Ranting about renting
I recently learned that the apartment I have been living in for a few years is converting to condos. So I am a bit more annoyed with all the bad things about renting. I used to have an on-site manager and she and her husband did a great job. After they left, the place has gone to shit. The last few managers are terrible. Left after only a few weeks on the job, no communication, unaware of break-ins and most everything with the building, hard to reach, the list goes on. But still, I like the apartment. For the price that I paid, the view of the space needle, downtown, and the mountains from my balcony rivals those million dollar condos.
Now that I have to move, I find the landlords/managers I contacted or tried to contact with, no better. No returning calls, flaking out on viewing appointments.
I saved some money but yeah, having your own place has some advantages. Not having to deal with incompetent manager is one thing.
Now that I have to move, I find the landlords/managers I contacted or tried to contact with, no better. No returning calls, flaking out on viewing appointments.
I saved some money but yeah, having your own place has some advantages. Not having to deal with incompetent manager is one thing.
Comments
and now...you'll never have to deal with a flaky manager. Hope you enjoy the risks of a flaky homeowners association.
Buy away.
Maybe things will improve this year. The smart money will be selling rental properties in 2007, so the only landlords left will be people who don't really care about profits.
However, I am quite a happy renter this morning. Last night - I put in a load of laundry before going to bed. Something went wrong with the machine and at four AM my daughter woke me up to tell me there is water dripping from the hallway ceiling on the bottom floor (It's a 3 story townhouse). I get to the main floor where the laundry room and kitchen are, and there is half and inch of water on the floor. Entryway and garage look like a deluge there is so much water coming out of the ceiling.
There is a bunch of drywall that needs to be replaced, and if she is smart - my landlord will probably open up the walls and replace the insulation too. I've had similar stuff to this happen as a homeowner, but never this bad. I am glad I am not going to be footing the bill for it - though I will get the inconvenience of the repairs.
I feel like crap it happened, but it's just one of those random things. hopefully it is mostly covered by insurance.
I don't know who would say renting is always better. It's the current Price/Rent ratio that's the problem in 2007. Plus, the market only went up 2.7 percent in Seattle over the last year.
Most people in Seattle though have a different story than yours. They didn't buy in the 1990s and they didn't selling at the perfect time (last year). Most who bought 20-30 years ago and think they made out like bandits have never done the math to figure out their annual returns. If they did most would realize they would have done a lot better in the storck market over the same period.
Probably the best financial choice now would be to buy a house if the Price/Rent ratio changes, or after the market bottoms out, which could take several years. That's IF the market actually drops, which seems likely at some point but nothing is certain.
There are other factors that go into buying and not dealing with bad landord is one of them.
It just seems like there has been an undertone of this lately. I don't agree generally - but with rents 250-350x purchase price - it definitely makes NO sense now to buy. Prices have a long way to come down (likely) or rents have a long way to go up (not likely, since you can't speculate on rent...) for buying to make sense.
I think that is more like 3-4 years away.
George - curious if you have a magic number you are looking for on the rent/buy multiple? Others have said the investor's rule of thumb is 100x - but this seems awfully low to me. more like that is a "buy for sure" sign. Simple rules of thumb like that ignore important things like the cost of funds, of course.
Yeah, I bought in '97 and sold in '06. Given that I leveraged my way into my first house with nothing down, I figure I made something like 20-30x what I put in as capital. I'm pretty happy but not dumb enough to think deals like that are always going to be available. That's what kills me - people who think they're geniuses because they bought a house and that it will always be that way.
As one of my b-school profs was fond of saying: "markets will fluctuate". Think that means they move up and down, not up fast and up not-so-fast.
Yours though is a really great question if I understand it. What is magic number if you're thinking of buying a house? (or considering selling into the peak, and renting for a few years)?
I think the answer is pretty complicated and you'd need to play with the NY Times rent/own calculator to figure that out. It's higher, right? Maybe 200X?
The bigger point here, as you know, is that housing market fundamentals still matter. Price/ Rent and Price/Income. The real estate industry knows this.
As if anyone needed more evidence as to why rents are rising... Inventory is being squeezed as landlords rush to cash-in on real-estate appreciation before the bubble pops. Unfortunately, a great many of the people who buy this converted property are investors who only plan on re-selling for a profit.
This pattern has played out all across the country, and Seattle is just catching up. Eventually all these converted condos, SFH rentals, etc, will come back on the rental market when the new investors find they can't find another mark to pay an even higher price.
While we wait for this cycle to bottom, expect rents to rise (before they fall)...