What are the pro's and con's to renting over owning???

It's strange because I've lived in a number of homes I owned when I use to bounce around a bit. Now I don't have a home. I kinda regret not paying one off at some point. But now that I am free from it all I'm debating the pro's and con's about getting a home again? I'm just not sure. There's a lot of pro's and con's to both. I don't have a family so practically there's no sense buying a home again. But anyone who rents knows it feels like you're throwing money away. So I'm not sure I want to do that forever either. I think I'd like to own something again at some point. Someone told me though that renting is a good option until you really are sure you want to settle down. Just debating what might be the best option? Then again I guess if money was no question then buying might be an option again. What are you're thoughts? For the single guy, rent, buy, live in a van what?

reply to post by spartacus699


I own my house, and always sleep better at nights with knowing I wont have to pay the bank a monthly payment. My Preference is own a house.

Well if you rent the landlord is responsible for fixing things that need repair. Or some will let you do the repairs and let you take it off the next month's rent if you give them the invoices showing what you paid for materials. that is one pro.

You don't have a job. How can you own a house?

Purchasing a House is an investment. It should be treated as any other risky investment. Some people win, some people lose. It is simply gambling if looking at it as an investment.

It can also be taken from you by the Government or by the private sector in a lawsuit due to large medical bills, your dog biting someone, an accident if you don't have enough insurance etc etc. It can also surprise you with really big bills, like a new roof, cracked slab etc etc. To top that all off it is like a prison. You will be strapped to the same location until you sell it or agree to lose your shirt.

I prefer to rent from solid people. Years at the same place at $1200 a month, if something breaks I don't pay for it. Due to an established relationship my landlord could care less if I pay rent on the first or the 20th. If I need to move for any reason 30 day notice and I am out!

I will take freedom over "Fake" home ownership any day.......

reply to post by spartacus699


Find a place you eventually want to live(retire) and buy some land. If you're young, throw some property up as it fits your economic condition.

My 2 cents

Owning a home and leasing one out to someone is not as good as people think. Home rentals usually generate around 6% return/year.

So someone might think, well, if I can buy one with just X money down, I will save money! But then again, your mortgage is going to be 4-6%. You will remain neutral.

Rich dad poor dad (I think it was) called hard assets free of loans, a liability. Because you aren't putting that money to good use.

Well, not exactly.

Let's say there are 2 people. 1 has 600,000 and the other has 100,000 and they both want a $550k house.

Fellow one pays it off. In that, he saves on not having 6% interest, and if the housing market grows, his net worth goes up.

Now, if person B puts his 100K down, buys the same house, he now is living the same luxuries lifestyle? Or so he thinks.

Because of our bubble economies we see interest rates skyrocket every 12-20 years. And I mean skyrocket. In the 80s I think it was 16% at the peak. And it reached over double digits during the dot com bubble (if memory serves.)

Well, it just takes one of those years during refinancing for person B to go broke. All of a sudden he needs to come up with $2000 extra a month, he can't so he sells. And someone else with hard assets and liquidity, buys his house on the cheap.

That's how it works. Thinking investment property? Unless you are paying it off completely, don't. Those 6% returns every year mean nothing when you are paying interest rates of the same value and it only takes a year or two of high interest rates to bankrupt you.

No BS economic school. Whatever you have been told, is to steal your money. Hence the old "Reverse mortgage" craze a few years ago. Entirely about pilfering people's hard assets.

Keep in mind with most financing options you are only paying very little towards your principle for a long time. And in the end, depending on your amortization, you end up paying double and triple the house value (in many cases.)

My argument is to find a very cheap place to rent that allows you to save 5K a/year. And don't buy unless you can put 50% down. It sucks, but if everyone did it there would be a lot more richer people out there. Immigrants know, they take very quick amortizing loans, pay off houses in a few years with x10, or x20 family members living in the house. Once one is paid off, the elders get it and they continue this plan. It works!

Met quite a few Chinese, Indian and others whose entire families all have paid off homes.

spartacus699
It's strange because I've lived in a number of homes I owned when I use to bounce around a bit. Now I don't have a home. I kinda regret not paying one off at some point. But now that I am free from it all I'm debating the pro's and con's about getting a home again? I'm just not sure. There's a lot of pro's and con's to both. I don't have a family so practically there's no sense buying a home again. But anyone who rents knows it feels like you're throwing money away. So I'm not sure I want to do that forever either. I think I'd like to own something again at some point. Someone told me though that renting is a good option until you really are sure you want to settle down. Just debating what might be the best option? Then again I guess if money was no question then buying might be an option again. What are you're thoughts? For the single guy, rent, buy, live in a van what?

I have two degrees, one in Finance, the other in Real Estate. I can tell you for me, the answer is simple. Owning a home, and here is why. When you own a home, it is an investment, the money you put into it, you get back most of the time. Real Estate values historically have always gone up over time. If you have a mortgage and you make payments, when you sell that house, you should be able to sell your home for more than what you originally paid for it, if so you get back all those mortgage payments you made, plus some extra cash. Also, if you own a home, you get a tax deduction. If you rent, all the money you put into it never gets returned back. It is a financial black hole if you will. Now renting is great for those who are not committed to staying in one place and like to move around and not have to deal with the maintenance of a home. But again, a home is an investment. Renters do not get a tax break from renting, home owners do. Just a few things to think about. I am only 25, I own my own home, I saved up money because I refused to pay rent, EVER. My home payment with escrow is less than most apartments in my town, I also get a nice tax deduction each year, and I don't have people stomping up above me, and I can do whatever the heck I want. Hope this helped.


P.S. If you pay $700 a month in rent that is $8400 a year you throw away. If you do that for 3 years, that is $25,200 you will not ever get back, and I am not even accounting for inflation!

I think I'd own a place if I could find a mortgage as cheap as my rent at the moment. The reality I see is that even a modest home purchase would add greatly to my monthly cash flow. I kind of like the renting thing because at the end of the day I just want to come home, feed the cats, dust a little, make dinner and relax. If I have to fix broken windows, water heaters or shovel snow, it becomes a part time job. I don't have a family to pass it on to and I sure can't take it with me

reply to post by Emerys

I can tell you for me, the answer is simple. Owning a home, and here is why. When you own a home, it is an investment, the money you put into it, you get back most of the time.

It's not an investment, it's a liability. Unless you buy it with cash, then it's an investment. If you have to meet a monthly demand for cost/money = liability.

There is a reason the system teaches you these things, and it aint to help people.

If you rent, all the money you put into it never gets returned back. It is a financial black hole if you will.

If I pay $500,000 to a bank over a 20 year amortization period, that money didn't go into a financial black hole? Odd, cause $500/month, is $6000 a year over 20 years is $120,000. It is quite easy to rent $500 month below a mortgage rate.

Now, if you can guarantee 120k at the end of the term, oh but then you still have that 500k you gave away. Sounds like a pyramid scheme…

I choose not to buy because I like to travel the world and see things, that's my choice...

I work, I save, I book a flight, end my tenancy with the landlord, then I fly away and eventually come home again for a while and then do it all again...

If I couldn't do that I would be in a mental home....

I can't come home and watch TV and all the other mundane things. I have to fly away and see more than the street I live in. That to me is living and we only get one life........

I am happiest meeting new people, socialising and being in total awe of the world around us....

But that's me...........

If you have extra time and extra money buy a home. You will have neither after that

boncho
reply to post by Emerys

I can tell you for me, the answer is simple. Owning a home, and here is why. When you own a home, it is an investment, the money you put into it, you get back most of the time.

 

It's not an investment, it's a liability. Unless you buy it with cash, then it's an investment. If you have to meet a monthly demand for cost/money = liability.

There is a reason the system teaches you these things, and it aint to help people.

I have to argue against that. Just because you are taking a loan out against it, does not mean that it is a liability. I bought my home for just $90,000 a year and a half ago. My home is now worth $115,000 according to a recent appraisal. All because of new developments and growth in my neighborhood. How the heck would you call that a liability!?! I could sell tomorrow and make a 22% profit!

spartacus699
...What are you're thoughts? For the single guy, rent, buy, live in a van what?

For the single guy? Live in a van!

Seriously, dude. Do what's cheapest. Spend as little money as possible, save what you can, buy when you have enough.

I'd say DO NOT sign your life over to any *#$%W#$ banker.

reply to post by spartacus699


The benefits of renting...
You don't have to pay property taxes or water and refuse bills. There's no upkeep or repair costs. It can cost less than a monthly mortgage depending upon where you live and the cost of real-estate. You can always just pick up and move and not have to worry about selling your apartment. You don't have to mow the lawn. You don't have to invest in major appliances.

boncho
If I pay $500,000 to a bank over a 20 year amortization period, that money didn't go into a financial black hole? Odd, cause $500/month, is $6000 a year over 20 years is $120,000. It is quite easy to rent $500 month below a mortgage rate.

Now, if you can guarantee 120k at the end of the term, oh but then you still have that 500k you gave away. Sounds like a pyramid scheme…

edit on 7-11-2013 by boncho because: (no reason given)

I just did the math using two calculators I use at my work on a daily basis (I work for one of the countries largest financial institutions). In my current home, I paid $90,000, by 2017 my home is predicted to be worth 147,000 using current growth rates for real estate in my area. By then, my loan balance would be around $83,000 using my 30 year amortization schedule. This means I would have paid over those 4 years $5156 in payments and $3357 in interest. If I were to sell my property for the predicted $147,000, subtract off my $83,000 loan balance, and subtract what I made in payments over the 4 years, plus the interest. I would still net $50,000. That is a nice profit. So how the heck can you calculate a loss off of that. Please do explain.


Also, in your above example, you are not taking into account the increase in value over 20 years of that $500,000 property, which by then would be a lot!

reply to post by spartacus699


Depends on your area:

If owning is cheaper than renting - own if you can. BUT if you plan on moving or your job isn't stable (like you missed a few rent payments, but the landlord was cool with it) don't own. You have to save for repairs though - a minor cost if you buy smart.

If you seem to move every few years - renting is the way to go. No anchors - No late payments - No worries if your plumbing goes out. That'll be the landlord's problem.

Disclaimer - Most home owners pay for extra crap - whether that be a home owner association, fire dept mafia payment, land tax, etc. If you don't want to hassle - don't buy. Rent.

Buying a home was for those who saved in the past - it would take families generations to save for a home. Bank home loans are fairly new. Not sure about the land down under, but in AmeriKa - the govt intervention with the banking system forced them to finance home mortgage loans. Without govt being pests - we would mostly be home renters, saving for a home of our own.

Now - all you need is a bank loan and BAM - home owner.

reply to post by spartacus699


Here in Perth Australia, the median house price is over $450,000.00.
You cant buy anthing even close to the city for less than that.
Most people wanting a 3x1 brick and tile look at over $550,000.00

I rent. The house prices are only that expensive becuase of the mining boom and the chinese.
Once the Chinese have their mining up and running in Africa, then the mining boom will leave WA and it will go cheaper.

I rent because if something were to happen, I can walk away from a rental. I cant walk away from a mortgage.

I rent because I can swap jobs without stressing its the wrong move, if i have a mortgage I need to be confident of every change.

reply to post by spartacus699


I am 25 and owning a home just does not make any sense to me at the moment.
It just seems like a really huge expense that isn't necessary ?

You pay 10,000 dollars roughly in taxes more or less.
You have a mortgage to pay off.
You have maintenance to do around the home... boilers, furnaces, air conditioning, repairs, etc.
You also have electric and water/gas utility bills.

I may have missed some extra costs but I think that really basically covers it?
I'm a technician in the pipefitters union and I can travel nationally and would like to do so without worrying about home back wherever it may be.
Maybe when I am super old or meet that someone I will settle down.
It's a question I have been asking myself and around.

Keep in mind that you NEVER own a home. If you finally pay off your mortgage, and get the deed in hand, you will find that you are still listed as "tenant." You still pay rent to the owner in the form of property tax. If you do not pay this rent, you will be evicted, and the home sold to those who will.