Renting or Buying ?

[Samer2010]

Hi All,

Which is better/wiser:

A) Renting an apartment for 450 Euros/Month ?

(Almost zero commitment, able to change the place whenever you want, and most importantly you pay 450 and that set).

OR

B) Buying the exact same apartment for a reasonable price, But, You have to pay 250 Euros/Month for the Hoitovastike?

(Full commitment, and most importantly you will always have to pay a semi-rent cost which is 250 every single month)


I would greatly and sincerely appreciate your opinions, and I am really having a hard time to understand which one is better than the other and why?

Thank you all !

[betelgeuse]

Which is better/wiser:

A) Renting an apartment for 450 Euros/Month ?

(Almost zero commitment, able to change the place whenever you want, and most importantly you pay 450 and that set).

OR

B) Buying the exact same apartment for a reasonable price, But, You have to pay 250 Euros/Month for the Hoitovastike?

(Full commitment, and most importantly you will always have to pay a semi-rent cost which is 250 every single month)

You will also have to pay interest unless you can finance the apartment out of pocket.

I would greatly and sincerely appreciate your opinions, and I am really having a hard time to understand which one is better than the other and why?

For Helsinki an apartment with hoitovastike at 250 could be for example a larger two room apartment. You will not be able to rent one for 450 euros (or any apartment on the open market for that matter). We are talking about easily over 1000 euros. Due to tax breaks and preference for owning, most of the time it makes sense to own one. If the spread would be smaller (like your example) then it's more a matter of preference.

[Samer2010]

Thanks betelgeuse for your inputs, I do understand your point fully. If the rent is between 700-1000, then, yeah it makes sense to buy.

Nevertheless, I'm only focusing on this particular example, and that's the reason why I'm torn between renting and owning because the rent is not that high, and on the other hand the Hoitovastike is really high.

That's why am asking myself what is the point of buying an apartment and still paying almost a semi-rent forever....

[betelgeuse]

That's why am asking myself what is the point of buying an apartment and still paying almost a semi-rent forever....

Historically apartments appreciate in value (and the sale is tax free). However, there are many markets currently in Finland where this not the case (at least not in the short-term).

[misnomere]

Of course RENTING !

no-brainer rocket scientist, Do the math and you will see the that ROI is unreasonable.

I challenge anyone on this forum to prove me wrong in this particular example !

[Rip]

In any case you should not expect to make quick profit in this property market, so if you are not planning to stay here, rent. Is the "hoitovastike" strictly that or is there also some "rahoitusvastike" included in that? If you do not care to share more details you could at least mention the rough price (for estimating the overall economics) and the year the house was built (one can make some rough guess-estimate of the upcoming renovations (the seller should have told about the projections for the next few years)

This must be somewhere outside the capital area. Prices are lower, rents are lower, the maintenance costs are usually somewhat, but not that much lower than in and around Helsinki.

[Samer2010]

Thanks all for your inputs.

Here are the details to make a better judgement:

I am NOT looking for making any profit at all. I just wanna make a decision and I hope I will not regret it, that's why I need your help.

The place: In a very tiny city, Not even in the city itself, But about 10 KLM away from it. So, Yes it is in the middle of nowhere, and I know that it very hard or almost impossible to be sold later.

Reason of living there: Work is located in that area, So I must live there. For how long? I don't know, who even knows such things anymore with this economy....

Here's the beef: I already live in the apartment as a tenant and pay 450 Euros/month which is the average rent in that area (Based on what I checked on the Internet). Now the owner told me if I want I can buy the same apartment for 32000 Euros which is kinda cheaper than the average prices of that area (Based on what I checked on the Internet).

As for the upcoming maintenance fees, YES, It gonna be VERY BIG because it includes: Pipes, Electricity, Sewerage,...etc and the estimated costs are about 250 000 Euros, BUT, I am NOT worried about that because this amount is divided across ALL the apartments in the whole complex and there are about 120 apartment, which means: my share is around: 2100 Euros, and that set.


The only thing that I am really annoyed about is the frickin Hoitovastike, why on earth it is 250 Euros? There is Rahoitusvastike but that is something the owner will take care of.

Paying 250 Euros as Hoitovastike every single month and forever feels exactly like paying a rent and costs almost like it too. This is the ONLY reason why I am feeling renting is better than owning.

What do you think ?

[betelgeuse]

The place: In a very tiny city, Not even in the city itself, But about 10 KLM away from it. So, Yes it is in the middle of nowhere, and I know that it very hard or almost impossible to be sold later.

So buy if you are prepared to entertain it as a holiday home after you move away. You might also be able to rent it to someone else if they are jobs there still.

As for the upcoming maintenance fees, YES, It gonna be VERY BIG because it includes: Pipes, Electricity, Sewerage,...etc and the estimated costs are about 250 000 Euros, BUT, I am NOT worried about that because this amount is divided across ALL the apartments in the whole complex and there are about 120 apartment, which means: my share is around: 2100 Euros, and that set.

In the capital area pipes are between 500-1000euros/m2 depending on the building and method chosen. Country side is cheaper but not that much. I wouldn't be surprised if your numbers are missing a zero. The board must maintain a five year plan for renovations. They usually include rough estimates for costs. This plan will be included in the documents to review when considering to buy.

The only thing that I am really annoyed about is the frickin Hoitovastike, why on earth it is 250 Euros? There is Rahoitusvastike but that is something the owner will take care of.

You need to ask the owner for the last financials of the building. The income statement tells you where the money goes. For example heating is about 25% where I live.

Paying 250 Euros as Hoitovastike every single month and forever feels exactly like paying a rent and costs almost like it too. This is the ONLY reason why I am feeling renting is better than owning.

What do you think ?

Hoitovastike includes things like heating and water that in many countries you could be paying directly to the utility companies. Every condominiums needs money to run itself so there are fees involved...

[Rip]

I can buy the same apartment for 32000 Euros

As such paying 32000 euros to save 2400 annually does not sound like a bad deal (interest rates probably staying low for long time), but you could try to see ( http://asuntojen.hintatiedot.fi ) if the area seems to have some resale market if you need to change jobs and place to live and will not retire there.

but

As for the upcoming maintenance fees, YES, It gonna be VERY BIG because it includes: Pipes, Electricity, Sewerage,...etc and the estimated costs are about 250 000 Euros, BUT, I am NOT worried about that because this amount is divided across ALL the apartments in the whole complex and there are about 120 apartment, which means: my share is around: 2100 Euros, and that set.

I too am wondering if all the significant zeros are included here. Double check. Isännöitsijän todistus as a starting point.

The only thing that I am really annoyed about is the frickin Hoitovastike, why on earth it is 250 Euros?

I my house it goes largely for heating (also heating cold water warm), water/sewage (if there is a separate water fee, it may still not cover all the costs), garbage costs, real-estate taxes (those should be lot less in Nowhere than in Helsinki) maintenance (cleaning public areas, taking out snow etc) fixing "small" things (bigger ones usually go rahoitusvastike), and then some for "administrative" costs (mostly for Isännöitsijä).

[misnomere]

As such paying 32000 euros to save 2400 annually does not sound like a bad deal

Have you ever went to school? It will take the OP 13 years to get even.

"paying 32000 euros to save 2400 annually": Your advice is horrible Rip

[betelgeuse]

As such paying 32000 euros to save 2400 annually does not sound like a bad deal

Have you ever went to school? It will take the OP 13 years to get even.

"paying 32000 euros to save 2400 annually": Your advice is horrible Rip

Ceteris paribus you don't think 7,5% annually is a good return?

[Rip]

As such paying 32000 euros to save 2400 annually does not sound like a bad deal

Have you ever went to school?

Yeah. I was even better than average in math.

It will take the OP 13 years to get even.

"paying 32000 euros to save 2400 annually": Your advice is horrible Rip

You know a lot alternatives with better estimated returns? I would not even need to ponder very long what to do if I for example had the chance to permanently reduce the maintenance fee in my apartment 200€/month by investing once 32000.

NB: I already noted risks related to significantly higher repair costs than assumed by OP and the possibility that he might need to sell the place after a few years.

[Rip]

Adding to an earlier post: If OP is seriously considering buying the place, he should ask at least the last years basic financial papers of the housing company. With the help of dictionary or native you should be able to see where the money (hoitovastike) goes. It would be very good if you could consult some native with at least some experience with the matter and show him the papers.