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Sassyz75
Turning a new page
Member since 5/05 9731 total posts
Name:
Dina
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Rent vs. Buy- rule of 15 from Today Show
I was watching the today show this morning and they had a real estate expert on talk about renting vs. owning and the "rule of 15".
She said that if you are renting you are supposed to take your montly rent and multiply that by 12. Then take that figure and multiply it again by 15.
If buying a comparable house/propery is more than that amount, the market still hasn't come down enough and it still isn't worth it to buy.
for example, I live in a 3 bedroom, 1 1/12 bath duplex town house and pay $1800/month rent.
Using the "rule of 15" I should be able to purchase this townhouse for no more than $324,000.
However, doing a MLSLI search, the cheapest comparable townhouse is $359k... A 3 bedroom 2 1/2 bath townhouse down the block on same street is $399 w/ a $265/month common charge and taxes of about $9k!
I don't know how accurate this is- but I thought it was interesting.
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Posted 7/9/08 2:40 PM  |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
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Re: Rent vs. Buy- rule of 15 from Today Show
I just did it
I came up with a $350K house
there is no such thing in my neighborhood
I rent a 3bed/2bath all updated (granite) with a parking spot
I could maybe find a house in Bay Terrace for double that
I could buy a 1 bedroom co-op -
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| Posted 7/9/08 2:54 PM |
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CaMacho
Sisters :)
Member since 7/06 15112 total posts
Name:
Jess
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Re: Rent vs. Buy- rule of 15 from Today Show
Doing the math you posted, it came to $210k.
Our last apartment was 2 bed/2 bath 1150 sq feet, no garage.
The townhome we just bought is 2 bed + den/office and 2 bath, 2100 sq feet, 1-car garage...
We paid way less than $210k.  
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| Posted 7/9/08 3:01 PM |
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luckysmom
Yes it is! Going as planned:)
Member since 6/07 5339 total posts
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Re: Rent vs. Buy- rule of 15 from Today Show
I just did the math and came up with $248,400.00. In the areas i would consider living in on LI you couldn't find a house near that.
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| Posted 7/9/08 3:10 PM |
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Katie111806
Team Pink!
Member since 12/06 5349 total posts
Name:
Katie
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Re: Rent vs. Buy- rule of 15 from Today Show
I just did it and came up with a figure of about 12K less than we are buying for. Not too bad.
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| Posted 7/9/08 3:16 PM |
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headoverheels
s'il vous plaît
Member since 6/07 42079 total posts
Name:
LB
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Re: Rent vs. Buy- rule of 15 from Today Show
that actually worked for me. it gave me a price of $414K for the house we are renting (no idea what other homes in the area are going for). the owner was asking $450,000 which we thought was much too high for the size and location... glad we decided to rent first!!
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| Posted 7/9/08 3:19 PM |
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Smileyd17
kids
Member since 5/05 20997 total posts
Name:
Mommy
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Re: Rent vs. Buy- rule of 15 from Today Show
I didnt rent..or at least have to pay rent..I was in my moms apt for a yr prior to the house.
I just didnt want to throw my money away at rent every month, JMO..why I purchased a home and no my mtg payment is not even near what rent in LI is but its MINE
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| Posted 7/9/08 3:22 PM |
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donegal419
St. Gerard, pray for us.
Member since 7/07 7650 total posts
Name:
K
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Re: Rent vs. Buy- rule of 15 from Today Show
well, i guess according to the today show, i'm screwed.
I came up with $168,300 --- can't find a house for that ANYWHERE on Long Island. We paid a little more than doulbe the $168 figure... granted though, we could afford more than we're paying in rent, but we have been trying to save money by renting a basement studio,
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| Posted 7/9/08 3:25 PM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
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Re: Rent vs. Buy- rule of 15 from Today Show
Posted by Smileyd17
I didnt rent..or at least have to pay rent..I was in my moms apt for a yr prior to the house.
I just didnt want to throw my money away at rent every month, JMO..why I purchased a home and no my mtg payment is not even near what rent in LI is but its MINE
it's nice that you had that option- not everyone is that lucky
so to me renting isn't throwing away money - it's a place to live while I decide where I want to buy a house- I have to live somewhere
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| Posted 7/9/08 3:26 PM |
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CrankyPants
I'm cranky
Member since 7/06 18178 total posts
Name:
Mama Cranky
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Re: Rent vs. Buy- rule of 15 from Today Show
This seems a bit skewed. Many people rent way below their means so that they can save for a house. This doesn't seem to take into account salary.
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| Posted 7/9/08 3:29 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Rent vs. Buy- rule of 15 from Today Show
I don't agree with it.
Rents in different locales tend to be a lot closer in prices than single family homes.
So in major metropolitian areas, this formula will never work.
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| Posted 7/9/08 3:30 PM |
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ave1024
I Took The Wrong Road
Member since 12/07 6153 total posts
Name:
That Led To The Wrong Tendencies
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Re: Rent vs. Buy- rule of 15 from Today Show
Posted by donegal419
well, i guess according to the today show, i'm screwed.
I came up with $168,300 --- can't find a house for that ANYWHERE on Long Island. We paid a little more than doulbe the $168 figure... granted though, we could afford more than we're paying in rent, but we have been trying to save money by renting a basement studio,
To be fair to the calculation, I think you should be calculating rents for the size of the apartment you are looking to get.
So if you are looking for a 4br house, you should see how much it would cost to RENT a 4br house.
Houses rent out at around $1800 or so. Maybe more.
So $1800 a month comes out to around 325k. Still pretty low.
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| Posted 7/9/08 3:31 PM |
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Smileyd17
kids
Member since 5/05 20997 total posts
Name:
Mommy
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Re: Rent vs. Buy- rule of 15 from Today Show
Posted by Beth1210
it's nice that you had that option- not everyone is that lucky
so to me renting isn't throwing away money - it's a place to live while I decide where I want to buy a house- I have to live somewhere
Yes I was lucky and if I had to...I would of rented but prob not done it for long.
I, didnt i say that already.... didnt want to throw away MY money.
Like I said, I rather of purchased a home. No way near a rent around LI price but you do what you need to do..and thats thanks to my lovely taxes.
ETA: Formula dont work-ITA!
Message edited 7/9/2008 3:37:47 PM.
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| Posted 7/9/08 3:33 PM |
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donegal419
St. Gerard, pray for us.
Member since 7/07 7650 total posts
Name:
K
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Re: Rent vs. Buy- rule of 15 from Today Show
Posted by ave1024
To be fair to the calculation, I think you should be calculating rents for the size of the apartment you are looking to get.
So if you are looking for a 4br house, you should see how much it would cost to RENT a 4br house.
Houses rent out at around $1800 or so. Maybe more.
So $1800 a month comes out to around 325k. Still pretty low.
okay, i see what you're saying...
so in this case, if we did rent a 4 bedroom house (which is what we bought) than this formula seems like it would work for us. I actually calcuated what we pay in rent, not what a comparable property's rent would be.
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| Posted 7/9/08 3:47 PM |
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Sassyz75
Turning a new page
Member since 5/05 9731 total posts
Name:
Dina
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Re: Rent vs. Buy- rule of 15 from Today Show
Posted by ave1024
I don't agree with it.
Rents in different locales tend to be a lot closer in prices than single family homes.
So in major metropolitian areas, this formula will never work.
It has to be for a COMPARABLE rental...
not saying, I live in a basement studio and paid $750/month so therefore should be buying for $135k because you couldn't BUY something comparable.
So- for example, if a 3 bedroom, 1 bath house in lindenhurst is renting for $1850 then the purchase price should be close to $333k which actually seems about right.
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| Posted 7/9/08 4:03 PM |
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Ophelia
she's baaccckkkk ;)
Member since 5/06 23378 total posts
Name:
remember, when Gulliver traveled....
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Re: Rent vs. Buy- rule of 15 from Today Show
according to this model, I shouldn't be paying more than 86,580 for a threee bedroom, one bath house with living and dining rooms.
 
this is why we are buying, but NEVER giving up our apt. 
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| Posted 7/9/08 4:30 PM |
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JandJ1224
Member since 6/06 5911 total posts
Name:
Jannette
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Re: Rent vs. Buy- rule of 15 from Today Show
In my town a whole house recently rented for $2300/mo the same house is also listed on the market at $469
According to the calculation the house would be $414
Some people use this idea to predict where the market should be
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| Posted 7/9/08 4:34 PM |
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tourist
Member since 5/05 10425 total posts
Name:
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Re: Rent vs. Buy- rule of 15 from Today Show
Wow--that was sort of accurate for when I moved in 2006. I rented on a block that had mostly co-ops & it would have been possible to buy something simlar to what we were renting for that mount. We just wanted a 2nd bedroom, so we had to move to the next town.
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| Posted 7/9/08 4:36 PM |
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sunnyplus3
:)
Member since 11/05 8749 total posts
Name:
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Re: Rent vs. Buy- rule of 15 from Today Show
We bought in 2004, according to "the rule" we paid $45,000 less than we could afford.
Renting whole houses & large condos & townhouses will become very popular again as the owners may not be able to sell so They'll become unlikely landlords. This will allow renters to find nice, spacious places at decent rent instead of living in someone's basement.
That makes a big difference IMO on whether or not its better to rent.
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| Posted 7/9/08 5:45 PM |
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sirk1020
*************
Member since 9/06 3046 total posts
Name:
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Re: Rent vs. Buy- rule of 15 from Today Show
the formaula can be about accurate if it is all comparable
renting a 3bed & 1 to 1 1/2 bath is about 2400 a month (in the area i am looking in LI) with this formula the house should be about 430k -- you can get a small 3 bad , 1 bath ranch for that price (in the same area you can pay the 2400 a month rent)
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| Posted 7/9/08 6:53 PM |
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sunnyplus3
:)
Member since 11/05 8749 total posts
Name:
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Re: Rent vs. Buy- rule of 15 from Today Show
this article was online yesterday
34 cities where its still better to rent
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| Posted 7/9/08 7:26 PM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
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Re: Rent vs. Buy- rule of 15 from Today Show
and the NY metro area is on the top half of that list
renting isn't always throwing money away- in this market- buying could be throwing it away also
let's take my brother as an example- he lives with in 15 miles of CaMacho
in a similar townhouse (hers is nicer IMO)
my brother paid about 3 times what she paid
his mortgage payment is triple what his rent was
and his house is worth IMO 60% of what he paid
so if he continued to rent- he would be in a much better place now!
so I really hate when people say renting is a waste of money
Message edited 7/9/2008 7:34:45 PM.
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| Posted 7/9/08 7:34 PM |
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sunnyplus3
:)
Member since 11/05 8749 total posts
Name:
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Re: Rent vs. Buy- rule of 15 from Today Show
buying in a property with an inflated value and/or stretching to buy a house you really can't afford are two things that are never smart.
Homeownership is still one of the best finacial moves you can make LONG TERM.
It always has been & always will be.
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| Posted 7/9/08 7:47 PM |
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Beth
The Key to your new home....
Member since 2/06 24849 total posts
Name:
Beth
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Re: Rent vs. Buy- rule of 15 from Today Show
Posted by KellyFG
buying in a property with an inflated value and/or stretching to buy a house you really can't afford are two things that are never smart.
Homeownership is still one of the best finacial moves you can make LONG TERM.
It always has been & always will be.
I'm not augring with that- I totally agree- which is exactly why I decided to wait an extra 2 years - what's 2 years out of lifetime???? to make the right move
my brother didn't want to wait - he streched himself on an over inflated house (not even a house- a townhouse with no land- and $9K in taxes)
he was never sure about staying in south FL- they always had plans to move back up North in 3 to 5 years
the only way he can pull that off is a short sale - or to just walk away
if he rented - he could have moved back north with a nice chuck of change instead of broke with bad credit
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| Posted 7/9/08 7:52 PM |
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qtdimps231
LIF Toddler
Member since 11/07 477 total posts
Name:
Diana
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Re: Rent vs. Buy- rule of 15 from Today Show
so i think it works. i looked up 3bed/2bath apartments in merrick and got $2800 a month. so that comes to $504K. I just got my house for $445. So I guess I did good. 
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| Posted 7/9/08 8:08 PM |
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