Looking for advice: From a city apartment to a rural house

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Ramen-o-kudasai's picture
Ramen-o-kudasai
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Looking for advice: From a city apartment to a rural house

Hello everyone. I have been pouring over the forums today trying to find some advice on something that has been nagging at me and I figured I would just ask.

Currently I live in an apartment in a large city. Until recently I had always lived in a rural house with a  very large garden, a pond, and woods. It worries me to live in a city with none of these resources. I am about to get married and the current plan was to move into my fiance's apartment. I have raised the idea of getting a house in a surrounding county. In order to do this we would need to get a mortgage. We both have college loans and one car payment. We both have very good credit.

Would it be a good idea to get out of the city into a house near a town, that has a yard, woods, etc., even though it means a mortgage? I was thinking a foreclosed home with a monthly payment less than or equal to our current rent. Fixing up the place sounds exciting. It means we stay in one place for quite a bit, but it brings a lot more mental security, and I think actual security.

 Any advice would be most appreciated. Thank you.

strabes's picture
strabes
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Re: Looking for advice: From a city apartment to a rural ...

Hi.  Your desire for a better living environment is I think precisely correct.  However, signing a mortgage right now is the last thing you should be doing as we go into a depression, especially if you're already in debt with student loans.  I recommend finding a place like you describe that's for rent.  Let the owner be the bank slave and just pay him rent.  

SamLinder's picture
SamLinder
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Re: Looking for advice: From a city apartment to a rural ...
strabes wrote:

Hi.  Your desire for a better living environment is I think precisely correct.  However, signing a mortgage right now is the last thing you should be doing as we go into a depression, especially if you're already in debt with student loans.  I recommend finding a place like you describe that's for rent.  Let the owner be the bank slave and just pay him rent.  

 

Strabes,

Bear in mind, as I say this, that I come from 65 years of being taught one way.

I always learned, and still feel that way, that it was better to be putting your money into actually owning your own place rather than renting it from someone else. Even if you're a "bank slave", you're still paying down a mortgage for property that will, one day, become all yours. (Of course, all bets are off if you think of it as an investment that you plan on cashing in some future date. I'm talking strictly long-term home ownership like my parents time when people looked forward to mortgage-burning parties.)

Also, I think that we will see strong inflation (if not hyper-inflation) when we eventually pull out of this deflationary period. That means paying off old debt with cheap dollars.

That being said, I am curious as to why you recommend renting instead of owning.

Ragnar_Danneskjold's picture
Ragnar_Danneskjold
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Re: Looking for advice: From a city apartment to a rural ...

If you have:

  1. very secure employment
  2. A substantial down payment (20%+)
  3. excellent credit history
  4. a very low debt/income ratio
  5. plans to live in the area for at least 10 years

Maybe much later this year or sometime next year?  But if you don't have the 5 above, keep renting.  If you decide to go forward, you should stick with a very modest house and NO EXOTIC MORTGAGE, regardless where interest rates may be at that time.   There will come a point where the housing market bottoms, and that point may not be too far away.  But get prepared.  Pay down debts to the extent possible and put aside some money for a good down payment.

 

capesurvivor's picture
capesurvivor
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Re: Looking for advice: From a city apartment to a rural ...

For me it is also peace of mind. When I was a renter, I never liked my landlord showing up for the rent, raising the rent,  snooping around, to show the apartment when I left, etc.

 

I don't know who said "a (wo)man's home is his (her) castle.' (Jeez, I hate PC!)

 

SG

SamLinder's picture
SamLinder
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Re: Looking for advice: From a city apartment to a rural ...
capesurvivor wrote:

For me it is also peace of mind. When I was a renter, I never liked my landlord showing up for the rent, raising the rent,  snooping around, to show the apartment when I left, etc.

 

I don't know who said "a (wo)man's home is his (her) castle.' (Jeez, I hate PC!)

 

SG

 

Google is a wonderful thing:

http://www.phrases.org.uk/bulletin_board/8/messages/1239.html

A MAN'S HOME IS HIS CASTLE - "This saying is as
old as the basic concepts of English common law.," From the "Morris
Dictionary of Word and Phrase Origins" by William and Mary Morris
(HarperCollins, New York, 1977, 1988).

"You are the boss in your own house and nobody can
tell you what to do there. No one can enter your home without your
permission. The proverb has been traced back 'Stage of Popish Toys'
(1581). In 1644, English jurist Sir Edward Coke (1552-1634) was quoted
as saying: 'For a man's house is his castle, et domus sua cuique
tutissimum refugium' ('One's home is the safest refuge for all'). First
attested in the United States in 'Will and Doom' (1692). In England,
the word 'Englishman' often replaces man." From "Random House
Dictionary of Popular Proverbs and Sayings" by Gregory Y. Titelman
(Random House, New York, 1996).

(Coke is pronounced "Cook.")

also see: http://www.phrases.org.uk/meanings/an-englishmans-home-is-his-castle.html

SagerXX's picture
SagerXX
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Re: Looking for advice: From a city apartment to a rural ...

Concur w/Strabes above, and Ragnar's stipulations as well.  Surely owning your own place is, considered in a vacuum, preferable to renting (assuming you don't think of your house as an investment you're gonna retire on) -- but we're not living in a vacuum.  Yah, if serious inflation hits it'll be easy(er) to pay down old debt (denominated in non-inflated $$$), but you have to still have an income to do it.  Will you?

Right now my 2 businesses are near all-time highs in terms of receipts, and I'm still playing everything as close to the vest as I was 2 years ago when we were merely comfortably in the black.  One major shock and all bets are off -- and I reckon we're tap-dancing on the edge of a fine, fine razor.

NOW:  if you're going to shift out to the country (which, all other considerations aside, I consider a savvy plan), make sure you end up on a patch of land that can grow a garden and ideally has a well (i.e. not on city/town water system).  And of course it oughta be as energy-efficient as can be.

 Just my $0.02 (worth less each day [smile]),  Sager 

Ramen-o-kudasai's picture
Ramen-o-kudasai
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Re: Looking for advice: From a city apartment to a rural ...

Thank you for the responses. These are all important things to consider.

Currently we are very close to living entirely off of one income, and we are with minimum monthly payments (I refuse to pay the minimum). All of our debt is fixed at 6.5% or less. The plan was to live off one income and use the rest for loan premium/savings/giving. A $30k or less house with an 8% or less fixed loan is less than $250 a month (I still need to look into property taxes). Current renting is $550+ where I live. Of course, losing a job while renting isn't as bad since we can move in with family and not have to keep paying the next month.

What I am trying to figure out is if the risks of buying(or rentingWink ) a house in the country outweigh the risks of renting in a very large city if/when TSHTF.

SagerXX's picture
SagerXX
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Re: Looking for advice: From a city apartment to a rural ...

Hmmm...R-o-K:

I'd humbly suggest you re-phrase your question to be:

"Do the risks of buying *or* renting a house in the country outweigh the risks of living in a city if/when TSHTF?" 

lundsta's picture
lundsta
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Re: Looking for advice: From a city apartment to a rural ...

Hey!

 

I am in a similar situation. It is a tough decision and you could go either way. Here is why I have decided to rent. (Even though we are in the city)

1. Income has to be 100% reliable. My husband and I are in Loss prevention at a major bank. I would like to say our jobs our secure, but in these times no one can say 100%.

2. Renting has allowed us to save every month. We could afford a house but we know that added up keep expenses would not allow us to save as much as we are right now. Plus with local governments feeling the pinch property taxes are on the rise again. In our area they have not assessed property taxes to reflect current market value. So some are paying as much as 5%.

3. Since we rent we are more flexible. I know I would become attached to a house and it would be hard to let it go if things got financially tough......or social unrest forced us to move.

4. Relatives own their homes. I take pride in never asking my parents for help. However if things do go south we have a house we can go to. Both of our families currently own their own houses and they have lots of land. There is an added benefit here of banding together and using our skills.

We thought of renting a house......but have seen to many landlords loose the house to foreclosure and the renters are forced out. This is something I cannot risk with a young baby.

Everyone is different and has to address all the possibilities. Happy searching for your right answer! :)

 

 

 

 

 

 

ckessel's picture
ckessel
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Re: Looking for advice: From a city apartment to a rural ...
Ramen-o-kudasai wrote:

Thank you for the responses. These are all important things to consider.

Currently we are very close to living entirely off of one income, and we are with minimum monthly payments (I refuse to pay the minimum). All of our debt is fixed at 6.5% or less. The plan was to live off one income and use the rest for loan premium/savings/giving. A $30k or less house with an 8% or less fixed loan is less than $250 a month (I still need to look into property taxes). Current renting is $550+ where I live. Of course, losing a job while renting isn't as bad since we can move in with family and not have to keep paying the next month.

What I am trying to figure out is if the risks of buying(or rentingWink ) a house in the country outweigh the risks of renting in a very large city if/when TSHTF.

 

RoK,

Can you purchase a house with land in a rural location for 30K?  If so I suppose I would have to think hard not to recommend a purchase! I'm of the same background as Sam.

But my initial thought would be to rent, pay off student loans and put away some savings in gold if possible. Then, educate yourself in permaculture and sustainable shelter options and keep you eyes open for a good opportunity. I think you will be able to find For Sale By Owner properties in the future and you could pick the one that best matches you research.  Regardless of what home prices are now I think they will go lower before they go higher. My .02$ worth!

Coop

propamanda's picture
propamanda
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Re: Looking for advice: From a city apartment to a rural ...

Where in the world does one get a house for $30K?

Ramen-o-kudasai's picture
Ramen-o-kudasai
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Re: Looking for advice: From a city apartment to a rural ...
propamanda wrote:

Where in the world does one get a house for $30K?

There are foreclosed houses listed for under 30,000 in Indiana. I know there are is a lot more that goes into it besides walking up and slapping a wad of cash on the table. And it will in the end probably cost more than the listed price.

strabes's picture
strabes
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Re: Looking for advice: From a city apartment to a rural ...

I recommended renting because we're in deflation:

1) real estate is projected to drop another 25% this year alone in the bubble areas.  Though Indiana will be nothing close to that, it will still be dropping a bit.  This depression could last 10+ years (though housing in particular won't take that long to bottom).  You do not want to be stuck with a declining asset if you don't need to.  A declining asset purchased with a liability that doesn't decline along with it (the mortgage) is a horrible investment.  

2) cash is king in deflation and you want nobody having a claim on your cash.  plus the down payment is cash that should be used for something prudent rather than giving it to a bank just so they can give you a massive liability.

3) renting provides a huge level of freedom over buying, and freedom is in short supply during deflationary depressions. 

The standard view that owning is better than renting is typically true during regular inflationary economic growth, which we've generally had since the Great Depression, so Sam even your 65 years of experience was all during primarily inflationary growth cycles.  This view reverses in deflation...let somebody else pay the financing cost for the deflating asset.  Having large bank loans during deflation is how people lose all their wealth...banks have the legal right to take it all from you if things go badly and you can't pay (as absurd as that system is, that's the way it is).

Having said all that, I'm stuck with multiple rental properties and I'm ticked that I can't sell any due to tenant agreements! 

strabes's picture
strabes
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Re: Looking for advice: From a city apartment to a rural ...

And to your question of which is better, city or country...

From those who have been through economic collapses in Russia, Argentina, etc. it seems pretty clear that small town is the place to be.  Cities are bad due to the obvious risk of anarchy/riots/martial law.  But rural standalone property like big farms are at a big risk of professional criminal attacks.  Small community/neighborhood can defend itself and watch out for each other better than a standalone homestead.  

So depending on what you mean by country, it could be a good or bad option.   

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