Comment by phaedrus | Hacker News Reader

Comment by phaedrus | Hacker News Reader

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Besides taxes, there is another sense in which outside circumstances can break your "rent control" model of home ownership with 30 year mortgage. Here in Oklahoma, insurance rates have skyrocketed in the last couple years. I now pay more in homeowner's insurance monthly than either my principle or interest payment (though perhaps not both together - yet). And I have a 4.something% mortgage.

I suspect it has or will soon reach the point where the Kelly criterion says mathematically I'd be better off to self-insure - if I didn't have a bank loan.

It's not just insurance (which is likely also weather-related); after a fluke super-cold Winter we had, our natural gas companies incurred a huge wholesale market bill which they've passed on to customers. I have a family member who owns his house free and clear whose gas bill went up so much he could no longer afford to heat his house. The gas company still tried / is trying to assess a one-time very large retroactive fixed fee even though he turned off his gas.

My point, I guess, being even homeowners are not totally insulated from being screwed over by outside market forces.

Assuming it's market condition based and not specific to your house, rents would easily pass along insurance rate hikes to you as well. I don't see much difference in insulation from that for renting vs. buying.

>I suspect it has or will soon reach the point where the Kelly criterion says mathematically I'd be better off to self-insure

Heh wait till you go to replace the property/damage. Unless you're doing yourself you'd absolutely crap on the floor once you see how high prices have got for this work.

Add to this the increasing incidence of weather/climate related damages to homes and the situation isn't looking good for many states.

> Here in Oklahoma, insurance rates have skyrocketed in the last couple years.

Insurance company profiteering is a disaster but that's a whole different topic.

But remember that rental properties are also insured. And the renter is paying for that insurance, it's just bundled in the rental price. So renters are also paying the wild insurance hikes.

And utilities like gas are generally directly paid by renters, so no difference.

In Berlin, only a small percentage of landlords beat inflation. It's a lot of work and a low return for an illiquid investment. Depending on the timing, many qualify housing as a lifestyle decision instead of an investment.

Aside from what you've mentioned, the state can raise the efficiency standard to protect the environment, raise the cost of services, or make you pay to rebuild the street or sidewalk in front of your home. Then come the maintenance: new roof, new windows, new kitchen and so on.

If your country has good tenant rights, there are not so many reasons to buy. It's better to invest the money for a while.

> Here in Oklahoma, insurance rates have skyrocketed in the last couple years.

I thought this was only a problem in CA or FL. I wonder if this is nationwide or specific to states with disaster prone areas.

You don't HAVE to carry home insurance do you? You can also change policies for different levels of insurance at any time. It's not exactly a debt, but an ongoing service

If you have a mortgage, you are required to insure the building at the least.

Banks want to insure the collateral.

To the point where if they're notified that your insurance has lapsed, they will warn you to get replacement coverage, or they will and then bill you for it.

I had a not so fun experience with switching insurance providers at about the same time that my bank was about to make the insurance payment out of escrow.

That was something we had to worry about when buying our house.

The house I have is pretty old and the roof had some issues. I obviously was planning on fixing those, but it became a bit of a catch-22 problem; the insurance I was planning on using (cuz I had a discount from my employer) said that they wouldn't insure me until the roof was thoroughly fixed and/or replaced, but I couldn't fix the roof until the deal closed, and the mortgage company wouldn't close the deal until we had insurance. We were afraid we'd have to pay the insane insurance rates from the mortgage company.

Fortunately, after multiple days of shopping, I found one insurance company that agreed to insure me as long as I fixed the roof within 30 days of closing, which I did.

I had a similar issue with buying a house. In the end we just wrote the roof replacement into the contingency of the contract and adjusted the price a bit so both sides paid a little bit into the cost of the new roof. The roof was replaced, we got our insurance, and the house was sold.

I am pretty sure that at least in NY you are required to have insurance if you have a mortgage.

I guess once the mortgage is paid off for whatever reason you’re welcome to not get insurance.

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