Why Would Someone Rent and live w/ Roommate in Houston? (Missouri City: short sale, foreclosure) - Texas (TX) - City-Data Forum

Visitor2007 · 05-03-2008, 11:06 AM

Why would someone pay $500, $600 or even $700 per month on rent and live with a roommate in Houston when he can buy a house and rent the room out.

Here is my calculation. Let's say someone buys a 3 bed/2 bath house for $120K in Alief, Missouri City, Sugarland, or Pearland and his monthly payment will be:

Mortgage: $660
Prop. Tax: $270
Insurance: $120
Total: $1050

Let's say this owner of the house live in one room and rent out one room (he could rent out two rooms, but let's be conservative and assume he rents out only one), he can get $550 for it and the help of utilities. Which means that he can be the owner of the house and only pay $500 per month while doing so. If he can rent out both rooms, he can own the house and live there virtually free.

Ofcourse there are maintenance involved, but if the house is in decent shape, those shouldn't be that much. What am I missing here?

desertsun41 · 05-03-2008, 11:12 AM

The renter has bad credit and can not get a mortgage.

The renter can not come up with a down payment.

The renter is looking to move out of area in short time.

The renter dont want the responsibility that goes with home ownership.

The renter does not have the smarts to understand the benifits of home ownership.

The renter just might be in college and buying is not an option.

The renter, in many parts of the country are just waiting for home prices to drop even lower.

Does that help?

jfre81 · 05-03-2008, 11:23 AM

Are you kidding? You're talking like everyone out there has the ability to go out and buy a house.

People who fell into desertsun's categories got bad mortgages they wouldn't ever be able to pay, lost everything, and helped cause our little economic quagmire we're in. They should've stuck to renting.

And of course the drawback to what you describe is you need to find roommates who you can trust, won't trash the place and won't drive you crazy. But in your world, everything sounds easy...

You might as well ask why you see people driving beaters when there are Mercedes dealerships everywhere.

Visitor2007 · 05-03-2008, 11:28 AM

Quote:

Originally Posted by jfre81

And of course the drawback to what you describe is you need to find roommates who you can trust, won't trash the place and won't drive you crazy. But in your world, everything sounds easy...

How hard is it really to find college students as your roommate? Most of them are/should not be criminals destroying your properties.

Quote:

You might as well ask why you see people driving beaters when there are Mercedes dealerships everywhere.

Com'on now. It cost a LOT more to get a Mercedes than a beater, but in my scenario above, it cost about the same or less to own.

Visitor2007 · 05-03-2008, 11:31 AM

Quote:

Originally Posted by desertsun41

The renter can not come up with a down payment.

What's the usual percentage for downpayment for someone with good credit?

Quote:

The renter does not have the smarts to understand the benifits of home ownership.

Does it really take a rocket scientist to figure out my simple math above?

Quote:

Does that help?

Somewhat. Thanks.

hindsight2020 · 05-03-2008, 11:50 AM

Quote:

Originally Posted by desertsun41

The renter has bad credit and can not get a mortgage.

The renter can not come up with a down payment.

The renter is looking to move out of area in short time.

The renter dont want the responsibility that goes with home ownership.

The renter does not have the smarts to understand the benifits of home ownership.

The renter just might be in college and buying is not an option.

The renter, in many parts of the country are just waiting for home prices to drop even lower.

Does that help?

Wow, I actually consider my renting situation more favorable than dumping thousands of dollars of liquid (down payment) for an assest that's closer to a general aviation airplane (holds value but flat appreciation to slight depreciation) nowadays than a cash cow. The benefits of home ownership have been overinflated by government to be able to sustain their tax revenue, a bunch of sheople who find value in paying a premium of 40% of their net income just to have a white picket fence around, and same sheople getting into this current mess based on the fundamental myth that "well...houses ALWAYS appreciate..duh". LOL

Look, I'll spare ya the book, the only benefit of homeownership to us "dumb renters" is the utilitarian value. No investment value, compared to putting liquid into the stock market and similar investment vehicles, and mind you these are much more liquid investment vehicles at that. Those real smart home owners and their need to be without a roof over their heads to be able to cash in their investment, or borrow against it and call it a return on investment LOL.

Utilitarian value.Just the roof over the head. Guess what, until my total cost of ownership (that's maintenance too buddy) is lower than my total cost of renting (never gonna happen in median home price is 5x the median income America) the benefits of renting (liquid reserves, flexibility, no maintenance cost, cheaper housing cost total= not being house poor or having a dual income household by necessity == relationship mortgaging) will far outweight the benefit of owning. Now, when mommy and daddy put that down payment for you like every other college graduate couple who magically finds itself in a house with less than a year's worth of work history, then yeah you've essentially normalized the cost of owning to the point where your out-of-pocket is right about the same as renting the place. For those people it works, for the rest of the world who has to wait decades to amount the kinds of downpayments neccessary to have a monthly out-of-pocket similar to renting, it's not a good deal for us at all to own. So consider the assumptions more carefully before you label renters "dumb". We just don't happen to be spoiled upper class newlyweds with a downpayment wedding gift.

desertsun41 · 05-03-2008, 12:46 PM

jfre actually made me think of another one. Yes those who were home owners and had to abandan ship, ummm walk away from their homes due to the deep recession we are in. These people are stuck for 7-10 years as renters because now their credit is crap and they are no longer eligible for a mortgage. In fact some of these people are having trouble renting now with that foreclosure on their record.

The future of credit worthyness is going to have to change in the near future. A whole lot of people out there have perfect credit except for a foreclosure or short sale. Many Landlords would tell you to go away in the past with that on your record. But in the next 7-10 years while all these bad marks are on ex-homeowners score, the Landlords and Lenders of the world are going to have to come up with a bit of leniency or there is going to be a whole lot of homeless families out there.

As for the other poster who asked about down payments. There is yet another example of perhaps renters just not knowing any better. There are many renters who have no idea how easy it is to buy a home. Even though the no/low downs are all but gone now, one can still obtain an FHA loan with 3% down and some bad credit marks.

There are some renters with good credit and high earnings. They just prefer to rent.

Have we covered all the bases?

LBSer · 05-03-2008, 12:57 PM

i was a renter. i live with my sis now but i pay $400/month "rent"... anyway, i don't wanna buy a house coz... i believe my husband-to-be should be the one to buy one for me... but if i still will not be married for say.. a year from now... i would prefer renting. moving and selling your house is such a hassle for a single woman like me.. where as if i just rent, i can choose a monthly basis contract and just go in a snap just like that. no worries. and anyway if you die you can not bring your house with you to the grave, can you?

jfre81 · 05-03-2008, 01:09 PM

Quote:

Originally Posted by LBSer

anyway if you die you can not bring your house with you to the grave, can you?

They'd have to dig a really big hole.

jimboburnsy · 05-03-2008, 01:40 PM

To buy that cheaply you need to live in a suburb. A lot of people have no inclination to live away from the center of town and do not want the headaches associated with homeownership. If you are single with no kids, what would you really want with a house? Other people have jobs that require them to "travel light." Can't be fettered with a house. As far as finding renters goes, how are you ever going to find someone to rent one of your rooms in an area that is cheaper to buy?? None of the areas described in the OP is anywhere near a university. You would have to charge an extremely low rent for college kids to break even on gas even if he or she was willing to drive that far that often. Renting makes more sense for some people.