some of the silly things that people believe and promote

[miamited]

Hello all. So, I'm just reading through my news feed and I come across a story about why retirees might not want to buy a home.

6 Reasons You Should Probably Not Buy a House When You Retire​

Story by Jordan Rosenfeld

This guy seems to be promoting one of the silliest ideas that many people have about renting vs. owning. He writes:
In his opinion, renting gives retirees more freedom because landlords handle repairs, property taxes and insurance costs that can surprise homeowners.

I was a landlord for 30 years so I know just a bit about the job and how rents are figured. Yes, the landlord does actually pay the contractor who works on a home, but does anyone really believe that they do that out of the goodness of their heart? Rents are calculated to include amounts for taxes, insurance and expected repairs. The tenant pays those costs, but they don't get the credit for it in any way,

Does anyone really believe that a landlord pays the taxes on a piece of property but hasn't figured that into the rent? So, he gets the credit for the taxes on his federal and state tax returns. An owner also gets credit for property taxes that they pay. But a renter doesn't even though it's really his money included in the monthly rent. Insurance. In Florida especially, property insurance is an outrageous cost. How many of you believe that property owners pay thousands and thousands of dollars for property insurance on a rental property and don't figure that in the rent. Again, the renter pays the money to the landlord that he used to actually pay the insurance, but the tenant gets nothing if the home is damaged by an insured loss.

Trust me please. Don't believe this guy. I bought my home after I retired. I was fortunate enough to pay cash for the home, but you certainly don't have to. If I itemize, I get credit for the property taxes that I pay as a deduction from my income. If I rent I don't, even though it's money out of my monthly rent through which the property owner is able to pay those very taxes. The same for insurance. When a landlord determines what he will charge to rent a home to someone he has surely included in that calculation an amount each month that covers the taxes, insurance and expected repairs. The renter pays all of it, but only indirectly.

But this idea that renting a place is somehow better because you don't pay taxes and insurance and repairs is just downright ignorant. Plus, for a renter, there is also some of what he's paying in rent that is the profit that the landlord gets to keep. Not so if you own your home. Finally, renting means that when you leave in 5-10-15 years you walk away with nothing. Me, I've got a goodly sum in the bank for all the equity in the properties I owned that a renter paid for me. Thank you very much. But even for my own home, I've lived in it for about 5 years now and I can sell it today and walk away with about $230k and I only paid $125k for it. No renter gets to do that. Not considering repairs, which is always an unknown as to exact amounts, but on a monthly basis I pay about $150/month to live in my nice 3/2 home on a1.5 acre lot. About $800 in county taxes and $1,000 in insurance which comes to about $150/month. Sure, every once in a while I have to replace the refrigerator or every 20-30 years a new roof and pay a couple of thousand dollars to paint the place every 5-8 years. But the landlord has all that pretty well figured out and the renter pays those same costs in their rent. But I can walk away today and stuff $200k in my pocket when I sell. How much money does a tenant walk away with after paying for all the taxes and insurance and repairs through his monthly rent to a landlord?

Sure, there are some few exceptions to the rule. For example, if you expect to only live in a place for a couple of years the costs of buying and selling a place can be greater than what one might have paid in rent for 2 years and property appreciation may not make that up. But in general, an owner always does better than a renter over the long haul.

Finally I will add. The owner pays his taxes once a year and the insurance once a year. So he doesn't have to be prepared to give some landlord 2-3 thousand a month. Once a year I have to come up with $800 to pay my county property taxes. Once a year I have to come up with $1,000 to pay my homeowners insurance. I support owning your home if there's any way that you can do that. Renting, while surely a necessity for many, is not the best use of housing funds.

 

[Hidden In Him]

Their argument here may be that there's at least a convenience in not having to hassle with matters of ownership. I know one of the things I liked about renting back in the day was that someone else took care of stuff like mowing and lawn care, repairs on stuff that broke. I do know they figure all that into the cost of your rent, so I'm not advocating renting over ownership if you can do it, but for those who can afford to have other people do so, it was kinda nice. Granted, retirees generally don't have a lot to do either, so it doesn't seem like having a few responsibilities to handle would be that bad.

Btw, I had to white back your text. The black looked really weird on dark theme, and it was hard to read.

 

[miamited]

Btw, I had to white back your text. The black looked really weird on dark theme, and it was hard to read.

I'm sorry, you had to what? I just wrote the post as I normally do. I wasn't aware of any color change in the text or background other than the quote from the article that I made blue.

 

[miamited]

However, yes. As I mentioned there are some rare circumstances where one needs to rent. I have rented in my life and I think that most young people do generally start off renting. But this article was about retirees. At my age in life (70) having equity in a home gives me security. I don't have to worry that if I can't pay the rent for a couple of months that I'm going to be evicted. And as I wrote, as long as the maintenance is up to date and everything doing fine my total monthly cost, that I only pay once a year, is $150. on a 12 month division of my taxes and insurance. For me, that brings financial security. Even if the county wants to sell a tax lien because I missed my taxes, they're not going to put me out of my home for at least a year. And anytime within that year I can pay the tax bill plus whatever interest or fees may have accrued on the unpaid tax bill. As a landlord, I generally would start a foreclosure if anyone was two moths behind and that would take about 45 days to get the tenant removed.

However, I would strongly recommend that retirees work during their life to have their home free and clear of any mortgage debt by the time they retire. And people should be sensible about their housing needs. Very, very few people 'need' 6 bedroom 5 bath homes when they're 70. So, if one finds themself in the position where they have too much home when they get ready to retire they should seriously consider selling and downsizing to a home that they can pay cash for. That's what I did.

When I retired I had 4 rental properties that tenants had paid for and my own home and walked out of Miami FL with about 1.5m in cash from owning rentals that I had put very little of my own money into. My wife used to always get on me that I should participate in the employee 401 program. When she left after 26 years of service she had about $200,000 in her 401. I had just at $900,000 in my retirement plan of being a landlord in four homes that were, by then, pretty much paid for. I think I had about $150k owed on all four of them and each one sold for about $350k And I didn't even start my plan until 10 years after she started her 401.

So, needless to say, based on my experience, this financial advisor is wrong for most retirees and whether or not they should own their home. I find a great deal of security and financial freedom in not having to write a check to some landlord every month for hundreds of dollars at my age. And if I have to go into a retirement home, then I can sell my home and take the equity and help pay for my retirement home. A renter who gets moved into a retirement home has nothing to show for his many years of faithful payment of rent to help cover the cost of his retirement home costs.

And yes, in my youth I didn't relish taking care of a property much, but in my later years I really enjoy getting on my big Craftsman pro 54" tractor and cutting the grass. I enjoy creating planting beds and taking care of flowers and shrubs. And other than a new roof and whole house painting, I'm still able to do most of my home maintenance tasks on my own. Last year I replaced my gas hot water heater for about $300 (the cost of the hot water tank itself). I did my own labor and a job that likely would have cost about $700-$1,000 dollars just cost me the $300. That was also one of the benefits of being a landlord. I learned how to do such maintenance tasks on my own.

BTW I was just sitting here reading my post and the black background just came up. I have no idea what I did that made that happen so I hope this posts on a white background.

 

[miamited]

Oh, I found it. It's the little 'settings' wheel at the bottom left hand corner of the page. I honestly have no idea what I did to change it, but at least now I know how to change it back.

 

[Christ_empowered]

I dunno

I’m glad I live in a property owned by family and that it’s a low upkeep situation. I kinda think that if I was older I’d crave the security of ownership more not less than I do now.

My place is modest but pleasant and comfortable. Rents keep rising more so in some areas than others. Zillow says my modest pleasant me sized place could rent for slightly over 1900/month. And…

Truth? When I read that I had a weird wave of panic . I mean…short lived…but that’s how ridiculous the rental situation is in my area. When I first moved in some places similar to mine might fetch 1000ish/monthly, maybe if they were furnished and had a view. Now the rents just keep rising and the home values have gone up too but not nearly at the same rate as the rental prices.

 

[Hidden In Him]

I'm sorry, you had to what? I just wrote the post as I normally do. I wasn't aware of any color change in the text or background other than the quote from the article that I made blue.

After the blue, your text went to black for some reason. It's cool.

However, yes. As I mentioned there are some rare circumstances where one needs to rent. I have rented in my life and I think that most young people do generally start off renting. But this article was about retirees. At my age in life (70) having equity in a home gives me security. I don't have to worry that if I can't pay the rent for a couple of months that I'm going to be evicted. And as I wrote, as long as the maintenance is up to date and everything doing fine my total monthly cost, that I only pay once a year, is $150. on a 12 month division of my taxes and insurance. For me, that brings financial security. Even if the county wants to sell a tax lien because I missed my taxes, they're not going to put me out of my home for at least a year. And anytime within that year I can pay the tax bill plus whatever interest or fees may have accrued on the unpaid tax bill. As a landlord, I generally would start a foreclosure if anyone was two moths behind and that would take about 45 days to get the tenant removed.

However, I would strongly recommend that retirees work during their life to have their home free and clear of any mortgage debt by the time they retire. And people should be sensible about their housing needs. Very, very few people 'need' 6 bedroom 5 bath homes when they're 70. So, if one finds themself in the position where they have too much home when they get ready to retire they should seriously consider selling and downsizing to a home that they can pay cash for. That's what I did.

When I retired I had 4 rental properties that tenants had paid for and my own home and walked out of Miami FL with about 1.5m in cash from owning rentals that I had put very little of my own money into. My wife used to always get on me that I should participate in the employee 401 program. When she left after 26 years of service she had about $200,000 in her 401. I had just at $900,000 in my retirement plan of being a landlord in four homes that were, by then, pretty much paid for. I think I had about $150k owed on all four of them and each one sold for about $350k And I didn't even start my plan until 10 years after she started her 401.

So, needless to say, based on my experience, this financial advisor is wrong for most retirees and whether or not they should own their home. I find a great deal of security and financial freedom in not having to write a check to some landlord every month for hundreds of dollars at my age. And if I have to go into a retirement home, then I can sell my home and take the equity and help pay for my retirement home. A renter who gets moved into a retirement home has nothing to show for his many years of faithful payment of rent to help cover the cost of his retirement home costs.

And yes, in my youth I didn't relish taking care of a property much, but in my later years I really enjoy getting on my big Craftsman pro 54" tractor and cutting the grass. I enjoy creating planting beds and taking care of flowers and shrubs. And other than a new roof and whole house painting, I'm still able to do most of my home maintenance tasks on my own. Last year I replaced my gas hot water heater for about $300 (the cost of the hot water tank itself). I did my own labor and a job that likely would have cost about $700-$1,000 dollars just cost me the $300. That was also one of the benefits of being a landlord. I learned how to do such maintenance tasks on my own.

BTW I was just sitting here reading my post and the black background just came up. I have no idea what I did that made that happen so I hope this posts on a white background.

I agree. My wife and I marvel at how much people are paying for rent, when we live in something much nicer for less. But I paid my dues. I loved in apartments until I was 45, so I'm glad those days are finally over.

 

[Hidden In Him]

My place is modest but pleasant and comfortable. Rents keep rising more so in some areas than others. Zillow says my modest pleasant me sized place could rent for slightly over 1900/month.

Exactly, LoL. Who can afford that? And unlike in an ownership situation, landlords can just raise it to whatever they decide to if they think they can pull it off, so your monthly rent bill is at the mercy of somebody else.

Granted, we trust in Christ, to where it is Him we entrust our needs to. But the prices these days are certainly getting expensive.

 

[WIP]

Hello all. So, I'm just reading through my news feed and I come across a story about why retirees might not want to buy a home.

6 Reasons You Should Probably Not Buy a House When You Retire​

Story by Jordan Rosenfeld

This guy seems to be promoting one of the silliest ideas that many people have about renting vs. owning. He writes:
In his opinion, renting gives retirees more freedom because landlords handle repairs, property taxes and insurance costs that can surprise homeowners.

I was a landlord for 30 years so I know just a bit about the job and how rents are figured. Yes, the landlord does actually pay the contractor who works on a home, but does anyone really believe that they do that out of the goodness of their heart? Rents are calculated to include amounts for taxes, insurance and expected repairs. The tenant pays those costs, but they don't get the credit for it in any way,

Does anyone really believe that a landlord pays the taxes on a piece of property but hasn't figured that into the rent? So, he gets the credit for the taxes on his federal and state tax returns. An owner also gets credit for property taxes that they pay. But a renter doesn't even though it's really his money included in the monthly rent. Insurance. In Florida especially, property insurance is an outrageous cost. How many of you believe that property owners pay thousands and thousands of dollars for property insurance on a rental property and don't figure that in the rent. Again, the renter pays the money to the landlord that he used to actually pay the insurance, but the tenant gets nothing if the home is damaged by an insured loss.

Trust me please. Don't believe this guy. I bought my home after I retired. I was fortunate enough to pay cash for the home, but you certainly don't have to. If I itemize, I get credit for the property taxes that I pay as a deduction from my income. If I rent I don't, even though it's money out of my monthly rent through which the property owner is able to pay those very taxes. The same for insurance. When a landlord determines what he will charge to rent a home to someone he has surely included in that calculation an amount each month that covers the taxes, insurance and expected repairs. The renter pays all of it, but only indirectly.

But this idea that renting a place is somehow better because you don't pay taxes and insurance and repairs is just downright ignorant. Plus, for a renter, there is also some of what he's paying in rent that is the profit that the landlord gets to keep. Not so if you own your home. Finally, renting means that when you leave in 5-10-15 years you walk away with nothing. Me, I've got a goodly sum in the bank for all the equity in the properties I owned that a renter paid for me. Thank you very much. But even for my own home, I've lived in it for about 5 years now and I can sell it today and walk away with about $230k and I only paid $125k for it. No renter gets to do that. Not considering repairs, which is always an unknown as to exact amounts, but on a monthly basis I pay about $150/month to live in my nice 3/2 home on a1.5 acre lot. About $800 in county taxes and $1,000 in insurance which comes to about $150/month. Sure, every once in a while I have to replace the refrigerator or every 20-30 years a new roof and pay a couple of thousand dollars to paint the place every 5-8 years. But the landlord has all that pretty well figured out and the renter pays those same costs in their rent. But I can walk away today and stuff $200k in my pocket when I sell. How much money does a tenant walk away with after paying for all the taxes and insurance and repairs through his monthly rent to a landlord?

Sure, there are some few exceptions to the rule. For example, if you expect to only live in a place for a couple of years the costs of buying and selling a place can be greater than what one might have paid in rent for 2 years and property appreciation may not make that up. But in general, an owner always does better than a renter over the long haul.

Finally I will add. The owner pays his taxes once a year and the insurance once a year. So he doesn't have to be prepared to give some landlord 2-3 thousand a month. Once a year I have to come up with $800 to pay my county property taxes. Once a year I have to come up with $1,000 to pay my homeowners insurance. I support owning your home if there's any way that you can do that. Renting, while surely a necessity for many, is not the best use of housing funds.

What you describe is true, of course. Rental property is a business and therefore it is not offered for lease without figuring in a certain amount of income or profit from the property. In order to gain an income/profit from the property, one must cover all the expenses and that includes whatever risk there is that comes with ownership. What if there's a major repair that suddenly appears? What if the house is destroyed by fire or tornado or other major disaster? Now, there's no income from the property while it is rebuilt unless the owner pays higher premiums for insurance with an income protection clause. What if the owner is unable to find a suitable tenant? The costs associated with the property don't magically go away and so now, the owner is running his/her business in the red and that can only continue for so long.

To the question about whether renting or buying is the better option, it can depend on the person's lifestyle.

Someone that is not very securely tied to the area might be better off renting because if it becomes necessary to move, owning a home adds the complexity of having to sell the current home and find another new home. This can take weeks, months, or even longer with many added contingencies whereas, a renter can simply give the agreed upon advanced notice and be gone.

Owning property means upkeep, maintenance, taxes, and so forth, something a renter doesn't have to think about. As we get older, doing the work of upkeep and maintenance also becomes an issue. We recently put a new roof on our house. Today, I'm not as sure footed and comfortable on my feet as I once was and I am not nearly as strong either. For that reason, we had to hire the work done. Doing the work myself means I am paying me the labor but hiring someone means I have to add all the labor costs to the project. In this regard, home ownership becomes even more expensive.

One advantage of ownership over renting is the potential for home equity and value growth, so it can become an investment that can sometimes pay off over time depending on the situation.

That isn't guaranteed, however. My life is a perfect example. I bought a home back in March of 1982 and was surprised in May to find out that I would be laid off at the end of the month. This was bad timing for sure. The country as a whole was in a deep recession and Minnesota's iron range was experiencing a depression with over 26% unemployment rate. Finding another job, any job, was nearly impossible and as a result the housing market in the area crashed. I remember asking a real estate company to take a look at selling our home and what we found out was that our mortgage was upside-down. We owed about 30% more than they felt it could be sold for.

I finally found a job, but it required that I move about 200 miles away, so I decided to put my home up for rent. I was fortunate to find a very good tenant, and because of the low housing market, rental property didn't bring much value either. I ended up renting it for just enough to cover my mortgage, taxes, and insurance. Fortunately, my tenant took very good care of the property and I had very little maintenance costs for those 10 years. What maintenance costs I did have came directly out of my pocket. In the end, after about 18 years of ownership, I finally sold the home for only about $5,000.00 more than I originally paid for the property. That's not much value increase over almost 20 years and certainly didn't cover the interest I paid on the mortgage. The investment didn't work out very well for me for sure.

It really comes down to the individual's circumstances, abilities, and desired risk level.

 

[WIP]

Exactly, LoL. Who can afford that? And unlike in an ownership situation, landlords can just raise it to whatever they decide to if they think they can pull it off, so your monthly rent bill is at the mercy of somebody else.

This is true in all things. Home ownership is no different. A home seller can price the home to whatever they want. The real question is whether or not they can find someone willing to pay their asking price, which if priced high means it will likely take a lot longer to sell it and that can be an issue if one is anxious to relocate for whatever reason. There's no law that determines the value of a home either for rent or to buy.

 

[miamited]

There's no law that determines the value of a home either for rent or to buy.

Well yes, there isn't any 'law', but there are valuations that determine the rental or selling price. Homes are generally sold on a per square foot pricing model which can be more or less depending on things like location and upkeep of a property. Rental valuations are similarly based on like for like comparatives. In some markets, like very rural areas, one might be able to negotiate some, but most landlords know what the market pricing is and will price their rental in that general range. Yes, you might be able to offer some incentive for a landlord to give you 50-100 dollars off, but that means you're paying that discount through whatever incentive was offered.

For example, I generally paid for lawn maintenance and included that in my rental valuation. But if a tenant sat down with me and said, "Look, I have all the equipment to take care of the lawn and I will do that for you", then sure, I might give him $100 off the rent because he would be saving me $125 that I would have paid to my lawn guy. Or a tenant might get $100 off for the first year if he offered to paint the place for me. But generally speaking, I rarely ever negotiated with a new tenant over the rent.

 

[miamited]

Now, there's no income from the property while it is rebuilt unless the owner pays higher premiums for insurance with an income protection clause.

Yes and I went through hurricane Andrew with 2 rentals and I had income protection and the tenant paid for those insurance premiums. After the home repairs were made from the hurricane damage I had enough money left over to make down payments on two more homes. That's how I wound up with 4 properties. For me, while the time spent making the repairs and keeping all my tenants happy throughout the rebuilding process was a bit of hard work, ultimately it was a great blessing for me financially. I was able to tell my tenants that they could have 2 months rent free because the insurance was paying for that time of repair. They were happy. I was happy. And I didn't lose either tenant during the process. Although, a fire or flood that might totally destroy a home wouldn't have allowed me to let the tenants stay in the home, but I still would have gotten rental income from my policy that the tenant paid the premiums for.

In that regard, rental insurance is much like PMI. It wasn't any benefit to the tenant, although I chose to give them some relief due to that benefit, but it mainly covered my losses and nothing for them. I think one thing that might be worth considering is that hurricane Andrew was a major hurricane that destroyed thousands upon thousands of homes in a 15 mile swath as it cut across the Florida tip. So, tenants didn't have any place to go because there was no place to go unless one wanted to drive 30 miles up the road to far north Miami-Dade county or Broward county. It wasn't like you could just drive a mile down the road and get a new place to live. Anything that was liveable was grabbed up within hours by thousands upon thousands of desperate people needing a new roof over their heads. I had to drive to Hollywood Fl, about 30 miles away just to find a place where I could live and have a hot shower and electricity for about a month. Hotel rates in Miami-Dade county went through the roof because many, many people in a 15 mile area were looking for a safe place to stay that had water and electricity. I still remember the many long days and nights listening to the sounds of generators running at practically every home where people were still able to live that hadn't been destroyed beyond livability.

Redirect Notice

 

[miamited]

Final tally of losses

• Deaths: 23 direct deaths in the U.S. and 3 in the Bahamas.
• Economic Damage: $26.5 billion (1992 USD) in the United States, with an additional $250 million in the Bahamas.
• Inflation-adjusted damages (to April 2025): The cost is estimated to be between $60 billion and $65 billion.
• Insured Losses:
  • In 1992, insured losses amounted to $15.5 billion.
  • In 2017 dollars, the insured losses were $27.3 billion.
• Homes: 25,524 homes destroyed and 101,241 damaged.
• Homelessness: About 250,000 people were left homeless in Dade County alone.
• Infrastructure:
  • 3,300 miles of power lines damaged or destroyed.
  • 9,500 traffic signs and signals damaged or destroyed.
  • 240 oil and gas production platforms were damaged over an 85-mile wide area off the central and southeast Louisiana coast.
• Agriculture:
  • 32,900 acres of farmland were damaged or destroyed.
  • Louisiana’s fishing and aquaculture industries suffered enormous losses.
  • 9.4 million saltwater fish valued at $7.8 million were killed.
  • 187 million freshwater fish in the Atchafalaya Basin and Bayou Lafourche were killed.
  • Sugarcane fields and soybean crops in Louisiana sustained $289 million in damage.
  • Sugar crop in St. John the Baptist Parish had a $1 million loss, and the soybean crop had a $100,000 loss.
• Businesses: 82,000 businesses were damaged or destroyed.

The picture in the link above is what 40% of that 15 mile swath looked like. Trust me, housing was at a premium for about 2 years after that event. But thanks to generous insurance settlements in those days and my ability to do a lot of the work myself with hired day labor that was everywhere around the area, I was able to repair my rentals and have that bit of money left over that I mentioned. But the idea that some catastrophic loss means that the landlord loses isn't generally the case. The final insurance costs for the rebuilding of south Miami-Dade county after Andrew is estimated to have been in the.area of $15B.

 

[miamited]

And that's the reason that I now live in South Carolina. I knew that at the age I was when I retired that I didn't want to have to go through something like that again. Then a tornado destroyed my home in South Carolina and again insurance came to the rescue and gave me about $50k more than I could have sold my home for at the time with no agent fees. I walked away with about $400k for my home that I had paid $290k for 12 years earlier and paid no seller agent fees. Then I went out and bought a new home. But a tornado is a lot different than a hurricane in the scope of damage to an area. Tornados generally only destroy a small swath of area while Andrew really did damage homes from Homestead Fl to Coconut Grove Fl. which is an area about 20 miles in diameter of a circle. As it says, 25,000 homes were destroyed and another 100,000 were damaged.

It was a mess for a long time, but hard work and perseverance paid off for me. But no, a tenant couldn't just move 10 blocks away to another rental unit. My tenants were actually thankful to me that I let them remain in the homes while repairs were under way and gave them 2 months free rent.

 

[miamited]

 

[miamited]

Hey, and be sure and watch the Fluffy video after the hurricane one above.

 

[WIP]

Well yes, there isn't any 'law', but there are valuations that determine the rental or selling price.

The valuation is only someone's opinion, albeit based on local trends, and they are not written in stone. Those valuations can change in a heartbeat just like the value of my home did when when within four years the value of my home was about $10K less than what I still owed on the mortgage. I remember doctors selling their $550K homes for $125K just to dump them because the market was so poor and interest rates were exceeding 18% apr. Things can go just the opposite too. My brother-in-law's neighbor in central MN put his lake home on the market in 2022. The market was going gangbusters at the time and he sold that home sight unseen to someone from Chicago in less than a week for $1.5M. I don't know what his asking price was but that person from Chicago really wanted that house. In the end, no matter what one asks for it, it will not be sold or rented until someone is willing to pay the price.

For example, I generally paid for lawn maintenance and included that in my rental valuation. But if a tenant sat down with me and said, "Look, I have all the equipment to take care of the lawn and I will do that for you", then sure, I might give him $100 off the rent because he would be saving me $125 that I would have paid to my lawn guy.

Why would you not give your tenant the entire $125.00? That wouldn't be very fair of you. Another example of how things are negotiable.

I've even negotiated prices with retailers. Too often people think they have no say but many times we do. I guess if you feel you must have something no matter the cost, you'll be willing to pay for it too.

Here's one example. In 2009, when I purchased my new F150 it came equipped with a 6-month subscription to Sirius radio. At the end of the six months, I decided to buy a lifetime membership for about $300.00. Then in 2016 I traded that vehicle for another new F150 and it too came with a 6-month subscription. When that was near its end and I began to get solicitations to buy in to a another lifetime agreement for somewhere around $500.00 and I replied to their emails with, "Are you kidding me?! I paid for a lifetime subscription and I'm not doing it again!"

Now, I was aware that the lifetime had small print that said it was the life of the truck and not the life of the person paying the bill. I also know that transferring the subscription to my new 2016 would require nothing more than to shut down the subscription to my previous truck's radio and enabling it on my new one. There is a code they use to identify the radios. In the end, I told them that I could understand a small fee being required because someone has to physically make the transfer. They replied with an offer to do it for $75.00 and I found that reasonable.

 

[JLB]

Hello all. So, I'm just reading through my news feed and I come across a story about why retirees might not want to buy a home.

6 Reasons You Should Probably Not Buy a House When You Retire​

Story by Jordan Rosenfeld

This guy seems to be promoting one of the silliest ideas that many people have about renting vs. owning. He writes:
In his opinion, renting gives retirees more freedom because landlords handle repairs, property taxes and insurance costs that can surprise homeowners.

I was a landlord for 30 years so I know just a bit about the job and how rents are figured. Yes, the landlord does actually pay the contractor who works on a home, but does anyone really believe that they do that out of the goodness of their heart? Rents are calculated to include amounts for taxes, insurance and expected repairs. The tenant pays those costs, but they don't get the credit for it in any way,

Does anyone really believe that a landlord pays the taxes on a piece of property but hasn't figured that into the rent? So, he gets the credit for the taxes on his federal and state tax returns. An owner also gets credit for property taxes that they pay. But a renter doesn't even though it's really his money included in the monthly rent. Insurance. In Florida especially, property insurance is an outrageous cost. How many of you believe that property owners pay thousands and thousands of dollars for property insurance on a rental property and don't figure that in the rent. Again, the renter pays the money to the landlord that he used to actually pay the insurance, but the tenant gets nothing if the home is damaged by an insured loss.

Trust me please. Don't believe this guy. I bought my home after I retired. I was fortunate enough to pay cash for the home, but you certainly don't have to. If I itemize, I get credit for the property taxes that I pay as a deduction from my income. If I rent I don't, even though it's money out of my monthly rent through which the property owner is able to pay those very taxes. The same for insurance. When a landlord determines what he will charge to rent a home to someone he has surely included in that calculation an amount each month that covers the taxes, insurance and expected repairs. The renter pays all of it, but only indirectly.

But this idea that renting a place is somehow better because you don't pay taxes and insurance and repairs is just downright ignorant. Plus, for a renter, there is also some of what he's paying in rent that is the profit that the landlord gets to keep. Not so if you own your home. Finally, renting means that when you leave in 5-10-15 years you walk away with nothing. Me, I've got a goodly sum in the bank for all the equity in the properties I owned that a renter paid for me. Thank you very much. But even for my own home, I've lived in it for about 5 years now and I can sell it today and walk away with about $230k and I only paid $125k for it. No renter gets to do that. Not considering repairs, which is always an unknown as to exact amounts, but on a monthly basis I pay about $150/month to live in my nice 3/2 home on a1.5 acre lot. About $800 in county taxes and $1,000 in insurance which comes to about $150/month. Sure, every once in a while I have to replace the refrigerator or every 20-30 years a new roof and pay a couple of thousand dollars to paint the place every 5-8 years. But the landlord has all that pretty well figured out and the renter pays those same costs in their rent. But I can walk away today and stuff $200k in my pocket when I sell. How much money does a tenant walk away with after paying for all the taxes and insurance and repairs through his monthly rent to a landlord?

Sure, there are some few exceptions to the rule. For example, if you expect to only live in a place for a couple of years the costs of buying and selling a place can be greater than what one might have paid in rent for 2 years and property appreciation may not make that up. But in general, an owner always does better than a renter over the long haul.

Finally I will add. The owner pays his taxes once a year and the insurance once a year. So he doesn't have to be prepared to give some landlord 2-3 thousand a month. Once a year I have to come up with $800 to pay my county property taxes. Once a year I have to come up with $1,000 to pay my homeowners insurance. I support owning your home if there's any way that you can do that. Renting, while surely a necessity for many, is not the best use of housing funds.

Thanks. Good post.

 

[miamited]

Hey WIP

Yes, there are variables that make many situations different. I owned my houses during the crisis of '09. Yes, I had four rentals and I had a tenant offer to buy one of them, that before the crash would have easily gone for $275k, for $125k. I told him not thanks. My wife got all jittery and I told her that housing prices are directly related to the cost to build and during the mortgage securities crisis they weren't building many new homes because people could buy used ones for pennies on the dollar compared to the real cost of building a new home. I mean, real estate prices fell, but the cost of lumber and labor didn't fall so I knew there would be a re-evaluation of pricing once the crisis was over. I told her that all we had to do was to keep them rented and the market would bounce back.

Sure enough, two years later real estate prices were back to where they were previously and I sold the house that the man had offered e $125k for for $250k. But people who, for whatever reason in their life, really had to sell their homes took a both. Me, I was able to wait it out and I was later able to sell the rest of them for that high $300k number that I posted earlier.

I can't speak to your specific situation and I'm also not familiar with real estate pricing in Michigan. But I can tell you that the Miami-Dade county real estate market has always been a hot market for real estate investors. And there's just no way that someone who bought a home and held it for 18 years would have only made $5,000. so long as the home was in reasonably good shape. I can imagine that in some markets like Detroit a lot of people lost their shirts because that market has been largely depressed since the auto manufacturers closing up shop in the area. But I think it clear that historical evidence shows that real estate appreciation has been pretty steady in most markets and pretty rapidly growing in the hotter markets of larger cities. Detroit is a unique situation. That city still hasn't recovered from the thousands of lost jobs to the economy. I understand that Detroit has lost about 2/3rds of its population from its heyday. Yes, that would be a problem for any area to overcome.

Good job getting Sirius to give you a good discount, but I generally only haggle over pricing for large purchases like cars and houses and stuff I buy at flea markets, yard sales and estate sales. And perhaps there is some haggling over rents and such, but not really much that I'm aware of in the larger markets. Rents are pretty much posted and if it's a fair rental valuation you will get it. I can't recall ever having to back down on any of my rental rates when a home went empty.

I also recall that when I put my last rental on the market for sale, it wasn't in the best of shape because I had already moved to South Carolina and so I wasn't there regularly to make repairs and such which is one of the reasons that I put the home on the market. The first couple of offers were from flippers and yes, they offered rock bottom prices. I got offers of $250k and my realtor said not to be anxious and let those offers pass. I did and 3 weeks later he brought me a contract for $369k.

So, as I say, I can't speak to your specific circumstances, but I can tell you that mine have all been really positive. As I said earlier, all four of those rental properties grossed me about $1.2m and after clearing up the $150k in mortgages, I walked away with a pretty tidy sum and have been living off of it ever since. That was when I was 50. I'm now 70 and pretty financially secure and still holding most of the money I squirreled away after paying cash for my new home in South Carolina.

However, I'm feeling like I may be bragging somewhat and that's not what this thread is about. I just think that the reason that the person in the posted article gave for a retiree not to own his home are pretty ludicrous. The tenant of a rental unit pays a rental amount that covers the taxes, insurance (whether or not you get income protection) and repair expenses and a little bit of profit. And the landlord is going to get that every month for the rest of the tenants rental term. Any tenant, if they can cobble together the down payment, will come out better in overall costs over the years by buying a home rather than renting a home when comparing like for like properties and holding the property for at least 4 years. That has been proven over and over and over time after time for the last 50 years, in general. Yes, there are specific and unique situations where that may not apply, but in general owning a home is the easiest way to build wealth for most people.

But, I had a friend, who was actually in the real estate business on the financing end. He bought a property just before the mortgage crash and got himself into financial straights that did force him to sell that home during the crisis. Unfortunately, his income being derived from real estate sales dropped off the face of the earth and he just couldn't make his payments. Yes, he lost his shirt and even had to get the bank to agree to a short sale. However, today, if he had been able to hold on to the property, he would have made a good sum of money. That home that I had a tenant offer me $125k for is now worth about $600k. The house across the street, which is half the size, just sold 3 months ago for over $500k.

 

[WIP]

Hey WIP

Yes, there are variables that make many situations different. I owned my houses during the crisis of '09. Yes, I had four rentals and I had a tenant offer to buy one of them, that before the crash would have easily gone for $275k, for $125k. I told him not thanks. My wife got all jittery and I told her that housing prices are directly related to the cost to build and during the mortgage securities crisis they weren't building many new homes because people could buy used ones for pennies on the dollar compared to the real cost of building a new home. I mean, real estate prices fell, but the cost of lumber and labor didn't fall so I knew there would be a re-evaluation of pricing once the crisis was over. I told her that all we had to do was to keep them rented and the market would bounce back.

Sure enough, two years later real estate prices were back to where they were previously and I sold the house that the man had offered e $125k for for $250k. But people who, for whatever reason in their life, really had to sell their homes took a both. Me, I was able to wait it out and I was later able to sell the rest of them for that high $300k number that I posted earlier.

I can't speak to your specific situation and I'm also not familiar with real estate pricing in Michigan. But I can tell you that the Miami-Dade county real estate market has always been a hot market for real estate investors. And there's just no way that someone who bought a home and held it for 18 years would have only made $5,000. so long as the home was in reasonably good shape. I can imagine that in some markets like Detroit a lot of people lost their shirts because that market has been largely depressed since the auto manufacturers closing up shop in the area. But I think it clear that historical evidence shows that real estate appreciation has been pretty steady in most markets and pretty rapidly growing in the hotter markets of larger cities. Detroit is a unique situation. That city still hasn't recovered from the thousands of lost jobs to the economy. I understand that Detroit has lost about 2/3rds of its population from its heyday. Yes, that would be a problem for any area to overcome.

Good job getting Sirius to give you a good discount, but I generally only haggle over pricing for large purchases like cars and houses and stuff I buy at flea markets, yard sales and estate sales. And perhaps there is some haggling over rents and such, but not really much that I'm aware of in the larger markets. Rents are pretty much posted and if it's a fair rental valuation you will get it. I can't recall ever having to back down on any of my rental rates when a home went empty.

I also recall that when I put my last rental on the market for sale, it wasn't in the best of shape because I had already moved to South Carolina and so I wasn't there regularly to make repairs and such which is one of the reasons that I put the home on the market. The first couple of offers were from flippers and yes, they offered rock bottom prices. I got offers of $250k and my realtor said not to be anxious and let those offers pass. I did and 3 weeks later he brought me a contract for $369k.

So, as I say, I can't speak to your specific circumstances, but I can tell you that mine have all been really positive. As I said earlier, all four of those rental properties grossed me about $1.2m and after clearing up the $150k in mortgages, I walked away with a pretty tidy sum and have been living off of it ever since. That was when I was 50. I'm now 70 and pretty financially secure and still holding most of the money I squirreled away after paying cash for my new home in South Carolina.

However, I'm feeling like I may be bragging somewhat and that's not what this thread is about. I just think that the reason that the person in the posted article gave for a retiree not to own his home are pretty ludicrous. The tenant of a rental unit pays a rental amount that covers the taxes, insurance (whether or not you get income protection) and repair expenses and a little bit of profit. And the landlord is going to get that every month for the rest of the tenants rental term. Any tenant, if they can cobble together the down payment, will come out better in overall costs over the years by buying a home rather than renting a home when comparing like for like properties and holding the property for at least 4 years. That has been proven over and over and over time after time for the last 50 years, in general. Yes, there are specific and unique situations where that may not apply, but in general owning a home is the easiest way to build wealth for most people.

But, I had a friend, who was actually in the real estate business on the financing end. He bought a property just before the mortgage crash and got himself into financial straights that did force him to sell that home during the crisis. Unfortunately, his income being derived from real estate sales dropped off the face of the earth and he just couldn't make his payments. Yes, he lost his shirt and even had to get the bank to agree to a short sale. However, today, if he had been able to hold on to the property, he would have made a good sum of money. That home that I had a tenant offer me $125k for is now worth about $600k. The house across the street, which is half the size, just sold 3 months ago for over $500k.

You touched on another reason for renting being a potential better option for some. Down-payment. Any good lender is going to demand that the borrower has skin in the game so a down-payment is going to be most likely needed and that can be difficult. I don't know what is usually required these days but back in the early '80s, it was not uncommon for lenders to request up to about 20% down, give or take. That can be a hard pill to swallow.

When I bought my first home in 1982 for $36,900.00, the lender required $8,000.00 down-payment. That was a lot of money in 1982.