Apple fanboy
macrumors Ivy Bridge
Those affected by flooding have the same issues here in the UK. Lots of places very near where I live, but fortunately our village has been spared.
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Mitthrawnuruodo
Moderator emeritus
One of the (many) advantages of living in Norway: We have quite strong Consumer Laws, so you have to f*** up royally before you get cut off from things like insurance.
There was even a case for the Norwegian Supreme Court this Summer where an insurance company tried to refuse to insure Hells Angels' club house. The insurance company lost.
bousozoku
Moderator emeritus
When I moved to the state of Florida in 1997, insurance companies were trying to leave. When I bought a new house the next year, I used the same company as my car insurance. Eight years later, they formed a separate company just for the state of Florida.
I can't imagine with so much ice and then, the flooding that insurance companies are having to respond in the UK. Government oversight shouldn't be necessary, but something has to be done.
Almost no one has earthquake insurance in California. The last big earthquake put an end to that in 1989. I can't imagine what would happen if Silicon Valley was completely demolished. The town where I live is 46 feet about sea level. It's surprising that it doesn't really have a flooding problem but we're about 100 km from the ocean.
Apple fanboy
macrumors Ivy Bridge
Flooding around here (Worcestershire) is from the rivers rather than the sea. The river seven floods every year now putting much of the town and area under water.
The enclosed area is a cricket ground rather than a lake!
Chuckeee
macrumors 68040
Mostly - rent free but not necessarily debt free. You still have insurance and property taxes, in addition to maintenance costs. Still better than renting if you can make it work
Apple fanboy
macrumors Ivy Bridge
But you pay those whatever you do. I’ve never understood people who rent (when they could afford to buy).
We lived mortgage free for years before we moved to a more expensive house. But we are here for the duration now. Moving is stressful.
I’ve always looked at renting as paying someone else’s mortgage. We bought after renting together for the first couple of years of marriage. We made it saving for a deposit a priority and made do with out everything else. It worked and got me where we are today. Nearly debt free.
bousozoku
Moderator emeritus
Bloody Hell! A couple of years ago in December, all the city's parks became ponds and lakes but not that bad.
I hope that the instant coffee is on the top shelf, along with the tea.
From a personal finance perspective, renting can make more sense than owning in many cases. A major factor is opportunity cost. If somebody has a better use for the funds needed for a down payment (for example, investing in a business with a higher expected return than buying real estate or raising the funds will require liquidating a tax deferred savings account), renting might be a better decision than owning. Other key factors include interest rates, career factors, current and anticipated local real estate market conditions, level of savings, and credit rating.
On the other hand, residential real estate is one of the few assets where individual buyers have access to large loans and in many cases, governmental guarantees to lenders. That’s why the folk wisdom to “buy not rent” is so pervasive in a lot of cultures.
Buying and owning a house has a huge emotional component, of course, so this kind of decision making can be very complex unfortunately.
bousozoku
Moderator emeritus
I paid cash for the last house I had. The utilities, insurance, and property taxes were reasonable, but I wanted to return to California. I'm renting a room for almost as much as the two bedroom apartment I was renting here in 2014.
I hope that everything works well for you. Just remember to not doze off while signing all of the forms.
Apple fanboy
macrumors Ivy Bridge
lol. Our instant coffee welded itself into a big lump in the jar years ago. Now I acquire the odd sachet from hotel rooms should we ever have a visitor here (tradesmen). As for tea I’ve probably got 3 months worth at least!
Apple fanboy
macrumors Ivy Bridge
Everyone’s circumstances are different. But personally being quite risk adverse owning your own home always was important to me. Most UK people buy or would like too.
Mousse
macrumors 601
Buying is the better choice if you're willing to put in the sweat or have the finance to maintain your property. Buy a house is how the middle class invest. Just don't let the realtor or banker talk you into buying at your limit. You never know when an emergency repair will financially ruin you and you start missing mortgage payment.😟☹️
Yes. Remember, what you pay is rent is the maximum you will pay a month. A mortgage is the minimum you pay a month. As a home owner and a landlord, many times I've had to shell out thousands in emergency repairs.
There are regular $$$ spent on maintenance every few months--at least yearly. And insurance. And the tax man. Gawd, 2/3 of the rent I get from tenants goes into maintenance, insurance and taxes. Oh well, a few thousands a year in fun money for the Missus is worth it. Besides, when I retire, I could likely sell the extra houses for 10x my initial purchase price.😎
Apple fanboy
macrumors Ivy Bridge
Don’t forget to factor in the increase in property value though into your calculations. I made an 80% increase on my first house (lived there for 2-3 years). That was a lot more than we spent on maintenance I can assure you.
Made a good chunk on our second home too.
I'll just add that a basic tenet in investing is past performance is no guarantee of future results. On top of that, residential real estate is a notoriously fickle asset. Each transaction is individually negotiated, the process is highly frictional, and emotions often drive both buyer and seller behavior.
So when planning, I think it is important to also consider adverse scenarios. And yes, housing can be "how the middle class invest", as I alluded to earlier, but using borrowed money magnifies the upside and the downside of owning an asset. In the USA at least, I think a better first investment for middle class people whose employers offer retirement savings matching is to take advantage of the match to the greatest possible extent. That is a rare case of a true "free lunch".
poorcody
macrumors 68000
New York Times has a good calculator comparing when renting or buying is more economical. Sometimes renting actually saves you more money in the long run.
www.nytimes.com
Is It Better to Rent or Buy? A Financial Calculator.
Our calculator takes the most important costs associated with buying or renting and compares the two options.
Apple fanboy
macrumors Ivy Bridge
In the UK at least property has been consistently a good investment during my lifetime. But for me it’s not about the investment. It’s about owning your own home, being free to choose what you do to that home and having the security.
Once the mortgage is paid off, if I were to lose my job or when I retire I still have somewhere to live. If I were to die (and this is more important to me personally), Mrs AFB has somewhere to live as the mortgage gets paid off in the event of my death.
Rents have been going up massively in the UK. I shudder to think what it would cost to rent where I live. A lot more than my mortgage payment I can tell you. If I was renting all the other bills would be the same. The only additional costs are building insurance (probably a few £100 a year) and maintenance which is not very much at all.
rm5
macrumors 601
Had a great gig tonight! Was nice to be welcomed home by all my people back here. And to play some great music!
There’s a huge problem coming down the tracks in the UK. Most retirees I know currently are owner occupiers with paid off mortgages, many of whom are on reasonable pensions. If you own your own property you can even probably just about survive on just the state pension plus a bit of additional low income benefits.
But there’s now large numbers of people my age and younger who will approach retirement with pretty much only the state pension but also renting. The state pension will probably barely pay the rent. There seems to be very little discussion or planning for the issues this will present.
It’s going to be a financial disaster for everyone.
But there’s now large numbers of people my age and younger who will approach retirement with pretty much only the state pension but also renting. The state pension will probably barely pay the rent. There seems to be very little discussion or planning for the issues this will present.
It’s going to be a financial disaster for everyone.
Expos of 1969
Suspended
What personal planning have you and others done? The state pension should not be your only lifeboat. Have you been putting something aside every payday since you started working? I am not saying you are one of the following type but look how many must have the latest trainers, phones, cars, and on and on. I have little sympathy for those who must satisfy every desire today yet give little or no thought to how they will survive in the future.
Apple fanboy
macrumors Ivy Bridge
That’s a little blunt but I agree with you mostly. Doesn’t matter what you earn. Always aim to spend less and save some. Obviously easier at some points in your life than others. But living within your means and not getting what you want (rather than need) is not a popular view with a lot of people I know.
Of course for many just getting what they need is more than a challenge these days.
If only they all stopped eating so much smashed avocado on toast eh? 😉 I joke, and I fully agree that people should try and take responsibility for their own futures etc, but...
... I'm afraid when it come to pension provision it really does. Average take home in the UK is somewhere around £2200 a month, average rent is somewhere around £1200 a month, council tax for the property, say £280 a month, gas and electricity say £100 etc etc. Most people I know who are under 40 are struggling to save money for a deposit for a property leave alone prioritising a private pension or investments. Most of the flippant spending* I see (cruises, brand new cars, month long trips to Oz etc) is being done by older people who are inheriting from the previous property booms.
We all have different perspectives and inhabit different national economies so YMMV...
* Nothing wrong with flippant spending - it keeps the velocity of money up and we probably need more of it these days
Mousse
macrumors 601
My houses have tripled in value from when I purchased them. A sound investment indeed, especially since they're all paid off now.🥳
No HOA in the UK? Gawd, I'm so jealous. I can do what ever I want on the inside, but have the HOA Karens breathing down my back about every little thing I do outside.🥺
👏👏👏👍
Here the rent has increased significantly as well; it has doubled in the past 10 years.😲 I have a tenant who has been renting from me for over a decade. I haven't raised the rent on them in 5 years since they take good care of my house. Basically, I pass on the savings in maintenance to them. Win-win.
Apple fanboy
macrumors Ivy Bridge
My dad had a few rentals. He has sold them all off now. He had a similar good tenant. When he told them he was selling and she would need to leave she complained to him she couldn’t find anywhere as cheap. Like that was somehow his problem?
And yes no HOA in the UK.
Apple fanboy
macrumors Ivy Bridge
Nope you are incorrect. What I said was it doesn’t matter what you earn. You should save some. I always have found away. If you spend what you earn (or more) then you are your own worst enemy.
Now if you don’t have the latest tech. Don’t buy coffees out or have take away, you should be able to save something. Enough for a deposit? Maybe not.
But every little helps.
rm5
macrumors 601
Happy Thanksgiving, everyone, to those who celebrate!