Is there anything "wrong" with renting?

[Lynne M]

You have excellent, well-thought-out reasons not to buy. You're not sure you want to stay in the area, and you're not confident about the finances.

I can tell you from personal experience that buying when you might leave the area is a bad idea. I got stuck with a co-op in NY when I moved to PA for a job, and I couldn't sell it for years because of a market downturn. I had to get an agent and have them rent it out, and ended up in court with the tenant from hell who did thousands of dollars worth of damage to it. Never got the money back.

I didn't buy again for many years, when I was completely sure I was going to stay in this area.

Do what makes sense to you. If that's renting, that's fine.

But as to your comment about not wanting to deal with maintenance....that depends on the condo you choose. Some do have maintenance available. At my building, we have two great guys who'll fix just about anything, and their rates are very reasonable.

 

[DLgal]

How do you figure owning a house is not an investment? Just curious as to your thinking.

An investment (an asset) puts money in your bank account every month. A liability takes your money every month. A house is a liability. A mortgage means you don't own the house anyway, you rent it from the bank. You end up paying over the value of the house in interest anyway, so any "equity" you build is likely just the same money you paid in interest being given back to you when you sell. Not all houses increase in value over time. Houses built after about 2000 have a "usable life" of about 30 years and then they start to become money pits due to maintenance issues. How many people realistically buy a house in their 20s or 30s and then live in it until they die? And even still, unless you own the land under your house, you will pay (increasing) property taxes FOREVER. The payments will not end when you pay off the mortgage. Where we live, most people pay an average of 12-15k annually in property taxes. That is another $1000+ a month!

I would rather rent and continuously have the ability to adjust the type of house I live in based on our life situation. And not worry about whose equity I am building up. My landlord is an investor. Good for her. We don't mind paying her to let us live in this gorgeous $900k house for less than the cost of the largest apartment available in our city, which is 600sq feet SMALLER than our rental home.

 

[North of Mouse]

Looking for some outside perspective. I'm a single woman in my early 30's with a good job and no kids. I currently live in a pretty basic apartment that I've been renting for a little over 3 years. I'm at a point where I can afford to upgrade to something bigger/newer with more amenities (laundry, garage, onsite gym, etc). I've been looking for a nicer place to rent, however some family members and coworkers are insisting I should buy. I could have a downpayment for a small condo in the next year or so.

I however do not want to buy for a few reasons - I don't want to deal with maintenance issues, I'm not certain I want to live in the area I'm in for a long time, and I'm just hesitant of getting in over my head.

Is there anything wrong with renting?

Nope! Under the circumstances that you have stated - I think it is wise to continue renting and not having to deal with any maintenance. Maybe renting a townhouse with a garage (or similar) would be a nice upgrade IMO, but I would not think of buying unless I were more settled.

 

[North of Mouse]

An investment (an asset) puts money in your bank account every month. A liability takes your money every month. A house is a liability. A mortgage means you don't own the house anyway, you rent it from the bank. You end up paying over the value of the house in interest anyway, so any "equity" you build is likely just the same money you paid in interest being given back to you when you sell. Not all houses increase in value over time. Houses built after about 2000 have a "usable life" of about 30 years and then they start to become money pits due to maintenance issues. How many people realistically buy a house in their 20s or 30s and then live in it until they die? And even still, unless you own the land under your house, you will pay (increasing) property taxes FOREVER. The payments will not end when you pay off the mortgage. Where we live, most people pay an average of 12-15k annually in property taxes. That is another $1000+ a month!

I would rather rent and continuously have the ability to adjust the type of house I live in based on our life situation. And not worry about whose equity I am building up. My landlord is an investor. Good for her. We don't mind paying her to let us live in this gorgeous $900k house for less than the cost of the largest apartment available in our city, which is 600sq feet SMALLER than our rental home.

I sure disagree with this reasoning!! According to you, our home built in 2001 will be needing major maintenance in 15 more years! Not if it's kept up, it won't! Will probably need a new roof (maybe), but otherwise the outside was built to be nearly maintenance free, up graded interior floors, etc.

Also, where do you live, and what price home are you saying is $12-25,000 annual taxes?? Our home is valued at $599,000 and we pay $3,300 taxes. You'd better believe that renting all the years we've owned is definitely not the thing to have done. You could not rent our home for 'one month' for the taxes and maintenance that we pay 'yearly'!

We now have all this as equity instead of money down the drain, and nothing to show for it. To each their own!

 

[si-am]

My husband and I have a house but honestly I miss renting. We bought in '07, right before the crash. Our home value plummeted; all these years later we're still pretty much upside down in it so there's no equity to speak of. And it seems like there's constantly stuff to fix or pay for in order to maintain it. Not to mention yard work that no one ever wants to do. It's also not convenient to either of our jobs now but we aren't in a position to sell. Ugh!

So... There are definitely some advantages to renting over buying!

 

[jt'smom]

There are a million reasons to rent and a million to own, and each individual has a different set of circumstances. My husband and I have been relocated for his job 7 times in the last 15 years, and in that time period we've owned 2 houses and rented several others. The last time we owned, we lost about 20 grand because we bought in a depressed market, and 3 years later, it was still depressed when we had to sell. After that, and with our kid almost college age, we decided to rent. Now we are empty nesters, we live a block from the beach in Florida, and let me tell you, I am perfectly happy renting to be 200 feet from walking across a sand dune! There is no way on earth we could afford to buy where we live, and it's totally worth renting to have our lifestyle.

 

[piglet too]

Yes you aren't building up equity, BUT you also aren't paying property taxes, maintenance, and your renters insurance is much lower than homeowner insurance in most cases. Those costs (especially upkeep and maintenance get overlooked in equity calculations a lot).

In the new economy renting is actually a smarter financial decision in more situations and the old norms about home ownership don't apply as often. (Some of this is dependent on your market)

To the bolded, you may not be paying property taxes directly, but you are paying them through your rent. There is not a landlord out there that doesn't foactor the taxes into what they charge you. This is a sore spot for me, I'm tired of people telling me I don't have a say in our local politics because I'm just a renter and don't pay taxes.

 

[gotomu212]

To the bolded, you may not be paying property taxes directly, but you are paying them through your rent. There is not a landlord out there that doesn't foactor the taxes into what they charge you. This is a sore spot for me, I'm tired of people telling me I don't have a say in our local politics because I'm just a renter and don't pay taxes.

You are absolutely right that taxes make up a component of your rent. However in the OP situation she has an apartment so her tax share is probably much less than stand alone primary homes (there can be variances based on area). I think a lot of people think once they own their homes outright they'll live 100% free, but for our home our property tax bill is more than monthly rent for apartments. Depending on your rentals TIF status and your local property taxes there can be significant savings from rent.
BTW that's ridiculous that people tell you as a renter you shouldnt get a say in local politics. By their logic pEople who have bigger houses and pay more in taxes should get extra votes which is not how things work here.

 

[disykat]

I have no problem with renting and probably would have continued to do so had I remained single.

I bought my first house with my dh when I was 30, paid off our 2nd home (after selling other one and upgrading to a better, yet still modest home) when I was 50. Having been mortgage free for several years now, THAT is where the best part our investment comes in. We will probably live here mortgage free for another 20 years or so and sell only if we can't live independently. We anticipate some upkeep expenses and pay property taxes, but those still add up to way less than paying rent.

We paid about what we would have to rent between the mortgage, taxes, and upkeep. Now we will pay significantly less than rent for many years.

 

[elphaba91]

There are definitely pros and cons to both. For my mum, her house is her main retirement fund as she doesn't have much superannuation. She plans on eventually selling it and downsizing to an apartment. Based on recent sales it's probably worth around $1 million more than what she paid to build it nearly 20 years ago.

 

[sk8jdgca]

The big key is that the OP said she doesn't want to stay in the area for long. Renting is then best. Unless you are lucky enough to buy in an area that goes up in value way above average in a short period, it makes sense to rent.

 

[IndyRnRfan]

An investment (an asset) puts money in your bank account every month. A liability takes your money every month. A house is a liability. A mortgage means you don't own the house anyway, you rent it from the bank. You end up paying over the value of the house in interest anyway, so any "equity" you build is likely just the same money you paid in interest being given back to you when you sell. Not all houses increase in value over time. Houses built after about 2000 have a "usable life" of about 30 years and then they start to become money pits due to maintenance issues. How many people realistically buy a house in their 20s or 30s and then live in it until they die? And even still, unless you own the land under your house, you will pay (increasing) property taxes FOREVER. The payments will not end when you pay off the mortgage. Where we live, most people pay an average of 12-15k annually in property taxes. That is another $1000+ a month!

I would rather rent and continuously have the ability to adjust the type of house I live in based on our life situation. And not worry about whose equity I am building up. My landlord is an investor. Good for her. We don't mind paying her to let us live in this gorgeous $900k house for less than the cost of the largest apartment available in our city, which is 600sq feet SMALLER than our rental home.

Thank you for sharing your thought. I don't necessarily agree with all of it and I now realize there are different circumstances for different parts of the country and for people as well. I kind of thought that already but now I've actually heard it. I'd rent if I was in the OP situation right now. A couple of differences between your situation and ours is property taxes. We pay around $2,000 per year in taxes and in my state your property tax cannot be higher than 1% of your entire property value. Also, if you rent a house around here, you are 99% of the time going to pay higher than you would if you have just bought it. Many, not all people, rent houses if they need space but have bad credit(not saying that's your situation at all) The few rentees I know always charge the house payment plus more to renters even if the house is already paid off. To rent a 900k home around us would run you in the vicinity of $7-8,000 per month plus utilities which would be a lot considering you're looking at minimum 9-10,000 sq. ft. home. Much more than renting an apartment but no apartment is that big here. Now, if you rented a not so nice house you could get it for about the price to rent an apartment but those houses are most of the time in not good areas or shape. There are more differences but that's getting off topic. We loved renting for the few years we did it but when we bought our house we had nothing to show in return from renting and we now pay $120 more per month to own with 500 more sq. ft. When we sell our house we will at minimum recover our house plus interest and taxes in return.

 

[The Mystery Machine]

A lot of good points on each side of the aisle.

However those "good points" are based on the fact you upkeep your house properly.

DH and I are "upkeepers" making sure to do 1 "big" project a yr on the house.

Other people may let things slide and then before you know it you are over your head with too many projects.

So renting vs buying does depend on the individuals in the end.

My parents were not "upkeepers" and ended up selling their homes at losses. They now rent. It is better for them.

 

[Patch'sD]

If you can afford it, it is always better to buy. You must look at it in after tax analysis. Right now, you rent, You are paying the landlords Maintenance, Mortgage, and Taxes. They get to claim all that on their taxes and also must claim the income from your rent. You are thinking of a Condo, so besides paint what type of maintenance are you looking at. Make sure the kitchen, bath and HVAC systems are in good working order. You can do this by getting a professional inspection of the property. Some of the common charges that are associated with Property Taxes and Your Mortgage Interest are tax deductible. Housing over the long period always appreciates. Paying rent just makes money for the other guy.

 

[DawnM]

An investment (an asset) puts money in your bank account every month. A liability takes your money every month. A house is a liability. A mortgage means you don't own the house anyway, you rent it from the bank. You end up paying over the value of the house in interest anyway, so any "equity" you build is likely just the same money you paid in interest being given back to you when you sell. Not all houses increase in value over time. Houses built after about 2000 have a "usable life" of about 30 years and then they start to become money pits due to maintenance issues. How many people realistically buy a house in their 20s or 30s and then live in it until they die? And even still, unless you own the land under your house, you will pay (increasing) property taxes FOREVER. The payments will not end when you pay off the mortgage. Where we live, most people pay an average of 12-15k annually in property taxes. That is another $1000+ a month!

I would rather rent and continuously have the ability to adjust the type of house I live in based on our life situation. And not worry about whose equity I am building up. My landlord is an investor. Good for her. We don't mind paying her to let us live in this gorgeous $900k house for less than the cost of the largest apartment available in our city, which is 600sq feet SMALLER than our rental home.

http://www.iwillteachyoutoberich.co...g-myths/?utm_referrer=https://www.google.com/

I think just recently we have started to understand this for ourselves more. A house is a place to live. Even if you sell for more than you bought, you may not really be "making" money. Inflation, costs of upkeep, etc....our hope is really just to break even when all is said and done. We may sell the house for more than we bought, but between upkeep, renovations, realtor fees, etc.....I doubt we will MAKE money.

The only time we made money was by buying in SoCal. We flipped 3 houses. The last house we bought in 2000 for $250K. We put $75K into it and sold it for $600K in 2004. But that wasn't because of our fantastic renovation job. That was because the market shot up so high. That house is now worth about $475K last I checked Zillow. So the new owners have lost money, should they decide to sell.

 

[Goofy_Disney_Dad]

No, there isn't.

 

[Kathryn Merteuil]

Most likely, owning is cheaper in the long run. Unless something completely unforeseen and disastrous happens. Even if you sell at a loss... you will still get "something" back out of your house. When you rent, the money is just GONE.

That said, I would rather rent for now because I have no idea how to do maintenance, I have no desire to do yard work, and I don't know exactly where I want to be. You pay a lot for the luxury of not worrying about these things.

 

[mi*vida*loca]

I sure disagree with this reasoning!! According to you, our home built in 2001 will be needing major maintenance in 15 more years! Not if it's kept up, it won't! Will probably need a new roof (maybe), but otherwise the outside was built to be nearly maintenance free, up graded interior floors, etc.

Also, where do you live, and what price home are you saying is $12-25,000 annual taxes?? Our home is valued at $599,000 and we pay $3,300 taxes. You'd better believe that renting all the years we've owned is definitely not the thing to have done. You could not rent our home for 'one month' for the taxes and maintenance that we pay 'yearly'!

We now have all this as equity instead of money down the drain, and nothing to show for it. To each their own!

I live in NJ and some towns have property taxes well into 12K+ a year.

I rent. I used to own but let the house go when I divorced. I would like to buy but the thought of maintenance and upkeep makes me not want to.

I live in a 3 bedroom apartment with my 2 kids and SO. I pay more in rent that what it is to own a house or close to it but I have someone that shovels, does yardwork, fixes everything, etc. And I pay for the school district. I could live in another town cheaper but I get to send my kids to an excellent school district.

 

[mnrose]

It really depends on your individual circumstances as to whether you should rent or buy. In many markets, it is "cheaper" to rent the home you are buying than the other way around! Not to mention maintenance costs, etc.

But a house can be a great investment. We bought a home in Tiburon CA in March 1996, and sold it in 2004 for exactly DOUBLE what we paid for it....made over $675K in those 8 years. Over 80K per year, and even if you factored in what I paid in mortgage and taxes, etc, there is NO WAY that was 80K per year, more like 40K. So I "put in" 40K per year and ended uo taking out 80 K per year. That was nice. And, today, if we still owned that house, it would be worth three times what we paid for it in 1996. Crazy. And, our first home we owned for less than 4 years and it doubled in value too. We have been "net winners" in the housing game, even though we've owned a couple of homes which have sold for exactly what we paid for them....no increase in value at all. And, right now, I own a home which is worth 100K less than I paid for it. Sigh. So, the market goes both ways.

There is also the upside that if you can eventually pay off that mortgage, you live with NO rent payment and NO mortgage payment. The house that's worth 100K less than I paid for it (while a drag for sure) is one I own. I live in it for the cost of property taxes ($500 a month) and insurance ($200 a month). And, the occasional maintenance expense. Renting that home, if you could at all, would be well over $3500 a month. While property taxes go up, of course (they never seem to go down), they rise much more slowly on a monthly basis than rents in my area.

Do what's right for YOU. Certainly listen to other people's opinions, etc, but in the end, it's your choice and your decision.

 

[mjkacmom]

I sure disagree with this reasoning!! According to you, our home built in 2001 will be needing major maintenance in 15 more years! Not if it's kept up, it won't! Will probably need a new roof (maybe), but otherwise the outside was built to be nearly maintenance free, up graded interior floors, etc.

Also, where do you live, and what price home are you saying is $12-25,000 annual taxes?? Our home is valued at $599,000 and we pay $3,300 taxes. You'd better believe that renting all the years we've owned is definitely not the thing to have done. You could not rent our home for 'one month' for the taxes and maintenance that we pay 'yearly'!

We now have all this as equity instead of money down the drain, and nothing to show for it. To each their own!

My house is worth $400,000+, and we pay $12,000 a year in property taxes. However, we bought when the housing market was much cheaper, so if we rented out our house, the rent would cover the mortgage and property tax payments. My friend is looking to rent a 2 bedroom condo here, which runs around $1800 a month.