renting a house vs buying

shabbatiscoming

Sun, Feb 01 2009, 2:28 pm

ora_43 wrote:

IMO it's good to rent when you don't know exactly where you want to live long-term and/or don't have enough for a down payment.

It's good to buy when you can afford to and when you know where you'll want to be for the next few years.

To me the point of buying a house is to own a house, so while it's unfortunate if the property value drops, the main purpose of buying has still been fulfilled. I think that's the real difference between buying in Israel or in America at this point in time--Israelis, by and large, buy an apartment in order to own and not in order to sell it and move a few years down the line. Almost everyone I know who owns property here lives in the first house/apartment they ever bought, while in the states it's totally the opposite... but that's just my own admittedly limited experience, so who knows.

those are the same reasons why we would love to buy here. we have been in this community for over a year now and we absolutely love it and the people who we have met and we want to put down roots, so it just has to do now if we have enough for any down payment on anything. we have to see.

as for what you wrote about people in america not satying in the same place for long, thats interesting, my parents and most of their friends have lived in the same homes for 30 - 40 years already....who knows....

ora_43

Sun, Feb 01 2009, 2:28 pm

I'm not sure about transactional costs, haven't had to deal with that yet. But I do think it's wise to consider the cost of moving as well. DH and I have been married for just over three years and we've moved twice already, and in each case our old landlords raised the rent dramatically so there's no way we could have stayed. It is very expensive (and stressful) to move. You take time off of work to hang out signs and/or look at apartments, you take hours and hours to pack, you pay almost a months rent to get a van to move all of your stuff (I think in the states maybe more rental places are furnished, but here it's not very common)... All in all it comes out to at least a 10% increase on whatever you're paying in rent, in my experience. There is such a thing as a long-term rental of course, but I've found it's pretty common for young couples who are renting to bounce around a fair amount (often not by choice) and the costs definitely add up.

And the emotional side shouldn't be forgotten either... dealing with a new landlord, worries about finding a place, often moving at a really inconvenient time (I think it would have been worth an extra 1,000 shekels at least to me not to move when we did (three days before Rosh Hashana and two weeks before my due date the first time, two days after my due date (and two weeks after the baby was born) the second). Man did that make me envy people who own their own apartments... you can get pregnant without worrying about where you'll be living in another 9 months...). (OTOH we can now look at jobs pretty much anywhere in the country, which is a big plus).

RachelEve14

Sun, Feb 01 2009, 2:28 pm

Ora I agree with you. We bought our apartment because we wanted a place to live, not because we wanted an investment. We might choose to upgrade to a house at some point (or not), but what the house is worth "on paper" is more of a point of interest now rather than a practical application in my life. Also since we put so much down (70%) I'm pretty sure we couldn't ever be upside down on our mortgage. Even with all the interest, etc, the mortgage is only about 20% of the value of the house now, so even if the house went down in value I'm not so worried. I'm not planning on selling any time soon.

ora_43

Sun, Feb 01 2009, 2:33 pm

shabbatiscoming wrote:

as for what you wrote about people in america not satying in the same place for long, thats interesting, my parents and most of their friends have lived in the same homes for 30 - 40 years already....who knows....

Most of the older couples I know have lived in the same homes for a while now, not 30-40 years but at least 10. But it's still not the first home they bought, the first was usually a small place, and most people moved cities at least once.

It could definitely be that my community was unusually nomadic. I only ever lived in college towns, and my family is very spread out. Or this could be a frum culture thing (ie, maybe frum people are more likely to stay put).

shabbatiscoming

Sun, Feb 01 2009, 2:47 pm

ora_43 wrote:

shabbatiscoming wrote:

who knows, my parents lived in a college town for 2 years whikle my father finished law school and then settled in a house in 1981. they are still there.

mandksima

Sun, Feb 01 2009, 2:49 pm

Hmmm...tough question to answer Shabbatiscoming and even though I own now, I was perfectly happy renting for the first 2 years I was here. We had a fantastic landlord and a well-kept place because our landlord was looking to sell it for the best price she could get. She fixed everything right away. There are pros to buying a place you've rented and lived in first because you know the house's/apt's problems and benefits. We bought a cheap place here so our mortgage is much lower than a rent here would be. It is not like that in all places.

One of the biggest plus to owning not mentioned yet, is the zechut to buy for yourself a part of Eretz Yisroel. You are not deciding between NY and NJ but in E"Y, so the mitzvah is huge if you can afford it. You can buy small and live in it a few years, then hopefully sell it or rent it out for a profit. If the market isn't great, you will have to live in it longer but as long as it is a little bigger than the average apartment size, you should be comfortable.

I love that my house is mine, I don't have to keep it in any perfect state for anyone else but ourselves. We are slowly putting up shelves where we want and need them and are thinking about painting rooms different colors. Of course, I'll be the one doing all of that, so the expense is minimal.

Did you own a property in the States before you came to E"Y? I am like Tamiri, I owned twice there and it came with a lot of headaches, it is not always fun. After a while, even "your mold" is still yucky, need-to-be-taken-care-of-now mold. I would not be so keen on owning now in the States if I were there. But, here in E"Y, I'd rather own something, however small and imperfect, than feel I am a guest in a house, a guest in the land that I want to feel grounded in. Let's just hope that the land my house sits on is never given away...

Just remember that it might take young couples a while to save up before you have enough to buy. Don't bite off more than you can handle and make sure you have savings for quite a few months if not longer, in case the earner/s in the family are not able to work. It is not as simple as just buying vs. renting. It costs a lot to buy and that can't be money that is needed to live on.

shabbatiscoming

Sun, Feb 01 2009, 3:43 pm

mandksima wrote:

no, I did not own property in america. I was single and living at home in america:) and my husband was living with room mates before he came to israel, so neither one of us has ever owned property before.

and as for what you wrote, that it is not just buying an actual house but all of the costs that go with it, I am well aware of that.

you also mentioned about buying a house that you are renting now. that was not what I was talking about. I was talking about either buying a house that was for sale OR renting a house that was for rent.

mandksima

Sun, Feb 01 2009, 4:28 pm

shabbatiscoming wrote:

Sorry, I did not answer your questions properly. I thought this was a first-time buyer question but was just checking.

Isn't there an option of renting a house that could turn into something to buy later? That way you can test out the house itself, see your neighbors in action and take a little time to see how the market is turning. If that is not an option, it is hard because the houses in your area are a bit overinflated and I wonder how the economic crisis will affect them. Even buying something small is more expensive than necessary but then again, location is everything and if you like the people there, are happy with the schools and work nearby enough, then it might be worth it.

One problem with renting a house that plans to always be rented is that the landlord usually isn't as quick to fix things (I think this problem is worse in Israel) and no money is ever put into it in order for it to be nicer and more updated. Anything temporary though, would hopefully be doable.

Marion

Mon, Feb 02 2009, 1:50 am

U.S. posters please note:

YOU CANNOT BUY A HOUSE IN ISRAEL WITH ONLY 5% DOWN! Most Israeli banks will require at LEAST 40-50%. It is incredibly difficult for a bank to reposess a home, so they are incredibly nit-picky about to whom they give a mortgage. Also, most Israelis (and probably most former non-Israelis who are permanently living in Israel) are not interested in purchasing homes so far above their budgets that they can't afterwards put food on the table.

Jupik, I don't know where you are located, but your links do not particularly apply to Shabbatiscoming's circumstances (AFAIK).

shabbatiscoming

Mon, Feb 02 2009, 1:53 am

Marion wrote:

well, thank you marion (I guess;>) b/c I have not looked at those links yet.

Raisin

Mon, Feb 02 2009, 6:11 am

Marion wrote:

so instead isrealis either have to save for 10-15 years to be able to afford the downpayment, or their parents pay the downpayment and can't afford to put food on their table.

Marion

Mon, Feb 02 2009, 8:38 am

Raisin wrote:

Marion wrote:

so instead isrealis either have to save for 10-15 years to be able to afford the downpayment, or their parents pay the downpayment and can't afford to put food on their table.

Why is it either or? Why can't it be like Imaonwheels does (and I'm sure others) that put away the kitzvat yeladim (child allowance) every month so that there's something there when they need it?

Raisin

Mon, Feb 02 2009, 8:47 am

Marion wrote:

Raisin wrote:

Marion wrote:

so instead isrealis either have to save for 10-15 years to be able to afford the downpayment, or their parents pay the downpayment and can't afford to put food on their table.

Why is it either or? Why can't it be like Imaonwheels does (and I'm sure others) that put away the kitzvat yeladim (child allowance) every month so that there's something there when they need it?

fine, so parents can't afford food when their kids are young becasue they are saving a percentage of their income to buy houses for their kids when they grow.

if you can afford to save, great. We save our child allowance too. But not everyone can afford it, sadly.

my parents both had good jobs (both phds) but kah quite a few children. They did save money for weddings, seminary and yeshiva, but did not manage to save $50-100,000 per child for downpayments.

It just seems to me that a lot of people are struggling, not becasue they can't look after their own family, but because they are supporting thier grown up and working kids too.

DefyGravity

Mon, Feb 02 2009, 12:04 pm

Barbara wrote:

Marion wrote:

I don't like renting. To me it's like throwing money away every month with nothing to show for it at the end. I think that's the only thing Imaonwheels and I agree on.

With house prices declining, what do you have to show for it after purchasing?

Who cares if the prices are declining? Most people that buy, buy with the intent that they are going to live in the house for a long time. With the interests rates so low right now, we're in the process of refinancing, and hopefully now we'll own our house in 15 years.

So we're still paying a mortgage that is less than what many people in our area pay for rent, and eventually, we won't have to pay a mortgage. To me, it seems like a win-win situation. Instead of throwing away money on rent, we are putting money towards the ownership of a home and in 15 years (IM"H) we will only need to pay utilities (which we would have to pay if we rented) and taxes, which are very low where we live.

Marion

Mon, Feb 02 2009, 12:34 pm

DefyGravity wrote:

Barbara wrote:

Marion wrote:

I don't like renting. To me it's like throwing money away every month with nothing to show for it at the end. I think that's the only thing Imaonwheels and I agree on.

With house prices declining, what do you have to show for it after purchasing?

I 2nd that. We're also trying to understand how refinancing works here so we can pay off much earlier. I can't think, off the top of my head, of any expenses that we incur for the house (plumber? electrician?) that we wouldn't incur if we were renting.