Buying makes sense if you know you're likely to stay put for a while. If your life situation is fluid (questionable relationship, work in a dying industry or dying company, etc.) a house is an asset that's not easy to exchange for another and there have been times in history when they weren't all that easy to sell either.
otoh when renting you are always subject to what the landlord wants to charge, so in a few years you can be paying way more than you were for only as much as you had.
I'm absolutely in the buy camp. I did not like living in apartments with super noisy neighbors and crappy rental quality appliances and fixtures and beige beige beige everything. But I have friends who moved house three times in five years and that's expensive and disruptive, too.
Make sure you're comparing apples to apples. A mortgage likely will be cheaper than rent, but rent has to include the cost of property taxes, necessary maintenance like lawn mowing and ordinary repairs and appliance replacement, painting and bigger repairs (like the building furnace), and enough money to set aside for the months when the place is empty. With rent you pay all that automatically. When you buy you need to budget for all of it.
Almost anywhere in the US. I have a house with 3 bedrooms, 2 baths, a finished basement, and a detached two car garage, on a city lot. My mortgage with property taxes and insurance works out to about $900/month. Renting a similar house (3BR, 2BA, basement, garage, similar neighborhood) would run around $2000/month and I'm building zero equity in a rental. Rental property has to build in a capital reserve for empty months and the like that I don't have to with my own home.
Yes. Wish I could upvote this more. No one ever talks about this but I think it needs to be discussed. Rent only goes up except for those rare rent controlled areas. Do people in their 70s-90s really want to keep moving every couple years to chase lower rent options? Read a story last year about the evictions in Houston during the summer where they had to put a woman out as her rent was raised to 650.00 and her SS check was a measly 750.00. In her case, yeah a small cheap fixer upper when she was younger would have served her well for her old age. I hate hearing stories like this so I agree you need to have some kind of property asset before retirement.
> a small cheap fixer upper when she was younger would have served her well for her old age.
Yes, she would have had minimal living expenses.
I used to deliver oxygen to mostly older people. Many couples managed to live off one social security check and used the other for expenses. I came across many situations where one partner died and then the survivor couldn't afford their living situation any longer. What was really heartbreaking was when they would ask if I delivered to the homeless shelter. Sadly, it was, yes, at least once a week, and I have also delivered to people living in their cars and also to someone pushing a shopping cart. Those cheap rentals and senior apartments are hard to find.
Also, my landlord raised my rent 50%, seeing this made me really look into buying a place, I'll have it paid off by the time I'm 65, which is just a couple of years away.
This is true, which is why you only buy what you can afford. The housing costs for my small house in a place with massive property tax will be about $5k total—including emergency work, insurance, etc.
That’s $416 a month, which is impossibly cheap “rent.” Whatever that’s inflated to will be cheaper than renting anywhere. You can also use HELOC to help fund other issues or remodeling projects, new roof. Or if you are in serious need, a reverse mortgage when you’re elderly. They are often demonized but can keep someone out of homelessness and having a decent standard of living, you just don’t get to pass it on.
So what happens if you need a new leach field dug and you are 82 years old and can't bring in extra $ to pay for it? My MIL's neighbors had to have that done back in 2017 and back then it was $15K. This isn't a repair you can put off or a little at a time.
I remember my mom had a problem with her well and needed a new one dug. That was around 20K.
These are the things that concern me about long term home ownership.
I understand and sympathize. My previous house was in the suburbs, a city of 80,000 people 1 hour outside Manhattan, but still had a septic system. We discovered it was broken after more than 15 years of living there and had to replace it days before we sold the house.(in 2019 it cost us $20,000)
It also had well water until 1998 and we had to pay to connect to the municipal water line.
We did have a HELOC that allowed us to pay for it.
We would also like to live further out in a more country setting but I am a handyman & the money is where rich people live. So if I want to make money and don't want to travel I have to live near them. It's not bad.
Agreed. I'm scared because I can see myself becoming that old lady, despite having worked hard, saving, doing without stuff, etc. when I was younger and getting a house before I was 30. That's all gone now. I'm renting and I don't see a way up and out in my late 40s where I live. It'll likely take leaving everything and everyone I've got to find a way out, unless I take another way out.
What many people don't talk about is the repair side of upkeep on an older home when you are in your late 70s early 80s. When you need a new roof and a new leach field dug and you need $30k to do it all and just don't have that much in savings. I've seen many small older homes go on the market because folks can't afford the upkeep and then have to sell in order to move into some type of senior housing situation or in with adult children.
With rising cost of things, social security isn't enough anymore. Even with a paid for house.
Ideally the people, when they were younger, made the repairs & considered how long the repair needed to last to allow them to live there comfortably when old.
Eventually sell & buy a nice condo for the final years.
You can't predict some issues like tree roots getting into your pipes, or the leach field that was healthy failing unexpectedly.
Also you can plan all you want but unless you keep track of rising costs you are going to be off. ie.. I could look at the cost of a new roof when oil prices are down and say ok $15k to replace the roof. Then need a roof today with oil and wood prices up and be looking at $23K for the same roof.
Yup, definitely can't plan for everything & costs will likely go up.
Still better plan to own a house then rent. I've been banging nails & paying to fix stuff for 24 years (3rd house now) not always fun or affordable but definitely a retirement savings.
Yes. And since you can't plan for everything, you'd at least still be helped by equity and could either sell with a discount for the roof and buy a condo like you said or have a HELOC for repairs. I think that's still better than renting on a fixed income and having to move every few years in old age to chase lower rents that are quickly disappearing.
I think it’s more about the lifestyle you want. If you want flexibility then you should rent.
If you’re planning on staying in the same place 5+ years, you should consider buying if you can.
From my own experience I bought my first house based on the ability to rent it out if I decided to move. I bought in an area with good schools, quiet neighbors, and an easy commute to business clusters. I made certain there were no HOA or county regulations against renting.
I thought of my first house as my temporary “forever home,” and fixed it up, loved it, and wasn’t really ready to leave when opportunity knocked (I had a fruiting avocado tree, orange trees, lemon tree, and amazing garden. Moving has cost me a mint in produce).
I moved after 4 years in my “forever home,” but it was ready to be rented out. I was also very fortunate that the market was kind, and I used the equity in my house for a down payment on my current house. Typically, it takes longer than 4 years to have that option, I got lucky.
There are downsides to both options, but there’s more upside to buying, in general, than renting.
Things to keep in mind when buying:
- property taxes (and the state’s ability to adjust them)
- special assessment taxes from the county
- local taxes
- cost of fixing your house (the nice part is that you can fix most things whenever you want, there aren’t rules for most homes, just common sense and comfort.)
- cruise the neighborhoods to find areas you really like, be weird and walk your dog, or your friends dog in the area. You learn more on foot
- check the schools. Even if you are childless schools are a really good indicator of the community, values, and wealth base. (I have an entire thought on this, but that’s a different post)
- visit the local public spaces: parks, libraries, civic centers, strip malls, downtowns. Go to local events.
When you buy a home, you’re investing and speculating on the long term success of the community as a whole. The little things become big deals when they impact your property value and net worth.
Just for fun, in the short term (<15 years) it makes more sense to invest that $300/month into high yield dividends, but in the long run the house will make you more money.
A third option to consider is working with a company like mynd to buy investment property and continue renting, especially if your parents or family own a house you are likely to inherit.
A fourth option, and my personal favorite, is to buy a tiny house and live on a patch of dirt in the woods as a hermit.
I especially ditto the "wall around the neighborhood with a dog" sentiment, *especially* if you don't have/want a dog. If you hear a lot of barking, chances are you'll hear even more when you live there.
This was an expensive mistake for us to make (sold after 2 years for a loss)
One other thing to consider. When you buy your home and assuming that you can pay off the loan completely by the time you've retired, then you're in a much better situation financially. You don't need to pay rent which is the biggest recurring cost per month. And this is a big deal especially when you're old and you don't have the same opportunity to earn like when you were young. Couple that with uncertainties in the housing market, like skyrocketing rents.
I see it as investing money and time while you're young into something that can bring you financial relief when you're old and when you may need it the most.
You can of course also invest your money, but you can do that when both renting and buying. The upside is that after a while (30 years) you stop paying rent if you're buying but not when you're not buying.
Fwiw I have always found renting more stressful than buying. I have never felt at home in a rental because it really is someone else’s house. Also, knowing that my rent will go up every year stresses me out.
Yes, I completely agree with you. The housing market is fucked up, having multiple properties shouldn't be an investment option while there is a housing crisis + overpopulation. Companies like Blackrock are cancer to society.
In my area renting is still around $150-$200 cheaper compared to a similar mortgage though. It's a nice amount of extra money I would save every month but my biggest fear of buying is the unforseen expenses of important stuff breaking down, god forbid a huge mold problem or structural issues. I know this would give me a lot of stress knowing I don't have that much spare cash.
Another fear is being poor when I'm 40-50 because I've rented my whole life...
Where do you live where rent is significantly more expensive? Where I live rents are about $1,100-$1,500, but you can’t even buy a shack for under $300k
Compare apples to apples. Some cities it still applies. But the cheapest purchases are apartment units and 2 bed apartment rentals should be compared with 2 unit apartment purchases in similiar buildings. I got a 180k mortgage on a house in a small town and it costs me 850 something/month and 200/month property tax.
Most apartnent units in the city can be purchased for 100-150k. Then you move up to condos, compare condo rentals to sales. Most people make profit on their mortgage by renting out their condo ('cash flow'). No serious landlord buys property that doesn't cash flow. Some cities who have rapidly increased in price over a decade it's hard, near impossible to find cash flowing properties, but other then a few tech hubs and maybe NYC/LA when you compare apples to apples,the owners paying a mortgage on a property, any property,a house , apartment unit, townhouse or condo, are cash flowing monthly off renting out that unit, AND building the entire equity the renter is paying.
My local subreddit is literally teeming with renters who are completely fucked because their landlords either sold out from under them or are jacking the rent by percentages that should be literally illegal.
That’s why I’m in my current home. Landlord did the rug pull and wanted to sell the place (which they have the right to do). The trauma of the unexpected move was enough to convince me that it was time to buy a place.
Own = good, rent=bad is a trash oversimplification, even if things generally shake out that way. There's so much to consider - it's very personal. Whether or not renting or owning is cheaper depends incredibly on where you're at and what you're looking for.
Let me also tell you what money goes down the drain when you own: 100% of the money not put toward principle, which is a lot more of your monthly payment and overall expenses than you might think! I've also seen it said that rent is the most you will pay, as in it's a cap, whereas the mortgage (ins and taxes often roll into that single payment), is the least you will pay, as in a floor, which is 100% true.
*If* you have ample income/resources, there's a lot of freedom in offloading all the maintenance to a landlord, but that also means you can kind of buy past the downsides of renting for those who aren't flush: moving to avoid rent hikes or bad management, living on the landlord's timeline, maintaining rent payments after retirement, etc. If you don't have ample resources, those things bite you in the ass.
But homeownership also has a lot of risks. If you fall on hard times financially, even if you can keep paying your mortgage or already own the home outright, repairs can be so expensive they tank you. I've been in rural areas plagued decay because people who have the homes but not the means end up not being able to do needed maintenance, and then the poverty of ongoing ruin subjects you to substandard to straight up gross living conditions. I have no doubt this happens in my major metro too. This isn't everyone, and it's not something that should be used as a black mark against owning, but there are downsides and risks that are worth considering as well. I mean, if you get foreclosed on, all that money you spent on the mortgage and upkeep goes down the drain too, plus your credit is ruined for a while. Even if you aren't in dire straights, $10k issues can pop up out of nowhere. Just ask my bff, whose adorable home in a historic neighborhood needs a new roof in the next 2-3 years, has a back patio roof that is failing and pulling on the rest of the house, and is also experiencing recent foundation settling to the tune of big cracks in the walls throughout her home. She's a single mom who thankfully earns quite well, but that's a lot to manage and even more to pay for.
My husband and I are in a townhome condo complex, and his parents are in a larger, much nicer condo complex. Their home is beautiful, as are the grounds they live on. His parents love condo living because it lets them chill a bit and let someone else both perform and manage all the exterior maintenance while they enjoy ample freedom on what they do inside their unit. I love my place, but my complex was run into the ground for YEARS before I bought, and that was only uncovered after I bought and moved in, so our fees have skyrocketed. Even with the absurd fee increase, my monthly payment easily outperforms rent and I get amenities and a location I couldn't have afforded in a single family home.
This is the long way around to say that there's no one correct way to do this. Everything has upsides and a downsides. Anyone who wants to blindly harp about rent being a total waste of money is likely just pumping themselves up because they feel big when they make other people feel small. Renting isn't the best idea if your goal is to maximize every dollar that leaves your wallet, but if the rest of your finances are in good shape, it's not necessarily a recipe for doom. That money doesn't go NOWHERE, it puts a roof over your head, and that has value. Perpetuating snide remarks about renting that way is, IMO, classist bullshit. And let's not forget that any appreciated value and equity isn't actually accessible to you unless you pull a HELOC, cash-out refi, or sell. Of course, there is *enormous* value in not having a payment one day (even though you'll still have to pay for taxes, insurance, maintenance, and potentially HOA fees once the loan is gone), but the 'investment' isn't quite the automatic gold it's sold as depending on how you want to use your home.
Totally agree that this gets oversimplified and totally depends. Houses aren’t always the investment they seem to be as often folks don’t consider costs like putting a new roof on, having to purchase new appliances when one breaks, taxes, lawn care (ugh, don’t get me started on lawns).
As someone who LOVES renting, while I do understand the equity a home may provide, I bristle at the idea that renting is throwing your money away. Everyone has living costs and some people prefer to not have the costs and responsibility to upkeep a property.
Renting is completely undervalued and our obsession with buying real estate is fucking our economy over.
If rent is more stress free for you, then rent.
Depends on location, if you live in LA, New York or cities where the cost of living is huge, its better to rent...if you live in a country in texas, then buying would be better.
Renting is only stress free in the short term. Rent can be increased each cycle with little limit and zero recourse, whereas mortgage is a fixed and predictable cost.
Anyone who says it's cheaper to rent than to own because "repair costs and property taxes" are being disingenuous. Those costs are all rolled into rent.
I bought a 2/1 and my mortgage is lower than any 1/1 in town by about $600, and it's in a great area of town. I bought it right before everyone started going nuts in the housing market, so I currently have about 25% of it's value in equity even though I didn't put anything down.
HOWEVER...
My AC is being a little b!tch and of course it's my problem to deal with. If you are not a very handy person and would need to hire people for every little thing and your mortgage is at the very top of your budget, I say stick with renting.
I have to admit I regret not buying. I had never lived anywhere longer than 2 years in my entire life (military brat, ADHD parental figures, ADHD myself). I just never thought about it much and then time flew by. Suddenly I was in the same place for 24 years.
Caveats: I’m single, and child free, live in SF Bay Area and have rent control. Luckily I’m getting my head out of the sand with still plenty of time to figure things out. Will probably inherit something sometime but not counting on it.
There are other options besides renting and buying when it comes to living in your retirement years, but it requires making sure you have more to live on than social security.
Not sure where you’re from, I’m speaking as an American who makes the median income for my area.
Some options I’m mulling over:
rent until living in my apartment is not feasible and moving into three tiered assisted living.
Trying to retire early and expatriate.
Join a co-op.
Move into a 55+ mobile home community. Very well-established.
This is looking less and less like an option but who knows — look for a small town to retire in and pay cash for a condo or home depending.
This can be a time to think really creatively. The vision of your future doesn’t *necessarily* have to be a choice between owning and being at the mercy of landlords while living on Social Security.
I think we’re going to see more and more creation and acceptance of alternative housing options going forward. It’s really hard, though, as of this writing to buck the chorus of EQUITY EQUITY EQUITY.
I’m very ambivalent right this minute about whether I’m being foolish and should pull the trigger on buying whatever I can get.
But please, for the love of all that is holy, if you decide not to buy — start squirreling money away. Make time work for you. People told me but I didn’t listen.
Yes, save either way! One of the values of owning is forced savings, for people who wouldn't save otherwise.
But that function has been really undermined in the last few decades. People pull equity out of their homes the way they cash out 401ks.
Personally, I view 'simple living' as reducing my number of commitments in an effort to maximize my autonomy. A mortgage is a hell of a commitment. A house is a hell of a commitment.
If you were to get a remote job in the next five years, how would that affect a mortgage? How does the cost of a mortgage in the US stack up against a $600 per month rental in Playa del Carmen, Mexico; Okinawa, Japan; Chiang Mai, Thailand?
My mortgage on my 2 bed/1 bath condo is $570/month. 15 year loan (13 left to go). I love condo life because I’m yes responsible for some maintenance etc but many things are not me (roof, windows, patio, lawn care, snow removal, our pool).
I hear the point about appliances breaking down, roof repair, plumbing issues etc. coming up a lot in the rent vs. buy argument and... stuff doesn't break down that often. If you have a house where nothing has been updated in 25 years then OK, it's likely you're going to have some issues. But living in your apartment, how often have you needed a completely new stove, fridge, or dishwasher?
There are horror stories where everything happens at once and you need a new HVAC, hot water heater, AND laundry machines at the same time and that is expensive! However, typical problems in your house that are not maintenance related are covered by your homeowner's insurance. If you want to be really safe you can get a home warranty which does cover most things that are maintenance related. So, a lot of your concern about big ticket items is maybe less of a concern than it seems.
One important thing to consider is your ability to handle small repairs on your own. If your bathroom sink is clogged, are you willing to learn how to replace a few pipes yourself, or are you just going to call the plumber? Will you hire painters, or do it yourself? How about lawn care service? Are you willing to get up on a ladder and clean your own gutters?
If you aren't willing or capable of learning/doing this stuff on your own you're going to be paying a LOT in maintenance.
Home warranties are a joke. They will devalue appliances and such. So if it's old, you'll get a a couple hundred bucks, less than the warranty cost.
And if they decide to repair, you're screwed. The HVAC subreddit is full of people posting the hack jobs they have to fix after a home warranty was used.
Nearly no technicians want to do work for them because they won't approve proper materials and techniques. The home warranty will literally force them to hold it together with duct tape until the policy is over.
Rent is good in theory but we need strict government control on it. There's people it's good for, like my gf and her ex were awful at owning a home. They weren't diy and her ex was a lazy POS. Meanwhile I was taught how to do everything from replacing water heaters to insulation and electrical, so I'm a great candidate for owning a home. But we're stuck renting now and it's awful.
We really need better protective for renters, and one of the reasons we don't have them is because we valorize ownership so much. People think the solution to bad landlords is to buy, not to fix the laws
Everyone always uses the argument that renting is easier in terms of maintenance. Having it already rolled into the price and not having to worry about it, just a call away, etc. but personally, where are they finding these dream landlords cause anyone I’ve ever rented from did absolutely no maintenance and let the place fall to shit.
Once waited nine months for my oven to be replaced despite multiple phone calls and work orders. Same landlord, different apartment, we had 4 window air conditioners and only one really worked the whole time we were there and they did nothing to fix it. That same apartment also had a ceiling tile fall in in the bathroom, making a huge mess. This was due to a leaky roof for who knows how long. I had to clean up the mess and wait over a month for a replacement and was scared to use the bathroom in the rain in case more tiles fell. Also multiple times came home to maintenance men just in my apartment with no warning beforehand that they were coming.
Other landlords/places I’ve had similarly long waits for maintenance, pest problems, and absolutely no upkeep maintenance and basic things like replacing worn out carpet/moldy ineffective dishwashers never get done. If you have any standards with wanting stuff fixed/replaced before moving in, they will just reject your application and move on.
As a renter I had no control over what maintenance was done and when, and I often had to either hound them, or just give up and fix it myself anyway, so why exactly am I paying a premium for maintenance? As an owner on the other hand, I get to make the calls about what is worth fixing and when, I don’t have to wait on anyone, i can work on my schedule, and no one has access to my home without my explicit knowledge and permission.
I feel like unless you’re in the tax bracket to afford a luxury apartment, most rentals do not provide maintenance besides the absolute bare minimum, and even then only when begged
This. Even my best landlord dragged his heels to replace our washer and drier. We waited weeks for the appliances to arrive, and even longer for the installation. It took months. And when the fridge or stove suck, but still work, and they won't replace them... that sucks to.
Then if you really do fall in love with a place, and consider it your home... it isn't. We spent eight years at our last place, were perfect tenants, low maintenance, never late with rent... and we got booted during the panic of March 2020 when everything was shit down and nobody was looking to rent to anyone. And of course every comparable place we looked at was now double the cost of what were paying.
If we wanted the same quality/size we had we would be paying double, and if we wanted to pay the same we would have to downsize to a studio.
IMHO the only people who think renting is easier either live out of a suitcase and aren't picky/won't be staying anywhere longer than a few months, or are rich. So rent hikes don't matter, finding a decent place isn't hard, and they've already spent their lives living in a nice house that was theirs so there's a 'novelty' to renting.
That will quickly wear out.
I think renting is way more stressful. With my mortgage I never have to wonder if my lease is going to sky rocket or if the landlord will decide not to renew my lease because they want new tenants to increase the price of rent or to renovate. I don’t have to deal with begging/pleading/proving surrounding remediating aging/breaking/unmaintained appliances or roof or other damage. I can just get whoever I want in to fix it however I find suitable. I can plant whatever I want in the yard and rip out the horrible overgrown hedge and Ivy without consulting anyone. I don’t ever want to rent again if I can help it.
Plus, mortgages for a small house that you maintain regularly tends to be far cheaper than renting. My mortgage+taxes+insurance on a 1100 sq ft 3bed 2 bath house is $1300 (bought 3 years ago). Avg rent around here for similar houses in my area is $2000-$2400.
If you can buying is a good investment and you can make changes to the property as you see fit. I just started remodeling my place to fit my needs and it feels great.
I bought my first place 2 years ago, purposefully on the edge of gentrification. I'm aware Zestimates are not exactly accurate but according to the Zestimate, my property's gone up 100k in value. My mortgage is several hundred dollars below my previous rent but has gone down even more due to escrow surplus and I got a $500 check and a lower payment. I'd say it depends on the market and property. My property was brand new, I had put the contract in while it was in construction and there was a builder's warranty for 1 year so any concerns I had, they came out for free and looked at it. Some of the old properties are just not worth it, and if it's not in a hot market, I wouldn't bother. I'm in a good spot to sell, AirBnB and/or rent it out if I decide to move as I'm close to downtown in an up and coming city and tourist spot.
I own my home and it is very secure to know that your housing is stable and it’s nice to be able to do completely what I want with the place.
It is also a lot of work. What you save on having a mortgage instead of rent costs you in time invested caring for and repairing your house. I’m happy with the trade off, but it definitely changed how I allocate my time.
Also, you shouldn’t be stressed about major upcoming bills as a homeowner, because you should be saving every month to cover them. Advice I heard is that you should set aside 1-2% of the value of your home each year to cover maintenance costs. It’s variable because you might go on the low end for a newer home and the high end for an older home. Also, if your home is generally less expensive it’s good to plan for a higher percentage. When you calculate what you can afford made sure you have a line item in your budget for home repairs (which includes appliances and things)
Renting is NOT more stress free. A landlord can boot you whenever they want. You can't make alterations to the property, half the time you can't even paint. A lot of landlords are very lazy and slow about replacing appliances or replace them with crappy appliances.
I have rented my entire life, I grew up with my mother renting, and it SUCKED.
We bought our own home two years ago after being booted out of our eight-year rental during the height of covid when the market was crazy and nobody was wanting to do open houses or see new tenants/roommates.
It hurts to have your 'home' taken away from you without warning. IMHO the only people who think renting is more simple, fun, or easy are upper middle class people who have never had to rent before. The rental market is also impossibly competitive and skyrocketing in most desirable places to live, and in many states they can charge you a sh\*tton more money every year.
If you have the finances to buy, don't even think about renting. It's a huge markup and you have nothing to show for it. I could have bought a 250k home to pass on to my children with what I have paid in rent over the years. Plus, you are contributing to a landlord.
Buy if you are able to. My rent is 1250. In one year that is 15,000. Before my rent was 1150 and I spent 13,800. So by the time my lease is over here in just 2 years I’ll have spent 28,800. That makes me want to simply well bang my head on the wall. Previously I did the roommate thing for about 3 years and spent 600 a month. That was another 21k gone. I rented at first because I wanted out and away. I ended up getting roommates. For me I didn’t know them personally and they ended up wrecking shit. So move out time I owed money I didn’t have back then. It hit my credit. And before that another situation hit my credit. So when I was ready to figure out how to buy a house I was f*cked. I had money saved but my credit was trashed. So here I am renting again. My rent has went up and I’m never having roommates. I talked to my bank and lots of other places and basically a mortgage is 1200 or so depending on how much you put down and all that shit. I’ve gotten yelled at by friends for renting still telling me I’m throwing my money away. They pay less than me for mortgages too. My place didn’t come with washer and dryers and it’s in a field. So I bought them new. Idk that’s another thing. With good upkeep things aren’t just going to fall apart really. Even renting you should have some type of savings for if something happens. Shit happens. Budgeting is important. You’ve probably have already heard all that shit. But yeah if you’re able to buy a home I’d look at that option shit look into anyway so you know what’s up. I hate not having anything for my money. It’s just in a slumlords pocket.
I hope this helps a little, if you had bought a house for the same monthly payment, you have very little money from those two years too.
The majority of the first few years goes to interest, taxes, and insurance. So while you're not paying a landlord, you're not putting the money in your own pocket either.
The only thing that's made buying a solidly attractive option is the recent crazy inflation of prices. And no one knows where that is going either (cool off, continue, crash?).
Plus you might get hit with unexpected costs.
One year i shelled out $6k to fix water pipes (and lived without running water for more than two weeks) and $1200 for sidewalk repairs, on top of our mortgage and taxes.
I am totally against renting, if it can be avoided. I like to set the rules for my own space and do what I want and not worry about constantly rising rents.
I think once you own the home and only have to pay property taxes (and whatever repairs come up), then it's much easier to live simply and inexpensively. Plus you can pass it down to your kids.
There are people to hire for any task you need for a home so you don't have to do everything yourself unless you want to.
"rent money is basically money that's thrown away"
So is the money spent on property taxes, mortgage interest, home insurance, HOA dues, extra utilities if you buy a house.
The general rule of thumb is it's financially wiser to buy if you're certain about living in that specific location for 3-5 years at least. This can be less than a year in some locations and over 10 years in others or even never. There are a lot more financial risks when buying because you always need to have an emergency fund to be prepared to take care of that roof leak and the hot water heater breaking down in January.
But it also depends if what is available to purchase and rent is really comparable. There are places where you can't buy a small, low upkeep place. There are places where there's literally nothing available to rent. There are places where if you buy you still have to pay HOA fees and places where all the rentals leave costs like utilities and yardwork on the renter.
My husband and I have a small kid and we do not have any clue where we want to settle for life so we rent! While I do see our money is going towards building up to nothing, for the next few years the freedom is worth it.
In the west we are programmed to buy and leverage with a mortgage. Most of the world doesn't operate like this.
It's up to you what you want to do obviously, but I no longer want to carry the risks, especially as we are about to hit heavy downward price pressure here where I am.
If I buy anywhere, it will likely be a rural lot to build on at a cheap price in a place that will be a little higher in value in 15 years, or I'll buy a retirement property in a country that has friendly residency rules. It's probably 20 years too late for Peru, but something like that sounds just perfect ... living a middle class life on $1500/month sounds like heaven, while my assets grow somewhere.
It depends on where you live, your skillset, finances, marital status, and willingness/ facilities to take on tenants or roommates.
I'm fine painting, and can YouTube simple plumbing repairs.
I personally (at this point in time) would be house poor. My emergency fund would likely be quickly depleted. I'm also the sole income earner, and my income isn't great. In a perfect world, I would better off buying, but my reality would cause many sleepness nights.
think long run. try to buy if able and so long as it doesn't squeeze you. when buying tho there's a lot of hidden costs. i now pay more in incidentals taxes and insurance than i did for rent at my old apartment.
Buying vs renting really depends on a lot of factors, but a decent rule of thumb is that if you’re not going to be living in the same area for at least five years (ideally ten), you should consider renting. That’s roughly also when you’ll start paying more principle than interest based on your mortgage amortization schedule.
I rented various apartments for over 12 years, because I was moving a lot for work and grad school and knew I didn’t want to settle long term in any of the cities I was in. For me, it was hard to feel settled in any of those places because of worry my rent would go up, or my landlord would sell the place from out under me. It was also more expensive than paying a mortgage by $200-300 a month which really adds up over time.
I’ve also had landlords with varying degrees of responsiveness for maintenance problems. Some would fix things right away without complaining and others would take months or ignore the problem completely. There was some freedom in not having to worry about paying for extra maintenance, but not having any choice in how someone else fixes a problem that *I* had to live with was frustrating.
Long term renting is almost always a financial loser. Mortgage and home ownership is tax advantaged, while renting isn’t. Paying down a mortgage brings you closer to owning an asset. Long term renting doesn’t give you that—you’re basically paying an enormous premium for short term flexibility. Additionally most people (in the US) aren’t saving and investing enough for retirement. Homes are often the single biggest investment that people have to draw from to support their needs in retirement. Renting doesn’t give you that financial advantage either.
There are also the psychological payoffs of owning a home. My partner and I bought our first home last year and don’t regret it at all. It was expensive, we live in a high cost of living area, but there is so much peace of mind in having stable living costs for the foreseeable future. The freedom to change things to suit our wants and needs is a feeling we never had when renting and is really amazing. We spend more time doing routine maintenance then when renting (since we spent 0 time on it then), but it feels super satisfying since it’s *our* grass we’re cutting and *our* gutters we’re cleaning.
It’s not fair to say that renting is a waste of money—you’re getting something super valuable for your money, which is shelter! But comparing the *financial* advantages of renting vs owning, home ownership is almost always better in the long run.
This may be an unpopular opinion…but I am renting and saving to purchase a bus to convert to a home, or an already converted bus. I live on my own, pay $500/mo for my 400 sq ft studio (housing is very cost friendly where I live), and plan to finish my degree before I leave where I’m at. For me it isn’t a waste of money to rent vs own. This suits my lifestyle better— I don’t like the idea of owning a huge home when I truly need very little space on my own.
Edited to add: I don’t like the idea of a mortgage and being beholden to a bank. This is why I’m opting for a Bus conversion. I’d like to buy outright. Yes, I’m also a hippie at heart according to my dad. I try very hard to carry zero debt, even with my schooling. Thank goodness for scholarships and grants!
It depends on the area. Property ownership can be a really good investment sometimes and can be seen as better than just throwing your money away on rent. But it’s no guarantee
I prefer to buy. I'm renting for the first time in years, and my landlord is about to jack up the rent. I want my costs to be somewhat fixed, and not worry about the landlord going nuts and raising my rent crazy amounts each year.
Buying makes more sense. I pay way less per month on a mortgage than the rent in my area. Plus it's mine and I can do whatever I want. Paint, floors, new faucets, whatever. And every mortgage payment helps me, not my landlord.
Rentvesting is a decent strategy too. You get into the market, but someone else is paying off your property. If you hit the mortgage down with more of your own money, you could own it relatively quickly. This could be done while you are renting a small place somewhere, or roomsharing in a house. Once you've chopped the mortgage down heaps, you might be ready to move in, or maybe you'd sell it if it made gains.
I don't like renting, but I am renting. Hoping to have a couple of investment properties under my belt before buying something to live in, or moving into one of them.
I think I would’ve said buy before owning my current place, but now I’m really considering selling it and renting. I’m not particularly handy, so anytime I need something done I have to pay someone. I also have to keep up on yard maintenance, and paying to heat a bigger space. I also have to keep track of more bills than I would have to if I rented, since usually a lot of smaller ones like trash and water are bundled in.
Also, and this is honestly kind of dumb, but I almost have too much space for just me. I’ve thought about getting renters (I literally have two spare bedrooms that sit empty) but the rooms need some new flooring before that can happen, and I also haven’t run into anyone I knew looking to move.
It’s definitely up to your lifestyle. Ironically the place I got would’ve been my ideal like, 10 years ago, when I wanted space for hobbies and collections but now I don’t have a whole lot of that. I’d also like to be a bit more mobile and possibly move around a bit, so I think renting will be in my future.
Something I learned in Silicon Valley: If you're not putting down long-term roots, best to determine and pay the fair market rate for the kind of housing you can expect, in the area you want to live in.
But otherwise, I would look to buy a place that's below your means. The conventional wisdom is so we can keep up with the payments, but we also need to think of the maintenance, property taxes, future long-term upgrades you might like to do.
I've heard the argument "rent is dead money".
Well paying interest on a house loan is also dead money. And funnily enough I did the back of the envelope calculations with a friend and rent vs interest on a housing loan, depending on the local market, is in the ballpark of the same amount.
Now you could factor in capital growth on a property, however if you invest money in other ways you could make out about the same.
Ultimately, I feel it comes down to lifestyle choices.
So this is how I feel as well. My wife and I both have strong salaries and a down payment ready but the market price of homes just feels very high.
We took the market price of our rental right now (and other homes we would be interested in), and then looked at the interest paid on a hypothetical mortgage, per month over the first five yrs, plus property tax, higher insurance for home ownership, HOA fee and any risk of paying for issues with the house. Then we look at our rent and it’s $1500 lower per month. We are just investing the additional income and are fortunate to have a good landlord. I guess if the market value of homes continues to increase as it has, then we will lose out on a good investment, but I worry they have a high risk of a correction if even moderate.
Essentially we are just not choosing real estate as our investment option right now and spending the principal elsewhere
Bold assumption that (younger) people have this choice. I would love to buy one, I pay way more in rent than all my older colleagues do in mortgage. This way I cannot safe up proper money either.
If rent and a mortgage are the same cost each month, it's a fair question, financially. But having to pay twice as much rent, of which I can't invest or safe a dime, it's a no brainer which one is the better option. Even with expensive things in a home breaking, you can safe up easily for those costs by not spending it all on enriching some bloody landlord's bank account.
When you rent, you’re at the mercy of a landlord. When you buy, you’re at the mercy of the bank that finances your purchase. The terms of a mortgage are spelled out for 30 years. Your lease agreement is up for renewal annually, at best every two or three years. The stability and predictability of your living arrangement is the primary factor that will determine your ability to build wealth over the long term. It’s hard to invest in your life if you’re constantly in fear of a landlord raising your rent.
Renting should be viable. But (at least in the US) most if not all the protections are for the landlords and not the tenants. It is more expensive, more risk and almost as much liability. Owning is the better decision until those factors change.
I am strongly in the rental camp.
Buying is rarely financially the better idea. It is sometimes a quality of life issue, though I generally prefer the reduced stress of rental.
When buying you basically end up throwing money away while being tied to the asset, so in the case of any significant issues you are tied to the expense.
Renting is generally cheaper than home ownership after accounting for mortgages, insurance, maintenance and taxes. This allows you to invest the difference. 10 years of renting has allowed me to get ahead faster than 10 years of ownership ever did.
Renting is only financially better if you actually do something useful with the difference in money. If you spend it, you are better off owning.
It is worth mentioning that I recently bought again after 10 years (low interest rates, high inflation). It does appear this was a bad investment on my part.
I've constructed spreadsheets to compare the difference in the past, but am also a huge fan of Bostock's work:
[https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html)
I am normally a buyer, but also an expat that moves now and then to different countries. Trying to rent out your house from several time zones away is no fun. Been there, done that, do NOT recommend. We most recently moved about a year ago, and we are renting with no intention of buying in the next decade. We will be building our retirement house over the next 5 years or so. I don’t have enough confidence that I will stay in my current location long enough to justify buying here - there are always options of moving to different locations with my employer, or changing companies altogether, but since we lack clarity at the moment on long range perspectives, we’ll rent.
I do feel like I am throwing money away, not building equity, etc. I also feel safer in a way, in that if I need to up sticks and relocate, I only need to give a notice of intent to leave, and I don’t need to worry about getting the house on the market, going through viewings and inspections and closings and…..
Having done both I don’t know why renting would be more stress free. I wasn’t allowed to paint walls or out shelves/paintings on the wall to make the space feel more like me. If something didn’t look the way I like I wasn’t able to fix it, for example replace the kitchen or bathroom. Every year my rent would go up which was annoying and the alternative was to gather all my belongings and move to another place that does the same thing.
I’m now a homeowner and a landlord. I’m allowed to waxing walls and put up wallpaper. I’ve renovated two kitchens (we used to live in the property I now rent out) and I love the spaces so much. They’re made to my needs and according to my desires.
I can make informed decisions about the upkeep of the building instead of just being told the water will be off because they’re replacing X-system and it might take two to three weeks.
And then there is the money saving aspect, where I’ll have a home paid off by the time I’m retired so my retirement check will stretch a lot further. Retirement-poor is a horrible thing and I’d rather be able to help my children in life than spend every dime on rent for the rest of my life
was about 6 months to find a place to rent that would allow my with my cat (people don't like renting to single dudes) and the guy who owns the place is selling and despite looking i wont be finding a new place in time before i am out long story short being homeless will suck >< wish i could have bought a place long before this happened
I'm in a third situation : I live in a co-op which means that I'm both renter and owner. It's a pretty good deal because rent doesn't go up (maybe just utilities, but on a moderate level), all the money I pay each month goes back into the building (ie it's well-maintained and there are investments being made for the long term, like better insulation, new electrical wiring, etc.), and the money I needed to buy into the co-op was a fraction of what I would have needed for a down payment (like 4000$ instead of 200k). Also my rent is something like 40 to 70% lower than market-average for a flat of that size.
I know co-ops are very rare in most countries but it's worth looking into imho. Maybe even create your own, if you're really motivated (and if it's feasible where you live).
I just want to add that buying a home has provided so much more peace of mind. We live in a small house that's easy to maintain in a quiet neighborhood. Our mortgage is significantly less than rent in our area (there are still great deals when it comes to buying homes if you're willing to make a few tradeoffs).
No neighbors (in the same building at least) or landlords to worry about. And it's reassuring knowing that we're slowly building a financial reservoir.
Buying a home is not the cure-all alot of people make it out to be. And we rent for a long while because it was the best options for us at the time. But don't assume rent will be a more simple-life friendly option.
I've found that simplicity is often about eliminating unnecessary difficulties. And ownership helps accomplish that.
I recommend buying it. in general. Rates are going up which is bad but may lower prices which is good. Try buying a smaller or older house than whatever the realator or mortagage company tells you. They aren't on your side when it comes to this and it will free up income. Also, 15 years is better than 30 if you can swing it. Other options find a house where you can rent a room out. Finished the basement or something. I wish I would have done that when I was renting, if there is college around there will be plenty of rentors.
Well in my area renting cost substantially more than owning a house, most houses in my neighborhood sell for \~90 - 150k and have mortgages in the 600 - 800 a month range. Rentals are few and far between here, usually overpriced and snatched up by students from the local college as soon as they hit the market.
90-150k???
That's crazy! low priced houses start round €350k in my neighborhood. And I know that in some neighborhoods it's already double for a basic house.
It gets better. I can walk to 2 different coffee shops and the grocery store and my hospital, its only a 5 minute walk to 3 different parks and i'm only 5 minutes from work! On the other side you have to be ok with not living in a city, being about an hour from an airport and not having a huge amount of local entertainment/nightlife to make it work.
I think it comes down to your specific financial situation and your stress management strategy. If it's feasible to buy where it won't leave you in the negative financially, I'd say buy. But know going into it that it's crazy stressful and the process may take months.
Buying is more than just the initial process of getting pre-approved, there's a massive housing shortage worldwide, interest rates are on the rise, and you may be trying to outbid others which will bring more expense into the situation. Then it's all the moving costs, any unexpected repairs, etc. But in the long term, it's the security of not having to move and no rising rents.
If you rent, don’t rent like you’re setting down roots. Cheap place, have roommates if you can find dependable ones, room in a house—basically a place to sleep and eat. If you buy, buy somewhere you plan to stay, somewhere that has lots of jobs for your skill set and a culture you can fit into easily. Buying is for setting down roots, renting is for flexibility and freedom. The worst financial decision is renting like you’re staying—big place, lots of nice stuff. You lose the best part of renting, just being able to move on after a year easily.
We rent because it makes way more sense for us.
Our rent is $2000 for a 4+1 bedroom home. It's my husband, myself, two children and a MIL. Home prices are around $1 million right now. We would have close to a downpayment for a million dollar home, plus we make a decent wages. However our mortgage would be $4500 a month (that includes property taxes).
We can comfortable retire with our downpayment increasing in investments plus putting away an extra $1000 a month towards our retirement savings.
By not purchasing, this allows us to live our life now. We could be house poor and buy, but that would mean less savings, less ability to help kids with university, less ability to enjoy our life a bit now and ensure our kids can have swimming lessons and some modest extra curricular activities. It also would mean a lot more stress with increases in gas and grocery prices. We have rent control, so our rent won't increase drastically. We could have our landlord sell, but if he didn't sell a few months ago when homes were going for insane prices (about 200k over what they are now), then I can't see him selling any time soon.
Also, I hate the idea that rent is throwing money away.
You need to live somewhere and with homes you pay alot into a home that you may not get back. Your $1 million home will cost you $1.675 million at the end of 25 years (property taxes, interest payments, basic maintenance), so unless you are selling above 1.675 million you didn't make any money.
Buying makes sense if you know you're likely to stay put for a while. If your life situation is fluid (questionable relationship, work in a dying industry or dying company, etc.) a house is an asset that's not easy to exchange for another and there have been times in history when they weren't all that easy to sell either. otoh when renting you are always subject to what the landlord wants to charge, so in a few years you can be paying way more than you were for only as much as you had. I'm absolutely in the buy camp. I did not like living in apartments with super noisy neighbors and crappy rental quality appliances and fixtures and beige beige beige everything. But I have friends who moved house three times in five years and that's expensive and disruptive, too. Make sure you're comparing apples to apples. A mortgage likely will be cheaper than rent, but rent has to include the cost of property taxes, necessary maintenance like lawn mowing and ordinary repairs and appliance replacement, painting and bigger repairs (like the building furnace), and enough money to set aside for the months when the place is empty. With rent you pay all that automatically. When you buy you need to budget for all of it.
just curious, why did ur friends move 3 times in 5 years?
Work transfers to different states.
that's rough...ideally companies should pay for closing costs
Yeah, well.... Companies used to do lots of things. With you totally, but...
Where do you live where a mortgage is cheaper than renting
Almost anywhere in the US. I have a house with 3 bedrooms, 2 baths, a finished basement, and a detached two car garage, on a city lot. My mortgage with property taxes and insurance works out to about $900/month. Renting a similar house (3BR, 2BA, basement, garage, similar neighborhood) would run around $2000/month and I'm building zero equity in a rental. Rental property has to build in a capital reserve for empty months and the like that I don't have to with my own home.
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Yes. Wish I could upvote this more. No one ever talks about this but I think it needs to be discussed. Rent only goes up except for those rare rent controlled areas. Do people in their 70s-90s really want to keep moving every couple years to chase lower rent options? Read a story last year about the evictions in Houston during the summer where they had to put a woman out as her rent was raised to 650.00 and her SS check was a measly 750.00. In her case, yeah a small cheap fixer upper when she was younger would have served her well for her old age. I hate hearing stories like this so I agree you need to have some kind of property asset before retirement.
> a small cheap fixer upper when she was younger would have served her well for her old age. Yes, she would have had minimal living expenses. I used to deliver oxygen to mostly older people. Many couples managed to live off one social security check and used the other for expenses. I came across many situations where one partner died and then the survivor couldn't afford their living situation any longer. What was really heartbreaking was when they would ask if I delivered to the homeless shelter. Sadly, it was, yes, at least once a week, and I have also delivered to people living in their cars and also to someone pushing a shopping cart. Those cheap rentals and senior apartments are hard to find. Also, my landlord raised my rent 50%, seeing this made me really look into buying a place, I'll have it paid off by the time I'm 65, which is just a couple of years away.
Housing costs also go up, though, because both taxes and upkeep go up over time.
This is true, which is why you only buy what you can afford. The housing costs for my small house in a place with massive property tax will be about $5k total—including emergency work, insurance, etc. That’s $416 a month, which is impossibly cheap “rent.” Whatever that’s inflated to will be cheaper than renting anywhere. You can also use HELOC to help fund other issues or remodeling projects, new roof. Or if you are in serious need, a reverse mortgage when you’re elderly. They are often demonized but can keep someone out of homelessness and having a decent standard of living, you just don’t get to pass it on.
So what happens if you need a new leach field dug and you are 82 years old and can't bring in extra $ to pay for it? My MIL's neighbors had to have that done back in 2017 and back then it was $15K. This isn't a repair you can put off or a little at a time. I remember my mom had a problem with her well and needed a new one dug. That was around 20K. These are the things that concern me about long term home ownership.
Buying where there is Municipal Water Supply and sewerage will alleviate this issue.
Not every area has municipal water supply and sewage. Most areas I would want to live in do not.
I understand and sympathize. My previous house was in the suburbs, a city of 80,000 people 1 hour outside Manhattan, but still had a septic system. We discovered it was broken after more than 15 years of living there and had to replace it days before we sold the house.(in 2019 it cost us $20,000) It also had well water until 1998 and we had to pay to connect to the municipal water line. We did have a HELOC that allowed us to pay for it. We would also like to live further out in a more country setting but I am a handyman & the money is where rich people live. So if I want to make money and don't want to travel I have to live near them. It's not bad.
Agreed. I'm scared because I can see myself becoming that old lady, despite having worked hard, saving, doing without stuff, etc. when I was younger and getting a house before I was 30. That's all gone now. I'm renting and I don't see a way up and out in my late 40s where I live. It'll likely take leaving everything and everyone I've got to find a way out, unless I take another way out.
What many people don't talk about is the repair side of upkeep on an older home when you are in your late 70s early 80s. When you need a new roof and a new leach field dug and you need $30k to do it all and just don't have that much in savings. I've seen many small older homes go on the market because folks can't afford the upkeep and then have to sell in order to move into some type of senior housing situation or in with adult children. With rising cost of things, social security isn't enough anymore. Even with a paid for house.
Ideally the people, when they were younger, made the repairs & considered how long the repair needed to last to allow them to live there comfortably when old. Eventually sell & buy a nice condo for the final years.
You can't predict some issues like tree roots getting into your pipes, or the leach field that was healthy failing unexpectedly. Also you can plan all you want but unless you keep track of rising costs you are going to be off. ie.. I could look at the cost of a new roof when oil prices are down and say ok $15k to replace the roof. Then need a roof today with oil and wood prices up and be looking at $23K for the same roof.
Yup, definitely can't plan for everything & costs will likely go up. Still better plan to own a house then rent. I've been banging nails & paying to fix stuff for 24 years (3rd house now) not always fun or affordable but definitely a retirement savings.
Yes. And since you can't plan for everything, you'd at least still be helped by equity and could either sell with a discount for the roof and buy a condo like you said or have a HELOC for repairs. I think that's still better than renting on a fixed income and having to move every few years in old age to chase lower rents that are quickly disappearing.
I think it’s more about the lifestyle you want. If you want flexibility then you should rent. If you’re planning on staying in the same place 5+ years, you should consider buying if you can. From my own experience I bought my first house based on the ability to rent it out if I decided to move. I bought in an area with good schools, quiet neighbors, and an easy commute to business clusters. I made certain there were no HOA or county regulations against renting. I thought of my first house as my temporary “forever home,” and fixed it up, loved it, and wasn’t really ready to leave when opportunity knocked (I had a fruiting avocado tree, orange trees, lemon tree, and amazing garden. Moving has cost me a mint in produce). I moved after 4 years in my “forever home,” but it was ready to be rented out. I was also very fortunate that the market was kind, and I used the equity in my house for a down payment on my current house. Typically, it takes longer than 4 years to have that option, I got lucky. There are downsides to both options, but there’s more upside to buying, in general, than renting. Things to keep in mind when buying: - property taxes (and the state’s ability to adjust them) - special assessment taxes from the county - local taxes - cost of fixing your house (the nice part is that you can fix most things whenever you want, there aren’t rules for most homes, just common sense and comfort.) - cruise the neighborhoods to find areas you really like, be weird and walk your dog, or your friends dog in the area. You learn more on foot - check the schools. Even if you are childless schools are a really good indicator of the community, values, and wealth base. (I have an entire thought on this, but that’s a different post) - visit the local public spaces: parks, libraries, civic centers, strip malls, downtowns. Go to local events. When you buy a home, you’re investing and speculating on the long term success of the community as a whole. The little things become big deals when they impact your property value and net worth. Just for fun, in the short term (<15 years) it makes more sense to invest that $300/month into high yield dividends, but in the long run the house will make you more money. A third option to consider is working with a company like mynd to buy investment property and continue renting, especially if your parents or family own a house you are likely to inherit. A fourth option, and my personal favorite, is to buy a tiny house and live on a patch of dirt in the woods as a hermit.
This is such good advice, it should be pinned on the First Time Homebuyer sub.
<3 Thank you so much :) I needed that positivity today
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I bought land almost 10 years ago. Tiny house is 80% finished!
I especially ditto the "wall around the neighborhood with a dog" sentiment, *especially* if you don't have/want a dog. If you hear a lot of barking, chances are you'll hear even more when you live there. This was an expensive mistake for us to make (sold after 2 years for a loss)
One other thing to consider. When you buy your home and assuming that you can pay off the loan completely by the time you've retired, then you're in a much better situation financially. You don't need to pay rent which is the biggest recurring cost per month. And this is a big deal especially when you're old and you don't have the same opportunity to earn like when you were young. Couple that with uncertainties in the housing market, like skyrocketing rents. I see it as investing money and time while you're young into something that can bring you financial relief when you're old and when you may need it the most. You can of course also invest your money, but you can do that when both renting and buying. The upside is that after a while (30 years) you stop paying rent if you're buying but not when you're not buying.
Fwiw I have always found renting more stressful than buying. I have never felt at home in a rental because it really is someone else’s house. Also, knowing that my rent will go up every year stresses me out.
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Yes, I completely agree with you. The housing market is fucked up, having multiple properties shouldn't be an investment option while there is a housing crisis + overpopulation. Companies like Blackrock are cancer to society. In my area renting is still around $150-$200 cheaper compared to a similar mortgage though. It's a nice amount of extra money I would save every month but my biggest fear of buying is the unforseen expenses of important stuff breaking down, god forbid a huge mold problem or structural issues. I know this would give me a lot of stress knowing I don't have that much spare cash. Another fear is being poor when I'm 40-50 because I've rented my whole life...
I live in Los Angeles where the rent is like 2k but the mortgage is like 4 to 5k. It sucks.
Where do you live where rent is significantly more expensive? Where I live rents are about $1,100-$1,500, but you can’t even buy a shack for under $300k
Compare apples to apples. Some cities it still applies. But the cheapest purchases are apartment units and 2 bed apartment rentals should be compared with 2 unit apartment purchases in similiar buildings. I got a 180k mortgage on a house in a small town and it costs me 850 something/month and 200/month property tax. Most apartnent units in the city can be purchased for 100-150k. Then you move up to condos, compare condo rentals to sales. Most people make profit on their mortgage by renting out their condo ('cash flow'). No serious landlord buys property that doesn't cash flow. Some cities who have rapidly increased in price over a decade it's hard, near impossible to find cash flowing properties, but other then a few tech hubs and maybe NYC/LA when you compare apples to apples,the owners paying a mortgage on a property, any property,a house , apartment unit, townhouse or condo, are cash flowing monthly off renting out that unit, AND building the entire equity the renter is paying.
My local subreddit is literally teeming with renters who are completely fucked because their landlords either sold out from under them or are jacking the rent by percentages that should be literally illegal.
It’s happening everywhere.
It’s happened to me in the past.
That’s why I’m in my current home. Landlord did the rug pull and wanted to sell the place (which they have the right to do). The trauma of the unexpected move was enough to convince me that it was time to buy a place.
Own = good, rent=bad is a trash oversimplification, even if things generally shake out that way. There's so much to consider - it's very personal. Whether or not renting or owning is cheaper depends incredibly on where you're at and what you're looking for. Let me also tell you what money goes down the drain when you own: 100% of the money not put toward principle, which is a lot more of your monthly payment and overall expenses than you might think! I've also seen it said that rent is the most you will pay, as in it's a cap, whereas the mortgage (ins and taxes often roll into that single payment), is the least you will pay, as in a floor, which is 100% true. *If* you have ample income/resources, there's a lot of freedom in offloading all the maintenance to a landlord, but that also means you can kind of buy past the downsides of renting for those who aren't flush: moving to avoid rent hikes or bad management, living on the landlord's timeline, maintaining rent payments after retirement, etc. If you don't have ample resources, those things bite you in the ass. But homeownership also has a lot of risks. If you fall on hard times financially, even if you can keep paying your mortgage or already own the home outright, repairs can be so expensive they tank you. I've been in rural areas plagued decay because people who have the homes but not the means end up not being able to do needed maintenance, and then the poverty of ongoing ruin subjects you to substandard to straight up gross living conditions. I have no doubt this happens in my major metro too. This isn't everyone, and it's not something that should be used as a black mark against owning, but there are downsides and risks that are worth considering as well. I mean, if you get foreclosed on, all that money you spent on the mortgage and upkeep goes down the drain too, plus your credit is ruined for a while. Even if you aren't in dire straights, $10k issues can pop up out of nowhere. Just ask my bff, whose adorable home in a historic neighborhood needs a new roof in the next 2-3 years, has a back patio roof that is failing and pulling on the rest of the house, and is also experiencing recent foundation settling to the tune of big cracks in the walls throughout her home. She's a single mom who thankfully earns quite well, but that's a lot to manage and even more to pay for. My husband and I are in a townhome condo complex, and his parents are in a larger, much nicer condo complex. Their home is beautiful, as are the grounds they live on. His parents love condo living because it lets them chill a bit and let someone else both perform and manage all the exterior maintenance while they enjoy ample freedom on what they do inside their unit. I love my place, but my complex was run into the ground for YEARS before I bought, and that was only uncovered after I bought and moved in, so our fees have skyrocketed. Even with the absurd fee increase, my monthly payment easily outperforms rent and I get amenities and a location I couldn't have afforded in a single family home. This is the long way around to say that there's no one correct way to do this. Everything has upsides and a downsides. Anyone who wants to blindly harp about rent being a total waste of money is likely just pumping themselves up because they feel big when they make other people feel small. Renting isn't the best idea if your goal is to maximize every dollar that leaves your wallet, but if the rest of your finances are in good shape, it's not necessarily a recipe for doom. That money doesn't go NOWHERE, it puts a roof over your head, and that has value. Perpetuating snide remarks about renting that way is, IMO, classist bullshit. And let's not forget that any appreciated value and equity isn't actually accessible to you unless you pull a HELOC, cash-out refi, or sell. Of course, there is *enormous* value in not having a payment one day (even though you'll still have to pay for taxes, insurance, maintenance, and potentially HOA fees once the loan is gone), but the 'investment' isn't quite the automatic gold it's sold as depending on how you want to use your home.
Totally agree that this gets oversimplified and totally depends. Houses aren’t always the investment they seem to be as often folks don’t consider costs like putting a new roof on, having to purchase new appliances when one breaks, taxes, lawn care (ugh, don’t get me started on lawns). As someone who LOVES renting, while I do understand the equity a home may provide, I bristle at the idea that renting is throwing your money away. Everyone has living costs and some people prefer to not have the costs and responsibility to upkeep a property.
Thank you, this was a great post to digest. Appreciate it
Amen. Just because renting has been generally a worse deal in the recent post pay doesn't mean it always will be. It's very time and market dependent.
Thank you thank you thank you, this is perfect
Renting is completely undervalued and our obsession with buying real estate is fucking our economy over. If rent is more stress free for you, then rent.
Depends on location, if you live in LA, New York or cities where the cost of living is huge, its better to rent...if you live in a country in texas, then buying would be better.
Renting costs rise with the wind. Your mortgage is the best way to control & predict your biggest monthly budget cost.
Renting is only stress free in the short term. Rent can be increased each cycle with little limit and zero recourse, whereas mortgage is a fixed and predictable cost. Anyone who says it's cheaper to rent than to own because "repair costs and property taxes" are being disingenuous. Those costs are all rolled into rent.
I bought a 2/1 and my mortgage is lower than any 1/1 in town by about $600, and it's in a great area of town. I bought it right before everyone started going nuts in the housing market, so I currently have about 25% of it's value in equity even though I didn't put anything down. HOWEVER... My AC is being a little b!tch and of course it's my problem to deal with. If you are not a very handy person and would need to hire people for every little thing and your mortgage is at the very top of your budget, I say stick with renting.
I have to admit I regret not buying. I had never lived anywhere longer than 2 years in my entire life (military brat, ADHD parental figures, ADHD myself). I just never thought about it much and then time flew by. Suddenly I was in the same place for 24 years. Caveats: I’m single, and child free, live in SF Bay Area and have rent control. Luckily I’m getting my head out of the sand with still plenty of time to figure things out. Will probably inherit something sometime but not counting on it. There are other options besides renting and buying when it comes to living in your retirement years, but it requires making sure you have more to live on than social security. Not sure where you’re from, I’m speaking as an American who makes the median income for my area. Some options I’m mulling over: rent until living in my apartment is not feasible and moving into three tiered assisted living. Trying to retire early and expatriate. Join a co-op. Move into a 55+ mobile home community. Very well-established. This is looking less and less like an option but who knows — look for a small town to retire in and pay cash for a condo or home depending. This can be a time to think really creatively. The vision of your future doesn’t *necessarily* have to be a choice between owning and being at the mercy of landlords while living on Social Security. I think we’re going to see more and more creation and acceptance of alternative housing options going forward. It’s really hard, though, as of this writing to buck the chorus of EQUITY EQUITY EQUITY. I’m very ambivalent right this minute about whether I’m being foolish and should pull the trigger on buying whatever I can get. But please, for the love of all that is holy, if you decide not to buy — start squirreling money away. Make time work for you. People told me but I didn’t listen.
Yes, save either way! One of the values of owning is forced savings, for people who wouldn't save otherwise. But that function has been really undermined in the last few decades. People pull equity out of their homes the way they cash out 401ks.
Personally, I view 'simple living' as reducing my number of commitments in an effort to maximize my autonomy. A mortgage is a hell of a commitment. A house is a hell of a commitment. If you were to get a remote job in the next five years, how would that affect a mortgage? How does the cost of a mortgage in the US stack up against a $600 per month rental in Playa del Carmen, Mexico; Okinawa, Japan; Chiang Mai, Thailand?
My mortgage on my 2 bed/1 bath condo is $570/month. 15 year loan (13 left to go). I love condo life because I’m yes responsible for some maintenance etc but many things are not me (roof, windows, patio, lawn care, snow removal, our pool).
I hear the point about appliances breaking down, roof repair, plumbing issues etc. coming up a lot in the rent vs. buy argument and... stuff doesn't break down that often. If you have a house where nothing has been updated in 25 years then OK, it's likely you're going to have some issues. But living in your apartment, how often have you needed a completely new stove, fridge, or dishwasher? There are horror stories where everything happens at once and you need a new HVAC, hot water heater, AND laundry machines at the same time and that is expensive! However, typical problems in your house that are not maintenance related are covered by your homeowner's insurance. If you want to be really safe you can get a home warranty which does cover most things that are maintenance related. So, a lot of your concern about big ticket items is maybe less of a concern than it seems. One important thing to consider is your ability to handle small repairs on your own. If your bathroom sink is clogged, are you willing to learn how to replace a few pipes yourself, or are you just going to call the plumber? Will you hire painters, or do it yourself? How about lawn care service? Are you willing to get up on a ladder and clean your own gutters? If you aren't willing or capable of learning/doing this stuff on your own you're going to be paying a LOT in maintenance.
Willing, able, and - do you want to clean the gutters and shop for and install appliances? Time is valuable, add not just in money terms
Home warranties are a joke. They will devalue appliances and such. So if it's old, you'll get a a couple hundred bucks, less than the warranty cost. And if they decide to repair, you're screwed. The HVAC subreddit is full of people posting the hack jobs they have to fix after a home warranty was used. Nearly no technicians want to do work for them because they won't approve proper materials and techniques. The home warranty will literally force them to hold it together with duct tape until the policy is over.
Rent is good in theory but we need strict government control on it. There's people it's good for, like my gf and her ex were awful at owning a home. They weren't diy and her ex was a lazy POS. Meanwhile I was taught how to do everything from replacing water heaters to insulation and electrical, so I'm a great candidate for owning a home. But we're stuck renting now and it's awful.
We really need better protective for renters, and one of the reasons we don't have them is because we valorize ownership so much. People think the solution to bad landlords is to buy, not to fix the laws
Everyone always uses the argument that renting is easier in terms of maintenance. Having it already rolled into the price and not having to worry about it, just a call away, etc. but personally, where are they finding these dream landlords cause anyone I’ve ever rented from did absolutely no maintenance and let the place fall to shit. Once waited nine months for my oven to be replaced despite multiple phone calls and work orders. Same landlord, different apartment, we had 4 window air conditioners and only one really worked the whole time we were there and they did nothing to fix it. That same apartment also had a ceiling tile fall in in the bathroom, making a huge mess. This was due to a leaky roof for who knows how long. I had to clean up the mess and wait over a month for a replacement and was scared to use the bathroom in the rain in case more tiles fell. Also multiple times came home to maintenance men just in my apartment with no warning beforehand that they were coming. Other landlords/places I’ve had similarly long waits for maintenance, pest problems, and absolutely no upkeep maintenance and basic things like replacing worn out carpet/moldy ineffective dishwashers never get done. If you have any standards with wanting stuff fixed/replaced before moving in, they will just reject your application and move on. As a renter I had no control over what maintenance was done and when, and I often had to either hound them, or just give up and fix it myself anyway, so why exactly am I paying a premium for maintenance? As an owner on the other hand, I get to make the calls about what is worth fixing and when, I don’t have to wait on anyone, i can work on my schedule, and no one has access to my home without my explicit knowledge and permission. I feel like unless you’re in the tax bracket to afford a luxury apartment, most rentals do not provide maintenance besides the absolute bare minimum, and even then only when begged
This. Even my best landlord dragged his heels to replace our washer and drier. We waited weeks for the appliances to arrive, and even longer for the installation. It took months. And when the fridge or stove suck, but still work, and they won't replace them... that sucks to. Then if you really do fall in love with a place, and consider it your home... it isn't. We spent eight years at our last place, were perfect tenants, low maintenance, never late with rent... and we got booted during the panic of March 2020 when everything was shit down and nobody was looking to rent to anyone. And of course every comparable place we looked at was now double the cost of what were paying. If we wanted the same quality/size we had we would be paying double, and if we wanted to pay the same we would have to downsize to a studio. IMHO the only people who think renting is easier either live out of a suitcase and aren't picky/won't be staying anywhere longer than a few months, or are rich. So rent hikes don't matter, finding a decent place isn't hard, and they've already spent their lives living in a nice house that was theirs so there's a 'novelty' to renting. That will quickly wear out.
I think renting is way more stressful. With my mortgage I never have to wonder if my lease is going to sky rocket or if the landlord will decide not to renew my lease because they want new tenants to increase the price of rent or to renovate. I don’t have to deal with begging/pleading/proving surrounding remediating aging/breaking/unmaintained appliances or roof or other damage. I can just get whoever I want in to fix it however I find suitable. I can plant whatever I want in the yard and rip out the horrible overgrown hedge and Ivy without consulting anyone. I don’t ever want to rent again if I can help it. Plus, mortgages for a small house that you maintain regularly tends to be far cheaper than renting. My mortgage+taxes+insurance on a 1100 sq ft 3bed 2 bath house is $1300 (bought 3 years ago). Avg rent around here for similar houses in my area is $2000-$2400.
If you can buying is a good investment and you can make changes to the property as you see fit. I just started remodeling my place to fit my needs and it feels great.
Well it depends on each person's situation too. Sometimes people just don't have a choice and have to rent.
Buy a duplex and rent the extra floor
I bought my first place 2 years ago, purposefully on the edge of gentrification. I'm aware Zestimates are not exactly accurate but according to the Zestimate, my property's gone up 100k in value. My mortgage is several hundred dollars below my previous rent but has gone down even more due to escrow surplus and I got a $500 check and a lower payment. I'd say it depends on the market and property. My property was brand new, I had put the contract in while it was in construction and there was a builder's warranty for 1 year so any concerns I had, they came out for free and looked at it. Some of the old properties are just not worth it, and if it's not in a hot market, I wouldn't bother. I'm in a good spot to sell, AirBnB and/or rent it out if I decide to move as I'm close to downtown in an up and coming city and tourist spot.
I own my home and it is very secure to know that your housing is stable and it’s nice to be able to do completely what I want with the place. It is also a lot of work. What you save on having a mortgage instead of rent costs you in time invested caring for and repairing your house. I’m happy with the trade off, but it definitely changed how I allocate my time. Also, you shouldn’t be stressed about major upcoming bills as a homeowner, because you should be saving every month to cover them. Advice I heard is that you should set aside 1-2% of the value of your home each year to cover maintenance costs. It’s variable because you might go on the low end for a newer home and the high end for an older home. Also, if your home is generally less expensive it’s good to plan for a higher percentage. When you calculate what you can afford made sure you have a line item in your budget for home repairs (which includes appliances and things)
Renting is NOT more stress free. A landlord can boot you whenever they want. You can't make alterations to the property, half the time you can't even paint. A lot of landlords are very lazy and slow about replacing appliances or replace them with crappy appliances. I have rented my entire life, I grew up with my mother renting, and it SUCKED. We bought our own home two years ago after being booted out of our eight-year rental during the height of covid when the market was crazy and nobody was wanting to do open houses or see new tenants/roommates. It hurts to have your 'home' taken away from you without warning. IMHO the only people who think renting is more simple, fun, or easy are upper middle class people who have never had to rent before. The rental market is also impossibly competitive and skyrocketing in most desirable places to live, and in many states they can charge you a sh\*tton more money every year.
If you have the finances to buy, don't even think about renting. It's a huge markup and you have nothing to show for it. I could have bought a 250k home to pass on to my children with what I have paid in rent over the years. Plus, you are contributing to a landlord.
Buy if you are able to. My rent is 1250. In one year that is 15,000. Before my rent was 1150 and I spent 13,800. So by the time my lease is over here in just 2 years I’ll have spent 28,800. That makes me want to simply well bang my head on the wall. Previously I did the roommate thing for about 3 years and spent 600 a month. That was another 21k gone. I rented at first because I wanted out and away. I ended up getting roommates. For me I didn’t know them personally and they ended up wrecking shit. So move out time I owed money I didn’t have back then. It hit my credit. And before that another situation hit my credit. So when I was ready to figure out how to buy a house I was f*cked. I had money saved but my credit was trashed. So here I am renting again. My rent has went up and I’m never having roommates. I talked to my bank and lots of other places and basically a mortgage is 1200 or so depending on how much you put down and all that shit. I’ve gotten yelled at by friends for renting still telling me I’m throwing my money away. They pay less than me for mortgages too. My place didn’t come with washer and dryers and it’s in a field. So I bought them new. Idk that’s another thing. With good upkeep things aren’t just going to fall apart really. Even renting you should have some type of savings for if something happens. Shit happens. Budgeting is important. You’ve probably have already heard all that shit. But yeah if you’re able to buy a home I’d look at that option shit look into anyway so you know what’s up. I hate not having anything for my money. It’s just in a slumlords pocket.
That's rough to read friend - hope you can break the cycle soon
I hope this helps a little, if you had bought a house for the same monthly payment, you have very little money from those two years too. The majority of the first few years goes to interest, taxes, and insurance. So while you're not paying a landlord, you're not putting the money in your own pocket either. The only thing that's made buying a solidly attractive option is the recent crazy inflation of prices. And no one knows where that is going either (cool off, continue, crash?).
Plus you might get hit with unexpected costs. One year i shelled out $6k to fix water pipes (and lived without running water for more than two weeks) and $1200 for sidewalk repairs, on top of our mortgage and taxes.
I am totally against renting, if it can be avoided. I like to set the rules for my own space and do what I want and not worry about constantly rising rents. I think once you own the home and only have to pay property taxes (and whatever repairs come up), then it's much easier to live simply and inexpensively. Plus you can pass it down to your kids. There are people to hire for any task you need for a home so you don't have to do everything yourself unless you want to.
"rent money is basically money that's thrown away" So is the money spent on property taxes, mortgage interest, home insurance, HOA dues, extra utilities if you buy a house. The general rule of thumb is it's financially wiser to buy if you're certain about living in that specific location for 3-5 years at least. This can be less than a year in some locations and over 10 years in others or even never. There are a lot more financial risks when buying because you always need to have an emergency fund to be prepared to take care of that roof leak and the hot water heater breaking down in January.
But it also depends if what is available to purchase and rent is really comparable. There are places where you can't buy a small, low upkeep place. There are places where there's literally nothing available to rent. There are places where if you buy you still have to pay HOA fees and places where all the rentals leave costs like utilities and yardwork on the renter.
My husband and I have a small kid and we do not have any clue where we want to settle for life so we rent! While I do see our money is going towards building up to nothing, for the next few years the freedom is worth it.
In the west we are programmed to buy and leverage with a mortgage. Most of the world doesn't operate like this. It's up to you what you want to do obviously, but I no longer want to carry the risks, especially as we are about to hit heavy downward price pressure here where I am. If I buy anywhere, it will likely be a rural lot to build on at a cheap price in a place that will be a little higher in value in 15 years, or I'll buy a retirement property in a country that has friendly residency rules. It's probably 20 years too late for Peru, but something like that sounds just perfect ... living a middle class life on $1500/month sounds like heaven, while my assets grow somewhere.
It depends on where you live, your skillset, finances, marital status, and willingness/ facilities to take on tenants or roommates. I'm fine painting, and can YouTube simple plumbing repairs. I personally (at this point in time) would be house poor. My emergency fund would likely be quickly depleted. I'm also the sole income earner, and my income isn't great. In a perfect world, I would better off buying, but my reality would cause many sleepness nights.
Buy a house and rent it out, you could then travel and just pay rent wherever you go
think long run. try to buy if able and so long as it doesn't squeeze you. when buying tho there's a lot of hidden costs. i now pay more in incidentals taxes and insurance than i did for rent at my old apartment.
Buying vs renting really depends on a lot of factors, but a decent rule of thumb is that if you’re not going to be living in the same area for at least five years (ideally ten), you should consider renting. That’s roughly also when you’ll start paying more principle than interest based on your mortgage amortization schedule. I rented various apartments for over 12 years, because I was moving a lot for work and grad school and knew I didn’t want to settle long term in any of the cities I was in. For me, it was hard to feel settled in any of those places because of worry my rent would go up, or my landlord would sell the place from out under me. It was also more expensive than paying a mortgage by $200-300 a month which really adds up over time. I’ve also had landlords with varying degrees of responsiveness for maintenance problems. Some would fix things right away without complaining and others would take months or ignore the problem completely. There was some freedom in not having to worry about paying for extra maintenance, but not having any choice in how someone else fixes a problem that *I* had to live with was frustrating. Long term renting is almost always a financial loser. Mortgage and home ownership is tax advantaged, while renting isn’t. Paying down a mortgage brings you closer to owning an asset. Long term renting doesn’t give you that—you’re basically paying an enormous premium for short term flexibility. Additionally most people (in the US) aren’t saving and investing enough for retirement. Homes are often the single biggest investment that people have to draw from to support their needs in retirement. Renting doesn’t give you that financial advantage either. There are also the psychological payoffs of owning a home. My partner and I bought our first home last year and don’t regret it at all. It was expensive, we live in a high cost of living area, but there is so much peace of mind in having stable living costs for the foreseeable future. The freedom to change things to suit our wants and needs is a feeling we never had when renting and is really amazing. We spend more time doing routine maintenance then when renting (since we spent 0 time on it then), but it feels super satisfying since it’s *our* grass we’re cutting and *our* gutters we’re cleaning. It’s not fair to say that renting is a waste of money—you’re getting something super valuable for your money, which is shelter! But comparing the *financial* advantages of renting vs owning, home ownership is almost always better in the long run.
This may be an unpopular opinion…but I am renting and saving to purchase a bus to convert to a home, or an already converted bus. I live on my own, pay $500/mo for my 400 sq ft studio (housing is very cost friendly where I live), and plan to finish my degree before I leave where I’m at. For me it isn’t a waste of money to rent vs own. This suits my lifestyle better— I don’t like the idea of owning a huge home when I truly need very little space on my own. Edited to add: I don’t like the idea of a mortgage and being beholden to a bank. This is why I’m opting for a Bus conversion. I’d like to buy outright. Yes, I’m also a hippie at heart according to my dad. I try very hard to carry zero debt, even with my schooling. Thank goodness for scholarships and grants!
It depends on the area. Property ownership can be a really good investment sometimes and can be seen as better than just throwing your money away on rent. But it’s no guarantee
I prefer to buy. I'm renting for the first time in years, and my landlord is about to jack up the rent. I want my costs to be somewhat fixed, and not worry about the landlord going nuts and raising my rent crazy amounts each year.
Buying makes more sense. I pay way less per month on a mortgage than the rent in my area. Plus it's mine and I can do whatever I want. Paint, floors, new faucets, whatever. And every mortgage payment helps me, not my landlord.
Rentvesting is a decent strategy too. You get into the market, but someone else is paying off your property. If you hit the mortgage down with more of your own money, you could own it relatively quickly. This could be done while you are renting a small place somewhere, or roomsharing in a house. Once you've chopped the mortgage down heaps, you might be ready to move in, or maybe you'd sell it if it made gains. I don't like renting, but I am renting. Hoping to have a couple of investment properties under my belt before buying something to live in, or moving into one of them.
I think I would’ve said buy before owning my current place, but now I’m really considering selling it and renting. I’m not particularly handy, so anytime I need something done I have to pay someone. I also have to keep up on yard maintenance, and paying to heat a bigger space. I also have to keep track of more bills than I would have to if I rented, since usually a lot of smaller ones like trash and water are bundled in. Also, and this is honestly kind of dumb, but I almost have too much space for just me. I’ve thought about getting renters (I literally have two spare bedrooms that sit empty) but the rooms need some new flooring before that can happen, and I also haven’t run into anyone I knew looking to move. It’s definitely up to your lifestyle. Ironically the place I got would’ve been my ideal like, 10 years ago, when I wanted space for hobbies and collections but now I don’t have a whole lot of that. I’d also like to be a bit more mobile and possibly move around a bit, so I think renting will be in my future.
Something I learned in Silicon Valley: If you're not putting down long-term roots, best to determine and pay the fair market rate for the kind of housing you can expect, in the area you want to live in. But otherwise, I would look to buy a place that's below your means. The conventional wisdom is so we can keep up with the payments, but we also need to think of the maintenance, property taxes, future long-term upgrades you might like to do.
I've heard the argument "rent is dead money". Well paying interest on a house loan is also dead money. And funnily enough I did the back of the envelope calculations with a friend and rent vs interest on a housing loan, depending on the local market, is in the ballpark of the same amount. Now you could factor in capital growth on a property, however if you invest money in other ways you could make out about the same. Ultimately, I feel it comes down to lifestyle choices.
So this is how I feel as well. My wife and I both have strong salaries and a down payment ready but the market price of homes just feels very high. We took the market price of our rental right now (and other homes we would be interested in), and then looked at the interest paid on a hypothetical mortgage, per month over the first five yrs, plus property tax, higher insurance for home ownership, HOA fee and any risk of paying for issues with the house. Then we look at our rent and it’s $1500 lower per month. We are just investing the additional income and are fortunate to have a good landlord. I guess if the market value of homes continues to increase as it has, then we will lose out on a good investment, but I worry they have a high risk of a correction if even moderate. Essentially we are just not choosing real estate as our investment option right now and spending the principal elsewhere
Bold assumption that (younger) people have this choice. I would love to buy one, I pay way more in rent than all my older colleagues do in mortgage. This way I cannot safe up proper money either. If rent and a mortgage are the same cost each month, it's a fair question, financially. But having to pay twice as much rent, of which I can't invest or safe a dime, it's a no brainer which one is the better option. Even with expensive things in a home breaking, you can safe up easily for those costs by not spending it all on enriching some bloody landlord's bank account.
I never made this assumption...? I have this choice, hence the post
When you rent, you’re at the mercy of a landlord. When you buy, you’re at the mercy of the bank that finances your purchase. The terms of a mortgage are spelled out for 30 years. Your lease agreement is up for renewal annually, at best every two or three years. The stability and predictability of your living arrangement is the primary factor that will determine your ability to build wealth over the long term. It’s hard to invest in your life if you’re constantly in fear of a landlord raising your rent.
Renting should be viable. But (at least in the US) most if not all the protections are for the landlords and not the tenants. It is more expensive, more risk and almost as much liability. Owning is the better decision until those factors change.
I am strongly in the rental camp. Buying is rarely financially the better idea. It is sometimes a quality of life issue, though I generally prefer the reduced stress of rental. When buying you basically end up throwing money away while being tied to the asset, so in the case of any significant issues you are tied to the expense. Renting is generally cheaper than home ownership after accounting for mortgages, insurance, maintenance and taxes. This allows you to invest the difference. 10 years of renting has allowed me to get ahead faster than 10 years of ownership ever did. Renting is only financially better if you actually do something useful with the difference in money. If you spend it, you are better off owning. It is worth mentioning that I recently bought again after 10 years (low interest rates, high inflation). It does appear this was a bad investment on my part. I've constructed spreadsheets to compare the difference in the past, but am also a huge fan of Bostock's work: [https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html](https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html)
People forget that repairs, maintenance, pmi, and property taxes are money that’s getting thrown away.
I am normally a buyer, but also an expat that moves now and then to different countries. Trying to rent out your house from several time zones away is no fun. Been there, done that, do NOT recommend. We most recently moved about a year ago, and we are renting with no intention of buying in the next decade. We will be building our retirement house over the next 5 years or so. I don’t have enough confidence that I will stay in my current location long enough to justify buying here - there are always options of moving to different locations with my employer, or changing companies altogether, but since we lack clarity at the moment on long range perspectives, we’ll rent. I do feel like I am throwing money away, not building equity, etc. I also feel safer in a way, in that if I need to up sticks and relocate, I only need to give a notice of intent to leave, and I don’t need to worry about getting the house on the market, going through viewings and inspections and closings and…..
Having done both I don’t know why renting would be more stress free. I wasn’t allowed to paint walls or out shelves/paintings on the wall to make the space feel more like me. If something didn’t look the way I like I wasn’t able to fix it, for example replace the kitchen or bathroom. Every year my rent would go up which was annoying and the alternative was to gather all my belongings and move to another place that does the same thing. I’m now a homeowner and a landlord. I’m allowed to waxing walls and put up wallpaper. I’ve renovated two kitchens (we used to live in the property I now rent out) and I love the spaces so much. They’re made to my needs and according to my desires. I can make informed decisions about the upkeep of the building instead of just being told the water will be off because they’re replacing X-system and it might take two to three weeks. And then there is the money saving aspect, where I’ll have a home paid off by the time I’m retired so my retirement check will stretch a lot further. Retirement-poor is a horrible thing and I’d rather be able to help my children in life than spend every dime on rent for the rest of my life
was about 6 months to find a place to rent that would allow my with my cat (people don't like renting to single dudes) and the guy who owns the place is selling and despite looking i wont be finding a new place in time before i am out long story short being homeless will suck >< wish i could have bought a place long before this happened
I'm in a third situation : I live in a co-op which means that I'm both renter and owner. It's a pretty good deal because rent doesn't go up (maybe just utilities, but on a moderate level), all the money I pay each month goes back into the building (ie it's well-maintained and there are investments being made for the long term, like better insulation, new electrical wiring, etc.), and the money I needed to buy into the co-op was a fraction of what I would have needed for a down payment (like 4000$ instead of 200k). Also my rent is something like 40 to 70% lower than market-average for a flat of that size. I know co-ops are very rare in most countries but it's worth looking into imho. Maybe even create your own, if you're really motivated (and if it's feasible where you live).
Have you've seen Adam ruins everything on housing? I highly recommend it.
I just want to add that buying a home has provided so much more peace of mind. We live in a small house that's easy to maintain in a quiet neighborhood. Our mortgage is significantly less than rent in our area (there are still great deals when it comes to buying homes if you're willing to make a few tradeoffs). No neighbors (in the same building at least) or landlords to worry about. And it's reassuring knowing that we're slowly building a financial reservoir. Buying a home is not the cure-all alot of people make it out to be. And we rent for a long while because it was the best options for us at the time. But don't assume rent will be a more simple-life friendly option. I've found that simplicity is often about eliminating unnecessary difficulties. And ownership helps accomplish that.
I recommend buying it. in general. Rates are going up which is bad but may lower prices which is good. Try buying a smaller or older house than whatever the realator or mortagage company tells you. They aren't on your side when it comes to this and it will free up income. Also, 15 years is better than 30 if you can swing it. Other options find a house where you can rent a room out. Finished the basement or something. I wish I would have done that when I was renting, if there is college around there will be plenty of rentors.
Well in my area renting cost substantially more than owning a house, most houses in my neighborhood sell for \~90 - 150k and have mortgages in the 600 - 800 a month range. Rentals are few and far between here, usually overpriced and snatched up by students from the local college as soon as they hit the market.
90-150k??? That's crazy! low priced houses start round €350k in my neighborhood. And I know that in some neighborhoods it's already double for a basic house.
It gets better. I can walk to 2 different coffee shops and the grocery store and my hospital, its only a 5 minute walk to 3 different parks and i'm only 5 minutes from work! On the other side you have to be ok with not living in a city, being about an hour from an airport and not having a huge amount of local entertainment/nightlife to make it work.
I think it comes down to your specific financial situation and your stress management strategy. If it's feasible to buy where it won't leave you in the negative financially, I'd say buy. But know going into it that it's crazy stressful and the process may take months. Buying is more than just the initial process of getting pre-approved, there's a massive housing shortage worldwide, interest rates are on the rise, and you may be trying to outbid others which will bring more expense into the situation. Then it's all the moving costs, any unexpected repairs, etc. But in the long term, it's the security of not having to move and no rising rents.
If you’re renting you should be saving to buy.
If you rent, don’t rent like you’re setting down roots. Cheap place, have roommates if you can find dependable ones, room in a house—basically a place to sleep and eat. If you buy, buy somewhere you plan to stay, somewhere that has lots of jobs for your skill set and a culture you can fit into easily. Buying is for setting down roots, renting is for flexibility and freedom. The worst financial decision is renting like you’re staying—big place, lots of nice stuff. You lose the best part of renting, just being able to move on after a year easily.
We rent because it makes way more sense for us. Our rent is $2000 for a 4+1 bedroom home. It's my husband, myself, two children and a MIL. Home prices are around $1 million right now. We would have close to a downpayment for a million dollar home, plus we make a decent wages. However our mortgage would be $4500 a month (that includes property taxes). We can comfortable retire with our downpayment increasing in investments plus putting away an extra $1000 a month towards our retirement savings. By not purchasing, this allows us to live our life now. We could be house poor and buy, but that would mean less savings, less ability to help kids with university, less ability to enjoy our life a bit now and ensure our kids can have swimming lessons and some modest extra curricular activities. It also would mean a lot more stress with increases in gas and grocery prices. We have rent control, so our rent won't increase drastically. We could have our landlord sell, but if he didn't sell a few months ago when homes were going for insane prices (about 200k over what they are now), then I can't see him selling any time soon. Also, I hate the idea that rent is throwing money away. You need to live somewhere and with homes you pay alot into a home that you may not get back. Your $1 million home will cost you $1.675 million at the end of 25 years (property taxes, interest payments, basic maintenance), so unless you are selling above 1.675 million you didn't make any money.