Wed 30 Apr 2008
From the Allentown Morning Call:
Five good reasons to be a renter
No risk. Owning a home can be a risky business, and there are no guarantees that it will be a good investment. Lots of people who got in over their heads with subprime loans (high-cost loans made to people with spotty credit histories) are learning the hard way that homeownership at any cost can be a losing proposition. When you rent, someone else accepts the financial risks, while you get to enjoy the peace of mind.
Cheaper. When you consider the cost of being a homeowner — mortgage payments, association dues, property insurance, property taxes, repairs, maintenance and upgrades to protect your home’s value — most of the time, renting will be cheaper.
Flexibility. A big home mortgage can keep you stuck in a job (or two) that you hate. When you are not tied to that kind of debt, you have the freedom to quit your job and move to another area. Or keep your job and move to another place. Or quit your job and start your own business. See? You’ve got flexibility.
Landlord. Owning a home is not all joy and sunshine when the roof starts to crumble, the furnace goes out or the plumbing springs a leak. When stuff happens (and it will, trust me), a renter calls the landlord. When you’re not worrying about fixing toilets, you have the time and freedom to do what you want.
Get out of debt. Homeowners who are up to their eyeballs in the costs of owning a home often struggle with paying down credit card debt because they’re so strapped for cash. And the temptation to keep adding to that debt because of all the costs to own a home can be great. Renters, on the other hand, have the opportunity to get really serious about getting out of debt because of all the reasons I just mentioned.
If you are a renter, sit back and count your blessings. Be grateful that you are among roughly 30 percent of American households for whom renting a home for now makes a lot of sense. And during these months and years that you are living more cheaply than you would be if you had a big mortgage, get into the savings habit. Save all you can so that when the time is right for you to buy, you’ll have a nice, fat down payment. That way, chances are great that you’ll take on a mortgage payment that is on a par with the rent you’ve been paying.
Now that’s an American dream!
April 30th, 2008 at 6:17 am
Only 30% rent? I think that number is off.
April 30th, 2008 at 7:49 am
“Now that’s an American dream!”
I never would have imagined the amount of freedom and $ that you actually save by renting. I didn’t sell for this reason. However, it has been a major benefit. I really don’t think many take into consideration the cost of carry. A house is a never ending money eating monster. If you don’t feed it, you then become a pos owner.
April 30th, 2008 at 9:25 am
ALL HAIL RENTERS!!!
April 30th, 2008 at 1:31 pm
Has the writer ever dealt with most landlords. If the money outlay was the same I’d rather be able to get something fixed by calling a contractor than waiting for the (Absentee) landlord to do anything.
April 30th, 2008 at 1:50 pm
#4 jcer -
I’m with you - our landlord has allowed our property to fall into disrepair, blaming us for everything that goes wrong with it and refusing to fix anything, even though the house is 100+ yrs old.
If we owned the place, we’d be calling handymen and doing improvements ourselves. Did I mention that our deposit was almost $3k? Also we have rats living under our porch.
Absentee landlord… more like slumlord. I think people who “own” houses sometimes forget what it’s like to be at the mercy of a slumlord. And you never know if you’ve got one until AFTER you’ve moved in.
April 30th, 2008 at 3:17 pm
Go research what your rights as a tennant are.
My landlord forced me to do so recently and now they are paying the price.
I am even using my security deposit + 7% compounded interest to pay my next 2.5 months rent (not final rent, just next 2 months) because they violated the statutes and the law allows me to use security for future rent payments AND they can never ask me for security deposit again, even if I live here 50 more years.
You don’t have to pay rent if the landlord does not make repairs, then when he finally does, you can deduct money off the rent you owe, all LEGALLY and not a damn thing they can do about it.
Haven’t heard a peep out of the pieces of sh!t landlord who tried to jack our rent up 200/month and threaten us with their half assed lawyer.
I did my research and had my lawyer (for $200) write them a letter 3 months ago that they still haven’t responded to (after sending us 2 or 3 initially- all threatening to do this, do that, we have to pay this ore get out, etc.). We hit them with so many things they were trying to do to us that they legally couldn’t, they don’t know what the hell hit them.
All renters-rejoice and learn your rights:
http://www.lsnjlaw.org/english/placeilive/irentmyhome/
April 30th, 2008 at 3:41 pm
#6 Mikeyboy-
Thanks for the link. I live in CA, though… Tenant rights here are decent, but unless you live in a rent-control area, the landlord can raise rent as much as he wants so long as he gives you enough notice. (I’ve seen landlords do this in order to force tenants to leave because they cannot afford a 2x increase in rent.)
Also, if things like 100+-year-old doorknobs, screen doors and ceiling fans start to break, they’re not considered essential components of your living space that would make it “uninhabitable.” I might use the moldy bathroom and rat nest under our porch as leverage if he tries to hoard our deposit, though.
Unfortunately, I get the sense that our slumlord can find any reason to suggest that if something broke, it was because of something WE did. Not because the house is old and falling apart from routine living usage.
When we leave to move back to NJ, I think it’s best we cut our losses and try our best to get every cent from our deposit.
But the experience has soured me enough against renting… I don’t have the time or money to wrestle against some slimebag slumlord who has the power to make my living situation very uncomfortable.
April 30th, 2008 at 3:52 pm
Sorry, figured you were in NJ since it is a NJ blog :)
As far as your security, just use it as your last couple of months rent payment.
That is what I would have done.
Aslo, check your town/cty as they may also have rent control type laws. My town is even stricter then the state when it came to rent increases.
landlord tried 200/month, law only allowed for $38.
I got them on so much stuff, they ain’t getting ANY increase now.
April 30th, 2008 at 4:05 pm
Not sure if using security deposit as rent payment is legal here… but I’ll check it out.
Our city has no rent control. Fun! State law requires landlord to give you 60 days notice if the increase is more than 10%. So, he can give you 60 days notice and raise it 200% if the spirit moves him.
That’s fine. If he raises it on us again, we move out, as we were planning to (back to NJ, where I grew up - that’s why I’m here :)). And then he’s got another vacant unit on his hands… among a few others he has already.
It’s amazing to me that your landlord would be so audacious as to raise rent to illegal levels when the laws are clear and easily enforced.
I think landlords are shiftier and more clever out here in CA. At my last place, they actually took my whole deposit and then charged me extra for things that ran over the admittedly small deposit amount… I hadn’t even known at the time that they were required by law to produce receipts for each repair or expense.
I guess for every tenant who knows their rights and looks it up on the internet, there are a half-dozen who pay that extra $200/mo.
So this experience hasn’t soured you on renting?? I’m over it, personally.
April 30th, 2008 at 4:08 pm
Taking my landlord to court from 3,000 miles away could be really crappy, too. I guess we’d have to weigh cost of round-trip plane ticket vs. cost of whatever he is wringing from our deposit.
April 30th, 2008 at 4:11 pm
I’d prefer not to rent, but not really feasible now as I am not willing to put every penny my wife and I make into an overpriced house now.
My landlord is just stupid. Ignorant husband and wife who lived here before (2nd floor of 2 family house). They screwed up the drain in driveway by garage and it started to flood garage (once REALLY bad) after that (hadn’t in the previous 5 years, go figure :)
They didn’t like that we complaint there was 4′ of water to the back of our garage or complained every other time it started to flood, so they tried to retaliate against us for it.
Well, that is against the law in NJ too and the law even sites what hey did as an example :)
I am actually waiting for them to take me to court as I have so many violations on them, but think they really do not know what to do now, they have a half assed lawyer (and mine is VERY VERY good).
We are just planning to stay here another year or so and think about buying around this time next year if prices get to be in line with incomes (which may not be next year :)
Stay in Cali, NJ sucks!
April 30th, 2008 at 4:20 pm
That’s great you found a good lawyer. I guess there are a lot in NJ? heheh.
Yeah, I definitely think that if your circumstances allow, you should keep renting until prices come down more. I haven’t seen enough movement in NNJ prices, so we’re in no rush to move back to the area, let alone buy a house there.
I’d love to stay here in CA, but my whole family is in NJ, and it would take waaaay more than “another year or so” for prices in the Bay Area to be reasonable enough for us to buy.
I’m lucky: I get to move from a ridiculously expensive area to an …expensive… area.
If our priorities were to pay rent and live in a pretty city with nice weather, we’d stay. But we would eventually like to own and start our own family, and we’re not getting any younger if you get my meaning.
Your landlords are lucky that you and your wife haven’t contracted West Nile from all the standing water…! More grist for the mill!
Show them the meaning of “retaliate.”
April 30th, 2008 at 4:24 pm
Renting isn’t just a bowl of cherries, I can tell you from my experience.
I rent a two bedroom, garden apartment in the same town I’m looking to buy in. The management company is pretty good, but I still have to wait on their schedule to get anything fixed. If there’s a bird in the attic or problems with the hot water, it could be a while until they get around to sending someone.
The electrical system in my apartment is ancient and sub-standard. It’s inadequate for the big TV, multiple computers, laser printer and other electronics I own. If it were my place, I’d have the whole thing redone in an eyeblink. As it is, I do what I can and call the super when stuff actually breaks.
Even worse, I feel like the place is not my own, even though I pay for it. I’ve gotten notices from the management company in the past where they tell me that they’re going to come into my apartment to do some emergency work some time in the next couple weeks and that I should secure my pets and valuables. Luckily, the super and his flunkies are good guys and as long as I can talk with them they’ll arrange to do it when I’m home.
I’m very much looking forward to having my own house again, although I’m not really looking forward to paying for it.
April 30th, 2008 at 4:31 pm
#13 Chuchundra -
Is renting generally still cheaper in your town?
IMHO, renting sucks extra hard when you want to have kids, but you’re not sure if the water in your rental unit is safe and drinkable (old pipes!) or if the paint has lead (old paint!) or if the walls are all caked in mold (they are!).
I’m fine putting myself at the mercy of the slumlord, but I’d like to protect these hypothetical future kids by being able to fix things quickly and make them safe enough to my standards, not his.
I guess there’s pros and cons to each side.
April 30th, 2008 at 7:08 pm
#13
“I rent a two bedroom, garden apartment in the same town I’m looking to buy in. The management company is pretty good, but I still have to wait on their schedule to get anything fixed. If there’s a bird in the attic or problems with the hot water, it could be a while until they get around to sending someone.”
But if you own, YOU have do something with the bird in the attic-
at least with renting, the mgt. co. eventually comes.
as far as repairs, i’ve both owned and rented - it’s hard to get someone to come, especially for “small” repairs when you own- and then you never know if you’re getting ripped off.
i eventually want to buy - no doubt about it - but until the numbers make sense, i’ll wait, save money, and spend my saturday’s on the golf course - not home depot.
April 30th, 2008 at 7:34 pm
Mikeyboy,
thank u so much for that link. I am renting a great home right now, but only after I broke a lease after 3 mos of living in a condo that was horribly bug infested. I have been planning to sue that landlord for my security deposit and the rent I inadvertently paid not realizing the landlord had broken their end of the lease. Yes, I have pictures and the actual dead bugs that I had to kill with all the pesticides and the emails to the property manager complaining about teh bugs and all the dates that the super and the exterminator came to the condo.
April 30th, 2008 at 8:01 pm
There aren’t a lot of SFHs for rent here, so it’s kind of hard to judge. If I score a good deal, put 20% down and count the tax savings, my monthly house payment would probably be less than I could rent for. If I count the lost opportunity cost of the downpayment as well as maintenance and upkkep, it will be more, at least to start. Either way, It will be more than I’m paying for my apartment.
I have to say that, taken overall, my renting experience has generally been a positive one. The management company can be a bit of a pain, but they do keep the place up and are, for the most part, responsive to my requests.
Still, I lived in my own house for 12 years before I got divorced. Now that I’ve seen both sides of the fence, I have to say that I much prefer owning to renting even if it’s not the best thing to do from a pure economic perspective. If I can get a good deal on a house I like, I’m going to buy this year. I’ll probably lose some money in the short term, but I’m willing to live with that.
April 30th, 2008 at 9:08 pm
Go get’em Poser!
May 2nd, 2008 at 8:34 am
For those under the misconception that as tenants they are not paying any association or maintanence fees & enjoying their so - called freedom from payments so ‘that they can save towards a down payment”…………….here’s a reality check.
A tenant pays for all the fees actually, since it IS rolled into the monthly rent by the landlord……nothing in life comes for free.
And while the Landlord enjoys writing off any expenses on repairs , insurance, taxes etc. the tenant is essentially paying for all that too, without receiving any tax deductions.
And a tenant can lose their place the same way a home owner can, if they default on the monthly payment.
The only aspect that is different is that the lack of commitment ( home ownership) allows for mobility, regarding place/town of living.
Also, if the market has improved by the time a tenant is ready to buy, they have to dig deeper or save some more to buy a home.
This does not even include other variables such as prevailing interest rates, lending standards & credit /down payment requirements.