Rent or buy your home?

Buying,because you build equity, renting is just making someone elses mortgage payment.

Buy so I can have the freedom to use the facilities at my leisure, any time I want. Last time I lived at home in a house I was free to take a 23.5 hour bath and read whole textbooks and novels with a pizza on the toilet seat and novels with in reach on the toilet tank. With the doors open.

@talljasperman I’ve never known anyone to look forward to placing a pizza on the toilet seat, but if that is what you like, I think it’s great!

I prefer to rent in general. I am considering buying a multi-unit property and renting the other units so I can live rent free.

I think rent especially for retirement. Then you don’t have to face major repairs on a fixed income.

It all depends on your lifestyle. I’m an apartment owner and since I know most will talk about the benefits of owning I will talk about th benefits of renting.
If something breaks, you don’t have to fix it. Just call your maintenance man.
Got bugs? Call management and they will send out pest control.
Crabby neighbors? 30 day notice and you can move.
Get a promotion but it’s 2 states away? No problem. You don’t have to stick around until you sell your house.
I have a lot of great reasons to live in an apartment too.
No yard work, cheaper utilities, pools and spas cleaned by others, access to a club room for parties, someone to receive your packages when your not home…..

I agree that it depends on the person’s needs and lifestyle. Some people need the freedom to relocate easily, while others need to put down roots.

We’re in a rent-to-own lease – the best of both worlds. We’ve lived here for a few years now and a portion of the rent is going towards the down payment. This gave us the opportunity to make sure we like the home and neighborhood, and also to be sure we work well as a couple, since this is the first home we’ve shared. We’re in the process of getting a mortgage now.

Our place is a townhouse with a homeowners association, so we don’t have the exterior and yard maintenance; just the interior, which works out perfectly for us. Our plan is to pay it off before we retire, so we won’t have the mortgage payment when our income is fixed.

I rent, and have rented all my adult life, but not for the reasons you might think. As an only child with no living relatives, if I purchased a place, what the hell would happen to it when I die/kick off/buy the dirt farm or whatever else you wish to call it? I could leave it in my will to someone, but to whom? Remember – no relatives. So, when I finally take my final curtain call or dismiss my final class or whatever the hell I’m doing at the time, the state of Texas would get my place and dispose of it with the money going to the state. Holy shit!!! Texas is one of the wealthiest states in the union (I’m hoping by the time I bid this world good-bye, the politicos in Austin will have had the good sense to secede, but that’s not going to happen because they may yell about it and what a great idea it is – but when push comes to shove, they’re all a bunch of chickenshit cowards) and the state doesn’t need it. As it is, all my money etc. goes to the university for scholarships in the department in which I teach, almost everything else goes to the university library and whatever someone gets from selling all my other shit also goes to the department for scholarship money.

With all that as background – why would I want to buy a house, pay taxes and insurance on it – only to have it eventually go to the state? Better in my case to rent.

I’ve had my house for 8 years. I’m not as healthy and upkeep is hard. It would be nice to have a landlord to fix stuff. But I do have some good equity in it.

It depends on your situation.

I really wish I was renting a larger apartment or house right now. I moved to a new city and the process of looking for a house has been very difficult here. I am in a decent sized apartment, but still have half my stuff in storage and some here in the apartment in boxes. If I had all my stuff in a rental place now set up like I really live there I would be comfortable and not as pressed to find something to buy. I have really enjoyed not having to do any maintainence, although in some cities you can buy condos and houses that are practically maintenance free, still not quite the same as living in a rental. Another benefit of renting is being able to move almost hassle free. I find renting less stressful when looking for a place to live, because I feel like I can change my mind easily in the future if I don’t like it there.

Owning over time means you usually come out ahead financially. When you own your house outright it usually is cheaper than renting. I wish my grandma and aunt had owned apartments in NYC where they live. Not because real estate prices went up so much, although that is a nice benefit, but because their monthly costs would have been, and would be in the case of my aunt, so much less. She has the beneift of the NY government capping how much her rent can be where she lives, but if she wanted to move somewhere else in the city she would lose that. With ownership expenses can actually be more fixed sometimes than renting. Fixed rate mortgage your payment will not increase, and eventually you will be done paying it altogether. Taxes can go up though and if you pay maintenance fees that can go up, and repairs and upkeep eventually need to be done.

You will hear people say owning gives you the tax break, but that doesn’t always work to your benefit, you have to do the math. Usually it is good to own if renting costs the same per month and then you do get the tax write offs and you actually pay less monthly than renting. A lot of it depends on the interest rate of the mortgage. Owning outright you save a lot of money over time if you aren’t great at investing your money in general. A $200k mortgage can easily wind up with you paying $400k by the time the loan is all paid off over 30 years.

I used to always say ‘buy’ for all the reasons above, but between the housing bubble crash (circa 2007–2009) devaluing my house considerably and my endless to-do list never getting any shorter — I’m having second thoughts.

I’d say buy in most cases. Renting is just throwing money away. The only part I liked about renting was that we had no responsibility to do any repairs – however, it became our responsibility to hound lazy, cheap landlords until they did those repairs and, even when they did, it was a half ass job. I’m so glad we don’t have to deal with that anymore.

The price difference is ridiculous. You generally pay much more to rent. We went from paying $500/month for a shitty single-wide trailer with holes in the floor and dirty wallpaper from the 70s to paying less than $300/month more for a brand new 2000 sq ft two-story home with brand new appliances and a warranty or two. The house next door to us is for rent, is similar to ours, and is listed at $1400/month, nearly double our mortgage. Before we bought this house, we were looking to rent an apartment and we were shocked to find out it would cost around $700 for a one-bedroom apartment – in South Carolina, at that. No regrets!

Lately, there are more and more articles being written about how renting is cheaper in the long run. @livelaughlove21, some would say that owning a home is just throwing money away. People tend to have the perception that once that mortgage is paid, everything will be A-ok. But houses need constant maintenance, and insurance and taxes can be expensive.

Here are a couple of brief articles:
Why it’s better to rent than buy (includes a link to an Excel spreadsheet for comparison)
Better off renting? The new economics for young adults

@glacial I think it really depends on the local real estate market. Like I said, the person needs to do the math with the specific options in their market. For instance, I lost a lot of money on my last house. About $150k! It sucks. But, I owned it outright, and had I been renting or paying a mortgage, I would have paid out that amoung anyway once you net it all down if I had been living in a fairly comporable place. Also, I have on other properties made quite a bit of money. The house before that I made over $250k, tax free. So, it kind of all washes out. A single family house is not the only option, there are townhouses and condos where the maintainence fees are there to budget for fixing what needs to be fixed.

It sounds to me like @livelaughlove21 made a sound choice financially, and for her comfort, living in what sounds like a nicer situation than the rental options in her market in her price range.

I’m willing to pay the extra maintenance fees over time (none so far!) in order to not live in a for shit trailer or a tiny apartment with neighbors on all sides. I like knowing I don’t need permission to paint the walls or adopt a pet (and no ridiculous pet fee). We also have a beautiful community pool that we definitely take advantage of. Small yards make lawn maintenance very cheap. I’d need some evidence that it’s cheaper to rent – evidence comparing two similar homes.

Like I said, the house next door, one very similar to ours, is $1400/month in rent. We pay less than $800/month for our mortgage, with our taxes and insurance included in escrow. In any given year, we “save” $7200. In 30 years, the length of the loan, we “save” $216,000. After 30 years, there’s no mortgage payment, but you bet your ass there’s still rent. $7200/year in home repairs? Doubt it. And even if you did spend that much, the benefits of owning your own home make it worth it IMHO.

Unless you plan on moving around a lot, renting is a crapshoot.

We buy. The plan is to get it paid off before we retire, if possible.

@livelaughlove21 Both of the links I provided give side-by-side comparisons. Obviously, there will be singular examples on both sides where costs are higher or lower. But right now, the trend seems to be toward busting the “owning-is-cheaper-in-the-long-run” myth. There are definitely social aspects to either choice that are more suitable depending on the person. Some people are just not built to be renters, and some are not built to be owners. Financially, renting seems to be the better option these days on average. But you’re right – making the right choice for oneself is about more than money.

And owning can be a crapshoot, too. I have plenty of friends and relatives who lost a lot on houses or condos, due to changing markets (usually coupled with changing employment), or natural disasters, or unexpected maintenance costs. Even @JLeslie gave an example above of having lost a lot of money on a home unexpectedly. One can’t plan for everything.

@glacial Nor should people live on “what ifs.” Most of us don’t lose our homes to natural disasters.

Your links wouldn’t load correctly on my phone, but there are a whole lot of articles I could post showing owning as the smarter option. I won’t, because I find these types of articles end up comparing the best case scenario of one and the worst case scenario of the other, based on their agenda.

I agree that renting vs. owning should be based on individual needs/lifestyles, but I simply don’t believe renting is the best option “on average.”

My ex and I owned our own home for 13 years. After the divorce I spent the next 4 years renting. Then I bought this house. The FIRST thing I did here was dig a big assed hole in the back yard, lined it with plastic and created a pool for my grandson. Can’t do stuff like that when you rent!

We’ve torn walls out, replaced a window with a fireplace, tore out a breakfast bar because it was in a stupid place, done tons of stuff you can’t do when you rent.

I’ll put it this way, if I hadn’t bought the place I’m in back in ‘88 I would totally not be able to afford it today. The neighborhood went from being somewhat backwater (affordable for teachers and tradesmen) to highly desirable in the meantime.

@livelaughlove21 “I simply don’t believe renting is the best option “on average.”

Yes, you’ve made that clear.

@glacial I thought so.

Buy below your means.
If you can afford a $1,000 house payment, buy a house with a $500 payment, get the loan for 30 years, and double up on the payments. I’ve owned 2 homes and have a commercial rental building, yet I’ve never carried debt on anything more than 5 years.

@glacial; Your links provide data and info about the area around Toronto. My daughter owns a nice, small house (1926? Sears bungalow) in Providence, Rhode Island, and is presently living and renting in Squamish, BC. Whenever she checks out what’s for sale in the area, she discovers that she would get a lot less bang for her buck in Squamish. Her Providence house would bring about 325k; a similar 3 bdrm house in Squamish, over 600K.. Plus, she says that the homes in that price range are ugly and not very well built.

The rent she gets from the tenants in her Prov. house pays for her rent in Squamish with a little left over. So, much as she’d like to buy a house in Squam., she can’t afford to.

Excellent advice @ibstubro. As a general rule of thumb, your payments will be about 1% of your buying price (do I have that percentage right?) So if you buy a $50,000 house, your payments will be about $500 a month.

@Dutchess_III Perhaps with a crappy interest rate. Our buying price was $140K, no downpayment, 30-year fixed at 3.75%. Adds up to $790/month. 1% would be $1400.

Holy Crap, @livelaughlove21. That’s amazing. My house was $80,000 and it has fluctuated between $800 and $1000.

My last interest rate was 1.9, and like a fool, I paid it off. lol I couldn’t stand owing money.

Why were you a fool to pay it off? I think it’s time to refinance…...

@glacial So I really thought about the math. Follow this if you want to bother, it is a little convoluted.

My first house I made $14k. My second house I made $32k. I also had a condo for a short time while owning my second house that I made $18k on. My third house I broke even, but my next move I came back to a more expensive market, so in a way I lost buying power, I would say $50k to buy back in so to speak, and when I sold that it was the house I made just over $250k more or less, and then losing $150 on the next one. I am way ahead, about $100k ahead so far. Although, I just moved to a more exoensive marjet, so I am willing to say it is a wash.

Then take the rent I would have paid over those 20 years it easily would add up to $360k! Now, we have to consider I paid a mortgage some of those years, let’s say half, so I will bring the loss down to $180k. $15k for maintainence fees. Another $30 for repairs and upgrades. $60k in property taxes. So 180–105=75k that I still would have been in the hole if I had rented and I did not even include the tax savings I have had. If I had been paying a mortgage all those years the number would not be that good. We always had mortgages we could easily afford. By our second house we chose a 15 year loan, and that was one of our better decisions because we were paying down the loan so fast.

Oh, and I owned a condo as an investment, not sure if we count that, where I made $45k. I held it about 14 months.

But, it is true there can be a lot of risk in owning property in the short run.

The tax benefit in the USA if you do profit on your home is incredible. Zero taxes on the gain up to $250k for a single person and $500k for a married couple.

Not to mention the houses I have owned have been much nicer than anything I could have rented for the same amount monthly, similar to @livelaughlove21. She lives in a $1400 a month “rental” community. It isn’t a rental community, but the renters around her are paying that, or she would have been in a community where people could only afford half. Depending where you live that can matter in more ways then one. It might determine the safety in the community, the schools your kids go to, the professions and education level of the people around you. It’s unfortunate, but it’s true. It really depends on the specific real estate market. I could afford double the house I live in, so I am not trying to be in the highest status place possible, I am just saying sometimes owning has other benefits besides a possible profit in the future. I had friends who bought houses further out to pay lower taxes, but they had longer commutes and their children went to private schools. If they had lived in a high tax area they would have paid $5k more a year, and a little more for a house, but the schools were good. Instead they paid for 2 children $20k+ for school.

I would definitely buy a house if I could afford one. The reason is very simple, I’d like to have MY house, something that belongs to me and, as years go by, something to give to my children when they will be older (and I’ll be older, too, sadly)!

I was paying 1.9%, @Dutchess_III. If, instead of paying the mortgage off, I’d invested that money in the stock market it would have increased in value by about 70% by now.

I just can’t stand debt.