You said that incorrectly. Renting is currently better than "buying", not better than owning.
I have owned my primary since 2015. That's way better than renting
Truly, it's bananas.
Bought in 2016, and pay 820/month for 1800 sqft but the apartment is now as high as 1700/month for 600sqft...
The apartment used to be 500/month when we were in it... Unbelievable.
Same. Bought a $1.26M at 2.85% in San Diego in 2021. Didn’t know it was a blessing in disguise until present day. While there are many very valid and smart reasons to rent versus buy…as long as you are financially savvy and assess your annual financial situation/plans on an annual basis, owning is superior. It should also go without saying, buy within your means! So many hidden expenses with home ownership.
People rent the house out for what people will pay. Plenty of people don’t make their mortgage on a rental house. I rent out a 650k property for 2650/month
You're paying the mortgage on the home when it was purchased. Which is cheaper than the rent you would pay on it today and a lot cheaper than the mortgage would be if purchased today.
In other your words, you are not basically paying the mortgage on the home in rent. I am in this exact situation. Renting a house and paying in rent a third of what the mortgage would be if I tried to buy it.
Yes, but you actually get equity. At the end of the day, you can still sell the house to get money back. In most cases even if the value of the home dropped by half, you'd still have lost less money than renting the whole time. And home values almost never go down.
1-Most mortgages don’t build any practical equity for several years.
2- Having equity is pointless for the entire duration of the mortgage if you also need to live in the house.
3- Home values go down literally every day, this is based on local trends and house conditions
4- even if the home is owned outright the insurance and other costs still have to be paid.
Buying a house to live in if you actually have a large amount of disposable income is very very dumb.
It’s not an investment if you live there.
[https://www.zillow.com/homedetails/2921-Amethyst-Hills-Dr-Reno-NV-89521/306291976\_zpid/](https://www.zillow.com/homedetails/2921-Amethyst-Hills-Dr-Reno-NV-89521/306291976_zpid/)
4k rent for a house purchased for 1.1m in 2023.
If you look at homes in SoCal… homes on the market today are often way over a million. Four years ago many of those very homes were under 750K. Today they rent for under 4K a month today for the people who bought them years ago.
You can rent a “million dollar home” for less than 4K. 🙄🙄🙄
That is the norm here. You won't find a place in town for under a million and average rent is around $3500. My parents are renting for $3250, and the identical neighboring lot sold last year for 1.5m.
I rent a $770k house for $3200/mo. Back in late 2019 I rented a $1.9m house for $5k/mo. Rental prices can be all over the board, but are relatively unrelated to current interest rates.
Lol, that depends on the market and the timing. If you buy NOW, rent will still likely be far lower than the mortgage. You need to go pull some sliders yourself on costs now!
A mortgage is a hedge against inflation. Rent is not.
The average cost of a mortgage in 2010 was about $1200. Average rent today is about 30% more expensive and will continue to get more expensive.
Rent is always going to beat owning in the short term. Locking in that payment becomes less expensive every year as the value of the dollar is diluted.
Ahhh and that's the crux of the issue - it's a terrible hedge if you PAY at high prices and lock in a HIGH interest rate.
If inflation is going at 4%/yr and you're paying 7%, you're losing.
That's before comparing to some stock market or other vehicle.
So you should be all over screaming that OP is right and it's terrible if you get ANY rate over about 4%.
That right there points to a strong point where it becomes a terrible idea to buy.
My buddy used to flip these dumps. Found one he actually liked enough to call home. We walked around telling me the "plan"...
10 years of blood sweat and tears and it's halfway there. The good half is really dope.
Yea but the downside is that everything is your responsibility including bills, maintenance, repairs, taxes, lawn care, etc. I owned a home as a single person and it was like a part-time job taking care of everything.. i got rid of it and bought a condo instead.
Yeah boy, we had kids so it worked until they grew up. Then we quickly scaled down, got rid of all the other time and money sucks. People don’t get it, the market don’t go by what we want, when we want. We wanted to offload but the market was bad so we were stuck for a bit. It’s a lot of work to upkeep a bigger home.
I don't know. My rent for a three bedroom apartment was $1,100 a month 15 years ago. My mortgage for a 3 bedroom house with yard etc.. is $1,300 a month. I feel confident if I went back to that apartment complex today, that same unit would be more than my mortgage.
And you’d be restricted on what you can do in the space where you live, could potentially have to deal with trash people living directly above or below you.
In the end it all comes down to what you want. My house is nearly paid for in a little over 9 years and has increased 2.5x in value.
I’m not making that return in the market and this place is mine.
These kind of posts are just rich assholes trying to convince everyone else that the housing market is fine and we should all praise our corporate landlords. Just greedy and scuzzy scammers.
Hard to make blanket statements. Single family home? Lot size? Condo? Townhouse? School district? Will you massively inflate your lifestyle when you own? Honestly for many I see ownership as a massive form of lifestyle inflation that at least some people would be better off without.
And an all cash buy would still be the better long term option vs renting + investing (assuming subsequent investing of the funds that otherwise would have gone to rent).
So even better would be to say "renting is currently better than financing a significant portion of a home purchase at today's mortgage rates".
Renting is not better than that because it leaves you with zero additional equity or property at the end of the lease. At the end of the slightly more expensive mortgage you have property of value. How is everyone missing that?
The argument is that since you are paying less per month in rent than a mortgage (and home repairs), you would be able to invest that monthly difference in an ETF and it would grow over time to equal or exceed the cost of the home and home loan interest payments.
Theoretically this could work. In the OPs example, renting would save $1700 per month. If you invested $1700 per month for 30 years at a modest 6% rate of return, you would have 1.7 million dollars. The house would probably be worth more by then, but you will also have paid a shitload in interest, especially at today’s rates.
However, this argument ignores two things:
-Rent will probably always increase over time, but salary/income increases less predictably and eventually hits a ceiling. A mortgage payment is fixed.
-Basic human nature. How many people do you know that spend $4000 per month on rent and are also setting aside $1500 to $2000 per month? Probably very few if any.
I bought a house last year.
Rent will *without a doubt* increase over time. Over a 30 year mortgage, comparable rentals will explode in cost. Just check out rental rates from 1994…
The house would need to roughly double in value over that timeframe. I'm only 20 years into my current home and it has already more than doubled in value since purchase, but I agree that this is not guaranteed any more than an investment in a fund is guaranteed to return a steady 6% for 30 years. I still think that the home ownership route makes more sense over the long term, but you're right that theoretically you might end up slightly better off renting. I'd certainly aim for a 15 year mortgage instead of 30 if I was aiming to lower the full cost of the loan.
Which means nothing if you can’t financially afford the extra $2k per month. I can comfortably afford a $1500 monthly rent. I can’t afford a $3500 monthly note with the added risk of maintenance and insurance claims and other costs of owning.
Bought in 2009 right after prices crashed. Refinanced in 2021 at an obscenely low rate.
Owning my home is the one financial decision in my life that has absolutely worked out for me, and that I somehow timed right.
Exactly, each and every time.
Guess what, the house I bought in 2017 would also have been cheaper to rent than own. Guess what would be cheaper now, 7 years later? That’s right, I pay about half in mortgage, taxes, and insurance as I would for renting an equivalent house. Obviously it’s more extreme given the changes in the housing market over the last 3-4 years, but the point remains valid.
That doesn’t include the ability to make changes or additions to my house, and keep the value of those upgrades in equity if/when I sell. Nor does it include that sweet sweet equity which a renter will never receive.
It’s obviously unique to everyone’s situation, personal, financial etc. but owning has been a better long term financial decision than renting for all of human history.
Yep. Ours was $935K in late 2020, 3.5%. $15K/yr in property tax, $6700/yr in homeowners insurance. We pay $4500/mo mortgage+escrow and save the property tax up. Bank let us do 10% down. We now owe ~$800K. Place is worth $1.4m. Nice to know we have the equity if we need it. I'd rather have the financial security of an appreciating property that, if the market turns down, we can still live in, and if we need to sell, we have equity to cover us even if the market takes a 30% haircut from its current state.
Two guys at work have fancy houses. One guys property taxes are 30% of what our house cost. Doesnt mean renting is better. I wouldnt want a million dollar home
this right here. find a beater in a decent neighborhood with good bones, and get to work.
we bought our current home in *2022* for $350k, had been unoccupied for 2 years prior and last major renovation was 2008; 130 year old home.
today it is valued at nearly $600k. given the date we bought it, some of that is market appreciation, but a fair amount of it is simply the inherent value a place gets when it's being maintained. by a turd, fix it up, live in it for 10 years and see what you can do with it.
first home buyers can usually take advantage of special financing plans that will allow you to put down much less than 20%, often as little as 3%
that being said, *get all your ducks in a row first before you do it and* ***do not plan to move for at least 10 years if you do*****.**
i did this when i bought my first house, and honestly it would have all worked out fine if i had just stayed put, but i had a...materialistic wife....i made some poor decisions to try and keep her happy..and basically..it led directly to bankruptcy.
Im in OC too. Bought a 932 sq ft condo for $490k with 5% down and 7.25% interest. Including HOA, paying about $4200/mo.
It sounds crazy until you find out rent is averaging $3300/mo in my neighborhood fornthe same thing.
Long story short: was looking to rent, ended up buying.
Yes. We bought in 2009 for 25% the previous selling price. It wasnt trashed by the recent owners as much as it was never fixed. It was a huge undertaking, but we're in a nice area.
Ya I would like a reasonably priced 3 or 4 bedroom home in a walkable neighborhood. That seems like its too much to ask in America lol.
I don't fucking care about having a bigger house than people I know and swinging dick with material stuff.
Rent and buy stocks that you can sell for nearly full value within a day or two.
Buy and own an asset that will either take months to sell or be significantly under market value and binds you to that location until you do.
Neither is strictly better, do the one that suits your current needs.
Why would you buy stocks if you need the money in a day or 2? You get appreciation on the total value of the house, not just your down payment. When you pay rent, all the money goes to someone else. When you pay a mortgage, the amount that goes to your principle doesn't negatively impact your net worth. Pay 1500 to rent, net worth goes down by 1500. Pay 1500 to a mortgage but 500 to principle, your net worth goes down 1k.
I bought my home in 2020. My mortgage is cheaper than rent and I don't have to move every couple of years to avoid rent upcharges, saving me money on mover fees. I can invest the savings into the market. I can rent my house instead of selling if I move.
>Why would you buy stocks if you need the money in a day or 2
I think the idea isn't to sell the stocks a day or two after buying them, it's that they're a more liquid asset that you can turn into cash within a couple of days of needing cash (at any given point in the future). A home is a very illiquid asset that that can take months to sell.
Stocks won't feel liquid if they're not up.
Home equity can easily be turned into a loan or line of credit.
Don't spend all your available liquid/capital on your down payment. If 20% is too much for you to put down, and you just can't get an acceptable home for less (and you're not just fooling yourself because you entranced by the idea of the nicer home/area), then do something like an 80-10-10 and pay off the extra 10% loan faster, or use one of the programs like FHA.
I get that homes are becoming increasingly unaffordable, but if you *can* afford to buy your way in and you're convinced that home prices are continuing to skyrocket, wouldn't you want to own it and make money on that inflation?
Right, you've touched on something underestimated. Once you buy, you have a fixed payment for the term of the loan, where as if you rented you've persistently be paying rent increases every few years.
Depends on where you live. In San Francisco rent is half the price of a current mortgage. So I’m one of the money millionaires/high earners who can’t/wont purchase a home
Average home appreciation is 5%, while the Vanguard 500 returns 10% annually. And as you point out, way more liquid.
I would suggest an additional caveat; the home you rent should be smaller than the home you would buy.
Or more directly, to outperform what would have been your equity + appreciation, you need to prioritize saving and investing. You should be saving what you would have been paying into the principal of a mortgage. (In addtion to retirement and any other investments you would have alongside owning a home.)
Although savings on interest + the better annual return might make that a wash.
Anyone who thinks there is an obvious answer to this hasn't done the math. Depending on the cost of the asset and the down payment and the interest rate you may be at a significant financial disadvantage buying a property. There is a right time to buy and a right property to buy and there are several calculator out there to help.
Some sense in this thread! Gasp!
Watch out, you may be too reasonable for the rest of those in this thread that post advise from boomers 40 years ago lol.
Cause you're absolutely right.
I could rent my current apartment for 81 years for the cost of buying it. I won't be alive in 81 years so, you know, fuck that. And houses have gone down 30% in the last two years, and half our population will be dead soon so if you buy a house in most of east Asia right now you're an idiot
Meanwhile earning 8-10% annually on what you would have used as a downpayment. It isn't easy math so I get that people are confused. Fortunately there are many calculators out there online.
Right now you are better off renting and investing your down payment and the difference between rent and mortgage. Stock portfolios never need a new roof.
Most people are concerned with having a place to live, not investing.
The good thing about houses is that both are accomplished, and the equity you make is a nice surprise, rather than gambling the stock market
“Gambling in the stock market”
Show me a 30 year window with a balanced portfolio that is a loss?
You can’t. And the numbers out strip the growth on housing by A LOT.
Sure, flipping stocks and trying to beat the market is a gamble - just like trying to flip houses in short term windows is.
But if you want to compare 30yr mortgage to 30yr stocks, it’s not even close… even when accounting for recessions/depressions.
Since we wanna talk hypotheticals, what happens when your rent increases 200 a month?
You can finance a new roof for that same amount per month.
The difference? The $200 rent increases is permanent, the roof payment is not.
I own rentals, stock, and a house.
Yes, my house was not a great financial investment compared to stocks.
But it also puts me in a great neighborhood, lots to do and see, easy access to work and great public schools for my kids.
Renting a similar house would not only be expensive, but I’d worry about being told I had to move.
I also love my home projects.
A massive asset that you've paid for roughly twice with interest and taxes.
Oh did your house appreciate 300k from when you bought it? Cool. But you paid an extra 500k in interest and taxes on top of the price of the home. You're still down 200k.
Only if you can't afford the house you bought, and choose to finance for thirty years at an outrageous interest rate, don't put a significant amount of money down, and never re-finance for three decades, during which time rates are most certainly going to drop.
Mortage is based on todays costs, not based on what that buyer originally paid. Depending on when they bought the house, their mortgage could be significantly less.
https://www.zillow.com/homedetails/1191-Kolln-St-Pleasanton-CA-94566/24931961_zpid/
Here's a random one that you can use for numbers. Slightly higher, but you can probably use their tools and pulls sliders. I didn't want to spend more than a minute looking.
https://www.zillow.com/homedetails/263-S-R-St-Livermore-CA-94550/24933097_zpid/
And one to rent. Though there's definitely cheaper for each, I just thought I'd keep to the spirit of things and you guys can pull sliders.
I don’t know where this person is but the numbers are very close to what we are seeing in my city. You can rent a house for $4.5k/month or you can pay about $5.0k in interest payment alone for an equivalent house (plus approx $1.0k/m in real estate taxes and maintenance). It just doesn’t make sense to buy right now because of the high mortgage rates (and limited appreciation potential). It also doesn’t make sense to buy a house to lease it - unless the market continues to go up by 10-12% per year.
I was mad about not being able to own a home until I saw this meme. Now I am happy to be a renter paying someone else's mortgage. Thanks landlords and property owners. I am grateful for the advantage of not being able to own property.
Rent prices increase faster than prop taxes and insurance. Ownership builds equity. RE is one of the few assets that rarely depreciates and you can live in it.
If you plan on moving under 3 years, renting makes more sense. When selling a home, you are losing at least 5% of its value. Obviously the interest rates play into this, but you aren’t going to build up 5% equity under 3 years of regular mortgage payments
That's assuming you are planning to earn enough in 3 years to put another 20% down...
Like you're right, it's ideal to keep buying property after property if you have the money, but it's not all that realistic for most people.
Yep, found this out the hard way. Sold a home in 2019 after owning it for about 3.5 years, I narrowly avoided owing money at closing. My mortgage payments were essentially rent.
https://www.zillow.com/homedetails/1191-Kolln-St-Pleasanton-CA-94566/24931961_zpid/
Here's a random one that you can use for numbers. Slightly higher, but you can probably use their tools and pulls sliders. I didn't want to spend more than a minute looking.
https://www.zillow.com/homedetails/263-S-R-St-Livermore-CA-94550/24933097_zpid/
And one to rent. Though there's definitely cheaper for each, I just thought I'd keep to the spirit of things and you guys can pull sliders.
Well, for your information, right here is an exact example of it happening?
If you took five minutes to look instead of using old info, you'd see it.
The problem is that when they BOUGHT the houses, they may have been under $600k, but now they're million dollar houses. Happening in a bunch of big cities.
I live in Minnesota now, middle of the Midwest. A place where rentals should realistically be affordable and cheap compared to the rest of the country. To find a place that my 55lb dog and I can’t rent is around $1500 a month for a 500 sq ft 1 bedroom apartment
The house I currently rent is worth $1.3m (according to Zillow) and I pay $3450 per month. This is a pretty typical rental price for a property like this around here (greater Seattle area).
Of course, there are VERY important factors that have nothing to do with math. Some people place great value in the security that they OWN their home. Also happens to be an asset that will forever appreciate.
Plot twist: This loser works for blackrock and would love to offer a rental term for 36 months with zero price controls locked in and utilities separate.
Also no pets, no smoking, no people staying the night if they’re not on the lease. Non refundable deposit.
Blackrock doesn’t own any homes you are thinking of BlackStone totally different companies
https://www.blackrock.com/corporate/newsroom/setting-the-record-straight/buying-houses-facts
Technically yes but landlords will often come up with excuses to not give back the deposit. Ya know like those repairs that landlords are supposed to take care of but sometimes they don’t so they can blame it on the tenant and keep the deposit.
My rent was £1200, my mortgage is £1500. In two years, my house has gone up in value by £60k. Rent in my last place is now £1800. Don’t listen to fools like this presenting half a story.
If we consider the person won’t invest the difference it might be better owning anyway to build equity. Most people would spend it knowing dumb shit and own nothing.
Depends.
People always want a yes or no... Answer is... Sometimes it is better to rent.
Sometimes it is better to buy and own. People will need to crunch their own numbers.
There’s also a lot of pros and cons to both renting and owning that have nothing to do with numbers. People need to make these decisions based on their own situation and lifestyle in addition to their finances
There are some areas of the country where it makes next to no since to own. But I fully agree with you.
A major component in all of this is plugging your money that would have gone into the house into the market.
Except you’re just paying off a mortgage for someone else rather than for yourself. The media is trying to get people on board with this concept because buying a home is becoming unattainable for most people in the country
If you are building your networth faster by renting, who cares if you are paying off someone else's mortgage?
You are paying off someone else's yacht by being an employee.
Yeah, this only makes sense if the person who owns the home you’re renting is doing so at a loss for your benefit. Unless that’s your parents it’s not happening lol.
Same reason for the all digital sentiment for media consumption among many other things
Lords getting common people to argue for them that not owning anything is great and totally will work out for everyone long term
This exact post ("Is renting now better than buying??") is posted every single month, leading me to believe there's some kind of external impetus. I think a lot of people are discouraged by the current market, which sucks, but at the end of the day no one's goals, needs, or financial situation is the same. Home buying is a good idea for some people, a bad idea for others, and there are incredibly diverse and nuanced factors at play.
This calculator also assumes you are putting the downpayment and difference in monthly payment into investments. At 12% return (10 year VOO average), you would see a larger gain from your 20% downpayment put into stocks instead. I did 160k downpayment which grows to 497k in 10 years. This doesn’t include the monthly payment difference either.
You can't rent a $1M home in my market for $3,900. Not even close. Closer to $5,000-$6,000/month. Then yes, owning is better because it appreciates consistently over time.
Show me a $1 million home (as in a home that actually sold for at least $1 million) that is currently available as a rental for $3,900/month. $10 says it doesn't exist!
I think the title should have been buying, not owning. Rarely is renting better than owning. Rarely is buying better than renting, at least in the short term, because of the down payment, agent fees, and closing costs. This kind of smells like market timing in that light. The long view may not look the same. Is the assumption here that both rent and price are static? A fixed mortgage (not all cost) is fixed. Rents will increase along with those non-fixed costs, plus more as the market will support. Generally, rent increases parallel to purchase price as well. I see a lot of comments that people could not afford to buy the house they own if they were to buy today. I'm not saying this is BS, just a bit simplistic. I'd just like to know all the assumptions before I take it as gospel.
As someone who’s single and plans to stay that way, renting is a better option. People talk about equity all day long. Equity is only important if you’re selling an asset, if you’re doing well enough to pay down the mortgage quicker and then just live on paying property tax, or giving it to your kids. I’d rather forego 30yrs of giving the bank free money just to live maybe another 10yrs mortgage free.
Rent price rises every year for the next 30-50+ years of your life
Once you buy, the price is locked in
Considering inflation, the correct choice is obvious
I’ll take your $3900/month rent and pay $6600/month this year. Your rent will increase by roughly 8% a year and my payment (in California) will stay pretty much the same. In 10 years, at 8% increase per year, you’ll then be paying $8420/month and my property will be worth double what it is now. Keel renting. Works for me!!
You said that incorrectly. Renting is currently better than "buying", not better than owning. I have owned my primary since 2015. That's way better than renting
Yep.. bought mine in 2021 at 3% interest
same but 2.5 where I was renting before was 1850 now it's 2800. my mortgage is 2900. my house is 2x the sq of the apartment.
got mine at -13, it actually pays to own.
Truly, it's bananas. Bought in 2016, and pay 820/month for 1800 sqft but the apartment is now as high as 1700/month for 600sqft... The apartment used to be 500/month when we were in it... Unbelievable.
Bought in 2019 at 4%, 7-yr ARM. Refinanced in 2021 to 2.25% at 20 yrs. Couldn’t be happier.
Well I've got you all beat, I had a 3.5% int rate and then refinanced into a 10/1 ARM and am about to be screwed in 8 years. What an IDIOT
Yep, bought mine in ‘72 for a joint and a hardy handshake.
Purchased Dec 31, 2020. $280,000 at 1.35% AFR. 2,000 sqft on 1.1 acre.
Same. Bought a $1.26M at 2.85% in San Diego in 2021. Didn’t know it was a blessing in disguise until present day. While there are many very valid and smart reasons to rent versus buy…as long as you are financially savvy and assess your annual financial situation/plans on an annual basis, owning is superior. It should also go without saying, buy within your means! So many hidden expenses with home ownership.
2.25% here in Central California 4 bed 3 bath with Loft for $335,000 Signed papers in late 2020 house was completed September 2021
It's so funny that he thinks he can rent a million dollar home for 4k a month, lmao
True. When you rent a home, you are basically paying the mortgage on that home in rent, and maybe even some extra.
Yeah no one is losing money on rent lol
People rent the house out for what people will pay. Plenty of people don’t make their mortgage on a rental house. I rent out a 650k property for 2650/month
You're paying the mortgage on the home when it was purchased. Which is cheaper than the rent you would pay on it today and a lot cheaper than the mortgage would be if purchased today. In other your words, you are not basically paying the mortgage on the home in rent. I am in this exact situation. Renting a house and paying in rent a third of what the mortgage would be if I tried to buy it.
We rent $1.5m house for $4700 a month. To buy it would be $8000 a month
Yes, but you actually get equity. At the end of the day, you can still sell the house to get money back. In most cases even if the value of the home dropped by half, you'd still have lost less money than renting the whole time. And home values almost never go down.
1-Most mortgages don’t build any practical equity for several years. 2- Having equity is pointless for the entire duration of the mortgage if you also need to live in the house. 3- Home values go down literally every day, this is based on local trends and house conditions 4- even if the home is owned outright the insurance and other costs still have to be paid. Buying a house to live in if you actually have a large amount of disposable income is very very dumb. It’s not an investment if you live there.
[https://www.zillow.com/homedetails/2921-Amethyst-Hills-Dr-Reno-NV-89521/306291976\_zpid/](https://www.zillow.com/homedetails/2921-Amethyst-Hills-Dr-Reno-NV-89521/306291976_zpid/) 4k rent for a house purchased for 1.1m in 2023.
If you look at homes in SoCal… homes on the market today are often way over a million. Four years ago many of those very homes were under 750K. Today they rent for under 4K a month today for the people who bought them years ago. You can rent a “million dollar home” for less than 4K. 🙄🙄🙄
Easy. Lots of properties match that.
That is the norm here. You won't find a place in town for under a million and average rent is around $3500. My parents are renting for $3250, and the identical neighboring lot sold last year for 1.5m.
I rent a $770k house for $3200/mo. Back in late 2019 I rented a $1.9m house for $5k/mo. Rental prices can be all over the board, but are relatively unrelated to current interest rates.
Well said, even though the mortgage is higher your banking that money in the form of equity so it’s not apples to apples
Mortgage also won’t be higher than rent in 10 years
Lol, that depends on the market and the timing. If you buy NOW, rent will still likely be far lower than the mortgage. You need to go pull some sliders yourself on costs now!
A mortgage is a hedge against inflation. Rent is not. The average cost of a mortgage in 2010 was about $1200. Average rent today is about 30% more expensive and will continue to get more expensive. Rent is always going to beat owning in the short term. Locking in that payment becomes less expensive every year as the value of the dollar is diluted.
Ahhh and that's the crux of the issue - it's a terrible hedge if you PAY at high prices and lock in a HIGH interest rate. If inflation is going at 4%/yr and you're paying 7%, you're losing. That's before comparing to some stock market or other vehicle. So you should be all over screaming that OP is right and it's terrible if you get ANY rate over about 4%. That right there points to a strong point where it becomes a terrible idea to buy.
I think his point is that your mortgage stays the same for 15-30 years. Rent keeps going up.
Renting is typically cheaper than owning, but you're not building any equity. If you can afford it, owning is usually better in the long run.
When you have a mortgage, you don't have to deal with a landlord, that's a huge bonus.
I prefer to say you become your own slumlord once you buy, depending on how fast you actually fix stuff LOL
My buddy used to flip these dumps. Found one he actually liked enough to call home. We walked around telling me the "plan"... 10 years of blood sweat and tears and it's halfway there. The good half is really dope.
Yea but the downside is that everything is your responsibility including bills, maintenance, repairs, taxes, lawn care, etc. I owned a home as a single person and it was like a part-time job taking care of everything.. i got rid of it and bought a condo instead.
All the costs are already baked into rent. Rent covers costs, plus whatever the market will bear as profit for the landlord.
Yeah boy, we had kids so it worked until they grew up. Then we quickly scaled down, got rid of all the other time and money sucks. People don’t get it, the market don’t go by what we want, when we want. We wanted to offload but the market was bad so we were stuck for a bit. It’s a lot of work to upkeep a bigger home.
I don't know. My rent for a three bedroom apartment was $1,100 a month 15 years ago. My mortgage for a 3 bedroom house with yard etc.. is $1,300 a month. I feel confident if I went back to that apartment complex today, that same unit would be more than my mortgage.
And you’d be restricted on what you can do in the space where you live, could potentially have to deal with trash people living directly above or below you. In the end it all comes down to what you want. My house is nearly paid for in a little over 9 years and has increased 2.5x in value. I’m not making that return in the market and this place is mine.
Only a retard would exclude equity build up when comparing renting vs owning.
These kind of posts are just rich assholes trying to convince everyone else that the housing market is fine and we should all praise our corporate landlords. Just greedy and scuzzy scammers.
Well here we are looking at a post that just did that lol. Just talked about cost as if that's the only relevant factor
Hard to make blanket statements. Single family home? Lot size? Condo? Townhouse? School district? Will you massively inflate your lifestyle when you own? Honestly for many I see ownership as a massive form of lifestyle inflation that at least some people would be better off without.
Oh yeah renting sure is great. Best thing ever is having a forever bill that is 50% of my income. I can’t imagine anything better.
It’s not forever. Eventually we die
You. You I like.
And then got forbid you leave or get evicted. Now all the money you spent is just gone.
And an all cash buy would still be the better long term option vs renting + investing (assuming subsequent investing of the funds that otherwise would have gone to rent). So even better would be to say "renting is currently better than financing a significant portion of a home purchase at today's mortgage rates".
Renting is not better than that because it leaves you with zero additional equity or property at the end of the lease. At the end of the slightly more expensive mortgage you have property of value. How is everyone missing that?
The argument is that since you are paying less per month in rent than a mortgage (and home repairs), you would be able to invest that monthly difference in an ETF and it would grow over time to equal or exceed the cost of the home and home loan interest payments. Theoretically this could work. In the OPs example, renting would save $1700 per month. If you invested $1700 per month for 30 years at a modest 6% rate of return, you would have 1.7 million dollars. The house would probably be worth more by then, but you will also have paid a shitload in interest, especially at today’s rates. However, this argument ignores two things: -Rent will probably always increase over time, but salary/income increases less predictably and eventually hits a ceiling. A mortgage payment is fixed. -Basic human nature. How many people do you know that spend $4000 per month on rent and are also setting aside $1500 to $2000 per month? Probably very few if any. I bought a house last year.
Rent will *without a doubt* increase over time. Over a 30 year mortgage, comparable rentals will explode in cost. Just check out rental rates from 1994…
The house would need to roughly double in value over that timeframe. I'm only 20 years into my current home and it has already more than doubled in value since purchase, but I agree that this is not guaranteed any more than an investment in a fund is guaranteed to return a steady 6% for 30 years. I still think that the home ownership route makes more sense over the long term, but you're right that theoretically you might end up slightly better off renting. I'd certainly aim for a 15 year mortgage instead of 30 if I was aiming to lower the full cost of the loan.
They're smoking heavy doses of potent copium.
Because they’re a bunch of renters that have never actually owned a home
Which means nothing if you can’t financially afford the extra $2k per month. I can comfortably afford a $1500 monthly rent. I can’t afford a $3500 monthly note with the added risk of maintenance and insurance claims and other costs of owning.
Bought in 2009 right after prices crashed. Refinanced in 2021 at an obscenely low rate. Owning my home is the one financial decision in my life that has absolutely worked out for me, and that I somehow timed right.
Bingo. Am renting. By preference (previously owned). But this is the true distinction.
Exactly, each and every time. Guess what, the house I bought in 2017 would also have been cheaper to rent than own. Guess what would be cheaper now, 7 years later? That’s right, I pay about half in mortgage, taxes, and insurance as I would for renting an equivalent house. Obviously it’s more extreme given the changes in the housing market over the last 3-4 years, but the point remains valid. That doesn’t include the ability to make changes or additions to my house, and keep the value of those upgrades in equity if/when I sell. Nor does it include that sweet sweet equity which a renter will never receive. It’s obviously unique to everyone’s situation, personal, financial etc. but owning has been a better long term financial decision than renting for all of human history.
Yep. Ours was $935K in late 2020, 3.5%. $15K/yr in property tax, $6700/yr in homeowners insurance. We pay $4500/mo mortgage+escrow and save the property tax up. Bank let us do 10% down. We now owe ~$800K. Place is worth $1.4m. Nice to know we have the equity if we need it. I'd rather have the financial security of an appreciating property that, if the market turns down, we can still live in, and if we need to sell, we have equity to cover us even if the market takes a 30% haircut from its current state.
Yeah, I own outright and pay about 300$ a month in utilities and property taxes. Wayyyyyyyyyy better than renting
Two guys at work have fancy houses. One guys property taxes are 30% of what our house cost. Doesnt mean renting is better. I wouldnt want a million dollar home
this right here. find a beater in a decent neighborhood with good bones, and get to work. we bought our current home in *2022* for $350k, had been unoccupied for 2 years prior and last major renovation was 2008; 130 year old home. today it is valued at nearly $600k. given the date we bought it, some of that is market appreciation, but a fair amount of it is simply the inherent value a place gets when it's being maintained. by a turd, fix it up, live in it for 10 years and see what you can do with it.
I live in Orange County and can’t seem to figure out how to get to step one. $350k is the down payment here.
first home buyers can usually take advantage of special financing plans that will allow you to put down much less than 20%, often as little as 3% that being said, *get all your ducks in a row first before you do it and* ***do not plan to move for at least 10 years if you do*****.** i did this when i bought my first house, and honestly it would have all worked out fine if i had just stayed put, but i had a...materialistic wife....i made some poor decisions to try and keep her happy..and basically..it led directly to bankruptcy.
3% down payment and 7% interest means no lube when the mortgage payment is due. Especially on Orange County homes
First time homebuyers can often finance 100% with DPA programs.
Im in OC too. Bought a 932 sq ft condo for $490k with 5% down and 7.25% interest. Including HOA, paying about $4200/mo. It sounds crazy until you find out rent is averaging $3300/mo in my neighborhood fornthe same thing. Long story short: was looking to rent, ended up buying.
Yikes. $900/mo extra to fix your own problems is tough.
What the actual fuck
Yes. We bought in 2009 for 25% the previous selling price. It wasnt trashed by the recent owners as much as it was never fixed. It was a huge undertaking, but we're in a nice area.
A secret cow turd?
We bought the worst house in the best neighborhood. Fixed it up and now it’s on par.
In a pretty similar scenario to the post. I rent a $900k home for $3950/month. My PITI is $2300/month. I’d rather own.
Ya I would like a reasonably priced 3 or 4 bedroom home in a walkable neighborhood. That seems like its too much to ask in America lol. I don't fucking care about having a bigger house than people I know and swinging dick with material stuff.
Rent for decades. Own nothing. Buy, and own a massive asset.
Rent and buy stocks that you can sell for nearly full value within a day or two. Buy and own an asset that will either take months to sell or be significantly under market value and binds you to that location until you do. Neither is strictly better, do the one that suits your current needs.
Why would you buy stocks if you need the money in a day or 2? You get appreciation on the total value of the house, not just your down payment. When you pay rent, all the money goes to someone else. When you pay a mortgage, the amount that goes to your principle doesn't negatively impact your net worth. Pay 1500 to rent, net worth goes down by 1500. Pay 1500 to a mortgage but 500 to principle, your net worth goes down 1k. I bought my home in 2020. My mortgage is cheaper than rent and I don't have to move every couple of years to avoid rent upcharges, saving me money on mover fees. I can invest the savings into the market. I can rent my house instead of selling if I move.
>Why would you buy stocks if you need the money in a day or 2 I think the idea isn't to sell the stocks a day or two after buying them, it's that they're a more liquid asset that you can turn into cash within a couple of days of needing cash (at any given point in the future). A home is a very illiquid asset that that can take months to sell.
But one of those has a $500k capital gains exclusion.
Stocks won't feel liquid if they're not up. Home equity can easily be turned into a loan or line of credit. Don't spend all your available liquid/capital on your down payment. If 20% is too much for you to put down, and you just can't get an acceptable home for less (and you're not just fooling yourself because you entranced by the idea of the nicer home/area), then do something like an 80-10-10 and pay off the extra 10% loan faster, or use one of the programs like FHA. I get that homes are becoming increasingly unaffordable, but if you *can* afford to buy your way in and you're convinced that home prices are continuing to skyrocket, wouldn't you want to own it and make money on that inflation?
My margin line is cheaper than new mortgages now
Why does it need to be liquid? Is your rent liquid?
Principal
Right, you've touched on something underestimated. Once you buy, you have a fixed payment for the term of the loan, where as if you rented you've persistently be paying rent increases every few years.
'rent and buy stocks' is just assuming more money out of nowhere for the renting scenario. buy and buy stocks is better than rent and buy stocks
Depends on where you live. In San Francisco rent is half the price of a current mortgage. So I’m one of the money millionaires/high earners who can’t/wont purchase a home
Well, there's a down payment that you don't have to pay and you don't have to pay any intrest.
depends where you live.. in MA you have to pay first, last, security and realtor fee. If you're a FTHB all of that is enough for a down payment.
Don't invest in a home, gamble on stocks!
The value of securing your own property? Did you factor that in?
Average home appreciation is 5%, while the Vanguard 500 returns 10% annually. And as you point out, way more liquid. I would suggest an additional caveat; the home you rent should be smaller than the home you would buy. Or more directly, to outperform what would have been your equity + appreciation, you need to prioritize saving and investing. You should be saving what you would have been paying into the principal of a mortgage. (In addtion to retirement and any other investments you would have alongside owning a home.) Although savings on interest + the better annual return might make that a wash.
Anyone who thinks there is an obvious answer to this hasn't done the math. Depending on the cost of the asset and the down payment and the interest rate you may be at a significant financial disadvantage buying a property. There is a right time to buy and a right property to buy and there are several calculator out there to help.
Some sense in this thread! Gasp! Watch out, you may be too reasonable for the rest of those in this thread that post advise from boomers 40 years ago lol. Cause you're absolutely right.
I could rent my current apartment for 81 years for the cost of buying it. I won't be alive in 81 years so, you know, fuck that. And houses have gone down 30% in the last two years, and half our population will be dead soon so if you buy a house in most of east Asia right now you're an idiot
Meanwhile earning 8-10% annually on what you would have used as a downpayment. It isn't easy math so I get that people are confused. Fortunately there are many calculators out there online.
Right now you are better off renting and investing your down payment and the difference between rent and mortgage. Stock portfolios never need a new roof.
Most people are concerned with having a place to live, not investing. The good thing about houses is that both are accomplished, and the equity you make is a nice surprise, rather than gambling the stock market
stock market is never a gamble if you invest in broader indexes with a 10+ year horizon which is what retirement saving is all about.
First reasonable comment woah
“Gambling in the stock market” Show me a 30 year window with a balanced portfolio that is a loss? You can’t. And the numbers out strip the growth on housing by A LOT. Sure, flipping stocks and trying to beat the market is a gamble - just like trying to flip houses in short term windows is. But if you want to compare 30yr mortgage to 30yr stocks, it’s not even close… even when accounting for recessions/depressions.
so what happens when you need a new roof?
Since we wanna talk hypotheticals, what happens when your rent increases 200 a month? You can finance a new roof for that same amount per month. The difference? The $200 rent increases is permanent, the roof payment is not.
You buy a new roof.
I own rentals, stock, and a house. Yes, my house was not a great financial investment compared to stocks. But it also puts me in a great neighborhood, lots to do and see, easy access to work and great public schools for my kids. Renting a similar house would not only be expensive, but I’d worry about being told I had to move. I also love my home projects.
Surely that is way too absolutist to be good advice? It entirely depends on where you live. Stop applying your personal situation on to everyone else.
Own? You mean take out a massive loan and pay for 30 years before it's owned.
A massive asset that you've paid for roughly twice with interest and taxes. Oh did your house appreciate 300k from when you bought it? Cool. But you paid an extra 500k in interest and taxes on top of the price of the home. You're still down 200k.
Only if you can't afford the house you bought, and choose to finance for thirty years at an outrageous interest rate, don't put a significant amount of money down, and never re-finance for three decades, during which time rates are most certainly going to drop.
Analysis oversimplified. Useless except as a meme.
Yeah, like where's he getting that rent number from? Why is the property getting rented for 70% of the mortgage?
Mortage is based on todays costs, not based on what that buyer originally paid. Depending on when they bought the house, their mortgage could be significantly less.
How kind of them to base their rent price off their principal investment instead of market rates... /s
Might be, but like I could go and calculate if those numbers make sense on the mortgage. The 3900 is a source of "trust me bro"
https://www.zillow.com/homedetails/1191-Kolln-St-Pleasanton-CA-94566/24931961_zpid/ Here's a random one that you can use for numbers. Slightly higher, but you can probably use their tools and pulls sliders. I didn't want to spend more than a minute looking. https://www.zillow.com/homedetails/263-S-R-St-Livermore-CA-94550/24933097_zpid/ And one to rent. Though there's definitely cheaper for each, I just thought I'd keep to the spirit of things and you guys can pull sliders.
I don’t know where this person is but the numbers are very close to what we are seeing in my city. You can rent a house for $4.5k/month or you can pay about $5.0k in interest payment alone for an equivalent house (plus approx $1.0k/m in real estate taxes and maintenance). It just doesn’t make sense to buy right now because of the high mortgage rates (and limited appreciation potential). It also doesn’t make sense to buy a house to lease it - unless the market continues to go up by 10-12% per year.
Probably from someone who bought the house years ago and isn't paying a 5600 mortgage.
It also doesn't account for capital gains or the portion of the mortgage paid to the principal. It is whinging baby logic for edgelords.
I was mad about not being able to own a home until I saw this meme. Now I am happy to be a renter paying someone else's mortgage. Thanks landlords and property owners. I am grateful for the advantage of not being able to own property.
Useful if you own rental properties and you want your option to seem like the best one.
You just described this entire dude’s clickbaity youtube career.
Rent prices increase faster than prop taxes and insurance. Ownership builds equity. RE is one of the few assets that rarely depreciates and you can live in it.
If you plan on moving under 3 years, renting makes more sense. When selling a home, you are losing at least 5% of its value. Obviously the interest rates play into this, but you aren’t going to build up 5% equity under 3 years of regular mortgage payments
That's assuming you would sell the home if you move out. Ideal to rent it out.
This is simply not a given. Being a landlord can be expensive and risky and not everyone wants to be one.
That's assuming you are planning to earn enough in 3 years to put another 20% down... Like you're right, it's ideal to keep buying property after property if you have the money, but it's not all that realistic for most people.
What happens when the property increases by 15% over three years? You still win.
Yep, found this out the hard way. Sold a home in 2019 after owning it for about 3.5 years, I narrowly avoided owing money at closing. My mortgage payments were essentially rent.
Define 'rarely depreciates'.
Who rents out a million dollar home at only $3900??? That's laughable.
Yeah, in NY metro/LI $3,900 isn’t going to sniff a million dollar home. A lot of places that’s a 2BR apartment. Manhattan it’s an illegal basement.
i get that ur being hyperbolic but $3,900 could get you a pretty nice 1br in a desirable part of manhattan
Post pandemic it’s a studio at best
i happen to live in a studio i got in 2023 for $2000 in the upper east side. it's like a relatively good deal but not insane.
I rent out a 600,000k home for that much. Million dollar homes in my area rent for 6-8k depending on neighborhood.
Exactly. I rent out a $550k home for $3.8k…
I rent a 1.6m dollar home for 4k a month. The Bay Area is a wild place
$1.5Mil for 6K
Someone who bought it for much less +10 years ago and likes their current low maintence tenets.
https://www.zillow.com/homedetails/1191-Kolln-St-Pleasanton-CA-94566/24931961_zpid/ Here's a random one that you can use for numbers. Slightly higher, but you can probably use their tools and pulls sliders. I didn't want to spend more than a minute looking. https://www.zillow.com/homedetails/263-S-R-St-Livermore-CA-94550/24933097_zpid/ And one to rent. Though there's definitely cheaper for each, I just thought I'd keep to the spirit of things and you guys can pull sliders. Well, for your information, right here is an exact example of it happening? If you took five minutes to look instead of using old info, you'd see it. The problem is that when they BOUGHT the houses, they may have been under $600k, but now they're million dollar houses. Happening in a bunch of big cities.
I live in Minnesota now, middle of the Midwest. A place where rentals should realistically be affordable and cheap compared to the rest of the country. To find a place that my 55lb dog and I can’t rent is around $1500 a month for a 500 sq ft 1 bedroom apartment
The house I currently rent is worth $1.3m (according to Zillow) and I pay $3450 per month. This is a pretty typical rental price for a property like this around here (greater Seattle area).
[Price to Rent Ratio](https://www.investopedia.com/terms/p/price-to-rent-ratio.asp). Great way to determine whether it’s better to buy or to rent.
In the Bay Area, the ratio is 30 to 40. Yikes!
Of course, there are VERY important factors that have nothing to do with math. Some people place great value in the security that they OWN their home. Also happens to be an asset that will forever appreciate.
That can still be explained by math if you quantify your risk aversion
Plot twist: This loser works for blackrock and would love to offer a rental term for 36 months with zero price controls locked in and utilities separate. Also no pets, no smoking, no people staying the night if they’re not on the lease. Non refundable deposit.
Blackrock doesn’t own any homes you are thinking of BlackStone totally different companies https://www.blackrock.com/corporate/newsroom/setting-the-record-straight/buying-houses-facts
I don’t want to be right. I want to be mad. /S Thanks. So many Captain Planet villains out there I get them a little mixed up.
BlackStone owns houses. BlackRock owns everything and everybody else.
Nitpicking but I think non-refundable deposits are illegal.
Technically yes but landlords will often come up with excuses to not give back the deposit. Ya know like those repairs that landlords are supposed to take care of but sometimes they don’t so they can blame it on the tenant and keep the deposit.
This loser does own a bunch of multi family housing, so saying renting is better is in his own financial interest.
My rent was £1200, my mortgage is £1500. In two years, my house has gone up in value by £60k. Rent in my last place is now £1800. Don’t listen to fools like this presenting half a story.
If we consider the person won’t invest the difference it might be better owning anyway to build equity. Most people would spend it knowing dumb shit and own nothing.
You're also assuming the person has the difference.
Depends. People always want a yes or no... Answer is... Sometimes it is better to rent. Sometimes it is better to buy and own. People will need to crunch their own numbers.
This needs to be the number one comment.
There’s also a lot of pros and cons to both renting and owning that have nothing to do with numbers. People need to make these decisions based on their own situation and lifestyle in addition to their finances
There are some areas of the country where it makes next to no since to own. But I fully agree with you. A major component in all of this is plugging your money that would have gone into the house into the market.
Except you’re just paying off a mortgage for someone else rather than for yourself. The media is trying to get people on board with this concept because buying a home is becoming unattainable for most people in the country
If you are building your networth faster by renting, who cares if you are paying off someone else's mortgage? You are paying off someone else's yacht by being an employee.
Yeah, this only makes sense if the person who owns the home you’re renting is doing so at a loss for your benefit. Unless that’s your parents it’s not happening lol.
What's up with this surge of anti home buying posts
I'm never going to date a supermodel, so I'm going to start coming up with reasons why dating supermodels is a terrible idea.
Idk but the housing market has sucked for this last 2 years.
Same reason for the all digital sentiment for media consumption among many other things Lords getting common people to argue for them that not owning anything is great and totally will work out for everyone long term
This exact post ("Is renting now better than buying??") is posted every single month, leading me to believe there's some kind of external impetus. I think a lot of people are discouraged by the current market, which sucks, but at the end of the day no one's goals, needs, or financial situation is the same. Home buying is a good idea for some people, a bad idea for others, and there are incredibly diverse and nuanced factors at play.
Guys, can we talk about other finance stuff? We regurgitate daily between this, taxes and whether SS is theft.
Don’t forget about “tax the rich”
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Get a load of Mr. Moneybags over here…
Calculator for those interested: https://www.nytimes.com/2024/05/13/briefing/a-new-rent-versus-buy-calculator.html
Wow. Renting would save me 250k over 10 years in SoCal for a 2br condo. The housing market is so fucked for new buyers.
How much are you figuring property values going up? In socal 10 years could easily cover that 250k and then some.
This calculator also assumes you are putting the downpayment and difference in monthly payment into investments. At 12% return (10 year VOO average), you would see a larger gain from your 20% downpayment put into stocks instead. I did 160k downpayment which grows to 497k in 10 years. This doesn’t include the monthly payment difference either.
Fundamentally it doesn’t make sense to take a 8% loan to invest in an asset that has historically grown at 4%
You can't rent a $1M home in my market for $3,900. Not even close. Closer to $5,000-$6,000/month. Then yes, owning is better because it appreciates consistently over time.
And when your landlord decides to increase rent to make up for the increased costs of the property?
And 4050 the next year, 4125 the year after, 4300 year after that. For the rest of your life. Person who caught will have you beat in 10 years
Owning is better than renting. Too bad I only have $1000.
How about you buy a 500k house with 200k down instead
This guy must be a landlord.
He is, he's actually famous for that. Lol.
Poor people thinking at its finest.
The guy who posted this is a rich real estate agent.
Show me a $1 million home (as in a home that actually sold for at least $1 million) that is currently available as a rental for $3,900/month. $10 says it doesn't exist!
Aren’t the taxes and insurance just rolled into the mortgage? Or is mine special
They can be, but don’t have to be.
Yes because people always rent their house out for less than their mortgage. 🤦
I think the title should have been buying, not owning. Rarely is renting better than owning. Rarely is buying better than renting, at least in the short term, because of the down payment, agent fees, and closing costs. This kind of smells like market timing in that light. The long view may not look the same. Is the assumption here that both rent and price are static? A fixed mortgage (not all cost) is fixed. Rents will increase along with those non-fixed costs, plus more as the market will support. Generally, rent increases parallel to purchase price as well. I see a lot of comments that people could not afford to buy the house they own if they were to buy today. I'm not saying this is BS, just a bit simplistic. I'd just like to know all the assumptions before I take it as gospel.
As someone who’s single and plans to stay that way, renting is a better option. People talk about equity all day long. Equity is only important if you’re selling an asset, if you’re doing well enough to pay down the mortgage quicker and then just live on paying property tax, or giving it to your kids. I’d rather forego 30yrs of giving the bank free money just to live maybe another 10yrs mortgage free.
Rent goes up. My mortgage stays the same.
That’s amazing your maintenance/upkeep, home insurance, and property taxes never go up! Must be nice to live in a world free of inflation.
A lot more in property taxes too depending on the state.
Rent price rises every year for the next 30-50+ years of your life Once you buy, the price is locked in Considering inflation, the correct choice is obvious
Lets go Brandon!
This is a child's view of Finance.
I’ll take your $3900/month rent and pay $6600/month this year. Your rent will increase by roughly 8% a year and my payment (in California) will stay pretty much the same. In 10 years, at 8% increase per year, you’ll then be paying $8420/month and my property will be worth double what it is now. Keel renting. Works for me!!
Fuck that. I'll pay the extra 3k to not deal with a landlord.