Rent increases vs owning personal residence

[Jared Michael Rollins]

Hello all,

I am trying to get my wife to understand the benefits of renting over owning. She works in retail management. She was also a business major in college so I think she sees things in a more “traditional” manner.

She is against your philosophy of rent not own your home and your home is not an asset. She believes when you rent, you are subject to landlord rent increases over time which in turn will cost you more in the long run.

She actually did numbers on a place we were looking to purchase and showed me how we would lose more money if we continue to rent. I told her instead of purchasing our own home we should purchase an investment property. This drives her NUTS!! Lol

I told her about investors I read about that say they only made $25 positive cash flow on their first investment property she finds pointless. She doesn’t understand why someone would take out a loan to make “just” 25 or even 100 bucks positive cash flow. She states that will take years to get your down payment back.

Thanks

Jared

[Jim K.]

@Jared Michael Rollins

I live in western Pennsylvania, currently in a $160K B-class condo. I am in the process of downsizing into a C/D-class duplex I bought for $45K and renting out its second apartment. The condo is not the most valuable property I own, the duplex is pretty far down the list.

I'm mentioning these numbers because they're important to my perspective on this topic -- housing is often extremely cheap in my area, and the math really never works out right for renting.

But even if I were in your shoes, I would live in the cheapest possible shack I could find to own if I were you, anything that would make the homeownership math work, in preference to any sort of nicer property that I would rent. I am a DIY landlord in a classic mom and pop operation. A few years ago, I really couldn't imagine what my life is like today, where the bulk of my time is spent as a handyman working on my renovations and keeping my rentals running smoothly. Although I can't argue with the profitability of the life, I often find it profoundly destabilizing.

When I go anywhere, it's with a little logbook in the car to obsessively record my mileage and claim it for tax purposes. I haven't made a simple purchase at Lowes or Home Depot for years without putting it on my tracking account. Having to record a very substantial portion of my income as rent is still odd for me. Wholesalers call me or contact me to consider selling my properties to them ALL THE TIME, in a variety of ways. In addition to the handwritten letters and postcards, there are calls to my landline, and yesterday this one dude even stuck a sticky note on my duplex's door. Sell me your house! SELL IT NOW!!!

I am growing further and further away from my old friends. I can't stand listening to them complain about their jobs and their bosses and the obvious outcomes of the incredibly stupid financial decisions they make (even though for many years, I made the same idiotic choices). My wife gets it, a group of the other local landlords I've met along the way get it, but overall, I very much feel like a stranger in a strange land. My wife and I go to parties and gatherings for social reasons and find ourselves consistently lying to fit in.

I could not have predicted how weird this life gets. The fact that I can just go to my house and lock the door and be OK under my own roof is invaluable to me. I could not imagine dealing with a landlord's arrogant baloney at this point. Inspections and the stupid face of a property manager, and nickel-and-diming, and periodic rent raises, and pompous certified letters, and broken promises to fix stuff (I've made and broken many of these promises myself now), and weak attempts to pass wear-and-tear expenses to me...all of it would just be too tedious to put up with. My house is my peaceful place, and it is MINE. The government can take it away with eminent domain, sure, the county government can force it to be sold at auction if I don't pay my taxes. But do I have to worry that the landlord is going to sell it to someone else from underneath me? Maybe forget to pay the sewage bill and the borough will start dunning me for the money? Have his buddy over for an unannounced visit just to show him the property, "Aw, come on, I know I'm supposed to give you notice, but help us out, sport, let us in..."

I don't need or want the drama in additional to all the other property-related problem solving I have to do

I would ask you to think about this before you commit to renting long-term while buying investment properties.