live on rented home
Before buying a property, it is prudent to rent in the target area for a while, analyze the history, and wait for a bargain.
For Bayonne and JC, I have lived in the municipal cities long enough. However, I want to define “location” as a much smaller neighbourhood.
See also home ownership rate
https://www.bbc.co.uk/sounds/play/w3csz8mz is a BBC short program, consistent with the statistics from other sources. If accurate, then these pictures make a backdrop for my family to be seen as /affluent/ immigrants when we arrive in the U.S.
==== based on https://www.aspeninstitute.org/blog-posts/the-covid-19-eviction-crisis-an-estimated-30-40-million-people-in-america-are-at-risk/ in Aug 2020
( For a Singapore perspective, https://www.mnd.gov.sg/newsroom/parliament-matters/q-as/view/written-answer-by-ministry-of-national-development-on-households-living-in-hdb-rental-flats has some Singapore stats. Due to my bias, I tend to perceive it as more accurate than the U.S. stats. )
.. an estimated 30–40 million people in America (presumably beyond citizens) could be at risk of eviction in the next several months. Many property owners, who lack the credit or financial ability to cover rental payment arrears, will struggle to pay their mortgages and pTaxes and maintain properties. The COVID-19 housing crisis has sharply increased the risk of foreclosure and bankruptcy, especially among small property owners.
Multiple studies have quantified the effect of COVID-19-related job loss and economic hardship on renters’ ability to pay rent during the pandemic. While methodologies differ, these analyses converge on a dire prediction: If conditions do not change, 29-43% of renter households could be at risk of eviction by the end of 2020.
30% of renters (in some unknown survey) indicate that they have borrowed cash or obtained a loan to make rental payments. Tenants are increasingly using credit cards to pay the rent.
Personally, I find these percentages too high to be realistic.
— rental unit stats
As of 2020, “mom and pop” landlords own 22.7 million out of 48.5 million rental units in the U.S. housing market. In addition, I think there exist additional “rentable” units out there, but not put on the rental market, perhaps because owner doesn’t like to deal with tenants.
As of 2020, 44% of single-family rental units have a mortgage or some similar debt. Percentage go up when you go beyond SFH. 65% of properties with 2 to 4 units and 61% of properties with 5 to 19 units have a mortgage.
https://www.huduser.gov/portal/pdredge/pdr-edge-frm-asst-sec-061118.html has lots of details.
— renter population stats
2020 Apr: NMHC and the National Apartment Association informed Congress in April that “more than 25 percent of the households that rent in the US may need help making payments” because of COVID-19 rental hardship, translating to nearly 11 million households and 25 million people.
More precisely, in 2020 there are 100.8 million people in 43.8 million “renter households”.
1 in 3 Americans (probably including foreigners) live as renters, according to https://www.nmhc.org/research-insight/quick-facts-figures/quick-facts-resident-demographics/renters-and-owners/
14 million, or 30% of, renter households include children. I think most renter households desire to buy their home when they have children. Many of these 14 million households are unable or unwilling to.
In Singapore, About 52,000 households currently live in HDB rental flats under government schemes.
— rental burden among total household expenses, even before covid19
Stay rented in Hoboken indefinitely?
Even though home price is possibly unaffordable, rent could be affordable, esp. away from waterfront.
in 2019, Yihai’s California friend (mid-40’s) bought a USD 1.85M home for his family of three. Household income is not that high — Apple engineer + accountant wife.
I guess they have no choice.
20% down payment = 370k. Mortgage installment would be $7k/month. Yihai used the term “mortgage slave”… At this price level, home ownership is impractical for many residents. Many would need to stay rented.
Looking at tri-state, at 700k price level, I would still consider it beyond me. So lease-spread is the way to go. Otherwise, consider condos.
Nirav pointed out that because of sky-high property costs, general retail prices will go up, same as the price differential in city center vs suburbs.
Previous title: two-phase strategy to cope with multiple inflexibilities
See also U.S.home: too many inflexibilities
Buying a family home has a huge impact on comfort, street safety, confidence/financial_security, school, commute, Chinese community, car dependency, resale liquidity, burn rate (heavier than renting) … Too many concerns. It would be great if I can put off half the concerns to a later phase.
Sugg: stay rented indefinitely so I can focus on the first concerns and not worry about commitment and cash flow pressure due to a big buying decision.
The first small purchase is really a rental property to defray my rental outlay. A 250k 1st rental property promises to provide positive NRY of 0~2k/M. 2-3K/M would enable my family to enjoy the flexibility of renting indefinitely.
With enough [1] NRY, I could solve commute, school, and car dependency problem by renting as a family in Jersey City for 2~3k/M. Commute would be by bike if working in JC, or by train to NYC. There are many good public and private schools in JC. I could lease a 4k/M house and sublet rooms in other floors to recover 2k/M.
[1] 3k is realistic as of 2019.
Compared to me as a student, my son is more influenced by classmates, so he needs a suitable school. Better stay rented and flexible to accommodate his schooling needs.
Similarly, overseas NRY of 1-2k/M also enables the family to enjoy the flexibility of renting indefinitely. A 4th property in Cambodia would increase the NRY by about $1k/M… a huge boost. However, don’t assume Cambodia investment is as safe as a Singapore investment!
Actually, I will have at least 3k/M overseas rental income. Still, I WANT (not “need”) to own a rental property in U.S. while paying U.S. rental.
https://www.zillow.com/rent-vs-buy-calculator/ is a nice graph Rahul showed me. It shows inflation !
2.5k can rent a nice small home in a reasonable location outside the luxury /belt/ like JC waterfront. With sublet I could take up a 3k house and collect 1k rental.
In contrast, if buying a 700k home, total burn rate could be 5k. Basically, high mtg and tax rate is applied on a big home value.
All my life, I have felt very uncomfortable with big rental burden (debt too .. another topic), so I always find ways to reduce it.
When my family finally comes over, I will need to find quick relief. A questionable relief is buying a home as it will further aggravate the cash-flow burden, and sink me to cash flow lower ground ! My default plan:
In the long horizon (no timeframe), I could buy a 2FH for family use, and sublet one unit. However, 2FH creates heavier cash flow burden including pTax
Q: USD 300k war chest for rental relief? How would it change my life?
Q: USD 100k war chest for rental relief?
update: some renters prefer simpler life in a condo.
I now feel condo is very popular for renters, with
However, investors are often better off with SFH or 2FH because