Here’s the situtaion:
My husband and I bought a house in NY about 7 years ago, and I hated being a homeowner. The mortgage was huge (our credit bites), it was a “fixer upper”, which we lacked the money/energy to fixer up, and I hated having to put money into stuff that broke when it did. (Water heater, furnace, that sort of thing).
We recently moved to NC, and we’re renting a house. The cost is HALF of what the mortgage in NY was, it’s in nice shape and the landlord is siding the house right now (it’s almost done and it looks great), and I love it. The thing I REALLY love is that if somethiing breaks, it’s officialy “Not My Problem”. I can call and have it fixed, and if it’s something huge or it can’t be fixed, I can pack my stuff up and get another place with just 30 days notice. I love that. A lot. I feel a lot of stress melting off just knowing that I’m not responsible for dealing with selling this place if I want to move or fixing structural issues if they need it or what have you.
My husband is a professional musician, and he travels a lot for work. We will probably like to move about every 5 years or so to another area. With all these issues in mind, does it make any sense (practically or financially) to ever BUY a house again?
For what it’s worth, we were lucky enough to get a buyer for our house in NY (the sale is going through now) but we had to pretty much sell it for what we owed- we simply were never going to unload it otherwise for various reasons. So we got NO financial gain from owning that piece of shit house.
Thoughts? Does being a grown up mean you HAVE to own your own home? Am I throwing money away by renting? Or being smart since I’ll probably want to move every 5 years or so?
Unless you plan to put a lot down, then no, buying does not make sense if you move every five years.
You could always buy the house, then when you move, hire a property manager to rent it out for you. That’s what we’re doing for our house in SC…the PM takes 10% of the rent and handles everything.
I guess it’s all your stress level…there’s no reason you MUST own a home when you become (drum roll please) an adult, but it builds up your credit nicely.
I wouldn’t rule it out, but no, it’s not a requirement.
If you can put up enough of a down payment to get the mortgage to resemble rent - buy it, rent it out when you move (let the tenants pay the mortgage). Repeat process, and you’ll have a nice retirement income (the rental income will rise faster then the mortgage expenses).
It makes some sense, but enough to overcome the fact that you don’t like to be a homeowner, maybe not.
Housing prices (while they may currently be at a bubble) do tend to increase over time. You won’t pay off enough of your mortgage in five years to build equity, but equity will build for you with an increase in housing prices.
You’ll take the tax writeoff on your mortgage - so if rent and a mortgage (remember to think about costs you’ll pay - if heat is included in rent etc) are about the same, you will come out ahead with a mortgage.
I hated a fixer upper as well. But there are alternatives. A newer house will require less work.
Ah, it’s always tradeoffs. For you, renting seems the way to go. The downside is that you may not always be able to find a nice house where you want to live and if you find a nice house, you might be cast out of it at the landlord’s whim, e.g. he decides to sell the place.
I can certainly sympathize with this – I’ve got a genuine fixer-upper that I paid too much for, and I’ve gotten to the point where I truly dread finding the next damned thing that needs replacing or repairing. Then again, I’m right in the heart of the real estate bubble, so my house is (conservatively) worth $50K more than I paid for it and quite possibly much more. And I don’t have to ask anyone’s permission to have a cat or hang pictures or even tear down walls when the urge comes upon me.
But probably the best argument I could come up with for owning a house is that some inconceivable amount of time down the road, you do own it. Take away house payments and even with the cost of taxes and maintenance, you can live pretty happily on a rather low income.
Very true, that. Something to keep in mind, that’s for sure.
Renting, to me, still feels like the smart thing for us. Sometimes I just kind of feel like it’s not the “mature” thing to do. Maybe that’s like having kids- it’s so expected that it feels weird going against the society norm.
I appreciate everyones input and welcome more comments/ideas.
I’m sorry I don’t have a cite for this - the ol’ memory is going - but I read/heard recently that in many cases, there’s not that big a difference between renting and owning, at least financially. This was especially true for people who move a lot. I can attest to that - we’ve always owned, and we’ve lost money or broke even more than we got ahead, but we’ve never been in one place more than 7 years, and usually more like 3-4. We did play landlord twice - didn’t learn the first time, and we’ll never do it again.
Yeah, you don’t get a tax writeoff, but that may be the price of not having headaches - assuming you have a good landlord who handles the headaches. You have the freedom and flexibility to get up and go that most homeowners don’t enjoy, because selling a house takes time.
My take on it: Do what works for you. That’s what real grown ups do!
I always had a hard time “throwing money away” on rent as well, because we had nothing to show for it.
We bought our first house in 1999, sold it in 2002 and bought another. We live in SoCal so the crazy housing market here worked for us (for once). The first house went up in value about 50% in the 3 years we owned it. We got a great deal on the new house, and were able to put a bunch of $ down.
But, if we were in a different situation (such as the one you describe), even buying a condo every 5 years might not be the best way to go. Between grad school & the military, my brother has never bought even when he had the money- too much miving around.
Do what you want! Don’t let someone tell you that grown-ups have to own a house!
When we rented, having to ask the landlord to fix something (even when we called the repair person) was a pain, more than outweighing not having to pay for it. But I can see how some people would feel differently.
Any house has problems from time to time, so if you’re doing a financial comparison, be sure to include the costs of painting and new roofs in.
Some financial columnist (just one, once) stated that you could take your down-payment money and invest it otherwise, and do the financial discipline thing by pretending you had a mortgage payment to make and investing that also (that is, investing the difference between rent money and house payment, adjusting for tax break if you’re picky). Add this to what you would normally expect to be saving if you had bought a house.
Assuming your investments worked, after 30 years you would have some nice money. While you would not be living rent-free, your money would be liquid as opposed to being tied up in your house. The advantages of this approach are liquid money for travel or med.expenses, and ease of moving as suits you.
I know what you mean. ‘grownups are supposed to have houses’, once we got ours I had a phase that ‘people in houses are supposed to have pianos’, ‘supposed to replace the garage door’, ‘supposed to have better furniture’, ‘supposed to improve the landscaping’—after a while I got over all that, thank goodness.
I’ve always heard that if rentors would only invest the money that they save by renting a house instead of purchasing a house, that in the long run they would be better off.
I don’t know - I’ve been asking myself the same question lately. I like being a homeowner. I rented for a LOOOONGG time, so it’s great to have the tax write-off, etc. I currently live in a 1914 bungalow and have a blast doing little things for it. I picked a good one this time around - no major sturctural issues, just cosmetics.
But, my luck is that I keep moving to areas in boom times and buying a the top of the market, only to have to move and sell a the bottome of the market during bust times.
That’s starting to get old. Maybe it’s time to ride out this bust and wait for the next boom?
(yeah, and I might win Powerball this week too) :rolleyes:
Of course, if you get ripped off on a mortgage, that will always looks better than a good deal on rent. Had you gottena decent mortgage and then later been ripped off on rent with a crummy landlord I’m sure your opinion of renting would have been worse.
Having crunched quite a few numbers on this very subject I’ve concluded that it’s close to being a wash at first, with ownership winning out as the better choice in the long haul, especially in terms of your retirement. But like anything else, you can get ripped off by anyone.
Very true, all opinions here. I’m renting a house, by the way, not an apartment. I think that makes all the difference, living conditions wise. The nice thing is that if you have psycho neighbors, at least you can move out and find another house rather then trying to sell yours and being made crazy by said neighbors.
Thanks for the advice, all- I’m really not interested in homeownership as an investment, so I think I’m right about the renting for my purposes. Thanks so much!
