Page 5: The Disadvantages of Owning a Home

[Angela Shelley]

Source: The Complete Idiot´s Guide to Buying and Selling a Home

Page 5: The Disadvantages of owning a home

"Moving to the flip side of the coin, the disadvantages of buying a home are mostly financial. You must make the monthly mortgage payments; if you don´t the lender can foreclose on the house, meaning they can take it away from you. In addition to the actual loan, you will have property taxes and homeowner´s insurance"

"Finally, you can´t pull up stakes and leave as easily if you own a home. If you´re a renter, you can give your notice and take off. Your don´t have any financial responsibilities to the landlord. When you have a house, on the other hand, your have commitments that you will have to settle before you move on."

When Not to Buy a Home

"If you´re buying a home solely as an investment, you should be aware that, though most homes do appreciate in value, appreciation is not guaranteed. Many things that you have no control over affect the value of your home - local economy, abandoned buildings or new businesses in the neighborhood, a land fill, tacky neighbors who paint their houses chartreuse."

[ursi]

1. I rent!

[Wcross]

2. I own & will have it paid off in ten days!

Very low property taxes. No nearby neighbors (1/2 mile away).

I rented for years though. Landlords can be funky. Neighbors can be funky. Rents can be raised. No thanks!

[elehhhhna]

10. WOW! Congratulations!!!

[Warpy]

3. One house in my area is taxicab yellow

with royal blue trim and a lemon yellow homemade fence. Another is light turquoise with dark turquoise trim except for the raw cement stucco around windows they've replaced.

House color is small potatoes here. As long as nobody's cooking meth and blowing themselves up (something my neighbors got rid of about 10 years ago), whatever they want to do with their decor is fine with the rest of us.

I would loathe living in one of those areas with HOAs telling people what kind of draperies they could have, how big their mailboxes could be, and when to wipe their noses.

I prefer the turquoise house across the street from the yellow house. I find their presence cheerful, not jarring. Property values here are determined by the area's convenience, the main reason I bought here, not the exuberant color sense of some of the neighbors.

[shain from kane]

4. The Complete Idiot´s Guide to the Economy, by George W. Bush. n/t

[LSK]

5. with an introduction by John McCain

[dmallind]

6. And of course

landlords don't pay mortgages and (in many states higher than occupiers) property taxes and insurance, and even if they do the kind hearted philanthropists never ever pass on those costs to renters, or roll in expected maintenance. And landlords never evict nonpaying tenants! The only real advantage in this list is that of immediate guaranteed flexibility to move on only the required days notice, but even there that is very very often limited by a lease. I can sell my house when I choose - and horror stories aside for the right price (which is by definition the price I would pay to buy a comparable home in the same market) it will sell in less time than a typical 12 month or even 6 month lease. Even that advantage depends on having an amenable landlord who will accept month to month agreements.

In return however NO rented property appreciates for the renter. Housing bubble or not homeowners at least have that chance.

Unless you are foolish enough to have an ARM when the last decade has seen historically low interest rates for mortgages, a homeowner will not see his monthly payment increase. A renter is at the mercy of a landlord's ability to increase prices either at will or after each lease is up.

The tax benefit of that interest and property tax payment accrues to the landlord, not the renter.

Nobody can tell the homeowner whether they can have a dog or not - try renting with a 75lb pooch(I suppose this does apply to some condos, but not single family homes or even most attached homes).

A homeowner can paint his walls whatever color he likes and change whatever fixtures and fittings he doesn't like - most renters take what's there and lump it.

You can buy an equivalent property cheaper than you can rent it in most markets - certainly all I've lived in which is up to 7 states now. I actually considered renting in my new home area for six months until the wife moves here after the kid's graduation. I can cover two mortgages though and when I priced the options I'm glad I could and did - because a home I close on next month that will cost me $1600 a month almost all tax deductible would rent out for about $2300 with very little deductible.

[Mountainman]

7. This week my house will be on the market 1 year. I reduced the price $50K.

There is no guarantee either way. Houses are not selling because people can't get loans. Sellers are reducing prices so your house may not appraise at the selling price you list at. You'll have to lower your price to that if the comparable houses that sold in the last 6 months.

[dmallind]

8. Yes you have to sell at market value of course - but you also buy at market value too

The big losers in any declining house market are those who had/have very little equity and those who are moving to a much stronger market.

But look at it this way - if you paid $300K for a house now worth $200K, and owe $100K on it, selling it at $200K is only a nominal hit if you are buying a similar house also with reduced value to $200K. It's not like prices decline for sellers but not for buyers too.

[Xithras]

9. Yep, I had a similar conversation with a tenant once.

I used to own several rentals, but managed to divest them as the market started slowing.

I remember talking to one of my tenants while I was giving her notice that I was selling the house she was in (we were friendly and it was a formality...I notified them all about a year in advance that the homes would be sold). When I asked her where she was moving to, she replied that she was looking for another rental. When I asked why she didn't just buy, she replied, "Oh, I could probably afford a mortgage, but not the repairs, property insurance, and taxes." She looked at me dumbfounded when I pointed out that she'd been paying the mortgage, repairs, property insurance, and taxes on THAT home for the four years she'd lived there. I owned those homes for years, and none ever cost me any money. The tenants rent covered the expenses, and I simply enjoyed the property appreciation.

That's why renting when you can afford to buy is so dumb. You're simply paying someone elses mortgage.