House vs apartment

[Bobby_M]

I'm assuming buying both here, and personally house, but apartments have some advantages, especially when you get a bit older.
-no snowwork in the mornings just so you can go to work, it's end of winter here now, but having to remove the wall that the snowplows made during the night at 7 AM is my least favourite part of winter...
-no big gardening projects, and you can always own a small cottage or such outside of town if you want somewhere to relax/garden a bit.

This premise assumes a private single family homeowner can't take the same money and hire out snow removal and landscaping services. A landlord doesn't pay for that out of their own generosity and the cost is always built in to the rent. Sure, there are people that want to make their housing as simple and predictable as possible, but that's not cheap either.

 

[treacheroustexan]

Buying is the way to go. Someone posted earlier about "making your landlord rich one payment at a time", which is mainly true (rich might be exaggerated though). Build the equity for y ourself every mortgage payment you make.

Just as an example (and slight brag)... My wife and I bought our first home in 2017. It needed a lot of work. I learned how to pretty much do everything myself (with proper permits pulled as well). New floors, bathroom reno, basement reno, built a deck, on and on). Bought it for 120k, sold it last year for 230k when we built a new house. Just by owning that home, we made well over 110k in profit. We weren't even renovating it to sell, just to improve it to our needs.

If we stayed in our apartment instead of buying that house, we would have made $0 when we built our house.

My point is, buying is always better in my opinion, unless you have a job where you move around a lot, I could see justifying rent that way.

 

[Kharnynb]

This premise assumes a private single family homeowner can't take the same money and hire out snow removal and landscaping services. A landlord doesn't pay for that out of their own generosity and the cost is always built in to the rent. Sure, there are people that want to make their housing as simple and predictable as possible, but that's not cheap either.

I'm talking about bought appartments, so no landlord, just shared fees, and it's a lot cheaper to have a service paid by 20 shared instead of single household.

 

[betarhoalphadelta]

I'm pretty sure that I'd be way ahead finainncially if I'd put every penny I ever put into real estate into a S&P 500 index fund instead. But ya gotta live somewhere.

Ahh, but that's the advantage of being a landlord.

If you're buying real estate to live in, you're spending YOUR OWN earnings to pay for the asset, and at that point you're choosing between spending it on real estate or investing in the S&P. But as you say, you have to live somewhere, so buying your own house [usually] makes more sense than renting.

If you're a landlord, you're using SOMEONE ELSE's earnings to pay for the asset. The hard part is coming up with the capital to get started.

It's a [mostly] passive income stream. I wish I had one of those lol...

 

[mac_1103]

There are expenses associated with being a landlord too. Especially an absentee landlord. Especially if you have typical tenants instead of great tenants.

 

[madscientist451]

Someone posted earlier about "making your landlord rich one payment at a time", which is mainly true (rich might be exaggerated though).


My point is, buying is always better in my opinion, unless you have a job where you move around a lot, I could see justifying rent that way.

Yeah, that was me, I was referring to a book I have: "creating wealth", published 1983, where the author describes how you can get wealthy by having someone else pay mortgages on houses you own. But its no secret, there have been countless books on the subject and a famous reality star/president's family became very wealthy renting moderate quality apartments and then buying more and more before moving on to luxury rentals and other investments.
No, buying isn't always better, when the housing bubble burst in 2008, there was a wave of foreclosures reaching almost 4 million by 2010. All those people lost their homes and whatever down payment and other equity they had in the property. If you don't remember, there were like 6 million fewer jobs from one year to the next. Can the bubble burst again? Will we see those kinds of job losses again? Some say maybe, some say maybe not. We are starting to see bank failures, is that a sign of things to come or just bad management of a few banks? People have short memories and seem to forget what happened not that long ago.
If you're renting, you're not losing any equity in a real estate downturn. Of course if you're laid off, you can't pay the rent either, so you'll be screwed either way.
Landlords are somewhat shielded from a housing bubble burst since rents rarely go down, and as long as someone else is paying the bills, there's no reason to sell into a depressed market.
Rents may even increase if the housing bubble bursts since millions foreclosed houses could sit empty for years and the former residents have to live somewhere, so with supply and demand, rents will go up.

 

[mac_1103]

Landlords are somewhat shielded from a housing bubble burst since rents rarely go down, and as long as someone else is paying the bills, there's no reason to sell into a depressed market. Rents may even increase if the housing bubble bursts since millions foreclosed houses could sit empty for years and the former residents have to live somewhere, so with supply and demand, rents will go up.

Plenty of people stop paying their rent when they lose their jobs. Evicting a tenant is not easy or free. Rental income is not recession proof. Ask me how I know.

Building wealth by being a landlord is a long game (kinda like owning your primary residence instead of renting). People thinking it was a risk-free way to get rich quick (and people lending them money they had no business borrowing) is what caused that massive recession you're talking about in the first place. Most of the foreclosed homes that sat empty for years after that bubble burst were rental properties.

 

[madscientist451]

Most of the foreclosed homes that sat empty for years after that bubble burst were rental properties.

Never heard that before, so I did a quick look around for proof. Can't find anything to support that assertion, however I did find some indications that the number of renters increased vs home owners. So not sure what to believe. The numbers in different stories don't always agree either, I said 4 million foreclosures in my post, but have seen 6 million and even 10 million. I guess it depends when the story was written and how complete the data was they were looking at.
Here's an article for some context:
https://www.marketplace.org/2018/12/17/what-we-learned-housing/

 

[betarhoalphadelta]

No, buying isn't always better, when the housing bubble burst in 2008, there was a wave of foreclosures reaching almost 4 million by 2010. All those people lost their homes and whatever down payment and other equity they had in the property. If you don't remember, there were like 6 million fewer jobs from one year to the next. Can the bubble burst again? Will we see those kinds of job losses again? Some say maybe, some say maybe not. We are starting to see bank failures, is that a sign of things to come or just bad management of a few banks? People have short memories and seem to forget what happened not that long ago.

Two of the most dangerous words in our language are "always" and "never". I moved to GA in 2005 (intent to be a long-term move) and bought a house. My now ex-wife changed her mind and we sold and moved back in early 2007. After realtor fees / etc, we did walk away with a VERY small (<$1K) profit on the house.

At that time, 2007, it was obvious to anyone who was paying attention what was about to happen in the market, so we rented and sat it out. She constantly was asking me if it was getting to be time to buy, and I spent 3+ years telling her "not yet", before jumping back in in 2010. For those three years, it was absolutely *NOT* better to buy.

Is anything like that going to happen now? I don't know, but I'm not jumping in yet because the risk of a severe correction is still WAY too high for my liking. Obviously we don't have a lot of the same macroeconomic drivers that caused the 2007 collapse, but there's a ton of uncertainty, very high interest rates, potential recession looming, etc. I think prices are still inflated because of low volume, as people are sitting on houses because they're not forced to sell. But I think a rash of job losses could flip that and start a trend of volume increasing and prices dropping.

Plenty of people stop paying their rent when they lose their jobs. Evicting a tenant is not easy or free. Rental income is not recession proof. Ask me how I know.

Building wealth by being a landlord is a long game (kinda like owning your primary residence instead of renting). People thinking it was a risk-free way to get rich quick (and people lending them money they had no business borrowing) is what caused that massive recession you're talking about in the first place. Most of the foreclosed homes that sat empty for years after that bubble burst were rental properties.

Totally agree, and again that "always"/"never" rule applies. Being a landlord isn't for everyone. I'm not saying it's easy. I'm not saying it's risk-free.

Just saying that using other peoples' money [OPM] can be a more effective way to build long-term wealth than using your own lol.

 

[mac_1103]

We're all rent seekers at heart.

 

[mac_1103]

And anyway, The Big Short is a great movie.

 

[krenshaw]

I know that landlords bake in some prices sometimes such as utilities so figured this may be a good place to ask a question I've always wondered about. I know places that are more drought-prone tend to have higher water costs. If you don't mind telling what is a typical water bill if you live in one of these areas. By me water is typically included in a rent, but I would assume that it isn't for places that it is expensive. For example, I own my place but I only pay about $10 a month in water bills for 3 people in a household. I would imagine if it is included in rent vs not that could vastly change the rates, or others that are included as well.

 

[DBhomebrew]

In my long experience as a renter, any time our apartment's water has been on its own meter, the bill was in our name. If it was a shared meter, it was in the landlord's name. Either way, you can be sure our earned wages paid the bill.

 

[krenshaw]

I was asking because, especially if utilities are high, a landlord could bake in an exorbitant amount to the rent and make it seem even higher, and pocket the difference month to month if there is any. I wouldn't think that would be illegal but would be one more way that owning is cheaper. You only pay what you would actually use across all utilities.

 

[FloppyKnockers]

Squatting is pretty cheap. No long-term commitments, no deposits, nothing down. You do have to live without electricity and running water though. Everything has its pros and cons.

 

[betarhoalphadelta]

I know that landlords bake in some prices sometimes such as utilities so figured this may be a good place to ask a question I've always wondered about. I know places that are more drought-prone tend to have higher water costs. If you don't mind telling what is a typical water bill if you live in one of these areas. By me water is typically included in a rent, but I would assume that it isn't for places that it is expensive. For example, I own my place but I only pay about $10 a month in water bills for 3 people in a household. I would imagine if it is included in rent vs not that could vastly change the rates, or others that are included as well.

SoCal, so it's definitely drought prone. 1200 sq ft. 2 adults full time, and three kids about 40%. We only irrigate the front lawn, not the backyard.

Prior to the worst of the drought, we were running a little over $40/mo. Rates went up more recently and now it's typically a little over $80/mo.

Hoping that comes back down after all the rain. But it's California, so I'm not counting on it.

 

[cmac62]

I'll say own because in an apartment the neighbors are way to close. I like people and all, but not where I can hear them breath. LOL

 

[Lee0110]

I have lived both there and there, so I will briefly describe what I think, I won't write about all the pros and cons.
As for houses, there are several pros: houses typically offer more privacy than apartments, they usually offer more space than apartments and they lead to a profitable investment if the property is sold later on. Cons: homeowners are responsible for maintaining their properties, which can be time-consuming and expensive, houses are typically more expensive than apartments, and of course, houses are often located in suburban or rural areas, which can lead to power outages in my experience (perhaps this is not such a problem if you buy a generator e.g. generac.)
As for apartment pros: many apartments offer amenities like gyms, pools, or common spaces that would be expensive or impractical to have in a house, and apartment living typically requires less maintenance than owning a house. As for cons: apartments often have shared walls or common spaces which can lead to noise and renters may face restrictions on things like pets or decorating.

 

[betarhoalphadelta]

I have lived both there and there, so I will briefly describe what I think, I won't write about all the pros and cons.
As for houses, there are several pros: houses typically offer more privacy than apartments, they usually offer more space than apartments and they lead to a profitable investment if the property is sold later on. Cons: homeowners are responsible for maintaining their properties, which can be time-consuming and expensive, houses are typically more expensive than apartments, and of course, houses are often located in suburban or rural areas, which can lead to power outages in my experience (perhaps this is not such a problem if you buy a generator e.g. generac.)
As for apartment pros: many apartments offer amenities like gyms, pools, or common spaces that would be expensive or impractical to have in a house, and apartment living typically requires less maintenance than owning a house. As for cons: apartments often have shared walls or common spaces which can lead to noise and renters may face restrictions on things like pets or decorating.

Also a big con for apartments are the fees required for those amenities. Sometimes those fees can be pretty significant. Especially because those fees are a monthly expense but they're NOT wealth-building or equity-building in the same way that a higher mortgage or a smaller mortgage and making improvements to a property would be.

I wouldn't say that I've had a lot of problems with power outages, or that they're more prevalent in houses. And where I've lived is basically suburban sprawl as far as the eye can see. It might be more problematic in rural areas, but I don't think it's as much of an issue in suburban areas.

 

[Erik the Anglophile]

I live "out in the sticks" and we have shorter power outages a few times a year, a bit more this summer due to planned breaks because they have modernised and done maintenance on the power grid.

But in general I take house over apartment any day of the week.
I have nature around the corner, closeness to hunting and fishing, can grow my own potatoes and carrots, veggies etc wich suits both me and my wife who both want to not disconnect from society but to keep it at a distance. Plus I get depressed by urban life and feel trapped.