Is there anything "wrong" with renting?

[North of Mouse]

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.

All I can say is 'Wow'!!

 

[phorsenuf]

My husband and I have owned houses (and still have one that won't sell up north) throughout our married life. When we moved to Florida 6 years ago we decided we were done owning a house. We much prefer renting. If something breaks, we call the landlord and they come fix it. If we decide we want to move, we can pretty much up and go. A couple years ago my husband switched jobs to a position he wanted for years. It required us to move from Clearwater to the Orlando area. If we had owned a house, he probably wouldn't have taken the job. Since we were renting, we gave a 60 day notice, packed up and went on our way.

Now my son and his family have moved here to Florida and are looking to settle in the Clermont area. Since we want to be close to them, more then likely we will be moving again. 60 day notice and off we will go again. We like having the freedom to move when it suits us. We have no desire to own a house ever again. We really do not care about building euity or any of that other stuff. We much prefer living stress free, and renting fits that bill.

 

[cabanafrau]

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.

While these facts may be true in your situation, they're absolutely not universal. Actually your first sentence isn't true either. An investment doesn't have to put money in your bank account every month to validate its status as an asset. Many great investments are a long-term prospect, and some of those are liabilities on a balance sheet for some time even though they may be paying dividends in other ways during the same time period. Investments come in a wide variety and aren't as narrowly construed as you define them.

As for the OP, renting may still be the better option at this time. For some folks and their lifestyles renting may always be the better option. I know in our area during the housing bust cycle and for some time after renting was very expensive all of the sudden because so many people were thrown into the market after losing their homes. Rentals here are still on the high side compared to their historic averages in comparisons to costs of ownership here. I know of several people who were doing any and everything possible to snag a home so not to find themselves facing rapidly escalating rent payments again if that ever becomes problematic. Everybody has to find what works for them and who cares what anyone else thinks. What's right at one time in life may not always fit through every phase of life either. It's okay to change with circumstances. Doesn't make what you did in the past "right" or "wrong".

 

[PollyannaMom]

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?

Not at all! Renting sounds right for you at the present time. There are many good arguments above both for and against, but I think the most important things to consider in financial decisions like this one are your own priorities. Owning a house might make sense on paper, but if it also makes you miserable, it's not a good decision.

 

[Cannot_Wait_4Disney]

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?

There is absolutely nothing wrong with renting. And in fact because you're not sure you wish to live in the area, you probably should rent.

 

[Cannot_Wait_4Disney]

An investment (an asset) puts money in your bank account every month. A liability takes your money every month. A house is a liability. .

From the point of view of the homeowner, the house is an asset and the mortgage a liability.

 

[pryncess527]

I won't say it's "wrong" to rent, but I do think it makes very little sense in some parts of the country.

My house payment for the last 11 years has been $575. Including taxes and insurance. I could set aside another $500 a month for maintenance and STILL not be paying as much as rent in this area. Plus, the value of my home has gone up at least $40,000 in the last 11 years (based on the listing price my agent recommended. It goes on the market Friday). So, I doubled my investment and lived more affordably for a decade than I ever could have renting.

We are moving, and will be renting a house for the first year. It's killing me to shell out so much money in rent, but it's the right thing to do while we learn the area and get ready to buy.

 

[TavieP]

I'm mid-30s, no kids, long-term partner, we both rent, our parents both rented their whole lives. We're all from NYC though, where it's impossible to afford to buy for most middle/working-class people.

 

[Paula Sedley-Burke]

I am in my mid 40's and have owned several properties by myself and with my now wife. There were times we bought got stuck with a property having to rent it out etc nightmare. I say it can wait! Low maintenance less risk is your friend now.. Best thing we ever bought was DVC!

 

[MIGrandma]

I don't think it's wrong to rent. Lots of people do it and are happy with it. For myself, I prefer to own, at least at this point in my life. Maybe in several years a senior citizen apartment complex would be appealing, I don't know. My parents rented for many years, then owned a place for a few years, then sold it and went back to renting. My Dad was not handy around the house, so in renting they always had a landlord to call when something needed repairing. The high prices people charge to rent their home/apartment though is what makes me prefer to own. I can't even imagine paying $1,000 or more per month just to rent a place. My Mom was paying $700 for her senior apartment before she went into a nursing home, it had been $450 12 years ago when they first moved in. It was good for her though as she didn't have to worry about lawn mowing, snow removal, or repairs.

 

[ChrisFL]

As someone who is in the same situation as the OP, thanks everyone for your input as this is very useful info!!

 

[msjprincess]

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'm on LI and we pay $9K on a house that's only worth about $325K these days. There are people in my town that pay over $40K a year in taxes. It's crazy.

 

[CPanther95]

Our annual property taxes on a $400K house are under $2500 a year here. That includes school taxes.

I love renters. I have a property purchased for $120,000 that rents for $1400 a month. Mortgage payments are about $430 a month and taxes are $300 a month (taxes higher on a property that isn't your primary residence.)

 

[cabanafrau]

Our annual property taxes on a $400K house are under $2500 a year here. That includes school taxes.

That's a bargain for our area. Here you would probably pay about two and a half times that on a house of that value.

 

[scrapquitler]

There is also the upside that if you can eventually pay off that mortgage, you live with NO rent payment and NO mortgage payment.

Well, not exactly. I just finished paying off my mortgage. However, property tax and homeowners insurance are still going to cost me $7000. a year, so while I don't have a mortgage payment, I'm not living here for free, and that doesn't even take into account all the upkeep I still have to do on the house.

 

[Disney Ella]

Renting certainly has its advantages, especially not having to replace/repair things that break, but I think I would rather own. I remember reading an interview with Dianne Wiest a few years ago where she said if she didn't find work soon, she wasn't going to be able to afford her rent. Soon after, she got that show she's on now, but I wouldn't want to be her age and feel I had to work. If she had bought an apartment somewhere at the peak of her popularity when she had more money, she would only have to worry about paying property taxes now. I know taxes aren't necessarily cheap, but they're usually cheaper than paying rent.

 

[bigbabyblues]

In the OP situation, it definitely makes sense to rent.

We bought our house when we were 22 and 21. I will be 40 next month, hubby is 41, and our house will be paid off in about 18 months. We live near family, and we have no plans to go anywhere.

 

[jdb in AZ]

Well, not exactly. I just finished paying off my mortgage. However, property tax and homeowners insurance are still going to cost me $7000. a year, so while I don't have a mortgage payment, I'm not living here for free, and that doesn't even take into account all the upkeep I still have to do on the house.

We're in a similar situation, but at least we can sell when we downsize, and use the equity somewhere else. A renter won't have any equity to show for all the $$$$$$ they've spent on an apartment.

That said, if someone isn't sure of their future plans/location it doesn't make much sense to invest in a mortgage.

 

[North of Mouse]

I'm on LI and we pay $9K on a house that's only worth about $325K these days. There are people in my town that pay over $40K a year in taxes. It's crazy.

Yikes! Those are some stiff annual taxes!!

Well, not exactly. I just finished paying off my mortgage. However, property tax and homeowners insurance are still going to cost me $7000. a year, so while I don't have a mortgage payment, I'm not living here for free, and that doesn't even take into account all the upkeep I still have to do on the house.

Where did you get that quote you quoted supposedly from me??? It's not mine, and I didn't post it!

No matter, you didn't even comment on it's content anyway. Doesn't say anything about not still having taxes and upkeep.

 

[Forevermarypoppins]

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

IMO- owning a home is only an investment, when it comes time to sell. If the market has increased/also good for equity loans like my husbznd and I did to buy out his siblings for my FIL's condo. I don't see either property as investments.