and more – the benefits of owning a house are no longer outweighing the benefits of renting instead. With high profile folks like Jose Canseco electing to be foreclosed on rather than make [...]

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Wed, 14 May 2008 18:11:27 +0000

[...] blurbs to pretty much sum up the financial status of the country. Sometimes it feels good to be “throwing money away on rent”. Especially as I almost took the dive on a “great offer” last year before deciding to [...]

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By: Amy

Amy — Thu, 24 Jan 2008 03:49:17 +0000

That’s absolutely true. We are paying $2400 in mortgage on our home, and comparable homes in our neighborhood are only renting for $1150 – $1250 per month. We’re stuck with this mortgage in Phoenix, and are now living in San Antonio because of my mother’s medical issues. We can’t rent our house out for what our mortgage payment is, and we can’t sell our home for what we still owe on it. Rock…hard place.

By: MG

MG — Thu, 20 Dec 2007 03:36:03 +0000

While this is the sound decision for someone with the means to flirt with the margin like that, many owners renting homes out in this market simply can’t afford to add property taxes, let alone basic monthly costs like HOA fees, into the rent.

Not when their neighbor is renting an identical house for $50 less.

You’ll find interesting times when you talk to 3 owners on the same block and mention, “well XXXX street will do it for $X,XXX”. I’ve met many owners willing to eat whatever they could so long as it was LESS than their next month’s mortgage payment for an empty house. Some is greater than none for sure.