Will renting ever Die?

Windsor, CA (windsor) · Member since 2018 · 21 posts · 6 votes

You always hear "buying a house is the best investment you can make" "Renting is like throwing your money away". What if everyone starts to listen and renting becomes a thing in the past? Now you're stuck with a property with no cash flow coming in. You think this is possible BP?

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Chris Purcell

Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes

@Steven Coppola

Is this a serious post

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Jason D.:
@Wayne Brooks you're assumptions are why you cant see the answer. 1) My mortgage was 65% of my homes value, so my payment is considerably less that that of someone that purchases it a retail price. 2) Expense writeoffs make an investment home less expensive than a private residence, more so now with the SALT Cap on tax deductions. 3) Depreciation that you get from an investment property. Owning a primary residence costs more, long term, than renting, without a doubt.
I disagree with this. at the end of 30 years of rent payments .. your rents go up over time mortgage stays level on a fixed rate. you sell you have NO tax and your home is paid off so you get a big chunk back you rent money is gone..
if your owing the rental when you sell you have HUGE recapture you have to pay back so the deprecation while it helped you it must be paid back.. where as with the owner occ home you have 250 to 500k TX free gain when you sell.
plus there is the familial aspect best schools are in owner occ areas not rental areas .. safety and other things ..
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Richard Arden
New London CT · Member since 2016 · 57 posts · 8 votes
8y
@Steven Coppola renting wont die because most people may know that real estate is the best investment you can make. But most people are complatiant and dont have the gumption to do anything that doesnt provide instant gradification.
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Pete Barrow
Investor · Indianapolis, IN · Member since 2017 · 145 posts · 158 votes
8y
If nothing else, there will always be students, young people unsettled in their careers, people who don't want to have to maintain a house, and sadly, people who can't or won't save up a down payment.
Then there are the millenials. There seem to be thousands of them in my town who have spent the last two decades drinking craft beer and listening to indie music, and watching while house prices went right through the roof. Now there's nothing cheap left for them to buy.
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Salvatore Lentini
Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes
8y
Most people don't know how to save money. They live paycheck to paycheck and care more about what they can afford per month rather than building equity. Bottom line - renting is easier and therefore will always be the default for many.
For these reasons I'm big on building a rental portfolio rather than flipping. Having great investor friendly lenders is key and once I solved that riddle my portfolio took off.
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Chaz Mathias
Real Estate Agent · Santa Rosa, CA · Member since 2018 · 84 posts · 105 votes
8y
Hi @Steven Coppola, like many others have said, the demand for rentals varies by area, but overall, there will always be people who aren't cut out for homeownership, whether they financially cannot or they don't want to. Many people enjoy renting as it provides more flexibility and a fixed cost as they can move whenever they choose to and do not get hit with the large expenses that homeowners do.
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Sunny Shakhawala
Parsippany, NJ · Member since 2016 · 64 posts · 49 votes
8y
@Steven Coppola “Buying a house is the best investment”? People actually say that?? I love renting. Will continue to rent for the foreseeable future.
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Sunny Shakhawala
Parsippany, NJ · Member since 2016 · 64 posts · 49 votes
8y
@Chris Purcell This.
0 Reply
Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
8y
@Jay Hinrichs but dont forget that in those 30 years, you've replaced 1 or 2 roofs, 2 water heaters, 2 HVAC units, and cosmetically renovated the house twice. So you've spent, depending on the home, an additional $100k or more. Then, after 30 years, you still have taxes and insurance, which may make up as much as half of your original PITI.
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Jason D.
Rental Property Investor · St. Petersburg, FL · Member since 2017 · 3k+ posts · 4k+ votes
8y
I guess it would be really interesting to do a long term comparison of cost. Maybe they've done that already, maybe I'm wrong....
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Jason D.:
@Jay Hinrichs but dont forget that in those 30 years, you've replaced 1 or 2 roofs, 2 water heaters, 2 HVAC units, and cosmetically renovated the house twice. So you've spent, depending on the home, an additional $100k or more. Then, after 30 years, you still have taxes and insurance, which may make up as much as half of your original PITI.
well not 100k but get your point.. I guess I just have a west coast perspective all the homes I have owned for more than 5 years have gone up 300 to 600k each.. so its hard for me to have the perspective of owning home that is a loser.. and even if your buying a rental at 65% ARV.. I built my last home here in Oregon for 425k at the bottom on the market ( building cost low because of market conditions and its worth about 1.1 today.. now to be fair It appraised when I got the construction loan for 600k.. so in 5 years its gone up 500k or more and I have not put a dime into it.. LOL so that's TAX free gain.. no recapture .. and I am thinking of selling as I bought a lot right around the corner taking the 500k tax free build another nice home that will be worth about 1.5 with instant 500k equity live there 2 years sell and retire... so to think I could rent this same home for maybe 4 to 5k a month or I could own it with payments less than rent and in 10 years instead of blowing 500k in rent I make 1million tax free.. could never do that with rentals based on leverage were I had Zero cash into these it was all forced equity..
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Hai Loc
Specialist · Toronto, Ontario · Member since 2012 · 2k+ posts · 891 votes
8y
1/3 of the population in Canada rent. I believe that will continue to escalate with lack of affordability especially for millennials.
1 Reply
Zachary B Herschensohn
Member since 2018 · 3 posts · 3 votes
8y
I own two multi-family properties, but I myself rent. My next purchase is another multi-family, not my own personal residence. As a point of fact, I live in a house that is pretty much outside of what I could afford to purchase. The houses that I own cash flow.
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Matt Shields
Broker · Phoenix, AZ · Member since 2015 · 351 posts · 273 votes
8y
The trend is going the other way with fewer homeowners. I think the bigger concern, especially with rising rental rates, is will the local/federal government continue to introduce further regulations like rent control and reduced tenant screening.
0 Reply
Steve B.
Engineer · Portland, OR · Member since 2014 · 1k+ posts · 1k+ votes
8y
@Steven Coppola yes obviously home ownership will be 100% with no renters in the near future. All apartments will convert to condos
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Tony Kim
Rental Property Investor · Los Angeles · Member since 2018 · 844 posts · 1k+ votes
8y
Originally posted by @Jason D.:
@Jay Hinrichs but dont forget that in those 30 years, you've replaced 1 or 2 roofs, 2 water heaters, 2 HVAC units, and cosmetically renovated the house twice. So you've spent, depending on the home, an additional $100k or more. Then, after 30 years, you still have taxes and insurance, which may make up as much as half of your original PITI.
30 years? My goodness, if only I were that lucky. If anyone has owned a home in the west coast for the past 30 years, 2 HVACS, 2 water heaters, 2 roofs and any other things you could throw at us would be peanuts compared to the tax-free capital appreciation you'd get from your primary residence. The $500K exemption might not be enough for a lot of people...
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Robert SpencerPro Member
Investor · Port Huron, MI · Member since 2016 · 58 posts · 14 votes
8y
At some point in the distant future the statistics may trend toward ownership and less rentals, but last I knew the trend was heading the opposite way. Many young people watched their parents work their rear beds off only to lose their house to foreclosure. Also, technology is enabling more and more jobs to be done wherever a person chooses to be. So, people will probably not want to lock themselves down to a location when they no longer have something else like a job doing that to them.
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
8y
Originally posted by @Tony Kim:

Originally posted by @Jason D.:
@Jay Hinrichs but dont forget that in those 30 years, you've replaced 1 or 2 roofs, 2 water heaters, 2 HVAC units, and cosmetically renovated the house twice. So you've spent, depending on the home, an additional $100k or more. Then, after 30 years, you still have taxes and insurance, which may make up as much as half of your original PITI.
30 years? My goodness, if only I were that lucky. If anyone has owned a home in the west coast for the past 30 years, 2 HVACS, 2 water heaters, 2 roofs and any other things you could throw at us would be peanuts compared to the tax-free capital appreciation you'd get from your primary residence. The $500K exemption might not be enough for a lot of people...
this is why this is all so regional many parts of the rust belt the values peaked 20 to 30 years ago and have been eroding ever since.. so get that they don't have the same upside all the west coast folks have .. nicely bought west coast properties especially if you built them yourselves will be plenty of money you don't need rentals.. you get tax free money when you sell then keep rolling it.. that's what many builders do .. and I know I have done it 6 times since I bought my first home in Silicon valley in the late 70s.. and I am just one of millions of other west coast owners who have done the same.. and of course those that bought rentals on the west coast plus their homes have serious equity.. those in the mid west or rust belt the only value proposition basically is cash flow and number of doors since they really don't get or have gotten meaningful appreciation..
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Kendy Peguero
Member since 2018 · 1 post · 1 vote
8y
@Steven Coppolanot everyone can afford to own a house.
1 Reply
JD MartinBusiness Member
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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 17k+ votes
8y
Originally posted by @Jason D.:
I guess it would be really interesting to do a long term comparison of cost. Maybe they've done that already, maybe I'm wrong....
It has been done before and on a long term basis buying beats renting in nearly all instances. I don't have references handy but I will post them when I get in front of a PC. Primary difference is that you pay rent with current dollars and get no tax benefits while you pay mortgages with depreciated dollars but get current tax benefits. Thus, you buy a house today and have a $1000 mortgage, 29 years from now you are still paying $1000 while rent has kept up with inflation and now costs 50-100 percent or more higher, while you also got to recapture some of the "rent" you paid the bank in the form of forced savings ( principal pay down) and appreciation, if any. Repairs and maintenance are immaterial because you pay that either way; the profitable landlord builds those costs into your rent.
There are exceptions, but they mostly revolve around doing it more than once - i.e., trading up in houses in short time periods, paying multiple closing costs, etc.
It's essentially little difference from the argument buying a car once vs. leasing or trading in every few years, other than appreciation. Financially you come out ahead virtually every time if you buy a car once and drive it into the ground. Same thing with a house. Where people get into trouble is thinking of their primary home as an investment. First and foremost it is a way to avoid sleeping under the bridge. If you make any money, great, but the goal (financially speaking) should be to live as cheap as possible as well as possible. Buy a reasonable house once and live in it forever and you beat all other options except under the bridge.
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Frederick Telles
East Vandergrift, PA · Member since 2018 · 3 posts · 1 vote
8y
@Ned Carey I would like to find a normal market! Everywhere I have lived rent is double the price of a normal mortgage but because I have debt issues I couldn't get approved for mortgages even with a VA loan. That being said unfortunately renting will never go away because mortgages are extremely hard to get.
1 Reply
Jonathan R.
Investor · Wichita, KS · Member since 2017 · 584 posts · 813 votes
8y
Originally posted by @Frederick Telles:
@Ned Carey I would like to find a normal market! Everywhere I have lived rent is double the price of a normal mortgage but because I have debt issues I couldn't get approved for mortgages even with a VA loan. That being said unfortunately renting will never go away because mortgages are extremely hard to get.
They aren’t hard to get if you are a W2 employee. I improved my credit score over 100 points in 30-45 days to get approved for a mortgage; after that, I’ve transitioned to investing in a couple single family homes and a duplex. I had 60k in student loan debt. It’s easy, you just settle all your debt but student loans 45 cents on the dollar, or as close as you can get, and then go to google and type in TransUnion dispute, Equifax dispute, and Experian dispute and find the line item and select or type in « Not mine, paid . » You need to dispute on all three sites, very important and easy. Only takes 15 minutes. Most creditors won’t reply if the debt is already settled and it will wipe clean off your credit report. Get a credit card for 6 months and pay it on time. After that, you’ll have a 640 credit score, I know it. If you can’t settle your non student loan debts for half of what you owe, you are having a money issue, not a getting loans issue. Good luck!
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Adam Mittermeier
Specialist · Little Rock, AR · Member since 2018 · 148 posts · 71 votes
8y
I think there will always be a market for renting because there will always be people that don't have the credit score to purchase a home.
0 Reply
Christopher Leon
Realtor · Schaumburg, IL · Member since 2011 · 289 posts · 118 votes
8y
@Steven Coppola no
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Account Closed
Omaha, NE · Member since 2014 · 201 posts · 85 votes
8y
@Thomas S. "There is no way you can be serious about that statement. Landlords make money by using leverage. If you are not using leverage, considering all factors, you most likely are losing money. " Foolish statement. Home rental cost is everything a homeowner has, plus more cost, plus profit. Plus an intentionally profitable purchase price. Only a foolish person rents for less then this which we can't speak to. Don't agree with leverage statement either, I make a killing on mine... and not paying a bank interest significantly increases profit benifit plus no debt risk which allows for great sleep at night.
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Chris Purcell
Investor · Philadelphia, PA · Member since 2010 · 739 posts · 372 votes
8y
Originally posted by @Steven Coppola:
@Chris Purcell don't reply to me. Thanks
Well since you told me not to...
A society in which banks approve 100% of loans that were applied for
What could go wrong ... right?
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