[HN Gopher] Show HN: Should I Get a House? a better rent vs. buy...
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Show HN: Should I Get a House? a better rent vs. buy calculator
Author : alach11
Score : 96 points
Date : 2021-07-19 13:22 UTC (9 hours ago)
(HTM) web link (shouldigetahouse.com)
(TXT) w3m dump (shouldigetahouse.com)
| ruined wrote:
| add a rent-increase rate. most landlords bump rent every signing.
| rhacker wrote:
| I think the largest issue for me with renting is dealing with
| someone that pretends to be following the law. All I see is a
| bunch of management companies that are collecting $40 here and
| $40 there. If it truly wasn't about the background check fee,
| those prices would be pass through and automated on a website -
| not a $40 check made out to the management company. It's an
| industry rife with a ton of illegal and evil practices. We don't
| have a dog and someone tried to charge us $300 cleaning fee for a
| giant dog piss area in a closet. I loathe renting with a passion.
| silicon2401 wrote:
| Based on checking a 500k house with a 50k down payment, this
| tells me PMI will be about 2k/year for the first 3 years. Is it
| really that cheap? Is there any reason to not go for a <20% down
| payment if it allows me to accelerate my house planning by
| several years, if it only ends up costing around 6k extra?
| vel0city wrote:
| Yeah, my home was ~$320k, ~10% down, my PMI is $140/mo. The
| mortgage is written so if the house appraises higher that
| speeds up the point where PMI is taken off.
|
| Personally I think some people overly freak out about PMI. When
| you're talking the size of numbers involved in the mortgage and
| escrow accounts, $140/mo for a few years really isn't that
| crazy especially if it means you can get into the market sooner
| in a home you really want. I probably wouldn't have bought the
| house I'm in now looking at comps in my neighborhood. In a bit
| over a year comparable houses in my neighborhood are $60k+ more
| than what we bought at, and Zillow's estimate for my house
| (take it with a _massive_ grain of salt) puts it a hair over
| $400k. If we would have waited a year for 15-20% we wouldn 't
| be where we are now.
| mauvehaus wrote:
| You get old enough, and you get tired of somebody else making
| decisions from afar that affect your day to day life with no real
| consequences to them.
|
| Little things like the kitchen layout being moronic and having
| zero drawers get old when it isn't your choice to remodel or live
| with it.
|
| And while it's nice to say "just move", let's not forget that
| moving costs a couple months rent and a massive time investment
| to find a place to move to that's actually better.
|
| And then your current landlord gets some shitheel realtor to rent
| the place who repeatedly tries to schedule showings on an hour's
| notice.
|
| I'm pretty convinced most people buy because they're either tired
| of the bullshit that comes with renting or want to buy into a
| specific school district, not because they're worried about
| making a return on their investment.
| ramraj07 wrote:
| Eh, almost no one I've seen has ever spent less by moving to
| their own home. They'll typically end up spending at least half
| of what they spent as rent just on things other than the
| mortgage (which would typically be much higher than the rent by
| itself). Now of course they often would get a larger, nicer
| place that's exactly what they wanted, but let's not kid
| ourselves that home ownership is somehow cheaper. It never is
| (except during the times when the prices went up no matter
| what).
| ghaff wrote:
| At some point, though, the mortgage is paid off and maybe
| you're paying something like $1K/month for taxes and
| maintenance for a property that may have a decent amount of
| land if you're outside a city--an amount that isn't going to
| go up. (Taxes vary a lot of course although that is
| presumably reflected in area rents as well.)
|
| You may be right, especially absent property appreciation,
| but there's a lot of value in having a fairly predictable set
| of costs into an indefinite future absent really
| unpredictable problems. And not being forced to move at some
| point.
| [deleted]
| crazygringo wrote:
| Funny, I'm the opposite.
|
| The more I get older the _less_ I want to deal with bullshit
| home maintenance, and the infinite time suck that is
| customization and endless improvements.
|
| Really part of a general life shift from "if you want it done
| right, do it yourself" and "if it's worth doing, it's worth
| doing right" -- to "outsourcing is a valuable tool" and
| "perfection is the enemy of the good".
|
| I realize my time is valuable and I want to make sure I spend
| it where it counts -- on people, activities, experiences,
| travel.
|
| When I rent a place, the kitchen layout and drawers are already
| good enough or else I wouldn't have rented it. And the things
| that aren't "perfect" I've decided I can live with, because
| nothing is perfect and there are more important things in the
| world to pay attention to.
|
| To be clear: your viewpoint is entirely valid too, for
| yourself. But you're not speaking for everyone who "gets old
| enough" -- other people grow in the exact opposite direction.
| chiefalchemist wrote:
| Regardless of age, needs and priorities change. There's no
| joy in moving, but it's still better than the time suck of
| hiring a contractor, electrician, and/or plumber. AND having
| to pay them.
|
| Owning is nice. But it's more limited and more time
| consuming. There's a cost associated with that.
| ghaff wrote:
| As you say, needs and priorities are different. Yes, home
| maintenance is a pain--and at this point I have pretty much
| no interests other than maintenance or otherwise
| proactively dealing with issues. But I dread the thought of
| moving. And I probably have too much stuff but things are
| as they are.
| slavapestov wrote:
| We bought because we wanted a rural property where we could
| keep horses. Can't really get that with renting or put a
| monetary value on that.
| autarch wrote:
| > I'm pretty convinced most people buy because they're either
| tired of the bullshit that comes with renting or want to buy
| into a specific school district, not because they're worried
| about making a return on their investment.
|
| Another big factor is noise. A detached house is going to be
| quieter than most apartments in a shared building. That was the
| big reason we moved to a house. I'm a light sleeper and noise
| from people walking around upstairs was driving me nuts. Moving
| to a house with no one walking around above me was a huge
| improvement in my sleep.
|
| Edit: Yes, you can rent houses too, but at least where I live
| (Minneapolis) this doesn't seem to be very common.
| ngngngng wrote:
| Noise was a big one for us, but it was the opposite problem.
| We were starting to have children and I didn't want to worry
| about making noise and disturbing my neighbors. In single
| family detached housing we can make as much noise as we want
| and only disturb ourselves.
| autarch wrote:
| Yeah, that's a good point. Sometimes my landlord (who lived
| above me) asked me to turn the music down while I was
| working from home.
| codegeek wrote:
| In other words, buying vs renting shouldn't only be based on
| numbers/math. I own a home for 8+ years and I have probably
| spent shit load of money in maintenance/prop.taxes/repairs that
| I probably wouldn't if I was just renting but there is no way
| in hell I am giving up my freedom of doing whatever I want to
| my home (yes yes there are limits with township/HOA etc). I
| don't need no landlord to tell me what I can and cannot do with
| my home for the most part. That itself is worth it for me. And
| yes there are added benefits like Building equity over years,
| hopefully having a place of your own to retire etc etc.
|
| Owning your own home is an emotion. It is a feeling that you
| have a place of your own. You cannot just put numbers on it.
| Yes don't buy a home if you are 23 and move every 2 years in
| your car etc. But if you are looking to raise a family, want to
| settle down in a place, owning a home is almost always worth it
| as long as you are doing it within your means.
| ghaff wrote:
| Yeah. By all means run the numbers. But at the end of the day
| most people probably shouldn't make a decision based on the
| numbers except maybe in some specific apartment vs. condo
| scenarios where they plan to stay in the area for a while.
|
| Otherwise, the type of place you want, how important mobility
| is to you, your freedom to make changes (and conversely your
| interest and willingness to do maintenance/repairs/manage
| projects), etc. should probably mostly be the deciding
| factors.
| gedy wrote:
| Similarly I've hated renting from owners doing it for the
| "investment", where the going rent is typically much cheaper
| than the mortgage for the property (California). Many landlords
| think they are giving you some great deal when they are the
| ones who bought beyond their means..
| hardtke wrote:
| For multifamily housing the price of a building is usually
| such that if you put around 40% of the purchase price down
| the building is cash flow break even after mortgage, taxes,
| expenses. The same is basically true if you buy a house to
| rent out. This is the case because over long periods of time
| real estate has appreciated by 8% per year with much less
| volatility compared to the stock market, and favorable tax
| rules (particularly depreciation) mean you can "lose" a lot
| of money on paper and claim those losses to offset other
| income. Your landlord is not giving you a great deal.
| sokoloff wrote:
| If you're worried about losing a couple months' rent, kitchen
| remodels are not for you...
| bluefirebrand wrote:
| A kitchen remodel is done once and probably not again until
| you sell and someone else moves in.
|
| Moving rentals every time something annoys you could be
| _very_ frequent.
| vineyardmike wrote:
| Some people move (rental) apartments every 12 months. Thats
| very common and adds up fast even if you're not broke.
| hatchnyc wrote:
| Yeah, I wish we had German-style "unfurnished" apartments
| available in the US where you can rent an apartment that's
| literally concrete subfloor and unpainted walls, no kitchen
| appliances or cabinets, etc. I guess Americans move too
| frequently to make this viable.
| dougmwne wrote:
| Would your landlord pay you for the improvements you make? Is
| seems a full interior build out could cost tens of thousands
| of euros. Why not just buy if you have that much free cash
| sitting around for a down payment? And what happens if your
| landlord tries to push you out?
| cheese_van wrote:
| How you weight the various factors involved with choosing a
| location varies by your stage in life. But a key consideration
| should be, "Do I want to live here? Does it accommodate my
| interests? Will living here bore me?" If you don't ask these
| questions the ROI will be less meaningful.
|
| And to an extreme, as I purchased after retirement, "Is this the
| house and community I'm won't terribly mind dying in?" It's a
| damned odd thing to ask yourself, if like me, it's your final
| house, but you'd better do it, the devil with ROI.
| mattgibson wrote:
| These calculators seem to miss the point for me.
|
| If I spend less overall by renting, I don't care because I can't
| pass the property as an inheritance to my kids. If I buy, they
| get a house for free when I pass on.
|
| Also, if I rent, I have to continue to pay the same (high) rents
| through retirement where my income will likely drop drastically
| once I stop full time work. The aim of buying is to be mortgage-
| free when you retire so your pension gives you a decent quality
| of life.
| anotherman554 wrote:
| The more sophisticated calculators allow you to compare buying
| and spending more on housing per month vs renting at a cheaper
| price and investing the extra money you have in the stock
| market. (Although many people may not have such discipline, and
| renting costs verse purchase costs are going to vary from
| market to market.)
|
| There's no advantage to passing on a house to kids verse
| passing on stocks. Also, similarly, there's no advantage to
| going mortgage free in retirement verse being rich on stocks
| and selling the stocks to buy a house 30 years from now, or
| paying rent by selling stocks.
| TomVDB wrote:
| > There's no advantage to passing on a house to kids passing
| on stocks.
|
| Except for Proposition 13 in California, which allows you to
| pass on your real estate tax to your inheritors once.
|
| In the case of my neighbors, that means their son will pay
| ~$1200 in taxes per year vs ~$30k for us who own an identical
| house.
| HWR_14 wrote:
| Repealing Prop 13 seems like the most important single
| change that can be made to the California real estate
| market.
| HWR_14 wrote:
| The calculators are used for "Downpayment is HHHHHH, mortgage
| is XXXX/month. Renting is (XXXX-YYYY) a month. HHHHH and (XXXX-
| YYYY)/month invested in [other investment] for 30 years =
| Z,ZZZ,ZZZ." Then you compare all the Z's the the estimated
| price of the house.
|
| And the more it includes (expected rent changes, repairs, HOA
| fees) the better the math becomes.
| ska wrote:
| You aren't looking at the calculations correctly, where the
| rent is a "win" it's because your overall net worth is higher
| than if you had bought.
|
| You might not have the house to pass to your kids, but you
| would have more cash than the value of the house. As to your
| second point, think of it this way: the tipping point on these
| two means you could just buy the house cash when you retire,
| and end up with more money in the bank also.
| runako wrote:
| This looks great! A couple of comments:
|
| - some (large?) portion of mortgages will not allow PMI to be
| removed until you either a) inject cash to get to 20% equity or
| b) get to the time in the amortization schedule when you are
| scheduled to get to 20% equity. That is, if your home increases
| in notional value by 20%, you still have to pay PMI. So the PMI
| line item should probably not terminate after 3 years.
|
| - It would be awesome to include a rent growth factor. When I
| bought my first house, my annual mortgage was > the amount my
| next-door neighbor paid to buy his (similar) house. (Which would
| be driven in part by rents at that time.) Part of the benefit of
| home ownership is insulation from rising rents, and adding a rent
| factor would capture that.
| jrs235 wrote:
| If your home value has increased you can usually ask/tell the
| lender you believe the value has increased enough that PMI
| should fall off and that you'd like/are willing to pay for an
| appraisal (typically a few hundred dollars). Or, if your loan
| is owned by Fannie/Freddie, you may not even need an appraisal
| if the new value/increase is within certain percent range. I
| know this because I spoke toy lender (a credit union) about
| getting an appraisal to remove PMI. Knowing the outstay loan
| amount was X I said of it appraises at X/.8 thenwe should be
| able to drop PMI. Lender called me back and said that X falls
| within Fannie/Freddie allowed range that an appraisal wasn't
| needed. This only works in a market where prices are
| increasing. Your mileage will vary depending on your lender.
| notwhereyouare wrote:
| Mine won't let me remove PMI early if value has risen until I
| have 2 years of payment history with them. I'm just looking
| at refinancing as it will be appraised that should remove PMI
| since we'll have more than 20% with the new value
| runako wrote:
| > Your mileage will vary depending on your lender.
|
| This is why I raised the issue. Some big prominent lenders do
| not allow this practice. (IIRC Wells Fargo & BofA fall into
| this category; they hold roughly $600B of mortgages between
| them.) IMHO it's not something to bank on before purchase
| unless your lender is willing to write the specific terms
| into the mortgage.
|
| Reviewing the Fannie Mae requirements [1], it appears that
| you also need to either get to 75% LTV (not 80%) unless you
| have held the property for 5 years, so the 3-year timeout in
| the calculator is still not likely to be valid in many cases.
| (Also note the Fannie Mae requirements have changed in the
| last ~2 years and are subject to change going forward. I
| would not bank on this provision being exactly the same in 5
| years.)
|
| 1 - https://servicing-guide.fanniemae.com/THE-SERVICING-
| GUIDE/Pa...
| monkeybutton wrote:
| +1 to including some kind of rent-growth factor. Where I live
| the amount a landlord can increase rent every year is capped
| fairly low (like 3%?) and I stayed in the same apartment for 7
| years. In the beginning my rent was market rate and by the end
| it was way below. By not bouncing around apartments every
| couple of years I saved a ton of money which I ended up using
| for a down deposit on a house. On paper the decision looks
| crazy because the mortgage payments are higher than the rent I
| was paying but it doesn't take into account that moving wasn't
| an option, I'd have to stay in the same place forever (or at
| least until I got "renovicted").
| alach11 wrote:
| Great point about the PMI.
|
| For rent growth, do you think I should use the home price
| appreciation rate or make a new rate? Right now rent goes up
| with inflation.
| runako wrote:
| I would make a new factor, so that people can input expected
| increases for their areas. I would expect many urban areas
| will continue to see rent increases far in excess of the
| broader inflation number. Rents may not track home prices due
| to supply issues.
| ska wrote:
| There are also jurisdictions with capped rent increase
| amounts, which can be in favor the other direction
| jwally wrote:
| I'll throw in my $0.02; maybe add in a way to pay off the
| mortgage early; make extra payments or whatever.
| waylandsmithers wrote:
| One piece of millenial defeatism I hear a lot is "Ugh, I'll never
| be able to afford a 20% down payment, home ownership is
| impossible"
|
| I'm not sure where this myth came from, but as a millenial who
| went through the buying process in 2012 and again in 2016, I
| remember both times the lender just asked how much we wanted to
| put down. We could have gone as low as 3%, or maybe even lower.
|
| Yes, you have to pay PMI (private mortgage insurance) for
| probably a couple hundred bucks extra a month if you don't have
| 20% equity in the house- but you can stop paying it as soon as
| you get to 20, and you can count increases in the home value
| towards that (through renovations or just market conditions). You
| can even have the interest rate increased very slightly instead
| of a separate PMI payment if you want to spread out the cost over
| the entire loan.
|
| The point is, you'll likely need to have 3 months rent for first,
| last, and security deposit when you start an apartment rental
| anyway, so the initial costs might be closer than you think.
| gbronner wrote:
| There are companies such as proportunity that will co-invest
| your downpayment as well
| smileysteve wrote:
| But if you go with 3% down, add pmi to your monthly payment and
| it's going to be tough to be in the same ballpark as a rental.
|
| Example: 377k home, 3% down is a $1461 payment; the $673 of
| equity you build each month is offset by $300 of pmi (not tax
| deductible). To sell will cost 6% (~24k if it appreciates to
| 400k). The likelihood of this being > rent of a equivalent home
| or leaving you underwater in 3 years is high.
| duped wrote:
| I mean this is the definition of a strawman argument. Whether
| it's 10 or 20% down payment is not that significant. Even 5% is
| un-affordable.
|
| The median sale price of a home was $347,000 last month (0). 5%
| down on that is $17,350, accounting for closing costs you're
| going to need around $24,000 in cash to purchase a home.
|
| Which isn't all that much money, except if you consider that
| it's more than 1/3rd of the median family income (1) and nearly
| 3 times the median household savings balance (2).
|
| The takeaway from these numbers should be that swathes of
| people cannot afford homes.
|
| (0) https://fred.stlouisfed.org/series/MSPUS#
|
| (1)
| https://www.census.gov/library/publications/2020/demo/p60-27...
|
| (2) https://www.valuepenguin.com/banking/average-savings-
| account... (perhaps there is a better source for this).
| wil421 wrote:
| Who pays closing costs when you are buying a house for the
| first time?
| 1123581321 wrote:
| 5% is not not 3x the median savings balance of families
| seriously trying to buy a home. That's setting aside that
| lower income families _tend_ to live near lower priced homes.
|
| Lower down payments meaningfully increase access to real
| estate. It matters hugely to be able to accelerate purchase
| timing by years, or decades.
| [deleted]
| chrisseaton wrote:
| > I remember both times the lender just asked how much we
| wanted to put down
|
| Well then why doesn't everyone say zero? Why is it even a
| thing?
| kube-system wrote:
| Because more equity = lower risk
|
| and lower risk = more options and lower borrowing costs
| staticman2 wrote:
| You usually can't put zero down. You have options but zero is
| not one of them.
|
| But in answer to your question putting more down can get you
| a better interest rate on the loan or less fees.
| smnrchrds wrote:
| I don't know about other countries, but in Canada, the banks
| cannot legally approve a mortgage without a 5% or higher down
| payment.
| ozarkerD wrote:
| Very true. FHA loans let you put as little down as 3.5% for
| first time buyers. I wouldn't recommend it but the opportunity
| is there.
| seattle_spring wrote:
| FHA loans in a competitive market put the buyer at an extreme
| disadvantage versus conventional or cash.
| asdff wrote:
| You still hear of people in these markets snagging homes
| for like 5% down even with the competition. Maybe I
| misunderstand, but you don't pay any realtor any money
| until you buy the home. Seems that there isn't any pain
| being 'in the market' continually getting out offered 99
| times out of 100, if it means you get an offer that one
| time and are going to be renting anyway until then. Plus
| the whole time you are presumably saving more money and
| coming up with a stronger down payment.
| kube-system wrote:
| Yes, but if you make an offer contingent on bank
| financing, and someone else makes an offer contingent on
| nothing, which offer would you choose as a seller?
| Guaranteed money now? or probably getting money after the
| bank completes their paperwork? Many people selling a
| home already have another home somewhere else, and
| they're not interested in keeping around another empty
| house to make payments on.
| asdff wrote:
| Not all offers are going to be all cash. People still buy
| homes putting down 5% or less in these hot markets, even
| if its not as common.
| kube-system wrote:
| For sure, I'm just expanding on why it might be smart not
| to.
|
| I bought in a buyers market and still opted to put down
| as much as I could, rather than as much as I was
| required, so that I could have a better chance to get my
| 1st favorite pick. I personally wouldn't want to be in
| the position to settle on my 15th(+) favorite house.
| There's a lot of people being forced to make a lot of
| compromises right now -- will they be happy with their
| decisions years from now?
| mandeepj wrote:
| Buying is better, if you are thinking a bit long term like 4-5+
| Years.
|
| Now, why I said that: Here's my story - I had lived in an
| apartment for 5 years. It's my longest stretch at one place so
| far. I paid about $100k in rent for all of those years. When I
| left that place, I got nothing out of it. If I had a house, then
| I would had built some equity.
|
| Edit: removed - 'Buying is always better' from the first sentence
| nobleach wrote:
| > I got nothing out of it
|
| That would be true if you paid that rent, and then went and
| lived outside in a cardboard box. You DID get something out of
| it. You got a place to live (potentially maintenance free)
| quickthrower2 wrote:
| The point of a calculator is to check this. If you could have
| invested more money in retirement account because you are
| renting you might end up ahead.
| dharmab wrote:
| If you are not willing to do at least some DIY repairs,
| homeownership can become significantly more expensive than
| renting.
| vmception wrote:
| Its a question because "having equity" isnt always the better
| answer
|
| Its how much, what percent of what, how much does it cost you
| to maintain and service, how long you are looking at
|
| Anyway thats the point of the calculator
| jjice wrote:
| Always is a strong word. I move around a lot, from 6 to 18
| months at a time. The time it would take to search, purchase,
| and resell a home doesn't make sense in that scenario. Renting
| gives some flexibility in moving compared to buying. If you're
| staying in one spot though, then I agree with you more.
| MattGaiser wrote:
| Depends on your transaction costs.
| reidjs wrote:
| Buying doesn't make sense if
|
| 1. You can't afford to own a home near your work
|
| 2. There's a chance you will not stay in your current job for
| more than a few years
|
| 3. You don't like DIY or home maintenance
|
| 4. You're single and want to live near other single people
| tiborsaas wrote:
| How does 4 makes sense? Property can be an apartment too in
| downtown, in case you pictured buying a house in the suburbs.
| jartelt wrote:
| The first several years of the mortgage you are paying mostly
| interest and not as much towards equity. Plus, you have paid
| closing costs when you bought, will pay 6% to a realtor when
| you sell, and have paid property tax and homeowners insurance.
|
| If you sell after 5 years, you are only making money if your
| home value happened to have gone up. This is by no means a
| guarantee on a short time frame.
| jmvoodoo wrote:
| So don't sell. Rent the house, take the income and move on.
| I'm building house #8 right now and the rent from the other
| homes (some of which are now paid off) provides an income to
| my family that would keep them housed and fed should
| something happen to me.
|
| Of course, you have to consider this when you buy because
| many homes are terrible investments. If you come in with the
| view that you're buying what will eventually be an investment
| property you'll make better buying decisions.
| hatch_q wrote:
| Interesting. In EU, max interest paid per annuity is 10% and
| 90% goes to equity.
|
| Also property taxes seem steep in USA.
| mrfredward wrote:
| I am a few months in to a 15 year mortgage after recently
| refinanced at a 2.125%. Here's a rough breakdown of where
| each dollar of my last mortgage payment went:
|
| Principal: 60%
|
| Interest: 22%
|
| Escrow(Taxes + Insurance): 18%
|
| And of course the percentage going to interest only goes down
| with each passing month. The conventional wisdom that you are
| paying mostly interest in the beginning a) really only
| applies to 30 year mortgages, and b) was way more true when
| interest rates were higher. We're currently near some of the
| lowest interest rates in history, so interest eats a lot less
| than it used to.
|
| I'll add that I pay a good bit less on my mortgage than it
| takes to rent an equivalent place in my area. But yes, paying
| 6% to realtors when you sell is huge, so you still need to
| own the house a few years for buying to make sense.
| jartelt wrote:
| Yea, you are right about the 2% interest rates changing the
| breakdown. I was referencing numbers I ran back when rates
| were 3-4%. That said, most folks still rely on 30 years
| mortgages!
| Aulig wrote:
| No it's not. In many cases it can be beneficial to rent and
| invest your money instead, as stocks have a higher longterm ROI
| than property.
| mandeepj wrote:
| Does it have to be mutually exclusive? My current mortgage
| and previous rent are almost the same.
|
| A friend of mine bought his house in 2011-2012 for $200k.
| Now, it's worth ~$500k.
|
| >stocks have a higher longterm ROI than property. That's
| debatable. And, it depends at what point you were in and for
| how long you can stay as there'll be set backs during the
| ride. Unfortunately, if you have to cash out due to emergency
| during a dip then ROI would not be favorable.
| Aulig wrote:
| Selling your house in an emergency would be similarly bad
| as exiting the stock market at an unfortunate time.
|
| The long-term ROI after costs and inflation of stocks
| (global) is about 3% higher p.a. than of property (global).
| Unfortunately this source is in german, but it cites
| research papers too, you can check those for further
| investigation: https://www.gerd-kommer-invest.de/die-
| rendite-von-direktinve...
| alach11 wrote:
| Buying a house can have an advantage over stocks in the
| leverage you get with a mortgage, and in certain cases
| tax incentives. Whether that's enough to compensate for
| the better returns of stocks is the hundred thousand
| dollar question.
| Domenic_S wrote:
| Assume he paid cash. If he had instead invested $200k in
| the S&P 500 in 2011, his account would be worth ~$756k
| today. So he essentially paid $256k, or roughly $2k/month,
| for housing over 10 years. If he could have gotten a
| similar place for an average over 10 years of $2k/mo, it's
| breakeven. That's before paying property tax but also
| before writing off interest & tax.
|
| Although this ignores the fact that you can make what's
| essentially a $200k investment with only $40k, and you
| still have to find a place to live - and the rent is
| virtually guaranteed to go up -- if you go the S&P route.
| conductr wrote:
| Anyone have luck with that default $2500 maintenance budget? My
| lawn guy is basically that whole budget. Any service call is $500
| minimum. I've replaced roofs, siding, HVAC systems, water
| hearers, etc. Trimming my mature trees costs over $3000!
|
| I know it's just a placeholder but I always see an insanely low
| placeholder on these calculators and can't help but think they
| are not properly setting expectations for prospective home buyers
| hasbot wrote:
| I don't spend anywhere near $2500 a year on my '53 house. I did
| just get a new $10k roof, though, but annualizing everything my
| maintenance budget is maybe $1500.
| dataminer wrote:
| Yes, depending on the condition of the house, and how
| temperamental it is. I was lucky with my last house, in 5 years
| of ownership only spent $6000, I took care of the lawn on my
| own. Roof was changed a year before I bought it so never gave
| me an issue and was under warranty. Water heater was a rental
| and was taken care by the company I was paying $20/month. After
| I sold the house, furnace gave up a week before the closing
| date so I got it fixed for $500. There was a water issue in the
| basement which cost $5000 to fix, but it still didn't blow the
| budget.
|
| Just a datapoint, but sometimes $2500/year is a reasonable
| budget.
| BrissyCoder wrote:
| For me the quality of life, security and mental health that comes
| from owning trumps whatever the results a calculator like this is
| going to say. It doesn't factor in the anguish from having a
| family and seeing 30 other groups inspecting every single decent
| rental open home. Has been like that the last 3 years or so in
| Brisbane.
| dynm wrote:
| This would be better if it included a slider for what yearly
| investment return you would expect for assets not in a house. If
| I don't spend my down-payment on a house, I'll put it in the
| stock-market or something. Those gains are typically a huge part
| of the calculation when considering to rent vs. buy. I might be
| mistaken, but as far as I can tell that isn't reflected here.
| alach11 wrote:
| I tried to account for that with the rate of return number in
| the results. You can compare rate of return to your expected
| returns in the stock market.
| dynm wrote:
| Oh, great, I misinterpreted that! (I thought it was the
| return on investment in the house, not your non-house
| portfolio.) A slider would still be nice. I've attempted
| calculations like this in the past, and I was surprised how
| much the choice ended up depending on the difference between
| the assumed investment rate vs. house rate.
| sys_64738 wrote:
| When ones rents then are they not already paying somebody else's
| mortgage?
| BrissyCoder wrote:
| I think you are missing the point.
| csomar wrote:
| Why is the mortgage interest capped at 10%?
| seattle_spring wrote:
| If your credit is so bad that you can't get a loan better than
| 10%, you should in no circumstances whatsoever be buying a
| home.
| thebean11 wrote:
| In the US yes, because inflation is 2.4%. Some countries have
| higher inflation.
| gruez wrote:
| Seems like a reasonable cap when the average rate for 30 year
| fixed rate is currently 2.88%
| https://fred.stlouisfed.org/series/MORTGAGE30US
| BugsJustFindMe wrote:
| 10% is more than 3x the average rate in the US for a 30 year
| loan period, and rates go down further for shorter periods.
| hasbot wrote:
| Need the ability to add pet fees and deposits when renting.
| LouisSayers wrote:
| Another factor people miss is that the place you buy might be
| much worse than a place you could rent. Atm I share a rented
| place with others, but it's in a great location - walkable
| distance to Melbourne's CBD. I pay $250 per week for a good size
| room and the house is worth at least $1.5M.
|
| If I were to go buy a place in the current market I could only
| afford a place perhaps around $850k at most. I'd have to move
| away from the city and wouldn't be close to all the trendy bars
| and restaurants. I'd also be stuck having to work to pay my
| mortgage.
|
| Instead, I've taken up part time work, quit my job and work on
| building my own business full time.
|
| For my situation it makes zero sense to own a home.
| ceejayoz wrote:
| Australia's real estate market is particularly bad in this
| regard.
| pestatije wrote:
| House prices are not included in inflation estimates, rental
| prices are. That's another thing that should be considered.
| alach11 wrote:
| There's a separate parameter to control the increase in house
| prices. My assumption is that houses have tended to increase
| faster than inflation in most markets.
| BeetleB wrote:
| > My assumption is that houses have tended to increase faster
| than inflation in most markets.
|
| In recent years. In the long run - not much. In the really
| long run, it's about 1-2% above inflation. Of course, it's
| hyper-dependent on the locale.
| pestatije wrote:
| Yes, and here is the great fallacy of current times
| economics. Whilst house price increases leave younger people
| unable to afford one, inflation (official numbers) keeps at
| its lowest levels ever.
| gruez wrote:
| >My assumption is that houses have tended to increase faster
| than inflation in most markets.
|
| It does? Random chart I found: https://www.aei.org/wp-
| content/uploads/2020/01/cpi2020-875x1.... It seems to be
| higher, but only slightly.
| pestatije wrote:
| That "Housing" in the chart is the housing component of
| inflation (rental, household furnishings, etc.)
| gruez wrote:
| Good point. The CPI increased 20.4% from june 2012[1] to
| june 2021 was 20.4%, but the "Rent of shelter" component
| increased 29.7% in the same time period.
|
| [1] that was the earliest year that was available at
| https://www.bls.gov/cpi/tables/supplemental-
| files/home.htm
| ska wrote:
| > My assumption is that houses have tended to increase faster
| than inflation in most markets.
|
| Historically this is usually true, but also usually less than
| the equivalent amount in say (equivalent to) index funds. Not
| sure where/how this is factored in.
| alach11 wrote:
| My wife wants to buy a house, but I'm unable to make life
| decisions without trying to minmax them. I wasn't satisfied with
| existing rent vs. buy calculators, so I decided to build my own!
| I'm not a developer, so I apologize if it's a little rough
| looking...
|
| Some things it takes into account: - The actual
| rate of return on your down payment and extra costs of a house
| - Inflation - Itemized deductions on your taxes - The
| impact of state taxes - Mortgage interest deduction limit
| and SALT tax deduction limit
|
| Let me know what you think or what improvements you would like to
| see!
| anotherman554 wrote:
| The best/ most powerful rent vs buy calculator I am aware of is
| the one offered here:
|
| https://michaelbluejay.com/house/rentvsbuy.html
|
| browsing it might give you some ideas of features you can add
| to your calculator. It's also a small thing but having the
| choice to select the downpayment based on percentage down might
| be nice.
|
| I don't know why your calculator tells me getting a house is
| not worth even if it thinks the transaction is profitable. It
| states my cumulative profit is $29,030 but I shouldn't get a
| house.
| alach11 wrote:
| The determination of whether to buy the house is based on the
| calculated rate of return. So even if you make a profit, if
| the time horizon is large you'd be better off investing that
| money in stocks.
|
| The UI doesn't make that clear enough.
| barrkel wrote:
| Houses are both leveraged investments (in a non-productive
| depreciating asset, I know, I know) and a forced savings
| mechanism. Investment in stocks by average people is not
| leveraged, and nor is there a forcing function that makes
| you put money into the stocks every month or you end up
| homeless.
|
| These two functions have some value - especially the
| latter.
| majormajor wrote:
| > The determination of whether to buy the house is based on
| the calculated rate of return. So even if you make a
| profit, if the time horizon is large you'd be better off
| investing that money in stocks.
|
| Can you give a more detailed example? What time horizon are
| you picturing? After you pay off the house you lose the
| leverage advantage of returns on selling a house you bought
| with a mortgage vs selling stocks, but you also stop having
| to pay the mortgage at all while you'd still be renting,
| likely at a far higher market rate, so looking at the post-
| mortgage-payoff curves, it's hard for me to see where the
| invested down payment + (mortgage + tax + upkeep - minus -
| rent) returns would be expected to be high enough to make
| up for that.
|
| (The more rational counterargument, though, would likely be
| around diversification? Better to have land + stocks then
| just one...)
| irrational wrote:
| I wonder if it is purposefully biased towards renting so he
| can use it to convince his wife to rent when he says that she
| wants to buy.
| phkahler wrote:
| >> My wife wants to buy a house...
|
| A pilot once shared with me the rule of the three F's. If it
| floats, flies, or fornicates, it's cheaper to rent than to own.
| You may substitute a 4 letter word for that last one.
|
| Anyway, you got a wife already so thats one. House don't start
| with F, so buy.
| camjohnson26 wrote:
| Seems like an oversimplification, usually it depends on other
| factors like how long you plan to live there.
| fennecfoxen wrote:
| This is missing a rate of return on the money you would
| otherwise use for the down payment, information on whether that
| return would be taxable or is sheltered in a Roth or similar
| tax shelter, current and anticipated tax brackets if one sees
| that income taxed (at both time of sale and possibly
| retirement), current and anticipated capital gains rates that
| might apply to the gains from the home sale in the future (if
| you're over the threshhold)...
| pessimizer wrote:
| > rate of return the money you would otherwise use for the
| down payment
|
| Really the most important number, but all of these
| suggestions are crucial to the calculation. Money that
| doesn't get invested in a house gets invested in other
| things. Pretend it's in an index fund.
| someelephant wrote:
| Life opportunity cost. When you buy a house you are making a
| big commitment. It will guide the path of your life. These days
| with remote work that's less and more of an issue. What if you
| would be happier living in the south of France?
| plank_time wrote:
| Some decisions aren't mathematical. Sometimes it's better to
| make a decision based on whether or not it makes sense for the
| family as opposed to dollars and sense.
|
| If your wife wants to buy a place, I suggest finding a
| compromise to figure out how to make both parties happy.
| reggiepret wrote:
| this is great!!
|
| The final cashflow amount of the house graph (in the example)
| ends in the negative, s this accurate?
| alach11 wrote:
| It is accurate! While the house cashflow is negative in the
| example, it's at least _less_ negative than the apartment
| cash flow. Maybe the moral of the story is living with your
| parents for free is better than either option!
| mikepurvis wrote:
| Depending on your circumstances, it may not be possible to
| seriously consider it, but another alternative to rent-vs-
| buy might include various van/camper/coach options, which
| can be parked for months at a time at "seasonal" campsites,
| often for $500-1000/month.
|
| Obviously equipment like this isn't going to appreciate
| either, and you'll be subject to all the same maintenance
| costs of owning, so in some ways it's the worst of both
| worlds-- but it may still be cheaper than trying to rent if
| you can't or won't enter the market right now and mooching
| from family isn't an option.
| jolmg wrote:
| If this calculator is rent vs buy, why does the graph
| compare house vs apartment? For both houses and apartments,
| they can be bought or rented. Are you someplace where one
| type of home can only be bought and the other can only be
| rented?
| alach11 wrote:
| Nah this is just bad terminology on the site. I'll fix
| it. In my personal situation I'm deciding between
| continuing to rent my apartment vs. buying a house.
| Finnucane wrote:
| Probably want to allow for the possibility of rent rises over
| time.
|
| One thing that I think this actually shows pretty well is the
| notion that part of the answer depends on how long you intend
| to stay in a place. If you expect to move in two or three
| years, it's probably not worth the hassle/expense of buying. If
| you intend to stay 5+ years in one place, it makes more sense
| to buy.
| pessimizer wrote:
| > Probably want to allow for the possibility of rent rises
| over time.
|
| Isn't that counting inflation twice?
| stonemetal12 wrote:
| No, rents go up and down for reasons other than inflation.
| kylestlb wrote:
| This all depends on geography though. Buying in the bay area
| and only staying for 2.01 years could get you a pretty hefty
| ROR assuming you don't remodel anything, considering the
| supply constraints. Maybe covid & remote work will change
| that.
| Finnucane wrote:
| Maybe. Flipping is a risky business. Returns are not
| guaranteed. If you're just looking for a place to live, you
| should really evaluate it on that basis.
| plank_time wrote:
| I know something who went bankrupt and got a divorce
| after flipping condos in chicsgo just before the housing
| bust. It works until it doesn't and it's usually
| catastrophic.
| HideousKojima wrote:
| >Probably want to allow for the possibility of rent rises
| over time.
|
| Most definitely, my apartment before buying a home was
| ~$100/month less than my current mortgage, now (3 years
| later) the rent for the exact same apartment is ~$300/month
| more than my mortgage.
| codegeek wrote:
| Nice project but if you are serious about buying a home, don't
| just look at numbers. Figure out what you and your wife want
| for yourself in next 2-5-7 years. If you see you guys staying
| in 1 place and build a family further, buying a home may not be
| a bad idea considering your finances are in shape (good credit,
| have 20% downpayment etc etc). I would say rule of thumb is 7
| years in 1 place. If you are going to live in same place for 7+
| years, buy with 20% down and total cost not >25-30% of monthly
| pay.
| madcaptenor wrote:
| This is nice. I definitely played around with some calculators
| like this when I was deciding to buy a house a few years ago.
|
| Off the top of my head, some things I'd add to make this more
| useful to a wide audience:
|
| - I don't know what I pay in state income and sales taxes. But
| I do know my income and my state's tax rate; income tax could
| be derived from that. I'm not sure how you'd estimate sales
| tax, though - you'd have to know how much of my spending is
| taxable.
|
| - I've heard a rule of thumb that home maintenance costs are 1%
| of the home's value per year; maybe default to that, especially
| since a first-time home owner doesn't really know what those
| costs are. However, older houses will require more maintenance
| and that cost probably scales with square footage, not cost.
|
| - you're assuming a 30-year mortgage - I'd put in the ability
| to change mortgage length. (Also, maybe a link to somewhere
| where I can find out what mortgage rates are.)
| hirsin wrote:
| Maintenance cost likely scales with both size and cost. Size,
| for obvious reasons, and cost because the labor/materials
| cost of a repair is likely correlated with housing prices in
| the area. You then have to account for the portion of cost
| that's already correlated with size...
|
| +1 to mortgage length. We heavily pivoted our decision to buy
| on getting a 7 year ARM because my friend and I knew we
| wouldn't grow old together there (wanting to do things like
| get married and have our own families). A time bomb on the
| mortgage was a feature, for us, and a cost savings.
| BeetleB wrote:
| > I've heard a rule of thumb that home maintenance costs are
| 1% of the home's value per year
|
| It's a very poor rule of thumb. Contrary to the other
| comment, these costs don't increase linearly with value of
| the house. Sure, if I live in an expensive area, it may go up
| 30%, but not much more. Looking at how much my house has
| appreciated, I can assure you I pay not much more in
| maintenance than when I bought it.
|
| The 1% rule came about when the median house price was under
| $200K.
| ghaff wrote:
| Furthermore, if you live in an early 1800s farmhouse like I
| do (which was very much a fixer-upper when I moved in and
| still sort of is), that's a very different situation from a
| modern in-city condo or even a new development.
| shadowlight wrote:
| Automated state tax generation. Historical house appreciation
| by state or even better, city.
|
| Option to account for income from money in sp500.
| simonw wrote:
| I'd love it to provide some mechanism for guestimating my taxes
| (maybe based on the state or city I live in) - I was too lazy
| to dig out a tax return to fill out those fields, which meant I
| couldn't easily use the calculator.
| bechap wrote:
| This looks great! For those going through the process, I also
| found this tool helpful in determining whether to rent vs. buy:
|
| https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...
| WarOnPrivacy wrote:
| In 2021, the buy vs rent decision is a little like _Should I buy
| a whale ranch on Mars or Venus?_
|
| I suggest that the decision whether to rent a house might want to
| take into account that each rental ad is getting hundreds of
| applicants, each day - with few new ads showing up.
|
| ref: https://www.militarytimes.com/pay-benefits/mil-
| money/2021/07...
|
| ref: https://www.amisun.com/2021/06/27/once-in-a-generation-
| housi...
|
| ref: https://www.thedenverchannel.com/news/national-
| politics/the-...
|
| ref: https://www.cbc.ca/news/bidding-wars-to-rent-a-house-in-
| onta...
|
| Buying isn't any better with sales going to all-cash buyers who
| are paying way above and beyond market.
| 293984j29384 wrote:
| Why would you assume it's to rent a house? It's a great time to
| be an apartment renter in big markets like NYC. I just got 2
| months free on my lease renewal and I've seen even better deals
| out there but I didn't want to move.
| jaqalopes wrote:
| Same here in Somerville outside Boston. There was a giant
| exodus last year due to COVID and landlords are desperate for
| any warm body even at a steep discount from the former rent.
| seanmcdirmid wrote:
| Completely the opposite here in Seattle. The rental market
| is bonkers right now, with very little inventory in places
| where people want to live. That is very different to how it
| was just a few months ago.
| pricecomstock wrote:
| At least in the part I'm looking at, this was still true at
| the end of May but is not even close now.
| cperciva wrote:
| _Buying isn 't any better with sales going to all-cash buyers
| who are paying way above and beyond market._
|
| If that's the price houses are selling for, that _is_ the
| market price.
| andrewmcwatters wrote:
| Guess you're not familiar with the concept of scarcity and
| outlier buyers.
| rhacker wrote:
| Or, more simply, bubbles.
| freeone3000 wrote:
| A majority, or even a large minority, of sales cannot be
| above market price, by definition. If there are enough cash
| buyers that it's being difficult to buy at a given price,
| the market price is clearly somewhere above it.
| kylestlb wrote:
| If data exists on historical growth between single-family homes
| vs townhouse vs condo, it would be quite interesting to show
| here. Since SFH are not being built in certain metro areas
| anymore their prices seem to rise dramatically faster than space-
| efficient property.
| yboris wrote:
| Mega-Classic from The New York Times:
| https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...
|
| A beautiful, in-depth calculator to answer "Is it better to rent
| or buy?"
| drfuchs wrote:
| Where do I enter the intangible value of owning: "Don't have to
| worry about getting priced out if the neighborhood becomes
| popular; can do any improvements I want, when I want, how I want,
| and they become an asset; don't have to worry about not getting
| lease renewed at an inconvenient time (perhaps in the middle of a
| school year) when the owner's nephew gets divorced and needs a
| place; on the other hand, don't have to worry if I do want/need
| to move unexpectedly, but I'm in the middle of a lease."
|
| Versus, of course, for renting: "don't have to worry that the
| roof will need replacement, etc."
|
| Finally, you can do all the calculating you want, but
| retrospectively the biggest effect on financial outcome is liable
| to be whether you bought in what turns out to be the Detroit vs.
| Silicon Valley of say 40 years ago. Who knew back then? Who knows
| now? You pay your money and you take your chances.
| pessimizer wrote:
| > Don't have to worry about getting priced out if the
| neighborhood becomes popular
|
| That's what property taxes are for.
| kube-system wrote:
| > Versus, of course, for renting: "don't have to worry that the
| roof will need replacement, etc."
|
| This is kind of a tangent, but worrying about maintenance is
| exactly why I own a house. When I rented, poor maintenance
| issues were my problem whether or not they were my
| responsibility. I'd much rather be empowered to do preventive
| maintenance or fix things immediately, than be forced to wait
| until something fails plus a few days for someone to show up to
| fix it.
| nick0garvey wrote:
| This is the whole point of doing the calculation. If you
| determine that you're going to have $10,000 less in pocket per
| year, then you can make the call whether the freedom of owning
| a house is worth it for you for that price or not.
| carabiner wrote:
| > can do any improvements I want, when I want
|
| This is the main thing I'm wondering about. Most people I know
| who own homes _enjoy_ working on them. Home improvement becomes
| a hobby that they like, whether it 's basic plumbing or
| painting the walls or building a deck. I despise this work
| (even though I do basic carpentry), and I fully consider it
| work that detracts from my life. It's like doing the dishes,
| it's a chore, and often stressful. Is owning a home worthwhile
| if I have no interest in these things? I do have great interest
| in privacy, not answering to a landlord, and not being priced
| out of an area.
| BeetleB wrote:
| > I despise this work (even though I do basic carpentry), and
| I fully consider it work that detracts from my life.
|
| I felt that way when I bought my house too. My experiences:
|
| Get used to the house never being fully OK. Things will
| continue to break, but over 90% of them aren't urgent. By the
| time I get one thing fixed (either by myself or by paying
| someone), something else is broken. That's OK. As time goes
| by, you realize that most of these things aren't really that
| important.
|
| Yes, my toilet has a leak so I've turned it off for now: I
| have 2 others in the house. It's not urgent.
|
| I cannot make ice in my fridge because the water hose to the
| fridge is leaking - had to shut off faucet. Am I going to
| chuck an otherwise good fridge over this? No. So for the past
| so many years, I manually add the water to the ice maker to
| make ice.
|
| My over-the-stove microwave died. Twice. Am I going to rush
| and buy another brand new one? No. I'll wait till there is a
| sale. In the mean time, I can get a perfectly good used
| microwave for $20.
|
| The list goes on and on.
|
| If you want everything working all the time, then it will be
| a major pain.
|
| Just learn how to find decent professionals/contractors, and
| learn to research prices before calling them.
| sokoloff wrote:
| I do a substantial majority of the repairs and maintenance on
| our cars and our house. It's a hobby of sorts, but it's also
| a real stretch to say that I _enjoy it_.
|
| I do it because it's a phenomenal way to save money (and that
| savings is not taxed, meaning that if I avoid paying a
| contractor $5000, it's about the same financially as earning
| an extra $8500) and many of the jobs don't take an
| extraordinary amount of time or skill once I factor in the
| time required to get three contractors to actually show up
| and submit bids, choose the one I want to use, and do what
| project management is required to hold them to the standards
| we agreed to in the contract.
|
| I don't know if you need to have _interest_ in doing home
| repairs, but you need to have a _willingness_ to do or to
| manage them.
|
| Homeowners are at the bottom of the pecking order when it
| comes to contractors' priorities. Property managers,
| landlords, and general contractors/builders can all give them
| more repeat business than homeowners can, so we get put at
| the bottom of the stack.
| aftergibson wrote:
| I felt the exact same way, I bought because I had a few
| rental properties in a row that would take us in, then kick
| us after the minimum contract length. Nothing to do with us,
| just selling, renovating and driving up rent etc.
|
| I got so sick of moving a family with an energetic one year
| old, I just recently purchased a place. Now my extended
| family has come to help on the house and I've found the work
| surprisingly pleasing(where I felt I have always hated this
| type of work).
|
| After so many years moving pixels around on a screen,
| physical work with a group of people is just, nice.
|
| But that's just me, I'm sure you very well might still hate
| it but I was pleasantly surprised.
| hardtke wrote:
| A hidden intangible that cannot be measured is that owners are
| much more likely to know and socialize with their neighbors.
| Even in a mostly homeowner neighborhoods, "the renters" often
| don't develop social ties the same way that owners do. There is
| something about knowing you are stuck there quasi-permanently
| with the same people.
| BeetleB wrote:
| > can do any improvements I want, when I want, how I want, and
| they become an asset
|
| Depends on the HOA rules, if you have an HOA.
|
| As for whether they'll be an asset, it depends on the
| improvement ;-) I tour open houses often, and people definitely
| have done some typically undesirable improvements.
| cmpolis wrote:
| Thanks for posting - this is really helpful (reminds me of this
| similar NYT tool:
| https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal...)
|
| A few notes:
|
| - "Final Cumulative Profit" is a bit confusing since this is not
| necessarily profit - this is how much less of a cost a house is
| over an apartment?
|
| - Is there a way to factor in opportunity cost of down payment
| being in the market instead of tied up in the house?
| alach11 wrote:
| Would it make more sense to invert it and plot cumulative cost?
|
| Rate of return in the results is basically the opportunity cost
| of your increased spend on the house. That can be compared to
| other possible investments.
| epic9x wrote:
| You might want to include rental income as an option here, lots
| of folks may have a place that includes an attached unit.
| secabeen wrote:
| The Deluxe calculator here is the one I used 10 years ago, it's
| quite good, but it doesn't have the best SEO, so it hide on the
| second page of the Google results, after a swarm of
| advertisement pages from mortgage companies:
|
| https://michaelbluejay.com/house/rentvsbuy.html
| gus_massa wrote:
| "Apartment" means rent and "House" means buying? I think that's
| confusing.
|
| It would be nice to auto update the graph every time something
| changes.
|
| It's nice that it has tips. Hi from Argentina! We have a somewhat
| different customs here so some fields are hard to guess. For
| example, I don't know if I can fill my taxes jointly.
|
| Another detail that confused me is that I didn't expect to sell
| the home after 14 years. It's not usual here, but I guess it
| changes in each country.
|
| Protip: Add a field that says " _My S.O. want 's to move anyway_"
| :)
| iso1631 wrote:
| A lot of things out of SV are built around American culture.
| "HOA", "State income taxes". "Property tax" as a percentage.
|
| Which is fine, but it's sad how it's just assumed a site on a
| .com is for america only. Of course a monoculture of 350
| million customers is more than pretty much any other country
| which explains why SV produces so many successes.
|
| Defaults are crazy too - $2,750 for home insurance?!
| gus_massa wrote:
| I see this like a personal project, so I don't mind some
| local bias. I thing it's a good post.
|
| HOA: I can translate it to the monthly payment in my building
| to pay for the cleaning, electricity for the lift, and other
| stuff.
|
| House vs Apartment: I think it's confusing. It's correct for
| the personal case of the OP, but it's confusing for everyone
| else.
|
| Mortgage interest <= 10%: In pesos? :) Most mortgages here
| are now in a fake money "UVA" that somewhat tracks the
| inflation. So if the interest is 5% in UVAs and the annual
| inflation is 40%, the actual interest is 45% (approximately,
| read the fine print before signing).
| pimlottc wrote:
| Agree with the terminology being confusing. Houses can be
| rented and apartments (condominiums) can be purchased.
| cpursley wrote:
| In North American lingo, "apartment" exclusively means a
| multi-family unit that you rent and don't own. If you own a
| multi-family unit it is a Condo (condominium) and never
| refered to as an Apartment. I know, confusing.
| seanmcdirmid wrote:
| Also, duplexes are houses with two units in them vs. a two
| floor apartment.
| yazanobeidi wrote:
| That's a stacked townhome.
| seanmcdirmid wrote:
| On the 30th floor of an apartment building?
| sly010 wrote:
| Maybe I am just missing it, but I don't see how this factors in
| the fact that you could invest the same money in the market.
| yboris wrote:
| Everyone should consider a manufactured home (mobile home) as an
| option. I lived in New Jersey where house prices were very high
| ($200,000 minimum for anything on the market). I bought a mobile
| home (1st house for me) for $50,000 and lived there for 6 years.
| Thanks to the crazy prices recently, I was able to sell it for
| more (this is not typical). But during the time, I paid
| significantly less in per-month costs than I would have, had I
| been renting.
| rascul wrote:
| I do a lot of work on houses, many of which are mobile homes.
| Many of them are made as cheap as possible and don't last well.
| The newer ones tend to be much better, as standards have
| improved. I would highly recommend having someone who has
| experience with mobile homes give it a thorough inspection
| before buying a used one. They can be great, though. I have an
| 1800 sq ft double wide built in 1993 that is in pretty good
| condition, but it had been fairly well maintained and I've had
| to do only minor repairs.
| BeetleB wrote:
| Be wary of mobile home parks, though. The owners of the parks
| are increasingly selling them to two types of folks:
|
| 1. Those who are looking to jack up rates and price people out.
|
| 2. Those who are looking to replace the park with, say, an
| office building or a mall.
|
| Particularly in the 2nd case, you are being evicted. And
| despite the name, mobile homes are not mobile in most cases.
| You will lose everything. Some states are passing regulations
| to protect the homeowners, so check your local laws.
| dragontamer wrote:
| I have some friends in Texas who had their first home as a
| manufactured home in a trailer park. But note that the validity
| of mobile homes / manufactured homes depends strongly on your
| local culture... culture that's quite different from state-to-
| state, or city-to-city even.
|
| There are plenty of locations where mobile homes were driven
| out by NIMBY laws, and are simply not an option.
| bachmeier wrote:
| There's no way to put this into a calculator, but this decision
| isn't purely monetary. Do you enjoy having to maintain a home and
| property? If not, maybe buying a house isn't for you. Even if you
| hire someone, that can be a massive hassle, you have to worry
| about being ripped off, ...
|
| If you're not settled in your career to where you can comfortably
| take off long stretches of time during the day, you probably
| shouldn't buy a house. It's generally a bad idea for someone at
| the beginning of a career. There's so much to learn and it never
| ends - that's valuable time that could go to refreshing your mind
| or building up career capital.
|
| There's also the matter of risk. Are you willing and able to
| handle replacing your air conditioner, furnace, and roof in the
| same year? If you rent, you call the landlord and have them
| replace those things. You'll be okay if you have a big savings
| account or you don't mind putting it on a credit card with a high
| credit limit. If you've been in your house for two years and you
| spent everything on the down payment and furniture, you might
| have trouble sleeping at night.
| jbb67 wrote:
| but also the reverse applies. If you want to make alterations
| or improvements to your house, better not rent
| seanc wrote:
| Yes, exactly. Or maybe you want a guarantee of being able to
| stay in one place for a long period of time, say to send your
| children to a particular school, or be close to neighbors or
| family.
| bachmeier wrote:
| The part about neighbors or family might be true, depending
| on whether they're going to stay put, but the part about
| the school is one of the biggest risks to buying a house.
| School boundaries get changed all the time. This is
| something I'm dealing with right now, and it could shave
| tens of thousands off the value of my house if it turns out
| wrong.
| bachmeier wrote:
| This is true, but it really only applies to someone with a
| pile of money laying around. It's nice to have the option to
| remodel your kitchen. The percentage of new homeowners that
| can afford to do it is likely small.
| city41 wrote:
| > Even if you hire someone, that can be a massive hassle, you
| have to worry about being ripped off
|
| This is a huge problem with home ownership, at the very least
| where I've owned homes (California and Michigan). The quality
| of contractors varies _dramatically_ , and many will happily
| rip you off or at the very least just do a bad job. If you
| can't get a good recommendation from someone you trust, you
| really roll the dice hiring someone. IMO, if you're going to
| own, you should be willing to do a lot of work yourself. At
| least then you know exactly what's happening to your house.
| maest wrote:
| > Do you enjoy having to maintain a home and property?
|
| Better question is, how much would you pay (or want to be paid)
| to maintain a property.
| PaulDavisThe1st wrote:
| If it was my house, I'd do it for free.
|
| If it was your house, I wouldn't do it for any price.
| swimorsinka wrote:
| Huge +1 to this. Don't get me wrong, I've been in my house for
| 10 years, and I probably won't go back to renting, but I think
| most people wildly underestimate these things.
|
| In the first couple of years I remember getting so irritated by
| all the time it took to take care of the house and yard.
| Nowadays, I've gotten used to it, and I view it as a welcome
| distraction from work, but that definitely wasn't true in the
| beginning. Even paying someone to do all these things is a
| large hassle. You have to be at the house to meet contractors,
| get competing bids, worry about the contractors doing stuff
| wrong, etc.
|
| I also think people wildly underestimate maintenance costs. I
| bought a 50 year old house, 10 years ago. I don't think I've
| had a single year where I didn't have to spend 10K on
| maintenance. I always wonder how most people handle these
| expenses - and then I realize that most people just don't take
| care of their houses.
| bachmeier wrote:
| > In the first couple of years I remember getting so
| irritated by all the time it took to take care of the house
| and yard.
|
| It's always been a problem for me. My work keeps me so busy
| (that's how I can afford the house) and much of the limited
| free time I have goes to my son's activities. The only thing
| that allows me to get it done is that my son is old enough to
| help me.
|
| > I don't think I've had a single year where I didn't have to
| spend 10K on maintenance.
|
| I kept hearing $150-200 a month for maintenance before I
| bought my house. That was just a bit on the low side. I had
| one year where I paid 20K for maintenance on a house less
| than 20 years old. There's always something, and if you
| postpone your maintenance (when it's even possible) you're
| going to have to find a way to catch up in the future.
| tiborsaas wrote:
| > If you rent, you call the landlord and have them replace
| those things.
|
| You also have to negotiate everything with landlord: color of
| paint, removing walls, replacing stuff you don't like because
| of the design alone.
|
| Home ownership gives you almost infinite options to fit the
| place 100% to your needs.
|
| So I agree that there are things hard to express with money.
| One can reverse the question: buying could set you back
| $xx.xxx, is it a fair price to be able to do anything with the
| property?
| anomaloustho wrote:
| Being in a unique position of renting out properties that I own
| while simultaneously renting, it seems like some of this is
| taken a little out of proportion.
|
| My net experience is that the burden of dealing with said
| landlord to get something fixed or maintained is roughly
| similar to fixing it yourself with equal pros and cons on both
| sides.
|
| Consider a $150 repair for your AC going out in 95F weather,
| 70% humidity. Landlord can and is allowed to take 2 weeks to
| fix that. (even with the best of intentions, he might still
| take 2 weeks) Whereas you can easily call and have it fixed
| within 5 hours if you owned it. Also, many repair companies
| will refuse repair if you are a renter unless they receive
| authorization. Also, consider that you want to upgrade to a
| smart thermostat, because your mercury-laden thermostat is from
| the 1980s.
|
| Also worth noting that a home warranty program helps a lot with
| these things both for my landlord and for myself as a landlord.
|
| Also, seems like some of the conversation implicitly revolves
| around "renting an apartment" vs "buying a house". I own 2
| apartments and rent a house. I don't have to maintain the yard
| for the apartments I own. I do have to maintain the yard for
| the house that I rent.
| toast0 wrote:
| > Also worth noting that a home warranty program helps a lot
| with these things both for my landlord and for myself as a
| landlord.
|
| Not the home warranty programs I've had, which seem to be
| focused on getting revenue via call-out fees and not doing a
| whole lot else. Even when the last one replaced an air
| handler because of a bad fan (seemed like they could have
| replaced the fan, but I dunno), and gave me a check to
| replace an oven with a bad control board (no replacement
| parts), the fact that everything took months to go through
| made the experience negative for me, even if it was a
| positive fiscally.
| asdff wrote:
| >Whereas you can easily call and have it fixed within 5 hours
| if you owned it.
|
| The caveat with these sorts of fixes is these service
| companies will sometimes upcharge a big fee for "emergency
| work" to have it fixed within 5 hours rather than in two
| weeks. I literally had water shooting out of my ceiling and
| the property manager admitted as much to me when I asked why
| the owner left me without water for days.
| kube-system wrote:
| True, but at least _you_ get to answer that question,
| instead of your landlord.
| bachmeier wrote:
| > Consider a $150 repair for your AC
|
| These are precisely the examples I was cursing after I bought
| my house. They were the ones existing homeowners always
| talked about.
|
| A $150 repair for the AC is nothing. The prospective
| homeowner needs to think about things like:
|
| "Your roof is shot." The lowest bid is $15,000. Check is due
| before they leave your property.
|
| "Your trees are dying." Cost of cutting them out and
| replacing them is $2000. When you give us the check, we'll
| start the job.
|
| "Your water heater needs to be replaced." And what you learn
| is that it's a special type of gas water heater that costs
| $2500 and up. Payment is due before they leave your house.
|
| On any of these, you call the landlord (or don't even need to
| in the case of the dying trees) and you don't think about it
| again.
| BeetleB wrote:
| > "Your roof is shot." The lowest bid is $15,000. Check is
| due before they leave your property.
|
| When you buy the house, you should have had an idea on how
| much it costs, and saved for it. $15K over 30 years is
| nothing.
|
| Also, of course this depends on where you live and how big
| your roof is, but for my house, $15K is overpriced. I
| recently got bids and while the numbers varied quite a bit,
| $11K was more typical. Of course, there are people who
| quote as high as $25K - learn to shop around.
|
| And none of them wanted all the money up front.
|
| > And what you learn is that it's a special type of gas
| water heater that costs $2500 and up.
|
| I think $2500 is a fairly standard price.
|
| One definitely needs to research these costs before buying!
| Especially for:
|
| Roof
|
| Garage doors
|
| Water heater
|
| Furnace
|
| Central AC
|
| Any pending yard work (like dying trees)
|
| Any kind of code related work you may need to do (asbestos,
| old electric wiring, etc).
| anomaloustho wrote:
| Having experience with most of these types of issues, I
| think there might be a bit of a scarecrow here.
|
| In particular, the remedy to each repair is presented as
| "replacement". It is my experience with most landlords that
| they will not "replace" anything unless they 100%
| absolutely must. When a roof needs to be replaced that has
| tenants in it, a landlord will patch the roof to avoid
| replacement for as many years as they can (a roof
| replacement is a well known item that is inspected prior to
| purchase) - Like the landlord, the homeowner can elect to
| patch the roof. A landlord will repair a water heater or AC
| by any means necessary, not replace it.
|
| As a tenant, you have no say in the repair process. The
| likely scenario is that the landlord will patch the roof 3
| times during your lease and take weeks for each repair.
| Leaving you to deal with weeks of water running down your
| walls as you wait for the landlord. (this is known from
| rental experience)
|
| As a homeowner, you might elect to patch the roof. You
| could pay in full for replacement. You could pay in monthly
| installments. You could also choose to install a Tesla
| solar roof instead. But I don't think your options as a
| homeowner will be limited to "check is due in 2 weeks".
| hnhousingthrow wrote:
| These calculators don't reflect the reality/absurdity of the
| current economy. Anecdotal, but I bought a house in eastern
| California last year for $600k, now Zillow says it's worth $835k.
| Also, I'll unlikely ever be able to afford a house in the Bay
| Area, even though I make $220k/year at a company there. Still
| don't know what I'll do if my employer makes us return to the SF
| office in a few months. Relatedly, a ~70 year old woman bagged my
| groceries today and I doubt she's doing it for fun. Seems the
| accelerating wealth inequality is destroying our
| society/communities if it hasn't already.
| anonAndOn wrote:
| I submit the housing market of Phoenix, Arizona as an example
| of peak bubble. There are numerous houses on the market today
| that were previously sold... ~30 days ago. This feels more
| ludicrous than the speculative housing bubble of '07.
| asdff wrote:
| It would be cool if this took in zip code to automate things like
| property tax rate or wherever else that data is relevant. It
| would be interesting to have some check mark too if you are a
| first time home buyer to apply those benefits.
| dasil003 wrote:
| Judging by how hard it was to get a concrete answer on what my
| property tax would be after actually buying a house a couple
| months ago, I suspect this might be a big lift.
| XnoiVeX wrote:
| This calculator needs to adjust for inflation/deflation.
| c4m wrote:
| This is a neat tool! There's one more feature I'd want before
| using it seriously, which is a field for stock market return
| rate.
|
| If my down payment is 50,000, then in the rental (apartment) case
| I want to estimate how much I would be earning with 50,000 in the
| stock market.
| actusual wrote:
| There is an edge case I see. When I set downpayment == to
| purchase price, it assumes I'll still be making payments, when
| there actually wouldn't be a loan. Not sure this matters.
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