calling stevejhx

patient09, I won't answer for stevejhx, but in my experience, he places things in strict economic terms - that is, he sees renting and buying an apartment as substitutes. I'd guess most people (though not all) would rather own than rent, which is why I've always held that there should be somewhat of a premium for owning. The question that naturally follows is, "how much?" Certainly not 100% or whatever the extremes were/are, and I'd guess it varies from person to person, which makes steve's equations a bit tough to swallow for some of us. I'd also agree with you on the general quality of rentals, and think you're onto something with the renovations/long-term lease idea, but that's a tough thing to work out. I'd imagine most smaller landlords can't afford $250k in renovations without a HELOC or some kind of financing.

"Why not work the deal instead to compensate for the weaknesses of the rental."

Verily, why not?

Because I don't accept any of your premises. I live in a very nice rental building; the only thing I'd change is to make it bigger. There are all sorts of very nice rental buildings, very comparable to some of the co-ops and condos I've seen and owned. It's also possible to rent someone else's high-end luxury condo if you like.

Can you change it? If you ask the landlord and he approves. But you need the same approval - sans paint - from a co-op board or condo board.

Buying has some advantages; renting has some advantages. The problem is, at what price do you do which one? Why would any sane person lock in a price that will undoubtedly fall? Why would any sane person spend twice as much to own a place as he does to rent a virtually identical place?

patient09, why do you assume that marriage provides stability for children?

and P09, that assumes that after buying you can still afford to renovate. I am just finishing up spending a modest but meaningful amount to renovate my rental, did the calculations, assuming I stay here for another three years I have saved a bundle by spending this money rather than buying, or even moving to another rental. And now I really like my kitchen, it's not my dream kitchen, but it's quite nice.

steve, you were doing ok until your last question. We have already clearly shown that your assertion that it costs twice as much to own as to rent is completely wrong.

Also, condo owners generally have a lot of freedom to renovate beyond painting. Coops are more restrictive.

I tend to agree with steve about the rent-buy economics right now, but I think patient09 is onto something too. We want more space (we live in a 1 BR in Brooklyn Heights and will move up to a 2 BR sometime soon). We'll probably rent because we can get a nice place for a comparable rent vs. own monthly payment without dropping the $90K-$100K downpayment it would take for us to buy right now.

That said, we're being picky about what kind of place we'll rent, and we'd like some kind of longterm lease (3 years? More?). Not owning, in the abstract, isn't a big problem for us -- we'll find a place that suits our needs and won't go bonkers thinking about all the stuff we'd like to change. If we DO go bonkers, we'll move -- with our without kids -- and potentially buy at that point because our downpayment stash will be intact (and we don't see prices shooting up anytime soon).

Yes, it's a pain to move, but it seems like it's more of a pain to tie up a ton of money in a depreciating asset then dump a bunch more into renovations. "Stability" (whatever that is) can't be worth THAT much.

In many ways, finding a great rental with a long-ish term lease would be the ideal situation right now, at least for us.

Oh, and just having re-read your original post Patient, are you suggesting that you would somehow negotiate with a landlord to drop 250K on renovations that YOU, the renter, would dictate? That seems like a very long shot ...

I've heard of longterm renters who have a great deal on their rent so they drop their own money into their rental, but I've never heard of a landlord being quite as accommodating as you're describing.

"We have already clearly shown that your assertion that it costs twice as much to own as to rent is completely wrong."

Who is "we"?

And - forsooth, LICC: "It's also possible to rent someone else's high-end luxury condo if you like."

You still haven't shown a single apartment that you could buy in Manhattan and rent it out to an unrelated third party and make money on it.

On the whole, under these economics, it is - as REPEATEDLY shown in many threads when comparing the same apartment for rent and for sale, that it is twice as costly to buy as to own.

The last time you tried to claim this absurd theory that it is twice as expensive to own as to rent, many posters showed time and again that you are totally mistaken. I took random examples from the home page on streeteasy and ran the numbers and you were wrong every time.

I've never understood this assertion that purchased properties are going to be nicer than rentals. I've been in plenty of rentals that have been better, building and unit, than a lot of co-ops.

I love our building, great views, etc etc..owner and I are both professionals, we get it. He propped to me, hey, why not be a long time renter, I will upgrade apt to your liking. That's how the story started. Nothing concrete, just considering the idea.

I have been reading the buy v. rent arguments here for months and it is clear to me that Steve simply does not get it (and that is ok). For some, even in a bad market, it makes sense to buy. I was a renter but have been converted to ownership. Here is why.

Assuming for the sake of this thread that Renter X is not a rent regulated tenant and has a one or two year lease. Renter X therefore is not entitled to a renewal lease. Can Renter X put in a new kitchen, or bathroom or reconfigure the walls or combine his apartment with the one next door? Perhaps he could do any of these but why would he when he might not be offered a renewal when his lease expires. Apartment ownership does not give one the same freedom to make it yours that home ownership does, but it gets close. More often than not, a renter is stuck with white eggshell walls and building standard appliances. I like Benjamin Moore and I like my Bosch Appliances. I like the fact that if I want to re-do my kitchen I don't have to beg.

A renter is, by nature, a transient. Any roots that a renter lays down can be (except if there is rent regulation at play) ripped up and tossed aside by the landlord. An apartment owner has the option (assuming financial stability) of weathering the storm and staying put in the home that he has made for himself even through bad times.

It is NOT all dollars and cents to everyone. Steve, if it is to you, that's your business.

I bought the home of my dreams in a bad market but that is meaningless to me. I can easily afford the wonderful home I have and I expect that when I move out it will be feet first.

PS. Steve, don't forget the tax benefit.

Not sure why the economics of this is hard --

Steve you get it wrong when saying you should only buy if the "rent" to yourself of the place is more expensive then renting in the free market ---

For Rent you need to fill out these assumptions:
Monthly Rent
Inflation Rate/Year (rent will increase over time)
Alternative Interest Rate (How much return you will get on your downpayment)
Holding Period

For Buying you need to fill out the following assumptions:
Purchase Price
Mortgage Interest Rate
Down Payment Rate
Appreciation Rate
Closing Costs
Selling Costs
Marginal Tax Rate
Holding PD
Mortgage Term
Inflation Rate
Property Taxes
Maintencance
Fire/Hazard Insurance

Once all those assumptions are filled out -- pretty easy to figure out Rent or Buy

we will obviously disagree over housing appreciation (or depreciation) and alternative investment rate -- these assumptions will drive the analaysis

"Get the owner to put $250k of renovations in your rental in return for a long term lease."

Are you f*cking nuts?

"A renter is, by nature, a transient. Any roots that a renter lays down can be (except if there is rent regulation at play) ripped up and tossed aside by the landlord. An apartment owner has the option (assuming financial stability) of weathering the storm and staying put in the home that he has made for himself even through bad times."

Conversely, an owner can become stuck with his/her apartment, not allowing him/her to weather economic storms by downsizing, or in fact to move where he/she would prefer to go. A renter is free to move when his or her lease is up, and very likely even before that.

"Conversely, an owner can become stuck with his/her apartment, not allowing him/her to weather economic storms by downsizing, or in fact to move where he/she would prefer to go."

Owners can move anytime they want to. ALl they have to do is put their apt. up for rent.

"Owners can move anytime they want to. ALl they have to do is put their apt. up for rent."

ALI, formerly known as Cassius Clay.

Negative cashflow extravaganza!!!

You can figure it out any way you want, and if it leads you to paying $1,000 psf in Long Island City, more power to you.

Yes alpine, you can put it up for rent. I will no longer underestimate your ability to find new ways to lose money.

Malthus, Alpine and alanhart, there are those of us who are where we would prefer to be and are just fine weathering the storm. I thought I had made it clear that moving is not an advantage for me, it is a hardship. The value of the real estate is only significant at 2 times, when you are buying and when you are selling. I have already bought, so that is not an issue. I expect that my executor will deal with the sale issues.

I guess that was steve's way to try to change the subject . . .

leasinglawyer: good for you. I don't take umbrage with your choice or your situation, just your blanket statement about the immobility of owners being all upside. More than a few people are experiencing the downside I pointed out and I think its a pretty glaring hole in any argument for owning. I'm glad you are not one of those people.

"Yes alpine, you can put it up for rent. I will no longer underestimate your ability to find new ways to lose money."

I realize rents have come down a bit, but aren't you essentially assuming that you can't rent it for more than your carrying costs? That's an incorrect assumption for a lot of owners. Moving is only a hardship for owners who can't cover their costs from renting out.

on average nycers move every 3 or 4 yrs (? I think I made that up on another thread at some point) and personally, i know of only one person who has not moved in 20 yrs. The parents of a HS friend who continues to live in a rent controlled apt.

Steve, nice try but wrong and wrong

Not trying to change the subject, LICC. You live in Long Island City, I live in Chelsea. If you think you've made a better decision than I have based on your view of economics, more power to you. I'm just tired of:

a) Fighting this fight, and most especially
b) Your saying that you "proved" something that you just made up off the top of your head.

You never prove anything; you just claim you're right and your victory. You haven't provided a single link to anything except a newspaper article claiming that co-op prices tripled in 3 years without analyzing what caused it (change in mix). Why bother arguing anymore? You think you're right, I wish you luck.

If you want to side with the other Real Estate Lone Wolf JuiceMan, FEEL FREE! I know where it's landed you and where it's landed me.

malraux?

Thanks Malthus, perhaps my paranthetical was not enought. Of course, if there are circumstances that might require a move, an owenr in a bad market will have problems. I am merely arguing against the blanket statments that anyone who buys now, for whatever reason, is insane and that renting is always better than buying. Simply not true. w67thstreet, I was in my last (rental) apartment for 16 years. Most people who I know (we are native new yorkers) stay put. I am talking about owners and renters. Not sure where your average comes from.

spunky!

I take actual examples, run through the numbers, and show that you are wrong. Actual examples. In NYC. I cite to Miller Samuel data and NY Times articles with sourced data. You misapply research papers that are not on point.

I bought my first home in 1998. I sold my last home in early 2008 before prices on comparable homes dropped 15%, and I bought in LIC at better than 20% below peak prices. If you consider the growth in capital of my first homes that I have subsequently rolled into new ones, my cost basis to value is pretty good right now
Yes, I clearly am better off economically than if I had been renting in Chelsea for the last 10 years.

clearly I made it up.... but why are there so many moving companies in NYC then? And why does Ikea do so well? and here is the one that I just can't get enough (Depeche) of .... every time I piss in Central Park... I accidentally pee on a RE broker.... so pls tell me how do you make a living as a leasing lawyer if nobody ever moves?

Well, LICC, you're tales are getting taller by the moment!

Show me this: "run through the numbers."

come on stevehjx... let's get outta here... this thread blows (not p09)...

quick question patient09... am i to conclude your partner is now considering maybe trying to sidestep the slow slog to a more sane price to rent ratio? and is willing to put in $250K? Hell I'd say give me the $250K right now and I'd travel the world.... hurry bf the dollar drops more, but the world is on sale... 4 seasons maui $200 per nite... just say w67thstreet sent you....

LICC congrats... like everyone that makes money easily... it is easily lost... must've felt great that ride up (1998 to 2008).... for yin there is a yang.... welcome to your yin on the LIC purchase....

w67: other than my own, I have not negotaited any residential real estate transations since well before the turn of the century and never did residential leasing (do you really need a lawyer to sign a Blumberg Form?).

You might try peeing in the toilet instead of in my park. Ikea does so well because their junk falls apart so easily. I have no idea why there are so many moving companies.

I will say that there is a large population of New Yorkers who enjoy their apartments and stay put. We do not all suffer wanderlust. We do not all buy to flip. Some of us like stability in our lives. Now, enough of this. I have some real work to get back to. There are 18 billable hours in every day.

There are so many I miss! Rufus, spunky, malraux, tech_guy, pertzitz, JuiceMan.

Some post occasionally, some not at all. All had their theories, none of which seemed to have worked.

ikea = agreed, is peeing in the concession's bathroom next to Sheep's meadow count as offensive to you? (and yes I know he was a RE broker cause he was doing the cell phone thing... yeah I'm so busy can't wait to finish but gotta pick up mid-stream and talk about some unit BS), aha! you admit the moving companies is evidence NYCers move on average every 3 or 4 years ( just as pulled from my arse).

My attorney charges $600 hr for leases... but I get the 13 yr client discount... he charges new $750. I probably sent 2 of his kids thru private schools till 4 th grade.... don't forget the terrorism rider... happy billing

what r u? like 5 and 0....

As long as it is in a toilet, it can be in my park. OFAC, I hate OFAC. I am not a terrorist and if I am I agree to indemnify you. So absurd. Have a great day.

"There are 18 billable hours in every day." ... yeah, that takes up maybe an hour or two of your time each day, which leaves plenty of time for StreetEasy.

alanhart... is it me, or does "Have a great day." only used for one's enemies? I always use it as a nice "f u" ... -shrug-

OBTW, one time I was joking to favorite attorney that the next go around I'd have him wear like the critter cam on this head.... so I could log on and see if his billable hours = the actual work.... I'd take a steady head bob as a sign he was thinking about it :)

i know an attorney who tried to bill more than 24 hours one day. he crossed the dateline.

but he was bi-polar... 2 personalities existing in the same time/space continuum.......

Maybe http://www.onlineconversion.com/ has a function to convert billable hours to hours?

"There are so many I miss! Rufus, spunky, malraux, tech_guy, pertzitz, JuiceMan"

Why do you miss me steve? Is it because I haven't posted today? Poor stevie.

"Show me this: "run through the numbers.""

Love this about steve. Every couple weeks he gets bold and says "show me the numbers" even though we have shown them over and over and over again. We just did this a couple weeks ago and steve looked silly (again). Go find the thread steve, no need to repeat. You could also just read the "how to be wrong" thread and repeat. Same old story, steve struggling with short term memory….

Here is the thread with plenty of numbers that steve could not deny nor defend. He also finally admitted that rent vs. buy calculations has to factor in the tax benefit and subtract principal. No need to have the conversation again, just read this 500 post thread...

http://www.streeteasy.com/nyc/talk/discussion/10692-cheaper-to-own-than-to-rent?page=5

Thank you for reposting that, JuiceMan, as it contains your link:

http://www.sef.hku.hk/~tsechung/e0503/Owner-occupied%20housing.pdf

where it says that it should cost the same to own as it does to rent.

"He also finally admitted that rent vs. buy calculations has to factor in the tax benefit"

I've always said it does - as long as you add the opportunity cost of investing elsewhere, and subtract it from rent.

"and subtract principal."

I've NEVER said that under the argument you're referring to. I said that if you buy a property to rent to an unrelated third party, when doing THAT calculation you subtract the principal. You don't subtract it if you're doing an imputed rent calculation - ever.

And about that link:

http://www.streeteasy.com/nyc/talk/discussion/10692-cheaper-to-own-than-to-rent?page=5

Did you find that ONE elusive apartment that you could rent out to an unrelated third party and at least break even?

I think not.

That's a novice mistake. If the calculation were different based on who lived there, then an identical place could have two different values. I go through this when I do interviews for our hedge fund at Wharton, Harvard, etc. and about 20% get it right intuitively, and probably 80% total when prompted. I offer to hire the 20% who know it (plus many other questions and interviews)

Confirmed that stevejhx is NOT EddieWilson!

You are correct. Je ne suis pas EddieWilson.