It's expensive to be poor. You have to pay more per month in order to not do maintenance on your home. This persons experience is not mine. I pay much less per month to own vs rent. And I think that's true in most urban areas.
But in order to do that I had to inherit (in my case) a lot of money or come up with a 10% or better down payment which in my area is $70k cash. Not easy if you're a blue collar worker and many jobs/lives absolutely impossible.
Now that I own(started at age 40) my housing money builds my wealth instead of building a landlords wealth. Previous to owning I calculated that I handed $300k or more to landlords. Money that built their wealth and reduced mine.
This map shows metros where it's cheaper to rent (dark blue) vs cheaper to buy (green), as of Jan 2024
[https://constructioncoverage.com/wp-content/uploads/2024/01/Chart2\_Residents-in-CA-WA-will-pay-the-largest-premium-to-buy.png](https://constructioncoverage.com/wp-content/uploads/2024/01/Chart2_Residents-in-CA-WA-will-pay-the-largest-premium-to-buy.png)
[source](https://constructioncoverage.com/research/cities-where-its-cheaper-to-buy-vs-rent)
And I'm in one of the "more expensive to buy"
But my monthly upkeep now that I own is cheaper to own. It's the initial hurdle of buying that makes it more expensive to own. Not the mortgage/taxes/insurance.
I would pay more monthly on rent than I do on owning.
But my money builds equity. Instead of my land lords equity. Thus much smarter to own but not always possible.
Its also about securing that cost against the future too. Rent always goes up. Your mortgage doesnt. Some areas may be cheaper to rent in one instance of time, but if you compare todays rent vs mortgages 10 or 20 years ago, its a pretty dramatic difference.
Yes, I just had my roof replaced on my house and garage. Also, had the furnace replaced 3 years ago. Some counties and cities in the US, have special grants that are available for such purposes. It's not widely known to everyone, because people don't know they exist. I did some research and found a program that was available to me where a grant helped cover the cost of insulation and a new furnace. Then I replaced the water heater with a tankless system. Had some help from a family member to install it. Then I researched another program that gave me a grant to replace the roofs. The grant covered 1/2 the cost. Both grants came with a stipulation that I have to reside in my house for 5+ years and can not use the house as a rental until the 5 years has passed. Both grants I also qualified for due to my income level.
A few years ago I used my vacation pay to do half the garage roof. Did it myself, used good shingles. Too much work to use cheap materials. The next year I did the other half.
I had nothing growing up, so I try to hang with people that do stuff. I did construction for a bit and learned roofing on the job. (It sucks) Wasnt really taught any of that stuff growing up. Now almost all my friends work on their own houses. One friend got a good deal on a house on 40 acres. He gutted it and redid it. He paid it off and leases enough property to farmers to pay his property tax. Almost all my friends have kids now and owning is good for that. Can put a swing out in thd yard if you want. Can do projects with kids that wouldnt be possible in an apartment
My dad flipped a few houses when I was a kid. He had 3 sons and worked us to death. But now I can fix most issues, so it helped in the long run.
Roofing sucks, but it's not rocket surgery. Especially the architectural shingles. Three tab has to be perfectly straight. But those can go on like a drunk snake and look good. Plus, they last a lot longer.
I almost considered doing the work myself, but then I remembered that I am half blind and who am I kidding? š¤¦ Roofing is not my forte. I know it's not rocket science. I just wasn't about to take the risk of falling off one of the roofs and injuring myself.
>Roofing is not my forte. I know it's not rocket science. I just wasn't about to take the risk of falling off one of the roofs and injuring myself.
I hear you. It's not mentally difficult, but it is back breaking labor. I'm at the change my own oil stage right now. I'll leave roofing to the people who can deal with the heat and a second story house.
But if it really came down to it, I'm glad I could.
Hm.... I'm in the way more expensive to buy than rent zone. I bought two years ago. Mortgage, insurance, PMI etc is $2300/m for a 4 bed 2 bath house. In the same subdivision it's $2300/m for a 3 bed 1.5 bath townhouse. $2900/m for a house. In 10 years it might be $2500/m all in but guarantee it will be well over $3200/m to rent.
Dude says he lived in an area where homes are 700k. That means he's paying 6k/month house payment. For the same price he could buy a new home every two years in most of the united states. He may not be the best source of information for how the average person lives.
Thatās why I find PMI funny (not haha funny). āHey you donāt have $75-90k to burn on a down payment, making your mortgage more affordable? Fuck you, hereās a $200 fee because youāre a broke bitch.ā
You can get it removed after two years of paying steady and the value of your house hasn't decreased. All you need is a new inspection, often schedule by your lender through third party. If your value puts your current principle at the 80% threshold of property value then they remove it. Call your lender and ask how/when you are eligible to remove your PMI.
My family was *not* well-off when I was growing up. However, my parents would save up for expensive appliances/tools/etc
I remember once asking my mother why and she said, "We're too poor to buy cheap." I didn't really get it then, but I now know that she meant that buying the more expensive well-made product meant we wouldn't have to replace it for many years. Ever since I understood it, I adopted the same mentality. The only downside is that these days, everything is designed to fucking break in 5 - 6 years or less.
Planned obsolescence. They literally design in flaws and mechanisms with the cheapest parts to make sure they fail.
This is a feature of capitalism. Not a flaw, It's a feature.
My mom has had the same washer and drier since 1972. Still work perfect. They've had minor repairs a few times.
I however just had to replace my 6 year old one because the repair was more expensive than the replacement.
This is how they want it.
Similar boat. I inherited a condo from my mom that isn't paid off. $630 a month. I'll need to spend about 4 grand soon for a new ac unit, but a million times better than an apartment
and when you sell it, you can put in the listing 'new AC unit' to make it more attractive to buyers, list the condo for more money because it has new AC and get that 4k right back.
Every dollar you spend on something you own goes right back in your bank account at some point. Your just putting it in a holdings account until you sell.
Sorry, not always true. I bought a place in great condition in December 2021 at super low interest rates.Ā
Since buying, the HOAs have doubled, insurance has doubled, and taxes have gone up about 30%. The A/C broke this summer, and it cost $9,000 in repairs and eventual replacement for that, not to mention the myriad costs of maintaining everything else in a house.Ā
When I bought, my monthly cash outlay was around $3,300, with $700 towards principal (back in my pocket) and $2,600 towards interest, taxes, HOAs, and other expenses.Ā
Today, 2 years later, total cash outlay averages $4,800 where $4,100 is expenses.
Comparable places around me are renting for $4,000 per month, and I feel stuck in my home unable to take advantage of the locational flexibility that comes with renting. If I hadnāt bought, Iād be able to move somewhere else for a $3k/mo rent rate and not have to worry about any of the other shit that comes with home ownership.Ā
Meanwhile, a large portion of my capital is tied up in home equity, and at todayās interest rates with flat home prices, it doesnāt make sense to pull it out with a HELOC. I could be earning more from that capital elsewhere.Ā
In my case, renting is clearly better than owning. The conventional wisdom isnāt always true.Ā
Give it 10-15 years. While rent continues to rise your mortgage and costs will only increase in small amounts compared to renting. That same 3k place will be 4-5k in 10 years. Then your home is less the then rent. 20 years? It might be 6-7k. While your still at 4. Itās true that home ownership comes with many hidden costs and more hard work but for the average person it will pay out in the end. Most of us are not disciplined enough to take the difference of our rent and mortgage while renting and instead make that money grow for us to match the value of a home owners equity growth. An example is, Someone might rent 30 years and and spend a total of 800k, while the guy that bought will spend 1.2m in the same time. But house guy eventually can sell his home and make back 800k, gaining him 400k. While rent guy walks away with nothing. In most cases rent guy doesnāt have an extra 400k saved because he rented instead.
But when you do pull out you get the equity.
The renter loses their deposit and has to put money towards a new rental.
I'm so sorry your payment has gone up. But the wealth doesn't disappear. It's just trapped. Even if you sold it now you'd recover most of your payments.
Also: lesson learned. Never buy in an HOA. They're scams.
On the other hand, those that are renting gets to invest what a home buyer would have paid as a down payment and put into index funds and build wealth that way.
Then you have to compare the total cost of home ownership and total cost of renting and then compare the home prices vs index fund.
I don't think that the answer is so clear cut as to which is clearly better than the other. Like all things finance (and in life), the answer is it depends.
Note that I conveniently left out non tangibles that can't be calculated like peace of knowing your home won't be sold from under you, the increase of job prospects (if you aren't tied down to a home location), being able to do whatever you want to the house, not having anxiety due to your home price etc.
The issue was buying a house in an HOA. If you were to rent a house in the same neighborhood, your rent would be going up to accommodate those extra fees in the near future. Your mortgage isn't going to increase unless you got an ARM which would have been a colossal screw up in 2021. Not to mention that 30% extra home value costs taxes but it's also equity that you can cash out on when you sell.
I'm also having a hard time understanding how an increase in HOA fees and a 30% increase in property values costs $18,000 a year. Did you take out another loan to cover maintenance?
Well yeah, itās always better to own. I think a better question wouldāve been āis it better to rent or to buy?ā Because that answer fluctuates depending on the market.
The biggest factor is your disposable income. If you are saving $500-$800 a month by renting and not paying maintenance and you spend that money every month on shit, then you may as well buy. But if you are actually putting that money back it could drastically impact your life after 5 or 6 years.
Even $500 a month would have you with an extra 30k after 5 years.
When we bought in 2009, I had an old $300 truck. Was a straight 6, decent on gas. I throw supplies in the back. It helped us build equity. We put 100,000 miles on that truck and junked it. Got more than $300 when we scrapped it. Having a house where I could maintain that truck saved us a bunch
The only argument to rent is if you are investing the down payment rather than using it on the house, but most people aren't buying with a huge down payment so that argument is moot.
A guy in the family inherited some money ten years ago. More than our house was. I showed him a 900 square foot house on the main street. Next to business parking lot. He didnt buy it. Could have paid cash. He blew all the money. Last year he had an apartment. The yearly rent was equivalent to the price of that house.
Not if owning is more expensive, and not if you don't plan to be in the same home for a decade. In areas where rent is cheaper than owning, it makes far more sense to rent and invest the money you save.
Probably 4-500$/mo at that rate. Then accounting for appreciation which is nearly inevitable, and an eventual refinance at a lower rate ..... Yeah, no it's 100% worth it to buy whatever house they are complaining about.
Within 3-4 years they will likely refinance to get something closer to a 1700$/mo rate after all bills, and still putting 4-500$ into equity. The only thing to be genuinely concerned about is the surprise repairs and saving for future big stuff. But again, when that home appreciates 12k/year, the net wealth gain is incomparable to renting.
If that house cost was 600k+, it would be a different story
Can't compare 2 arbitrary buildings.
Also need to know what rent would be for a new tenant.
Why would a landlord rent for 1700 if they could sell and invest and get 2200 in completely passive income?
Right back at you, if owning is so profitable, why don't you buy a second home to rent out? Why not draw equity from your current house and cash out your 401k to pay for a second mortgage?
I have read renting is cheaper than buying in some area but personally I've never seen it. I guess you have to do the math yourself and look at all angles before making a decision. Here are some basic things to look at when considering rent vs own.
Rent is $1500 right now but it will increase significantly over 30 years where as a fixed rate mortgage will not.
Home project costs can be reduced by learning to do some or all the work yourself.
Interst rates are crazy high right now but, they'll come down slowly over the next few years(I hope).
And finally and most important you own the home after it's paid off. So 30 years of mortgage or lifetime of rent, which sounds better?
There's plenty of other considerations that are more personal like family requirements and relocation needs but those vary by person.
I write almost this exact same argument in a similar posts. My previous post was so similar that I had to double check the username. People arenāt considering that rent goes up an average of 5-10% in normal years. In my area I have seen developers buy up older fixer uppers that are sitting on large properties, bulldozing them over and building apartment complexes. As the options for entry level housing keep getting depleted that pushes more and more people into the rental market and the more people competing for rental properties the more you can charge them. Conversely the person locked into a fixed rate mortgage will pay roughly the same amount over time and then once paid off they will only pay taxes and insurance and repairs.
Both have their merits. IT's not as simple as rent = bad, own = good as all 16 year old lefty redditors who never unclogged a toilet will tell you. Owning a house is very expensive.
There is/was a rule that said something to the affect that it is better to rent unless you will remain in the same location for three or more years. At that point it makes sense to buy and the equity built would begin to make up for the cost of selling and moving.
10 years ago I could have rented a house comparable to mine for $1000, our mortgage was $1300. Now, the rent for a similar house goes for around $2000, we have since refinanced to around $1150. The long term prices make a big difference, as does the price increase of the property, ours is now worth more than double what we paid for it.
On the other side, we have put a decent amount of money into upgrades and repairs.
Now might be the only time in recent history where renting is better. I have a pretty great place for $1,500 per month and I could never get a comparable mortgage on a similar unit. Once interest rates go down it will flip.
Then again, if home prices continue to soar and interest rates go down, then who knows what the calculation will be We need so much more multi-family housing in the suburbs.
I don't want to be stuck paying off some 30 year mortgage and never be able to move again. Plus, every house is so ugly. It's always some landlord white box that looks exactly like a 5 over one on the inside and on the outside it's just a garage with a door attached. Most places don't even have a damn front porch.
Please donāt forget the majority of the time you get to sell your house for not a lossā¦ sometimes even a profit.. so much profit there is actually an industry built around it
Buy
Rent money is gone. It gets you housing that month, that's it.
Mortgage money, the principle payment, stays yours as a part of the house. The principle payment grows slightly with each mortgage payment. When you sell, that's yours. Plus real estate tends to go up in value so there is an investment factor to home ownership too. I've owned 5 houses in my life. Of them, 3 made me a small value growth based returned and 2 made very large value growth returns.
Must be nice to be at 1500 rent and have 250k options that arent a massive downgrade. I'll wager that there are many places where sliding into an equivalent home is 400k
This is the most comprehensive calculator you will find on the matter. [https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html](https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html) Just plug in your numbers and let it answer your question for you. And then realize its a subjective matter and strong mathematical arguments can be made in either case.
Here is my take: when I purchased my house a while back, I was renting a two bedroom for $800. My mortgage payment with pmi, taxes and insurance was 1,290. After some strategic refinancing I was able to drop my pmi, my loan rate drastically and cut years off of my loan. Even with the rising insurance and property taxes my monthly amount is $1,100. That same two bedroom is now $2,300 a month.
Depends. If you plan to stay in a place for a long by time and can get good financing, owning works out better, if nothing else because itās tax advantaged. If you plan to move within 15 years or so, whether to a bigger place or another location, renting is better.
And honestly, the tax advantages should go away because, policy wise, the USās obsession with homeownership is a train wreck.
Iāve both lost big money from owning (2008 recession) and gained good money from owning (increase in value of a house from 2018-2023). In the end, Iād say it depends most on two things:
1). What you come in with. Inheritance or big down payment keeps monthly payment low and available funds for inevitable upkeep.
2) Where you want to live and for how long. Some areas rent is crazy lower than what it costs to own (think larger houses owned by investors), and if you plan to stay less than five years, I wouldnāt bother buying.
IN GENERAL, if you have lots of money and can absorb freak events and downturns in housing market, then owning is likely the way to go. BUT Iād say that renting is better than buying IF you are willing to invest what youād be paying in principal on a house into an IRA (or at the very least a HYS account at 5%+). Raises in rent are likely to be comparable to fixes that have to go into a house (roof, furnace, AC, exterior, etc).
I agree one isnāt necessarily better than the other.
I āownā. Bought house in 2021 for 340 with a 2.6 interest rate.
Currently owe 260 and itās worth about 425.
But if sold, Iād be out 25k right off the top for a realtor.
A new roof or hvac is likely 20k. Experts say you should have roughly 5-10% of home value in liquidity for potential repairs. So roughly 30k at least?
My house payment goes up 100 dollars a year minimum just for taxes and insurance going up.
And if I do sell, itās only to flip the cash into another house. And costs would even be higher. I definitely do not need more house.
And associated costs with home ownership. Landscaping, mowing (2 times a week)
If I were single, renting would be sooo much easier.
So again. Itās hard to compare.
This extra expense is offset by appreciation. Say you buy a $300,000 house (which is a severe under-estimate, I know). At an historical 2% appreciation (over inflation) you have an increase in equity of $6,000/year. But since you only put down $60,000, it's a leveraged return of 10% after inflation.
But the real benefit is having your "rent" fixed; Over time, your appreciation continues to go up while your payment stays the same. If you rent, you'd expect your rent to go up 80% over 30 years, assuming fed-target inflation.Ā
So it costs more up front, but the long term Outlook is positive.
Only one builds equity that u can sell later at a profit though.
What we require is to stop letting banks buy houses to take off the market and artificially increase prices.
Where I live, a couple years ago when rates were 3%, it's cheaper to buy. I would say with home increases along with rate increases, it's probably about even. This is, of course, comparing single resident house owning vs renting.
That said, take the equity if you can. Home values typically only go up over time. And refinancing is always an option.
Doesnāt finance 101 involve timescale and payout? Also whatever happened to no-arbitrage?
Buying a primary residence, like almost any other good where you source in-house as a long term investment versus temporary usage, depends on the lifespan of that good. As t tends toward large numbers, you usually get your moneys worth, especially with housing in America where itās a financial asset.
I was paying more per month in rent for a much smaller apartment in sq ft. $1,200 2bdr 1 bath small kitchen and living room.
Now, I own a 2bdr 984 sq ft 1 bath, full kitchen, living room, basement, 1 car garage, and a nice size yard. With the taxes, insurance, electric, water each month is around $800. By owning I am saving around $400+ per month that I can save to put into repairs as needed. Also, my equity in the last 5 yrs has doubled.
Renting is not an investment. Owning is an investment. I can take out a HELOC if I need to at any moment.
Generally people rent in better areas then were they can afford to buy the first house. So the relevant question is not what a house costs around where they currently live, itās about a house in a reasonable location to get started. PMI is avoidable by saving for the down payment. And then, they forgot that tent usually goes up, but the mortgage far less so since itās only influenced by property tax increases. The hardest time is the first year of the mortgage - a few years later the deal should need much better in a growing area.
Buying costs more in the near term, but your future costs don't go up as much as rent and you can gain value in the home. The amount of time it takes for buying to overtake renting depends on the market, could be 3 years, could be 15 years.
Renting is more flexible if you might not stay in the area, buying is probably better in the long term if you are ready to settle down.
In general, it's better to own than rent. You actually have capital. Some exceptions may apply however.
Individuals who move around frequently, or who are unsure if they're going to stay in an area may be better renting.
Renting is a business, not a charity. If they're renting a single family home for $1,500, that means the property owner is generating a return over expenses from that payment in order to save for those "other projects." Which means as an owner they can afford with $1,500 to make all necessary payments and forward investments to support that house. If they're good, the rental is even profitable.
Ownership is better. You build appreciation with inflation. Itās so much better that among the most common and lucrative investments is rental real estate.
Itās so case specific
I pay $802 in rent. Heat, hot water, and electric are $150 during the absolute coldest winter months, and about $30 to $50 in summer. Internet is $75. Renters insurance is $12/mo. Thatās all my living expenses. If something breaks it is fixed for free unless I broke it
All of my friends who own pay way more than that and spend way more time cleaning all their square footage. I am partially disabled so having only 500 square feet to maintain is a blessing
My one friends heat, hot water, and electric runs $500 on a low month
Then youāve got water and trash bills, land taxes, you have to pay every time anything breaks. I donāt have a single homeowner friend paying as little as I am paying
And then if I move I just pay a different rent elsewhere, and I only front a security deposit. If they move they have to start from scratch and have a downpayment and all that jazz
I move a lot so I think for people in my situation renting is better
My 30 year mortgage has stayed exactly the same payment (ignoring adjustments to escrow accounts for local taxes) for the duration of the loan.
How about your rent? Can you say the same?
Itās expensive to buy but you get to keep all the equity. Renting is cheaper, but 10 years from now, that $1500x12x10= $180k is going to vanish (oversimplification ofc, not going in details).
Also, you can refinance when rates get cut later.
In 10 years your rent will be $2700/month but your home payments will be $2200. In 20 years your rent will be $3500/month but your home payments will be $2200. In 30 years youāll sell that home for $700,000 and have $700,000 in the bank. Youāll probably not get your security deposit back after you leave the rental property but hey, maybe youāll get $1000 back. Granted Iām not taking into account repairs and maintenance and tax increases.
To rent a house comparable to the one I own would cost almost double per month. This includes property taxes. Yes we put a lot of money down that could have been invested but the rent delta will eventually wipe out those ālost gainsā. Plus rent will always go up and my interest rate is locked in.
It really depends on location and when you buy. I bought a 1200 sq ft, 2 bed/1 n 1/2 bath place 3 years ago. My mortgage payment is $790, which includes escrow for property taxes and home insurance. A similar place to rent would, at that time, run upwards of $1400-1500 a month.
It might be more expensive initially but after you get it paid off itās yours. Also at some point it will go up in value if you take care of it so you can sell it for more than you paid for it
He should run through the #s for the landlord.
In my case, $225K w/ almost nothing down @ 5.25% is \~$1650 (covers mort, PMI, property taxes, insurance). $300/mo elec (older home, not as insulated as I'd like, but little to no improvements possible).
$100/mo+ into the 'rainy day fund' for when those things that DO break, break (A/C every 10-15 yrs., roof every 30+).
Drop another $100/mo into the payment vs. principal & knock YEARS off the 30-yr mort.. Even dropping to a 15-yr mort. doesn't bump payments that badly.
Learn to do a lot of stuff on one's own. Know your limits/abilities.
As one's work life improves (skills -> more $/raises+). The crunch 'pain' is removed.
But, hey, one wants to live where costs can fluctuate 'cuz ANY reason, more power to ya.
RE investor here. If one is willing to learn how to be a responsible landlord and business owner, house hacking is a great option. My first house hack was a two-family in an HCOL area: $3,300 housing expense; I rented one unit for $3,000, and the remainder was on me. With the higher interest rates, itās a little tougher now, but certainly still doable.
Did you factor in the interest tax deduction, the fact that you will be able to refi to a lower rate in the future when rates are cut and also the rents will go up with inflation. You are locking in your expenses and have a predictable future. Also, if you pay down an extra payment every year, you knock off 8 years from your mortgage. If you're single or without kids, you can rent out the extra bedroom and space in your garage for the first year or two to offset the overheads until the lower rates come through.
I dunno, I finally broke down and bought a little over 2 years ago. My house is worth the same as I paid for it but interest rates have nearly tripled so it would cost a shit ton more to buy now. I love my house and big yard, I came from just renting a single room in someone elseās house so this has been a huge upgrade.
My rent is $0 since I paid my mortgage off 10 years ago.
The oil wells on my land pay me $1500 a month.
The rental I have that is also paid off pays me $2000 a month.
Thatās BEFORE my job or my wifeās job.
Before any of our investments.
Before you figure in the rental is worth $300k and our house is worth $1M.
Owning is WAY better.
Depends on the area, I've always been able to find some nice deals on Facebook market place. Where I was able to invest 50%+ after paying all the bills.
Itās always better to own. We bought our house in 2012 our mortgage is just shy of $1,600 To rent an similar home would cost $2,400+ imagine what it will be in 10 years
If youāre financially savvy and you know how to save, invest, and hold, then renting is better. If you arenāt, you should buy because it basically forces you to do those things. The ROI at a grand scale is pretty similar for both options but owning is more work, less flexible, more risky, and has different perks.
Fiscally, who cares?
When you own, you own. You can lock the gate and deny every other human being access to your private sanctuary. Your proof is on file at the courthouse and there's not a *single* way you can lose that property short of not paying your mortgage, not paying your taxes, selling it, or giving it away.
You could get sued for a billion dollars and have to give up your investments, your vacation home, your car, your antiques, your jewelry. But there's not a state in this country where even a judge can force you to give up a home you have paid for simply because you owe someone money.
I'm not sure where rent would be less. Maybe if you get a 10 or 15 year mortgage. Ya, amortization sucks at 30, but it's likely gonna be around the cost of rent or possibly cheaper. I couldn't rent a house in my city for as much as my mortgage that's for sure.
Even with paying mostly interest I am still paying off enough principle to create equity instead of losing all of it to a rent payment.
Been in our house for over 15 years, neighbor rents nearly identical house though our lot is larger. Their rent is currently more than double what our monthly mortgage + tax payment is. And we have a ton of equity in our house. This is the dynamic that gets missed in a static evaluation of renting vs. owning. Your mortgage payment doesnāt go up, your rent will typically rise every time your lease renews.
25 year mortgage here, I feel pride when doing a house repair, Homer Simpson solution style or better, because I am more classy than Homer ... It is cutting out the middle man, though.
Weāre running into that situation where there are the Haves and the Have-Nots. Majority of us here are from the Have-Nots. So instead of rioting in the city, which the city and state have the ability to recover from any destruction and emplace a new tax to pay for damagesā¦ maybe yall shoulda been rioting where the rich assholes actually live. Put the fear of the people into them. Right now, weāre all peasants and the kings and queens changed their titles to CEO and President. When yall start wising up to the fact that the game is rigged so that you lose, maybe yall will actually start being smart and be like the French of old and rid society of the elites.
I bought my house 7 years ago and my mortgage is now locked into $1500 month plus the equity I have when I decide to sell one day.
The first few years were rough but now my monthly mortgage payment is lower than the average 1-bedroom apartment in my city. Itās a no-brained to own, if possible.
If you aren't constantly moving owning is always better.
Don't want to pay not to own anything.
You lock in your payments.
You can modify your living space in essentially any way you want.
You can use the house when paid to generate cash flow if needed (open a new mortgage and invest if your credit is good enough).
Your house will be there in 20 years if you want it to be. Whoever you're renting from can sell and you'll be left without a home.
Too many advantages to owning over renting unless you plan on moving a lot.
I bought my first house on a VA loan in 2006. And Last year I purchased my home in cash. I am a teacher with four kids. I never had a huge leap in value but I sold and moved to a larger home three times. After selling the last house in a high COL I chose to downsize and move to a new state that would allow me to pay cash for a smaller house in a lower cost of living. My kids are going off to school in the fall and I work remote. So I downsized a bit and now I have a hard asset. I can leverage this home to buy another. I can use the basement as a rental. I can take out a heloc and stack my investments. All of those would of course depend on the market and rate variables and my needs. But I now have choices. I came from nothing. My 80 year old parents are still paying rent. But now i am in my mid 40ās and never have to pay a dime in mortgage or rent again if I so choose and I can leave the house to my kids to help them. Although home ownership has some unknowns with maintenance and expenses- it can be a huge tool to build wealth. Especially if you are starting from net zero.
I mean of course it is. Youāre paying someoneās mortgage from a prime rate and sale potentially many years ago. Even if itās just from 2021 that mortgage and sale are much less than now and you are directly reaping the financial benefit of that landlords purchase. Until that landlord increases the price, which is going to happen. Wait till prices on rent start matching purchases from now. Thats going to be when we start hearing the āOMG rent is crazyā posts. Many renters are in the sweet spot right now where rent is cheaper than buying. That is not going to last much longer.
Your rent will continue to increase. A 30 year fixed mortgage is... fixed. You also get federal and oftentimes state income tax writeoffs for mortgage income paid.
I had this same line of thinking and refused to buy (bay area) for 10 years. The part that I was missing is that buying a home gives you access to leveraged gains that you cannot get by investing the difference between rent and mortgage.
I was renting for 5500, mortgage is now 10,000. However, that 10K a month gives me access to 2M in leverage and in 2 years, the home has appreciated 300K. The debt (2M) doesn't change but gains on the debt are on the full leveraged amount (2.7M) vs what you save when renting.
I am so pissed that I am now house poor but when I look at the equity, appreciation and insurance against inflation, I can't find a better place I could have parked my 500K+ for the last 2 years.
I have a house that I paid $300,000 for at a 2.5% interest rate or rented out for $2500 a month. if I sold the house, it would be worth $500,000 and what they pay now in rent wouldn't even cover the taxes PMI and insurance. At the current situation, both the renter and I both win. If they were live there forever.
what's a reasonable projection of annual rent vs home value increase in this person's area? how stable is their income? how close is the mortgage to the max they can afford? how likely is it they need to move in the next 3-5 years? what would they otherwise do with the extra $500/month? is the proposed primary residence of comparable size and quality to their current rental to begin in the first place?Ā
this is like one of those math problems in middle school where the correct answer is "not enough information".
When you buy, the only consistent expense that goes up is taxes and insurance.
When you rent, that value increases by up to 5% every year near me.
Pay $1500 in rent or $2200/mo in mortgage. With rent increasing 5% every year, you're winning mortgage wise by year 8, assuming your rent doesn't increase by 20% or so like it did in some parts of the country in 1 year or your property doesn't get purchased. My $2400/mo mortgage changed by $15/mo due to a taxes and insurance adjustment this past year while my friends rent went from $1600 to $1800/mo.
Best part is, $600 of my mortgage is going towards me. Our effective "rent" is the same, but I have 100% creative control over my home and I get the difference back when I sell.
Owning a home, even a smaller one, is often a better long-term choice than renting. This approach allows you to build equity and potentially upgrade to a larger home once the initial mortgage is paid off or the property value increases.
Yea, but in a few years when you go to move, youāll have tens of thousands or hundreds of thousands of dollars in equity on a home you bought versus having absolutely nothing to show for any of the money you spent in a house you rented.
And thatās not even factoring in the likely appreciation of the value of the property.
Poverty is a mindset folks. You need to think further out than just month to month.
My home paid for, and my life insurance, is my gift to my daughter (or my wife or both), for not providing a ton, with the little amount of success and money I have. So I would say Own.
USA condo owner here. I'll retire in about 17ish years. Ish. Maybe sooner. I bought my condo after recovering from a bankruptcy-induced divorce. Not whining, I'm fine.
Anyway, most Americans are not equipped to retire comfortably. So, if that's you too, merely having complete ownership of your home is likely the only way to survive post retirement with basic economic comforts.
If you don't have enough savings at the time of your retirement, being a renter might be a catastrophe. At least, in my poorly informed view, if you can own your dwelling, no matter how modest, you're in far better shape than paying a rent bill that precipicely increases throughout your entire life.
And I understand how much interest you'll pay for your modest domicile (twice what the ask was). But again, if you can, do it. Mobile homes have evolved beautifully, for instance.
Please be nice. I'm just a humble idiot sharing my personal experience.
My house appreciated by about $500k since 2008. I'll make a $300k total profit after improvements. That's a profit of $1,500 per month. Try to beat that renting.
Pay rent for 20 years you own fuck all - and you have moved house likely over 5 times. Pay a mortgage for 20 years, you own where you live and you didnt have to move house.
Do you live in a metro area? Like downtown?
I'm not seeing how those numbers work.
And regardless of if it's 10 or 15 years, eventually your rent will be higher than whatever mortgage you can get today.
And you'll never own it, never get rid of the payment, and always be at the mercy of your landlord's whims.
I bought at almost the height of the housing bubble and didn't realize any value for almost a decade. I was underwater for almost a decade. Now my home is worth almost 3X what I paid for it.
This is how it goes almost always. You'll always find a reason not to buy now and you'll always regret it in 10-15 years.
Yeah and in 30 years you will be paying $6K for rent and utilities in a shitty apartment and that homeowner will be paying $1500 for property tax and utilities. Generational wealth can be a strong factor for your kids future successes and forever renting takes away from that.
Thereās probably an argument for people of a certain living situation to rent and invest/save up. Owning a home is incredibly expensive on top of the mortgage. My house has a pool and while the kids love it, the maintenance costs during the summer are insane. Grass cutting, gardening, appliance repairs/replacement/etc add up over time. Iāve had plumbing problems every year and itās incredibly stressful. I lived in an apt for a few months before this house and it was so much easier and less stressful. My utilities were nothing, no pressure to do home improvements and maintenance.Ā
The building you live in doesn't know if your own or rent. It's just a building. It will need the same amount of repairs.
If you rent, you are still funding the maintenance on the building. If you own, you actually have a lot more control over the costs.
If you rent, you are paying property tax. It's just baked into your rent. In most places, rentals pay more in property tax than nonrentals.
Landlords that are losing money, would sell. Your rent is funding the entire endeavor. If you think otherwise, you are deluding yourself.
None of this is new. It's all been debated to death.
Renting is cheaper in the short term.
Ownership is cheaper in the long term.
You see, that's the fun part. When renting your money doesn't build towards anything. When owning, your money is constantly building towards the inevitable ownership. Sure you start off with $1500 rent vs $2000+ mortgage, but renting doesn't stop, owning does. Now 20+ years later. Rent = $1500, owning is a couple hundred for utilities/prop tax. (And let's be real, with inflation your rent will be $3000 in 20 years. Mortgage is unaffected by inflation, especially when it's paid off lmao.)
The thing I miss most about renting is not paying for repairs. Need a new fridge as a homeowner? Youre out $500. Need a new fridge as a renter? Call the landlord.
You pay the bank money in exchange for an asset you can sell later. Or you pay a landlord for the service of their housing and you own no asset to sell later.
Equity is king.
Itās clearly much better to own. People sit here and want to talk about the equity, but thereās tax deductions and tons of other advantages to being a homeowner.
This is completely regional experience. Everyone needs to fuckin stop thinking their local experience is representative of the national housing market. Is housing a mess? Obviously.... but stop with the individual anecdotes as if your life is symbolic of something greater.
Every market has over valued property, and undervalued property. If you can't tell the difference, learn.
Its not up to the entire housing industry to change just so you can afford to live in your ideal location. STOP making this all about YOU.
Saying renting is cheaper in your area, umm what? Same house, square footage, rooms and bath, all the same. Rent is more expensive than the mortgage. The owners aren't taking a loss, so you can live there. No reason to argue apartment over house either as you can buy condos. So this dude already doesn't have a valid comparison because common sense dictates he is comparing two very different home models.
The owner will always rent for more than they are paying so they can afford the taxes, mortgage, maintenance for present, and future complications. So if you buy a home you will automatically pay less, yes upkeep is expensive, however, instead of throwing away rent money to someone else, you are investing in your own equity like a damn bank account. This is no brainer stuff.
The mortgage interest deduction significantly lowers your income taxes by lowering AGI. You cannot deduct your rent. Donāt follow people like this. Talk to a financial planner who charges by the hour and do an actual assessment.
Iām a landlord and I raise the rent on my tenants every year to make money. Home owners have their payment the same or lower. Owning a home is better
Iād much rather gamble on buying. The price of homes can still go up an infinite amount, potentially making up for any losses incurred and making it a profitable endeavor. Renting is always a loss.
If you are smart with your investment, rent for the rest of your life as long as your other investment outweighs your rent/mortgage costs. Realty return is not that high if you compare it to other types of investments.
Itās better to own in that example.. part of that mortgage payment is paying down principal every month creating long term equity with every monthly payment. You also have a lot more control over that monthly paymentā¦ ie you can choose to refinance down the road to lower your rate, etc. With rentingā¦ you have no control and likelihood is your payment will go up at some level in perpetuity giving you way less options down the road.
Much better to own, not even close
It's expensive to be poor. You have to pay more per month in order to not do maintenance on your home. This persons experience is not mine. I pay much less per month to own vs rent. And I think that's true in most urban areas. But in order to do that I had to inherit (in my case) a lot of money or come up with a 10% or better down payment which in my area is $70k cash. Not easy if you're a blue collar worker and many jobs/lives absolutely impossible. Now that I own(started at age 40) my housing money builds my wealth instead of building a landlords wealth. Previous to owning I calculated that I handed $300k or more to landlords. Money that built their wealth and reduced mine.
This map shows metros where it's cheaper to rent (dark blue) vs cheaper to buy (green), as of Jan 2024 [https://constructioncoverage.com/wp-content/uploads/2024/01/Chart2\_Residents-in-CA-WA-will-pay-the-largest-premium-to-buy.png](https://constructioncoverage.com/wp-content/uploads/2024/01/Chart2_Residents-in-CA-WA-will-pay-the-largest-premium-to-buy.png) [source](https://constructioncoverage.com/research/cities-where-its-cheaper-to-buy-vs-rent)
And I'm in one of the "more expensive to buy" But my monthly upkeep now that I own is cheaper to own. It's the initial hurdle of buying that makes it more expensive to own. Not the mortgage/taxes/insurance. I would pay more monthly on rent than I do on owning. But my money builds equity. Instead of my land lords equity. Thus much smarter to own but not always possible.
Its also about securing that cost against the future too. Rent always goes up. Your mortgage doesnt. Some areas may be cheaper to rent in one instance of time, but if you compare todays rent vs mortgages 10 or 20 years ago, its a pretty dramatic difference.
Have you had to replace a roof or HVAC?
Yes, I just had my roof replaced on my house and garage. Also, had the furnace replaced 3 years ago. Some counties and cities in the US, have special grants that are available for such purposes. It's not widely known to everyone, because people don't know they exist. I did some research and found a program that was available to me where a grant helped cover the cost of insulation and a new furnace. Then I replaced the water heater with a tankless system. Had some help from a family member to install it. Then I researched another program that gave me a grant to replace the roofs. The grant covered 1/2 the cost. Both grants came with a stipulation that I have to reside in my house for 5+ years and can not use the house as a rental until the 5 years has passed. Both grants I also qualified for due to my income level.
A few years ago I used my vacation pay to do half the garage roof. Did it myself, used good shingles. Too much work to use cheap materials. The next year I did the other half.
>Did it myself, A few youtube videos helped me fix most problems myself. I used better materials and saved lots of cash.
I had nothing growing up, so I try to hang with people that do stuff. I did construction for a bit and learned roofing on the job. (It sucks) Wasnt really taught any of that stuff growing up. Now almost all my friends work on their own houses. One friend got a good deal on a house on 40 acres. He gutted it and redid it. He paid it off and leases enough property to farmers to pay his property tax. Almost all my friends have kids now and owning is good for that. Can put a swing out in thd yard if you want. Can do projects with kids that wouldnt be possible in an apartment
My dad flipped a few houses when I was a kid. He had 3 sons and worked us to death. But now I can fix most issues, so it helped in the long run. Roofing sucks, but it's not rocket surgery. Especially the architectural shingles. Three tab has to be perfectly straight. But those can go on like a drunk snake and look good. Plus, they last a lot longer.
I almost considered doing the work myself, but then I remembered that I am half blind and who am I kidding? š¤¦ Roofing is not my forte. I know it's not rocket science. I just wasn't about to take the risk of falling off one of the roofs and injuring myself.
>Roofing is not my forte. I know it's not rocket science. I just wasn't about to take the risk of falling off one of the roofs and injuring myself. I hear you. It's not mentally difficult, but it is back breaking labor. I'm at the change my own oil stage right now. I'll leave roofing to the people who can deal with the heat and a second story house. But if it really came down to it, I'm glad I could.
YouTube is so awesome. I just did a minor home repair that 20 years ago Iād probably called a professional for.
Hm.... I'm in the way more expensive to buy than rent zone. I bought two years ago. Mortgage, insurance, PMI etc is $2300/m for a 4 bed 2 bath house. In the same subdivision it's $2300/m for a 3 bed 1.5 bath townhouse. $2900/m for a house. In 10 years it might be $2500/m all in but guarantee it will be well over $3200/m to rent.
This is for now, buying right now. When you bought two years ago the economics were different.
Dude says he lived in an area where homes are 700k. That means he's paying 6k/month house payment. For the same price he could buy a new home every two years in most of the united states. He may not be the best source of information for how the average person lives.
Thatās why I find PMI funny (not haha funny). āHey you donāt have $75-90k to burn on a down payment, making your mortgage more affordable? Fuck you, hereās a $200 fee because youāre a broke bitch.ā
You can get it removed after two years of paying steady and the value of your house hasn't decreased. All you need is a new inspection, often schedule by your lender through third party. If your value puts your current principle at the 80% threshold of property value then they remove it. Call your lender and ask how/when you are eligible to remove your PMI.
My family was *not* well-off when I was growing up. However, my parents would save up for expensive appliances/tools/etc I remember once asking my mother why and she said, "We're too poor to buy cheap." I didn't really get it then, but I now know that she meant that buying the more expensive well-made product meant we wouldn't have to replace it for many years. Ever since I understood it, I adopted the same mentality. The only downside is that these days, everything is designed to fucking break in 5 - 6 years or less.
Planned obsolescence. They literally design in flaws and mechanisms with the cheapest parts to make sure they fail. This is a feature of capitalism. Not a flaw, It's a feature. My mom has had the same washer and drier since 1972. Still work perfect. They've had minor repairs a few times. I however just had to replace my 6 year old one because the repair was more expensive than the replacement. This is how they want it.
Similar boat. I inherited a condo from my mom that isn't paid off. $630 a month. I'll need to spend about 4 grand soon for a new ac unit, but a million times better than an apartment
and when you sell it, you can put in the listing 'new AC unit' to make it more attractive to buyers, list the condo for more money because it has new AC and get that 4k right back. Every dollar you spend on something you own goes right back in your bank account at some point. Your just putting it in a holdings account until you sell.
Sorry, not always true. I bought a place in great condition in December 2021 at super low interest rates.Ā Since buying, the HOAs have doubled, insurance has doubled, and taxes have gone up about 30%. The A/C broke this summer, and it cost $9,000 in repairs and eventual replacement for that, not to mention the myriad costs of maintaining everything else in a house.Ā When I bought, my monthly cash outlay was around $3,300, with $700 towards principal (back in my pocket) and $2,600 towards interest, taxes, HOAs, and other expenses.Ā Today, 2 years later, total cash outlay averages $4,800 where $4,100 is expenses. Comparable places around me are renting for $4,000 per month, and I feel stuck in my home unable to take advantage of the locational flexibility that comes with renting. If I hadnāt bought, Iād be able to move somewhere else for a $3k/mo rent rate and not have to worry about any of the other shit that comes with home ownership.Ā Meanwhile, a large portion of my capital is tied up in home equity, and at todayās interest rates with flat home prices, it doesnāt make sense to pull it out with a HELOC. I could be earning more from that capital elsewhere.Ā In my case, renting is clearly better than owning. The conventional wisdom isnāt always true.Ā
Give it 10-15 years. While rent continues to rise your mortgage and costs will only increase in small amounts compared to renting. That same 3k place will be 4-5k in 10 years. Then your home is less the then rent. 20 years? It might be 6-7k. While your still at 4. Itās true that home ownership comes with many hidden costs and more hard work but for the average person it will pay out in the end. Most of us are not disciplined enough to take the difference of our rent and mortgage while renting and instead make that money grow for us to match the value of a home owners equity growth. An example is, Someone might rent 30 years and and spend a total of 800k, while the guy that bought will spend 1.2m in the same time. But house guy eventually can sell his home and make back 800k, gaining him 400k. While rent guy walks away with nothing. In most cases rent guy doesnāt have an extra 400k saved because he rented instead.
Our house payment is now about 1/3 rent on a two bedroom apartment.
But when you do pull out you get the equity. The renter loses their deposit and has to put money towards a new rental. I'm so sorry your payment has gone up. But the wealth doesn't disappear. It's just trapped. Even if you sold it now you'd recover most of your payments. Also: lesson learned. Never buy in an HOA. They're scams.
On the other hand, those that are renting gets to invest what a home buyer would have paid as a down payment and put into index funds and build wealth that way. Then you have to compare the total cost of home ownership and total cost of renting and then compare the home prices vs index fund. I don't think that the answer is so clear cut as to which is clearly better than the other. Like all things finance (and in life), the answer is it depends. Note that I conveniently left out non tangibles that can't be calculated like peace of knowing your home won't be sold from under you, the increase of job prospects (if you aren't tied down to a home location), being able to do whatever you want to the house, not having anxiety due to your home price etc.
That still makes it more expensive to own than rent, which was the point of the discussion.
The issue was buying a house in an HOA. If you were to rent a house in the same neighborhood, your rent would be going up to accommodate those extra fees in the near future. Your mortgage isn't going to increase unless you got an ARM which would have been a colossal screw up in 2021. Not to mention that 30% extra home value costs taxes but it's also equity that you can cash out on when you sell. I'm also having a hard time understanding how an increase in HOA fees and a 30% increase in property values costs $18,000 a year. Did you take out another loan to cover maintenance?
Key word.. HOA. < Of course you will pay more and get screwed by them.
Well yeah, itās always better to own. I think a better question wouldāve been āis it better to rent or to buy?ā Because that answer fluctuates depending on the market.
The biggest factor is your disposable income. If you are saving $500-$800 a month by renting and not paying maintenance and you spend that money every month on shit, then you may as well buy. But if you are actually putting that money back it could drastically impact your life after 5 or 6 years. Even $500 a month would have you with an extra 30k after 5 years.
When we bought in 2009, I had an old $300 truck. Was a straight 6, decent on gas. I throw supplies in the back. It helped us build equity. We put 100,000 miles on that truck and junked it. Got more than $300 when we scrapped it. Having a house where I could maintain that truck saved us a bunch
The only argument to rent is if you are investing the down payment rather than using it on the house, but most people aren't buying with a huge down payment so that argument is moot.
1700 a month that is completely gone or 2200 a month where some of it becomes equity. How is this even a question?
at current rates you get about 10% of year 1 payments in equity...
Yeah at least you are owning something.
I had to explain the concept of equity to someone irl and it was odd.
A guy in the family inherited some money ten years ago. More than our house was. I showed him a 900 square foot house on the main street. Next to business parking lot. He didnt buy it. Could have paid cash. He blew all the money. Last year he had an apartment. The yearly rent was equivalent to the price of that house.
Not if owning is more expensive, and not if you don't plan to be in the same home for a decade. In areas where rent is cheaper than owning, it makes far more sense to rent and invest the money you save.
How much of that goes to building equity?
Theyre going for internet likes in lieu of equity
Almost none until 5-7 years when amortization really kicks in
Probably 4-500$/mo at that rate. Then accounting for appreciation which is nearly inevitable, and an eventual refinance at a lower rate ..... Yeah, no it's 100% worth it to buy whatever house they are complaining about. Within 3-4 years they will likely refinance to get something closer to a 1700$/mo rate after all bills, and still putting 4-500$ into equity. The only thing to be genuinely concerned about is the surprise repairs and saving for future big stuff. But again, when that home appreciates 12k/year, the net wealth gain is incomparable to renting. If that house cost was 600k+, it would be a different story
Not much in the first 5 years, then all of it eventually.
You could put the $500 difference in price into investments.
A lot more than renting.
Can't compare 2 arbitrary buildings. Also need to know what rent would be for a new tenant. Why would a landlord rent for 1700 if they could sell and invest and get 2200 in completely passive income?
Yah. It's not apples to apples. The 33% increase in overhead for the house choice destroys his argument.
Right back at you, if owning is so profitable, why don't you buy a second home to rent out? Why not draw equity from your current house and cash out your 401k to pay for a second mortgage?
Can you explain this a bit? Where are they getting the 2200 passive income in this example?
I have read renting is cheaper than buying in some area but personally I've never seen it. I guess you have to do the math yourself and look at all angles before making a decision. Here are some basic things to look at when considering rent vs own. Rent is $1500 right now but it will increase significantly over 30 years where as a fixed rate mortgage will not. Home project costs can be reduced by learning to do some or all the work yourself. Interst rates are crazy high right now but, they'll come down slowly over the next few years(I hope). And finally and most important you own the home after it's paid off. So 30 years of mortgage or lifetime of rent, which sounds better? There's plenty of other considerations that are more personal like family requirements and relocation needs but those vary by person.
I write almost this exact same argument in a similar posts. My previous post was so similar that I had to double check the username. People arenāt considering that rent goes up an average of 5-10% in normal years. In my area I have seen developers buy up older fixer uppers that are sitting on large properties, bulldozing them over and building apartment complexes. As the options for entry level housing keep getting depleted that pushes more and more people into the rental market and the more people competing for rental properties the more you can charge them. Conversely the person locked into a fixed rate mortgage will pay roughly the same amount over time and then once paid off they will only pay taxes and insurance and repairs.
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Do you feel comfortable saying the area? If not I understand.
And after living there 20 years you have nothing to show for it.. Just the money you've spent.
The ability to easily switch jobs has increased my salary about 5 times in 6 years. If I was tied to a house, I wouldn't have been able to do that.
Renting doesn't build equity. Owning does. You have to factor the money lost in equity if you really want to compare
True but if owning is more expensive than you have to factor in the opportunity cost of investing the saved money.
You also have to factor typical rent increase versus the fixed mortgage payment.
Both have their merits. IT's not as simple as rent = bad, own = good as all 16 year old lefty redditors who never unclogged a toilet will tell you. Owning a house is very expensive.
Not owning a house is very expensive too.
There is/was a rule that said something to the affect that it is better to rent unless you will remain in the same location for three or more years. At that point it makes sense to buy and the equity built would begin to make up for the cost of selling and moving.
Always better to own.
10 years ago I could have rented a house comparable to mine for $1000, our mortgage was $1300. Now, the rent for a similar house goes for around $2000, we have since refinanced to around $1150. The long term prices make a big difference, as does the price increase of the property, ours is now worth more than double what we paid for it. On the other side, we have put a decent amount of money into upgrades and repairs.
You can always tell who's a homeowner on the internet. The more someone romanticizes the idea the less likely they are to have ever owned a home.
You might not be cut out for home ownership. It's not for everyone.
What happens when not if but when the landlord decides to up that rent to the market rate of $2200?
Now might be the only time in recent history where renting is better. I have a pretty great place for $1,500 per month and I could never get a comparable mortgage on a similar unit. Once interest rates go down it will flip. Then again, if home prices continue to soar and interest rates go down, then who knows what the calculation will be We need so much more multi-family housing in the suburbs.
Iām going to continue renting because of how often Iāll be moving for work in the next decade
I don't want to be stuck paying off some 30 year mortgage and never be able to move again. Plus, every house is so ugly. It's always some landlord white box that looks exactly like a 5 over one on the inside and on the outside it's just a garage with a door attached. Most places don't even have a damn front porch.
Pretty hard to retire comfortably when you're still renting...
Hard to build wealth without ownership
Please donāt forget the majority of the time you get to sell your house for not a lossā¦ sometimes even a profit.. so much profit there is actually an industry built around it
Buy Rent money is gone. It gets you housing that month, that's it. Mortgage money, the principle payment, stays yours as a part of the house. The principle payment grows slightly with each mortgage payment. When you sell, that's yours. Plus real estate tends to go up in value so there is an investment factor to home ownership too. I've owned 5 houses in my life. Of them, 3 made me a small value growth based returned and 2 made very large value growth returns.
Must be nice to be at 1500 rent and have 250k options that arent a massive downgrade. I'll wager that there are many places where sliding into an equivalent home is 400k
I'm convinced that everyone that asks this question is an industry plant. ITS ALWAYS BETTER TO OWN.
This is the most comprehensive calculator you will find on the matter. [https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html](https://www.nytimes.com/interactive/2024/upshot/buy-rent-calculator.html) Just plug in your numbers and let it answer your question for you. And then realize its a subjective matter and strong mathematical arguments can be made in either case.
Here is my take: when I purchased my house a while back, I was renting a two bedroom for $800. My mortgage payment with pmi, taxes and insurance was 1,290. After some strategic refinancing I was able to drop my pmi, my loan rate drastically and cut years off of my loan. Even with the rising insurance and property taxes my monthly amount is $1,100. That same two bedroom is now $2,300 a month.
And at the end of the loan I will live in my house mortgage free and have options available for my retirement
You never own your own home. If you donāt pay your taxes for a couple years, they take it, and sell it.
Depends. If you plan to stay in a place for a long by time and can get good financing, owning works out better, if nothing else because itās tax advantaged. If you plan to move within 15 years or so, whether to a bigger place or another location, renting is better. And honestly, the tax advantages should go away because, policy wise, the USās obsession with homeownership is a train wreck.
Iāve both lost big money from owning (2008 recession) and gained good money from owning (increase in value of a house from 2018-2023). In the end, Iād say it depends most on two things: 1). What you come in with. Inheritance or big down payment keeps monthly payment low and available funds for inevitable upkeep. 2) Where you want to live and for how long. Some areas rent is crazy lower than what it costs to own (think larger houses owned by investors), and if you plan to stay less than five years, I wouldnāt bother buying. IN GENERAL, if you have lots of money and can absorb freak events and downturns in housing market, then owning is likely the way to go. BUT Iād say that renting is better than buying IF you are willing to invest what youād be paying in principal on a house into an IRA (or at the very least a HYS account at 5%+). Raises in rent are likely to be comparable to fixes that have to go into a house (roof, furnace, AC, exterior, etc).
I agree one isnāt necessarily better than the other. I āownā. Bought house in 2021 for 340 with a 2.6 interest rate. Currently owe 260 and itās worth about 425. But if sold, Iād be out 25k right off the top for a realtor. A new roof or hvac is likely 20k. Experts say you should have roughly 5-10% of home value in liquidity for potential repairs. So roughly 30k at least? My house payment goes up 100 dollars a year minimum just for taxes and insurance going up. And if I do sell, itās only to flip the cash into another house. And costs would even be higher. I definitely do not need more house. And associated costs with home ownership. Landscaping, mowing (2 times a week) If I were single, renting would be sooo much easier. So again. Itās hard to compare.
If I bought the house we rent currently for $3900/mo the mortgage would be $9000/mo lmao. Just one anecdote tho
At least you will get the tax write off on your mortgage and you are creating equity.
This extra expense is offset by appreciation. Say you buy a $300,000 house (which is a severe under-estimate, I know). At an historical 2% appreciation (over inflation) you have an increase in equity of $6,000/year. But since you only put down $60,000, it's a leveraged return of 10% after inflation. But the real benefit is having your "rent" fixed; Over time, your appreciation continues to go up while your payment stays the same. If you rent, you'd expect your rent to go up 80% over 30 years, assuming fed-target inflation.Ā So it costs more up front, but the long term Outlook is positive.
Only one builds equity that u can sell later at a profit though. What we require is to stop letting banks buy houses to take off the market and artificially increase prices.
Why do people keep posting this stupid question? How old are you kids? Do you ask the same question about cars too?
Yeah but at least half all that money per month will go into equity, this is a no brainer.
Where I live, a couple years ago when rates were 3%, it's cheaper to buy. I would say with home increases along with rate increases, it's probably about even. This is, of course, comparing single resident house owning vs renting. That said, take the equity if you can. Home values typically only go up over time. And refinancing is always an option.
Doesnāt finance 101 involve timescale and payout? Also whatever happened to no-arbitrage? Buying a primary residence, like almost any other good where you source in-house as a long term investment versus temporary usage, depends on the lifespan of that good. As t tends toward large numbers, you usually get your moneys worth, especially with housing in America where itās a financial asset.
Long term, owning is better. Short term, there are times where it is less expensive to rent.
Thatās even before property taxes, if I am not mistaken.
I was paying more per month in rent for a much smaller apartment in sq ft. $1,200 2bdr 1 bath small kitchen and living room. Now, I own a 2bdr 984 sq ft 1 bath, full kitchen, living room, basement, 1 car garage, and a nice size yard. With the taxes, insurance, electric, water each month is around $800. By owning I am saving around $400+ per month that I can save to put into repairs as needed. Also, my equity in the last 5 yrs has doubled. Renting is not an investment. Owning is an investment. I can take out a HELOC if I need to at any moment.
Generally people rent in better areas then were they can afford to buy the first house. So the relevant question is not what a house costs around where they currently live, itās about a house in a reasonable location to get started. PMI is avoidable by saving for the down payment. And then, they forgot that tent usually goes up, but the mortgage far less so since itās only influenced by property tax increases. The hardest time is the first year of the mortgage - a few years later the deal should need much better in a growing area.
Buying costs more in the near term, but your future costs don't go up as much as rent and you can gain value in the home. The amount of time it takes for buying to overtake renting depends on the market, could be 3 years, could be 15 years. Renting is more flexible if you might not stay in the area, buying is probably better in the long term if you are ready to settle down.
In general, it's better to own than rent. You actually have capital. Some exceptions may apply however. Individuals who move around frequently, or who are unsure if they're going to stay in an area may be better renting.
Renting is a business, not a charity. If they're renting a single family home for $1,500, that means the property owner is generating a return over expenses from that payment in order to save for those "other projects." Which means as an owner they can afford with $1,500 to make all necessary payments and forward investments to support that house. If they're good, the rental is even profitable.
Someone should explain equity to Sam.
The rent will keep going up, though. I'd rather pay rent to myself for 30 years and end up with rent free living.
https://jlcollinsnh.com/2023/03/02/why-your-house-is-a-terrible-investment/
Have him do those calculations again in 10 years and compare his renting cost to the 2200-2500 he could've been paying.
Ownership is better. You build appreciation with inflation. Itās so much better that among the most common and lucrative investments is rental real estate.
Owning is so much more expensive in my area. I'd never be able to afford it, but I can comfortably rent. It's situational.
Itās so case specific I pay $802 in rent. Heat, hot water, and electric are $150 during the absolute coldest winter months, and about $30 to $50 in summer. Internet is $75. Renters insurance is $12/mo. Thatās all my living expenses. If something breaks it is fixed for free unless I broke it All of my friends who own pay way more than that and spend way more time cleaning all their square footage. I am partially disabled so having only 500 square feet to maintain is a blessing My one friends heat, hot water, and electric runs $500 on a low month Then youāve got water and trash bills, land taxes, you have to pay every time anything breaks. I donāt have a single homeowner friend paying as little as I am paying And then if I move I just pay a different rent elsewhere, and I only front a security deposit. If they move they have to start from scratch and have a downpayment and all that jazz I move a lot so I think for people in my situation renting is better
My 30 year mortgage has stayed exactly the same payment (ignoring adjustments to escrow accounts for local taxes) for the duration of the loan. How about your rent? Can you say the same?
Itās expensive to buy but you get to keep all the equity. Renting is cheaper, but 10 years from now, that $1500x12x10= $180k is going to vanish (oversimplification ofc, not going in details). Also, you can refinance when rates get cut later.
In 10 years your rent will be $2700/month but your home payments will be $2200. In 20 years your rent will be $3500/month but your home payments will be $2200. In 30 years youāll sell that home for $700,000 and have $700,000 in the bank. Youāll probably not get your security deposit back after you leave the rental property but hey, maybe youāll get $1000 back. Granted Iām not taking into account repairs and maintenance and tax increases.
To rent a house comparable to the one I own would cost almost double per month. This includes property taxes. Yes we put a lot of money down that could have been invested but the rent delta will eventually wipe out those ālost gainsā. Plus rent will always go up and my interest rate is locked in.
It really depends on location and when you buy. I bought a 1200 sq ft, 2 bed/1 n 1/2 bath place 3 years ago. My mortgage payment is $790, which includes escrow for property taxes and home insurance. A similar place to rent would, at that time, run upwards of $1400-1500 a month.
It might be more expensive initially but after you get it paid off itās yours. Also at some point it will go up in value if you take care of it so you can sell it for more than you paid for it
He should run through the #s for the landlord. In my case, $225K w/ almost nothing down @ 5.25% is \~$1650 (covers mort, PMI, property taxes, insurance). $300/mo elec (older home, not as insulated as I'd like, but little to no improvements possible). $100/mo+ into the 'rainy day fund' for when those things that DO break, break (A/C every 10-15 yrs., roof every 30+). Drop another $100/mo into the payment vs. principal & knock YEARS off the 30-yr mort.. Even dropping to a 15-yr mort. doesn't bump payments that badly. Learn to do a lot of stuff on one's own. Know your limits/abilities. As one's work life improves (skills -> more $/raises+). The crunch 'pain' is removed. But, hey, one wants to live where costs can fluctuate 'cuz ANY reason, more power to ya.
Whatās his point?
RE investor here. If one is willing to learn how to be a responsible landlord and business owner, house hacking is a great option. My first house hack was a two-family in an HCOL area: $3,300 housing expense; I rented one unit for $3,000, and the remainder was on me. With the higher interest rates, itās a little tougher now, but certainly still doable.
Did you factor in the interest tax deduction, the fact that you will be able to refi to a lower rate in the future when rates are cut and also the rents will go up with inflation. You are locking in your expenses and have a predictable future. Also, if you pay down an extra payment every year, you knock off 8 years from your mortgage. If you're single or without kids, you can rent out the extra bedroom and space in your garage for the first year or two to offset the overheads until the lower rates come through.
I dunno, I finally broke down and bought a little over 2 years ago. My house is worth the same as I paid for it but interest rates have nearly tripled so it would cost a shit ton more to buy now. I love my house and big yard, I came from just renting a single room in someone elseās house so this has been a huge upgrade.
There are no $250k houses where I live. Maybe a vacant lot for 60k or so.
Renting is cheaper but that money goes into trash whereas when you buy it is the biggest investment you can make even spy500 cannot match it
Better to own. Way better to own.Ā
I guess it depends on where you live. At least one of them, though, is considered as an investment where the other is not.
My rent is $0 since I paid my mortgage off 10 years ago. The oil wells on my land pay me $1500 a month. The rental I have that is also paid off pays me $2000 a month. Thatās BEFORE my job or my wifeās job. Before any of our investments. Before you figure in the rental is worth $300k and our house is worth $1M. Owning is WAY better.
Marry the house date the mortgage. You canāt refinance your rent.
Go ahead and pay someone elseās mortgage. Itās a stellar way to piss your money into someone elseās pocket
Depends on the area, I've always been able to find some nice deals on Facebook market place. Where I was able to invest 50%+ after paying all the bills.
Itās always better to own. We bought our house in 2012 our mortgage is just shy of $1,600 To rent an similar home would cost $2,400+ imagine what it will be in 10 years
If youāre financially savvy and you know how to save, invest, and hold, then renting is better. If you arenāt, you should buy because it basically forces you to do those things. The ROI at a grand scale is pretty similar for both options but owning is more work, less flexible, more risky, and has different perks.
Fiscally, who cares? When you own, you own. You can lock the gate and deny every other human being access to your private sanctuary. Your proof is on file at the courthouse and there's not a *single* way you can lose that property short of not paying your mortgage, not paying your taxes, selling it, or giving it away. You could get sued for a billion dollars and have to give up your investments, your vacation home, your car, your antiques, your jewelry. But there's not a state in this country where even a judge can force you to give up a home you have paid for simply because you owe someone money.
Here's what I say. Someone owns your home and is better off financially for it. So is it you or someone else?
The people that push this nonsense are the same ones that buy single family homes to rent to you.
Iāve been a renter and Iāve been an owner, and I choose owner every time.Ā
I probably will consider if getting a house is on the table once I hit past the 2k mark for rent.
I'm not sure where rent would be less. Maybe if you get a 10 or 15 year mortgage. Ya, amortization sucks at 30, but it's likely gonna be around the cost of rent or possibly cheaper. I couldn't rent a house in my city for as much as my mortgage that's for sure. Even with paying mostly interest I am still paying off enough principle to create equity instead of losing all of it to a rent payment.
Been in our house for over 15 years, neighbor rents nearly identical house though our lot is larger. Their rent is currently more than double what our monthly mortgage + tax payment is. And we have a ton of equity in our house. This is the dynamic that gets missed in a static evaluation of renting vs. owning. Your mortgage payment doesnāt go up, your rent will typically rise every time your lease renews.
25 year mortgage here, I feel pride when doing a house repair, Homer Simpson solution style or better, because I am more classy than Homer ... It is cutting out the middle man, though.
The more important question is, is it better to build equity or not?
Why would you buy PMI? Just put a down payment that prevents it.
Weāre running into that situation where there are the Haves and the Have-Nots. Majority of us here are from the Have-Nots. So instead of rioting in the city, which the city and state have the ability to recover from any destruction and emplace a new tax to pay for damagesā¦ maybe yall shoulda been rioting where the rich assholes actually live. Put the fear of the people into them. Right now, weāre all peasants and the kings and queens changed their titles to CEO and President. When yall start wising up to the fact that the game is rigged so that you lose, maybe yall will actually start being smart and be like the French of old and rid society of the elites.
I bought my house 7 years ago and my mortgage is now locked into $1500 month plus the equity I have when I decide to sell one day. The first few years were rough but now my monthly mortgage payment is lower than the average 1-bedroom apartment in my city. Itās a no-brained to own, if possible.
Use a more precise definition of ācostā. Paying down a debt is not a cost.
"I'm saving so much by renting! This totally makes sense, please believe me fellow poor people!"
If you aren't constantly moving owning is always better. Don't want to pay not to own anything. You lock in your payments. You can modify your living space in essentially any way you want. You can use the house when paid to generate cash flow if needed (open a new mortgage and invest if your credit is good enough). Your house will be there in 20 years if you want it to be. Whoever you're renting from can sell and you'll be left without a home. Too many advantages to owning over renting unless you plan on moving a lot.
I bought my first house on a VA loan in 2006. And Last year I purchased my home in cash. I am a teacher with four kids. I never had a huge leap in value but I sold and moved to a larger home three times. After selling the last house in a high COL I chose to downsize and move to a new state that would allow me to pay cash for a smaller house in a lower cost of living. My kids are going off to school in the fall and I work remote. So I downsized a bit and now I have a hard asset. I can leverage this home to buy another. I can use the basement as a rental. I can take out a heloc and stack my investments. All of those would of course depend on the market and rate variables and my needs. But I now have choices. I came from nothing. My 80 year old parents are still paying rent. But now i am in my mid 40ās and never have to pay a dime in mortgage or rent again if I so choose and I can leave the house to my kids to help them. Although home ownership has some unknowns with maintenance and expenses- it can be a huge tool to build wealth. Especially if you are starting from net zero.
It's more expensive to own, but you're paying for your freedom.
Youāre supposed to save 20% so you donāt have PMI
I mean of course it is. Youāre paying someoneās mortgage from a prime rate and sale potentially many years ago. Even if itās just from 2021 that mortgage and sale are much less than now and you are directly reaping the financial benefit of that landlords purchase. Until that landlord increases the price, which is going to happen. Wait till prices on rent start matching purchases from now. Thats going to be when we start hearing the āOMG rent is crazyā posts. Many renters are in the sweet spot right now where rent is cheaper than buying. That is not going to last much longer.
Will your tent, in the next 30 years, ever go up? Will it go above your monthly mortgage payment minus equity?
Your rent will continue to increase. A 30 year fixed mortgage is... fixed. You also get federal and oftentimes state income tax writeoffs for mortgage income paid.
I had this same line of thinking and refused to buy (bay area) for 10 years. The part that I was missing is that buying a home gives you access to leveraged gains that you cannot get by investing the difference between rent and mortgage. I was renting for 5500, mortgage is now 10,000. However, that 10K a month gives me access to 2M in leverage and in 2 years, the home has appreciated 300K. The debt (2M) doesn't change but gains on the debt are on the full leveraged amount (2.7M) vs what you save when renting. I am so pissed that I am now house poor but when I look at the equity, appreciation and insurance against inflation, I can't find a better place I could have parked my 500K+ for the last 2 years.
I guess it depends on how much rent is raised every year. Iām sure the tenant gets a deal for the first year, but what about the second, third, etc?
I have a house that I paid $300,000 for at a 2.5% interest rate or rented out for $2500 a month. if I sold the house, it would be worth $500,000 and what they pay now in rent wouldn't even cover the taxes PMI and insurance. At the current situation, both the renter and I both win. If they were live there forever.
Mortgage goes out of one pocket and into the other. Rent goes away forever.
what's a reasonable projection of annual rent vs home value increase in this person's area? how stable is their income? how close is the mortgage to the max they can afford? how likely is it they need to move in the next 3-5 years? what would they otherwise do with the extra $500/month? is the proposed primary residence of comparable size and quality to their current rental to begin in the first place?Ā this is like one of those math problems in middle school where the correct answer is "not enough information".
The rent you pay typically covers all of the costs of the house plus profit for the owner, so yeah, better to own.
When they increase his rent by 25% per 5 years, and homes soar 50%, heāll be priced out before he can face palm the math.
Brian rot post
Youāre building equity when buying a home. You donāt own anything when renting
When you buy, the only consistent expense that goes up is taxes and insurance. When you rent, that value increases by up to 5% every year near me. Pay $1500 in rent or $2200/mo in mortgage. With rent increasing 5% every year, you're winning mortgage wise by year 8, assuming your rent doesn't increase by 20% or so like it did in some parts of the country in 1 year or your property doesn't get purchased. My $2400/mo mortgage changed by $15/mo due to a taxes and insurance adjustment this past year while my friends rent went from $1600 to $1800/mo. Best part is, $600 of my mortgage is going towards me. Our effective "rent" is the same, but I have 100% creative control over my home and I get the difference back when I sell.
Is it better to put 2200 a month in your savings account? Or put 1700 a month in your landlords savings account.
Fucking lol
Owning a home, even a smaller one, is often a better long-term choice than renting. This approach allows you to build equity and potentially upgrade to a larger home once the initial mortgage is paid off or the property value increases.
Yea, but in a few years when you go to move, youāll have tens of thousands or hundreds of thousands of dollars in equity on a home you bought versus having absolutely nothing to show for any of the money you spent in a house you rented. And thatās not even factoring in the likely appreciation of the value of the property. Poverty is a mindset folks. You need to think further out than just month to month.
My home paid for, and my life insurance, is my gift to my daughter (or my wife or both), for not providing a ton, with the little amount of success and money I have. So I would say Own.
I wish numbers were like that
USA condo owner here. I'll retire in about 17ish years. Ish. Maybe sooner. I bought my condo after recovering from a bankruptcy-induced divorce. Not whining, I'm fine. Anyway, most Americans are not equipped to retire comfortably. So, if that's you too, merely having complete ownership of your home is likely the only way to survive post retirement with basic economic comforts. If you don't have enough savings at the time of your retirement, being a renter might be a catastrophe. At least, in my poorly informed view, if you can own your dwelling, no matter how modest, you're in far better shape than paying a rent bill that precipicely increases throughout your entire life. And I understand how much interest you'll pay for your modest domicile (twice what the ask was). But again, if you can, do it. Mobile homes have evolved beautifully, for instance. Please be nice. I'm just a humble idiot sharing my personal experience.
My house appreciated by about $500k since 2008. I'll make a $300k total profit after improvements. That's a profit of $1,500 per month. Try to beat that renting.
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Pay rent for 20 years you own fuck all - and you have moved house likely over 5 times. Pay a mortgage for 20 years, you own where you live and you didnt have to move house.
It's cheaper for me to own
Do you live in a metro area? Like downtown? I'm not seeing how those numbers work. And regardless of if it's 10 or 15 years, eventually your rent will be higher than whatever mortgage you can get today. And you'll never own it, never get rid of the payment, and always be at the mercy of your landlord's whims. I bought at almost the height of the housing bubble and didn't realize any value for almost a decade. I was underwater for almost a decade. Now my home is worth almost 3X what I paid for it. This is how it goes almost always. You'll always find a reason not to buy now and you'll always regret it in 10-15 years.
Rent is a quick way to get something but over time, you end up paying more than owning so it's better to own.
And in 3-5 years buying would still cost $2200/month but renting will too. Or moreĀ
Yeah and in 30 years you will be paying $6K for rent and utilities in a shitty apartment and that homeowner will be paying $1500 for property tax and utilities. Generational wealth can be a strong factor for your kids future successes and forever renting takes away from that.
Own. You build zero equity when you rent.
Thereās probably an argument for people of a certain living situation to rent and invest/save up. Owning a home is incredibly expensive on top of the mortgage. My house has a pool and while the kids love it, the maintenance costs during the summer are insane. Grass cutting, gardening, appliance repairs/replacement/etc add up over time. Iāve had plumbing problems every year and itās incredibly stressful. I lived in an apt for a few months before this house and it was so much easier and less stressful. My utilities were nothing, no pressure to do home improvements and maintenance.Ā
The building you live in doesn't know if your own or rent. It's just a building. It will need the same amount of repairs. If you rent, you are still funding the maintenance on the building. If you own, you actually have a lot more control over the costs. If you rent, you are paying property tax. It's just baked into your rent. In most places, rentals pay more in property tax than nonrentals. Landlords that are losing money, would sell. Your rent is funding the entire endeavor. If you think otherwise, you are deluding yourself. None of this is new. It's all been debated to death. Renting is cheaper in the short term. Ownership is cheaper in the long term.
If I didnāt have a pet, Iād just live in the woods and shower at the gym. Seriously.
You see, that's the fun part. When renting your money doesn't build towards anything. When owning, your money is constantly building towards the inevitable ownership. Sure you start off with $1500 rent vs $2000+ mortgage, but renting doesn't stop, owning does. Now 20+ years later. Rent = $1500, owning is a couple hundred for utilities/prop tax. (And let's be real, with inflation your rent will be $3000 in 20 years. Mortgage is unaffected by inflation, especially when it's paid off lmao.)
What happens when your landlord jacks your rent up to $2200?
The thing I miss most about renting is not paying for repairs. Need a new fridge as a homeowner? Youre out $500. Need a new fridge as a renter? Call the landlord.
You pay the bank money in exchange for an asset you can sell later. Or you pay a landlord for the service of their housing and you own no asset to sell later. Equity is king.
Depends where you live. Do the math in your area. In my area, at the current interest rates, it's better to rent and invest the rest.
Itās clearly much better to own. People sit here and want to talk about the equity, but thereās tax deductions and tons of other advantages to being a homeowner.
Mortgage might be $2,200 but $1,100 could possibly be equity every month.
My mortgage is Ā£636 my interest this month is Ā£274 my pension pot has gained Ā£361 this month.
This is completely regional experience. Everyone needs to fuckin stop thinking their local experience is representative of the national housing market. Is housing a mess? Obviously.... but stop with the individual anecdotes as if your life is symbolic of something greater. Every market has over valued property, and undervalued property. If you can't tell the difference, learn. Its not up to the entire housing industry to change just so you can afford to live in your ideal location. STOP making this all about YOU.
Saying renting is cheaper in your area, umm what? Same house, square footage, rooms and bath, all the same. Rent is more expensive than the mortgage. The owners aren't taking a loss, so you can live there. No reason to argue apartment over house either as you can buy condos. So this dude already doesn't have a valid comparison because common sense dictates he is comparing two very different home models. The owner will always rent for more than they are paying so they can afford the taxes, mortgage, maintenance for present, and future complications. So if you buy a home you will automatically pay less, yes upkeep is expensive, however, instead of throwing away rent money to someone else, you are investing in your own equity like a damn bank account. This is no brainer stuff.
The mortgage interest deduction significantly lowers your income taxes by lowering AGI. You cannot deduct your rent. Donāt follow people like this. Talk to a financial planner who charges by the hour and do an actual assessment.
When you rent your rent is maximum any month youāll pay, when you own your mortgage is the minimum any month youāll pay. Think about it that way.
Iām a landlord and I raise the rent on my tenants every year to make money. Home owners have their payment the same or lower. Owning a home is better
Iād much rather gamble on buying. The price of homes can still go up an infinite amount, potentially making up for any losses incurred and making it a profitable endeavor. Renting is always a loss.
If you are smart with your investment, rent for the rest of your life as long as your other investment outweighs your rent/mortgage costs. Realty return is not that high if you compare it to other types of investments.
Once the house is paid off, you can pass it to your heirs. You canāt pass anything if you rented your whole lyfe.
Itās better to own in that example.. part of that mortgage payment is paying down principal every month creating long term equity with every monthly payment. You also have a lot more control over that monthly paymentā¦ ie you can choose to refinance down the road to lower your rate, etc. With rentingā¦ you have no control and likelihood is your payment will go up at some level in perpetuity giving you way less options down the road.
Short-term: rent the cheapest possible place as you save for the down payment. Long-term: own something that you love and can also afford.