Renting or buying....again

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Renting or buying....again


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Old 17th August 2019, 06:48 PM
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Default Renting or buying....again

I know this has been discussed before but it keeps coming up in my mind. Iím older, 70, and I rent in Madrid. I had every intention when I came here a year and a half ago, of buying a place. Itís how I lived in NY. But then I read about all the added taxes and fees.
There are added cost in NY too like high maintenance fees..Iím talking apartments, not homes . But as I read stuff here I thought it would be wiser to rent. Iím older, there are more taxes here, I think....Iím not actually sure. Renting seems very precarious to me. I have a nice landlord but I was thinking of moving. I pay a lot of rent and while I do have a lot of space, the way itís laid out, is not useful for me, Iím an artist and I wanted a bedroom to be my studio. But the second bedroom is the size of a nursery.
I should add that the issue of inheritance, of leaving something for someone else, is not a factor for me. Nor is having a mortgage. I would prefer to pay outright.
But for those of you who did buy apartments and homes, could you describe what the pros and cons are? Gracias.

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Old 18th August 2019, 02:00 AM
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If you're coming from the US I'm a little surprised you find things like property taxes high.

The main advantage of renting is you can use the purchase money for something else. Invest it. Travel with it. You also aren't tied down. If in five years you feel you want to be elsewhere off you go.

The main advantage is if you buy you can within limits do whatever you want. You don't need to worry about rent increases.

Not to be morbid but at 70 you're old enough you aren't planning for the next fifty years. You need to consider what your health might be like in five or ten years. Will you want a smaller place easier to look after? Or closer to the shops? Renting will make it easier to adjust your lifestyle to whatever changes come along

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Old 18th August 2019, 07:35 AM
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If you're coming from the US I'm a little surprised you find things like property taxes high.

The main advantage of renting is you can use the purchase money for something else. Invest it. Travel with it. You also aren't tied down. If in five years you feel you want to be elsewhere off you go.

The main advantage is if you buy you can within limits do whatever you want. You don't need to worry about rent increases.

Not to be morbid but at 70 you're old enough you aren't planning for the next fifty years. You need to consider what your health might be like in five or ten years. Will you want a smaller place easier to look after? Or closer to the shops? Renting will make it easier to adjust your lifestyle to whatever changes come along
Thanks Nick. In NYC, I always lived in Co-ops, where the maintenance fee covered all the taxes, most of which were paid by the Co-op itself. Plus there were certain tax write offs in NY. So Iím not used to paying yearly property taxes.
Iím good at choosing apartments that fit future needs...like elevators, transportation and shops (as well as cafes) are a must!
It isnít that I want a large place. I just want 2 bedrooms where I can use one as my art studio. Currently, in my more spacious apartment, Iíve had to spread my work areas into the living room and dining room.
And I hate moving. And as I said I hate the insecurity of having a landlord.
So my question was not so much about the cost of an apartment but about the other yearly costs and taxes.

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Old 18th August 2019, 08:12 AM
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I chose to buy rather than rent in Spain - twice (originally bought a house then sold it 13 years later and bought an apartment). It is certainly expensive in terms of taxes and fees to buy and sell property here, but I looked at it in terms of the total outlay including the purchase price of the property, taxes and fees gets me a better property than I could get for the same amount in my home country (the UK).

My annual outgoings in terms of taxes and fees are not huge. My IBI bill (annual property tax) is Ä447 for the year and the monthly community fees are Ä40.

I want to own both for security and the feeling of being settled (have had friends who have rented and have had to move a few times due to either landlords giving them notice or problems in getting the landlord to address repairs - which an owner can just sort out themselves, although they do of course have to pay for them). I also have a wider choice of properties when looking for somewhere to live as the number of properties on the market for sale here is much, much bigger than the number advertised for long term rent. I did look serioiusly at rental properties when we had sold our house but did not see one that I would really have liked to live in, although no doubt the pool of rental properties available in Madrid is much bigger than it is here.

Although I cannot say that owning property here is a good investment in the financial sense, it is a better investment in my opinion than paying rent, where you get back exactly nothing from the money you have paid.
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Old 18th August 2019, 08:35 AM
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I chose to buy rather than rent in Spain - twice (originally bought a house then sold it 13 years later and bought an apartment). It is certainly expensive in terms of taxes and fees to buy and sell property here, but I looked at it in terms of the total outlay including the purchase price of the property, taxes and fees gets me a better property than I could get for the same amount in my home country (the UK).

My annual outgoings in terms of taxes and fees are not huge. My IBI bill (annual property tax) is Ä447 for the year and the monthly community fees are Ä40.

I want to own both for security and the feeling of being settled (have had friends who have rented and have had to move a few times due to either landlords giving them notice or problems in getting the landlord to address repairs - which an owner can just sort out themselves, although they do of course have to pay for them). I also have a wider choice of properties when looking for somewhere to live as the number of properties on the market for sale here is much, much bigger than the number advertised for long term rent. I did look serioiusly at rental properties when we had sold our house but did not see one that I would really have liked to live in, although no doubt the pool of rental properties available in Madrid is much bigger than it is here.

Although I cannot say that owning property here is a good investment in the financial sense, it is a better investment in my opinion than paying rent, where you get back exactly nothing from the money you have paid.
Thanks Lynn. You make some good points. While Iím not looking for an investment. You never know.
Feeling secure about my living arrangement is important to me.

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Old 18th August 2019, 10:15 AM
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I owned properties all my life until I left the UK fifteen years ago, first for Prague, then for Spain. I was a landlord in the UK and Canada. I sold the lot and invested the proceeds. This supplements my retirement pension income.
We decided to rent and lived in big houses with pools and extensive gardens, houses we neither wished to or could really afford to buy. Last year after forty happy years together my partner died and I didn't want to go on living in the spacious four bedroomed villa we had lived in for ten years. Within a week of deciding to move I had found the ideal place for me, a typical Spanish finca in rural surroundings but near a town. Houses of the kind I moved out of are often on the market for a very long time as some are near or over the seven figure price range, hugely overpriced, Spanish owned.
I'm your age or near about. Not n the best of health currently, in fact having a pacemaker installed tomorrow. I have one son who doesn't need any inheritance and certainly not another house in Spain as he has properties here and elsewhere. So it's me I have to think about.
Maybe if I live another ten years I'll need to move to a smaller apartment in town. No problem there.
I have a five year rental contract on my finca but the owners are good friends so I have security.

People will say that by renting you put money into a landlord's pocket. If you need a mortgage to buy you are putting money into the bank's coffers. All of the three landlords we've had here and in our three years in Prague were good honest people so I was happy to give them the income.

Looking back, I think I would not have got into property like I did. I would have rented and invested in something productive. One cause of the UK's economic sluggishness is our obsession with property so that money that could be put to use in investing in the productive side of the economy goes instead to the financial side, adding to our high level of personal debt.
That's my tuppenceworth on the subject.

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Old 18th August 2019, 10:37 AM
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Although I cannot say that owning property here is a good investment in the financial sense, it is a better investment in my opinion than paying rent, where you get back exactly nothing from the money you have paid.
Equally if you rent you pay the market value for a property, or move out, which is what some of our Spanish friends did when rents for our area dropped. The property they left has now stood empty for over 4 years despite it being an architect designed and owned eco-friendly house with sea glimpses.

We, on the other hand, now have negative equity on our mortgage-free property. Our 2 bed garden flat with underground parking and communal pool probably costs about 1800 euros a year for 2 people with all bills paid.

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Old 18th August 2019, 10:42 AM
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People will say that by renting you put money into a landlord's pocket. If you need a mortgage to buy you are putting money into the bank's coffers.
True. But if you buy a property with a mortgage over 25 years, say, at the end of that time the property is yours, albeit you have paid the bank over and above the price of the property. You can then, if you wish, sell that asset.

If you rent for 25 years at the end of that time the property will still belong to someone else and you can recoup none of the rent you have paid.

The OP doesn't plan to get a mortgage, anyway.

Good luck tomorrow, I hope the pacemaker does the trick.
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Old 18th August 2019, 10:46 AM
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Equally if you rent you pay the market value for a property, or move out, which is what some of our Spanish friends did when rents for our area dropped. The property they left has now stood empty for over 4 years despite it being an architect designed and owned eco-friendly house with sea glimpses.

We, on the other hand, now have negative equity on our mortgage-free property. Our 2 bed garden flat with underground parking and communal pool probably costs about 1800 euros a year for 2 people with all bills paid.
I don't quite understand how you can have negative equity on a mortgage-free property. Doesn't negative equity mean that the value of the property is less than someone borrowed to pay for it? When I sold my original house, I didn't recoup the cost of the transfer tax, etc. although I did get back the original purchase price. Had I rented the house for that period, I would have got back nothing at all.

We rent out our parking space (as we don't have a car) which more than pays for our monthly community fees. In fact it covers our water bills, too.


Last edited by Lynn R; 18th August 2019 at 10:55 AM.
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Old 18th August 2019, 11:09 AM
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Average rents have gone up 50% in five years.

https://elpais.com/economia/2019/08/...35_118589.html

Of course this is not across the board, and there are still places where you can rent cheaply, but it would certainly help me make my mind up if I had to decide whether to rent or buy.
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