Apartment rent, how do you guys manage?

[thatfeel]

I don't own a home yet but would like to in the next 5 years. I've lived in a couple of houses and apartments renting because I wasn't sure if I'd stay in the area but it looks like I'm going to be.

For those of you who have extensive experience or are still living in apartments, how the hell do you justify the exorbitant rent most seem to charge for how "little" you get back?

I live in the SE Houston area and it just seems like all of the places, even the bottom of the barrel garbage complexes charge just a little less than the more "premium" facilities. Most places want 800-1000 a month. I make 50k a year and still find that hard to stomach. I know that a decent mortgage could easily be a grand a month but at least I'm getting some equity.

What sort of views do you guys have? And just to beat some of you to the bush, I'm sorry in advance for rejecting the idea of moving back in with my mom or father. I know financially it's a decent choice but I like having female company over far too often.

 

[Bible_Belt]

The rental market is different in every location. My family's renters pay about half what they pay for a mortgage payment on a decent house.

A multi-unit property, like a du-plex or tri-plex, where you live in one unit and rent the others out, can be a great deal. But you have to be capable of being a landlord. If you can do at least some of your own maintenance and upkeep, you'll save a lot of money. You'll also get a better deal on the property initially if it needs a little work. You'll find that a lot of the money you save by being your own handyman gets invested into buying tools, but at least you end up with a lot of nice tools.

 

[MatureDJ]

I remember paying only $520/mo in Orange County, CA (about 5 miles from the beach) when I was making about $35K/yr. I then moved to a Gulf Coast city with a similar income, and rented a place for $450/mo that was a little out in the sticks, and then bought a starter home for $70K that I sold at the peak of the real estate boom for $160K. I then bought a $40K home (renovated old home, REALLY out in the sticks) that I keep as a home base while I live abroad (currently paying about $400/mo in a major Russian city).

If you want to be mobile, you cannot own a home. However, if you've already decided to stay, then you should buy an inexpensive, "starter" home in a far out suburb where the prices are low - and get a super fuel economy car. Some may say that you should be close to the city so that you can partake of the "scene". I say that you can get your fill of the "scene" on weekends - just learn to not drink too much when out & about.

 

[taiyuu_otoko]

Right now renters in the U.S. are getting screwed. It's an unnatural combination of a lot of things, but rents (compared to wages) have never been higher.

Here's a detailed explanation why:

America's Housing Problem: Buying And Renting Are Both Unaffordable

It includes a handy infographic that shows the amount of hours, at minimum wage, it takes to pay the average rent per state. Not that you're making minimum wage, but it gives you an idea of which states are more expensive than others.

 

[Tenacity]

I personally have no interest in tying my life to a mortgage, paying property taxes, dealing with repairs and homeowners' insurance. I get why it's an attractive option, but for me the benefits of renting are 1) I don't deal with any of that, and 2) I can move when and where I want to at the drop of a hat.

I do agree there is a threshold at which rent makes less sense than a mortgage, however. I'm just way below that right now and I'm okay with it.

^^^ This right here. I'm never buying a house. It's important that we be mobile to take advantage of market/job opportunities anywhere in the country or outside of it, and buying a house nails you to ONE area at least for 15-20 years unless you want to sell early and take a loss.

Housing as an investment is and has been extremely over-rated.

I'm an efficient renter for life. Efficient in that I get all of the benefits of the luxury apartment (lakefront patio, business center, full fitness center, resort like swimming pool area, all amenities in the apartment including washer/dryer and remodeled kitchen with carpet) all for a range of $675 - $750 here where I'm at in Clinton Township, MI which is a SUBURB area. That's efficient renting right there.

 

[thatfeel]

A lot of the people commenting on that article seem bitter, while I kind of agree regarding the underlying sentiment that most of them share, that is, that owning a home is rather expensive, surely owning something is better than renting at the end of the day is it not? At least no one can kick you out or anything.

I just wish there was some actual government regulation regarding rent and all these bullchit app and admin fees you have to pay.

 

[thatfeel]

^^^ This right here. I'm never buying a house. It's important that we be mobile to take advantage of market/job opportunities anywhere in the country or outside of it, and buying a house nails you to ONE area at least for 15-20 years unless you want to sell early and take a loss.

Housing as an investment is and has been extremely over-rated.

I'm an efficient renter for life. Efficient in that I get all of the benefits of the luxury apartment (lakefront patio, business center, full fitness center, resort like swimming pool area, all amenities in the apartment including washer/dryer and remodeled kitchen with carpet) all for a range of $675 - $750 here where I'm at in Clinton Township, MI which is a SUBURB area. That's efficient renting right there.

I guess I'm also worried I'm gonna still be renting when I'm like 70 plus years old. Rent is a drain on your savings and stuff like your roths and pensions one would think.

 

[taiyuu_otoko]

surely owning something is better than renting at the end of the day is it not? At least no one can kick you out or anything.

Here's three unknowns that you'll simply have to deal with if you ever buy a house:

1) The market value. There's no guarantee the price will go up, even over 10-20 years. Houses are subject to supply and demand like anything else. There's not much happening in the U.S that indicates demand for housing is going to pick up.

2) Property taxes are completely out of your control. With governments getting broker and broker, who knows what property taxes will be in 10 years. In reality, you'll NEVER own your home, as you'll always have to pay "rent" to the government.

3) You have ZERO CONTROL on your neighborhood. A nice area now might not be so nice in 5-10 years. Too hard to predict.

Not saying that buying a house shouldn't be an option, just make sure you understand all that's involved.

 

[Bible_Belt]

I agree. To expand upon your list of downsides:

The cost of insurance can change a lot over time, especially if a natural disaster causes a lot of claims. A lot of people have been screwed over by the flood/hurricane/storm surge insurance gimmick, where they just attribute the damage to whatever insurance you didn't buy so they can deny your claim.

Zoning regulations can also change a lot. Some municipalities get outright aggressive with issuing fines and tickets. It's an important revenue source. I remember in St Petersburg, FL, they would go around after a hurricane and write tickets any time they saw the plywood that had been screwed over the windows leaning against your house.

The financial markets have been kind to everyone who took a chance on an adjustable rate mortgage, because rates have stayed so low. But a lot of people with those loans have no understanding at all of the risk they are taking and how much their payment could rise if rates went up.

Hell, there even homeowners in Florida who lost everything due to Chinese drywall: https://en.wikipedia.org/wiki/Chinese_drywall

 

[sharkbeat]

1) The market value. There's no guarantee the price will go up, even over 10-20 years. Houses are subject to supply and demand like anything else. There's not much happening in the U.S that indicates demand for housing is going to pick up.

There has been plenty of activity in the past 2-3 years.

Anyway, back to the original topic.

1. Pick the cheapest you can find. Like everything else, this may take time and diligently look for online and newspaper ads.

2. Don't make clutter. Get rid of things you don't need. You want your life to be as streamlined as possible. Having fewer things is less headaches, and allows you rent smaller space which is also cheaper. There were several years in my life where I didn't own a TV. The only furniture I owned was a small bookshelf, a foldable desk and chair, and a bed.

3. Live closer to work, possibly less than 1 mile away. Cost of commute is a lot.

Expenses are not just rent. Gas, food, lifestyle all are taken into account. See if you can find a nice balance. Maybe some area have higher rent price, but close to work. Maybe some areas have a lot of cheap food options.

 

[Moonshiner]

Renting isn't throwing money away. One thing that helped me, was to realize renting or owning a property that you live in are economically the same thing. By definition, a house or apartment is an asset in that it provides shelter. You consume the asset on a monthly basis by living there. If you own the asset, you can rent it out to someone else, who will consume your housing asset in exchange for rent. But if you own the asset and live there yourself, you are consuming the rent it could potentially generate on a monthly basis. When you buy a house, you are buying all future rents that house will generate indefinitely, and paying for all those future rents up front (though most people can't afford to pay up front, so they get a mortgage loan). If you choose to rent an apartment, you are paying for your housing consumption in the form of rent on a monthly basis instead. So pay everything up front, or pay as you go - either way you have to pay for housing.

I'm out in California for the time being, where housing costs are insane. We never recovered from the 2006/2007 bubble, yet prices are going up again. Many people here view housing as their main retirement investment, yet historical average stock market returns have surpassed housing market returns. They love hearing stories about someone who cashed out at the height of the market and made out like a bandit - but in reality those people are few and far between.

I bought a condo after the first bubble, but I didn't do it right. I got a good deal compared to the local market in California, but it wasn't a good deal for an investment. After a few years and a couple epiphanies later I realized that condo was a drain on my finances, and sold that sucker.

To give you an idea of the market here, I make decent money working as an engineer, yet 37% of my take-home pay goes to rent/housing expenses. And that is for a mid-grade apartment in a decent part of town. Most people in their 20's here are forced to have roommates in 1 bedroom apartments, live at home, etc, just to make ends meet.

My advice is to see if you can find an area that will pay you close to your current income, but has a lower cost of living. Many people think you have to be in a large city to make good money, yet for certain professional jobs they will pay the same or near the salaries for the same job in smaller cities in order to attract people to those jobs. For example, many science/healthcare/engineering professional jobs are pretty similar in salary no matter where you work in the country, so why not live in an area where your expenses will be lower (especially housing)?

Personally, the next property I plan on buying would be a house I want to live in for a least a few decades, if not the rest of my life - so it needs to be nice and have certain features. But in order to do that I've got to leave California and go where I can get more for each dollar. There are no houses where I'm at that paying all future rents upfront (by purchasing the house) makes financial sense given my income. In the meantime, consuming housing on a monthly basis in the form of renting an apartment works.

 

[Desdinova]

It really depends on how you want to shape your life. Owning a home isn't for everyone.

The greatest benefit to having your own place, regardless of whether you own it or rent it is you don't live with your parents. Living with one's parents can have an upside, especially if you have some sort of life plan laid out. However, you have no privacy and are always being judged by them. Having your own place gives you independence and freedom, and you have to learn that 5hit at some point in your life.

Like others have said, owning a home takes time and money. If you like having a place you can dwell and call yours, then you should own a home. If you just need a place to sleep, shower and fvck, then renting is a great option. It really depends on what your lifestyle is.

 

[zekko]

So pay everything up front, or pay as you go - either way you have to pay for housing.

The advantage with buying a house though, is that there is a light at the end of the tunnel. When you pay it off, you've got free housing for life.

Well, sort of. And here's where more downsides come in. You still have to pay for insurance and property taxes, and both of those can be expensive. Any maintenance problems? You're paying for it. You're going to need a new roof at some point, a new water heater, etc, etc.

Also, if you live in a place that is economically depressed, you may have a very hard time trying to unload your property if you should decide to move. You might find yourself stuck with it.

Of course with your own home, you can do anything you like with it. I can see the advantage to both sides. If you plan on being mobile, I would definitely rent. If not, I'd probably buy. Like many things, it depends on the individual.