Which do you think is better?
Personally I’ve done both and over the long run would say owning is better but in the short term where one must be able to move quickly for job reasons, or you just dont want the hassle of mowing the lawn, then renting is a better option.
I have always been firmly in the rent camp: I don’t particularly want to deal with yards, or maintenance stuff…
And yet, I’m talking to my credit union this week about what I need to do to qualify for a mortgage. Why? Because I’m tired of apartments (I want to move to a new place, but can’t find one that’s 1) within my price range and 2) has the specific amenity I want this time around without going someplace that would double or on bad days triple my commute. I’m still not sure I’m going to buy, but I’m not completely opposed to it anymore either.
There is no single answer to that question - it will depend on your current situation, future plans, job market, real estate market, and life goals. Owning is right for me now, previously it was renting, who knows what the next phase will be.
It depends. Owning was far better for me – I had a very low mortgage, which I paid off a decade ago.
I’m generally on the side of owning, for the simple reason that after you own for 30 years, you have equity in the form of the real estate you live in, while if you rent for 30 years, you have nothing to show for it (you got value, but it depreciated entirely over the course of you living there).
Plus, I get a mortgage, and my mortgage payments never go up. Rent payments go up every year. so at year 25, I’m paying far less for something I get equity in than someone who rents and gets no equity.
Now, that doesn’t mean owning is always the right move. If the housing market is in a bubble, or the area is in decline, or you’re going to be moving a lot, or you simple can’t afford the down payment on a house, renting is the right move. But in general, I think you should be looking to own.
As far as maintenance, lawn mowing, etc… you know you can hire people to do that for you, right?
Try to not rent anything that depreciates, like cars.
I own and rent out a bunch of houses and my tenants are responsible for mowing their own lawn. I hire someone to do it at my own house. If I really hated grass I’d consider buying an apartment-style condo before renting an apartment.
In other words, I think renting is right for some people some of the time, but whether it’s a single-family home with a yard or an apartment is independent of whether you own or rent it.
I think I’d like to live in an apartment someday when I’m older, but I expect to owe building maintenance fees that will probably balance out my savings on yard care… it won’t be to save a bit on monthly expenses.
Yes, unless you intend to move around, owning is far more profitable.
For example after the Second World War my parents bought a house for £2,500.
They lived in it for 55 years (and brought my sister and I up in it), then sold it for £250,000.
I like renting; there’s something very nice about not having to worry at all about maintenance/appliances/repairs/etc. I write a check every month, and that’s that.
However, it’s not a “for life” situation. At some point, I’m sure the landlord will sell, and who knows what the new owners will do, and I’ll be forced to move (if I’m still here, that is).
Eventually, the benefits of owning a property (stability, the ability to customize exactly as I want, and building equity) will outweigh the benefits of renting (low responsibility, relative financial freedom), and I’ll buy a place. Not yet, though.
For me, renting is the way to go. I’m terrible at maintenance things (not even talking about the hard stuff; just the mowing the lawn thing would be forgotten or procrastinated terribly - and I certainly don’t have the money to hire anyone to do it for me!)
More importantly, I don’t have the financial security for it. Even if I could scrounge up a down payment, or even if we were in the same economic situation as 20 years ago and I could get a first time homeowner’s loan with no down payment - I don’t have enough of a nest egg. I see my homeowning friends struggling with a furnace that blew, a roof that was damaged in a thunderstorm, a hot water heater that died… if any of that happened, I couldn’t afford to fix it. Now when stuff like that happens, I just call the landlord. If I were to own a house, I’d want at least $20,000 sitting in an interest bearing account somewhere just for covering homeowner disasters.
Watching what happened to people when the housing market crashed was a bit of a confirmation of what I’d always suspected. It was awful seeing people literally stuck - they couldn’t move to take a better job or go take care of their sick mothers, because they couldn’t find a buyer, and they were living in houses that were suddenly worth 1/3 of what they owed on them, so they couldn’t even get a second mortgage to pay for repairs and upkeep. The idea that houses *always *go up in value just flies in the face of logic and observation, to me.
Also, I’ve run mortgage calculators. That thing people say about a mortgage payment being about equal to rent, so rent is just a waste of money? Yeah, not even close. If I wanted to live anywhere remotely safe in my city, in a space as big as I rent, my monthly housing expense would *double *with just a mortgage, taxes and insurance.
Renting is just throwing money away.
The goal of owning is to eventually rent it out. I think what most people above are talking about is your primary residence. Usually, that doesn’t generate income until it’s paid off, and you can get screwed by the market.
To me, in the short term scenario, I’d love to buy a temp place with the goal of moving out later then renting it.
For that reason I loved renting, but OTOH I like being able to do whatever I want to the house and yard and not worry about having to undo it when I moved on to the next apartment. And I’ve had a few landlords who were annoying and/or just constantly around doing stuff around the property; sometimes it felt like living in Grandpa’s garage.
That’s a compound annual growth rate of 8.73%. I’d happily take a 55 year average rate of 8.73%, but it excludes 55 years of property taxes and maintenance and repairs, plus the realtor’s commission and other selling costs. So we know the actual annualized return was something less than 8.73%.
So it’s probably not highly profitable, but better than the certain loss that comes with renting.
I don’t think it’s always clear cut. Certainly there is an advantage in owning in that once can do what they like with things they own (within local zoning ordinances). But from a purely financial point of view, you also have to look at some of the other costs of owning:
Closing costs
Property taxes
Maintenance/condo/coop fees
Repair and maintenance costs
Insurance
Time spent on repairs and maintenance
Opportunity costs of taking your down payment or the monthly difference between renting and owing and putting it towards some other investment.
You also need to consider the type and size of a place you can afford to own vs rent.
Renting isn’t a certain loss. You can invest the money you would have spent on a down payment, along with the amount of money you save every month renting, and get a return that is comparable to what you would make investing in real estate.
The only advantage real estate offers, is that it forces you to do the investing every month.
Whether to rent or buy is a personal decision based on a lot of factors, but this observation is just not true. Real estate prices, like the stock market, do go up - over longer periods of time. For either, one can point to short term periods of losses and crashes but over any long term measure real estate values have always increased. Over any 15 year period you care to choose, real estate and the market have always increased in value.
It wasn’t the real estate price drop that hurt most people in the most recent recession, it was the combination of that AND losing a job. When income dropped enough that the mortgage couldn’t be paid, depressed real estate values (and/or over borrowing) eliminated the common options of refinancing or selling, so people ended up in foreclosure. What the press did not report so much was that people got evicted from rental properties, too, when they couldn’t pay the rent.
I’m in the “buy” camp unless there is a compelling reason to rent for a certain period.
I see it as a long-term planning problem. Buying a home early can be a substantial boost to one’s retirement, if one needs it. I have relatives that would like to retire but haven’t paid off their mortgage yet, so I would like to have someplace to live without having to pay rent when I get there.
I think I have the best of both worlds: a townhouse in an association. I own it, so I get the equity and the tax advantages, but all the external maintenance is taken care of by the homeowner’s association. The only maintenance I’m responsible for is the internal stuff, and we have a staff that’ll take care of stuff like that for a minor fee if I don’t feel like doing it myself.
And that’s an extra caveat that A) I didn’t include and B) No one adds when pushing renters to buy. Believe me, I’ve heard it a lot. I’ve been told many times over the years that if I just bought a house, I could “flip” it in a year and double my money. Maybe, sometimes, if you do a lot of work and research your neighborhood carefully and you’re lucky. But I’ve never seen it be the sure thing that people tend to portray it as.
“Always,” to me, means always. As in, at any point, your house will not cost you money to sell it, you can at least sell it for what you still owe on it. I think that’s what most people think, and that’s what so many of my friends found shocking when they wanted to sell and discovered they’d have to pay the bank a large sum of money to get out, beyond what they could sell it for…if they could find a buyer. (And none of them were jobless, actually.)
You have honestly heard many people say that you can double your investment in one year by flipping a house? It’s insane that any one person would have said this, even at the height of the market, but you hear it routinely?