Why Renting Doesn’t Suck

May 23, 2011 · 46 comments

I’m seriously messed up in the head. Part of me thinks Girl Ninja and I should buy a house in the next six months (because interest rates are so low), while another part of me wants to rent for at least a few more years. My thoughts on home ownership change every day, and today I’m feeling like renting is kicking owning’s butt.

The most common argument AGAINST renting is that you are essentially throwing your money away. Let’s take a look at how this argument applies to the Ninja household.

Girl Ninja and I should be able to find a nice 2 bedroom apartment for about $1,200/month. Aside from utilities, the only other rental cost we’d have is renters insurance ($15/month). To keep things pretty, lets just estimate $1,300/month for living costs (including utilities). That’s $1,300 a month down the toilet.

Now let’s look at buying (this is where things get interesting).

If Girl Ninja and I were to buy a house, we’d be looking for something that we could live in for at least the next ten years. Probably a 4 bedroom/3 bathroom house in a good neighborhood. Where we live (Seattle-ish), this would cost us around $400,000. Right now, we only have enough saved to put $40,000 down (10%), leaving us with a $360,000 mortgage.

We could probably get an interest rate in the high fours to low fives, so let’s just assume a 30-year fixed mortgage at 5%, resulting in a $1,932/mo payment. About $432 of that goes to principal and the other $1,500 goes to interest. Property tax hovers around 1.1% so that would be another $330/mo in property taxes. Since we wouldn’t be able to put 20% down, we’d have to pay PMI, costing about $150/month. Home owners insurance would run us about $50/month. And let’s just say $130/mo for utilities. This brings our monthly payment to about $2,592. With only $432/mo going to the principal, we’d be spending $2,160/mo on all that other crap. Over the course of a year we’d pay about $20,000 in mortgage interest. This is tax deductible, which would reduce our net out of pocket (on all that crap) to about $1,744/month, instead of $2,160.

Do you see where I’m going with this? I admit, we ARE essentially throwing our money away by renting. But not as bad as we would be by purchasing. Interest, property tax, PMI, and home owners insurance ARE NOT investments. They are expenses. We are actually throwing away $444 ($1,744$1,300 = $444) less per month by remaining renters.

In my opinion, owning makes financial sense under two circumstances.

1. If you have a lot of cash, you can put down a huge down payment, which in turn eliminates PMI, and reduces the total interest you pay to your lender. In the example above, Girl Ninja and I would have to put about $150,000 down in order for owning to start making sense.

2. The other situation in which owning makes sense is when you are looking to buy something similar to what you are renting. You’ll notice Girl Ninja and I are fine renting a small two bedroom apartment but we would never buy a two bedroom house. When the time comes for baby ninjas (and more bedrooms) we can start looking at owning a three or four bedroom home, since we’d have to rent something of that size anyways. No reason to pay for bedrooms we don’t plan on using.

Is my logic flawed? Did I overlook anything? Why does renting get such a bad rap?

1 Ryan

In your situation, renting is the better option. Here’s my story about how buying saved me money. Disclaimer – I live in a low-cost area in upstate NY.

I was renting a two-bedroom apartment about 20 minutes from work for $560/month. On a whim, I went and looked at a two-bedroom condo (only 8 minutes from my work) on the market for $65000. I didn’t have enough for a down payment at the time either, but I went ahead and put an offer and purchased it. Every month, I pay $800. About $250 of that goes to principal, and I get about $40 in tax breaks from the interest and taxes, which means I’m paying $510/month for a larger apartment with a shorter commute.

The only answer to the renting vs. buying debate in any given situation will not depend on ideology, but a detailed look at the numbers. The difference in YOUR case, Ninja, is you are comparing apples (two bedroom apartments) to grapefruits (four bedroom house). For me, I can save money and build equity through this purchase, maybe even creating a rental property when my soon-to-be-wife and I outgrow the current home.

2 Executioner

I agree with the prior comment. You’re not just comparing renting with buying; you’re comparing renting a smaller place with buying a larger one.

Remember that even if you don’t pay it directly, your rent covers your landlord’s mortgage, taxes, and insurance, so you’re paying all of that “crap” indirectly. Those are not expenses you can simply avoid by renting. The reason renting gets a bad rap is because you don’t build equity while you cover your landlord’s expenses. Sure, there are some advantages to renting (flexibility, etc) in the short term, but over the long term, I think it would be tough to make a case that renting is the better option for building wealth.

3 Zan

This is something that my husband and I are thinking about too. The more I look, the more I’m trying to figure out how buying makes sense for anyone living in a large metro area. I don’t know–its a very sensitive subject, so I really don’t want to say much. People get very defensive!

4 Spork

It may be comparing apples to oranges, but if it’s the type of home you’d buy versus the type of place you rent, technically it’s the comparison you need to make. Also, don’t forget maintenance costs, buying a lawnmower/refrigerator/other appliances, homeowner’s association fees, etc in your calculations. The NY Times has an interesting online calculator that gives you a rough idea of how long you would need to stay in a home to make buying a better financial decision than renting.

http://www.nytimes.com/interactive/business/buy-rent-calculator.html

People get emotional arguing about the buy vs rent decision but the decision is different for everyone. Even if you’re “throwing your money away” renting, it’s your money to throw (especially if it is into your savings account to pay for your first down payment).

5 JT

I think renting makes sense for you right now. You will be able to keep saving for a down payment and avoid PMI by renting now and continuing to save. Keep in mind that once you buy a home you will have to mow the yard and maintain it.
I have owned a home for about ten years now but my current home only cost 130k but my property taxes are about 2.5%.
Keep in mind that you won’t have to buy a house right away when your wife gets pregnant unless it’s twins.

6 John

First, you made the right decision. I made the same decision recently. One easy way to build wealth in this situation is to take the $432 that you would have put into principal each month and put it aside for a future downpayment.

7 slug | sunkcostsareirrelevant.com

The apples and oranges criticism is a valid one. Another is you’re looking at year 1. As you know the ratio of equity:interest in your mortgage payments changes over time. This reduces your tax write-off but leaves you with increased equity that you can leverage down the road if necessary. Further, there is the emotional component where the immeasurable feeling of owning your place comes into play. Another piece related to this is the powerful nesting instinct that comes from any new mother. Good luck once that kicks in!

8 Jeremy

I can’t say I ever understood the whole ‘renting is throwing money away’ line. You’re not throwing money away, you’re spending money on a place to live! To me, that’s the same thing as saying eating out at a restaurant is wasting money because there’s nothing permanent you get to keep after. You’re spending money and getting a nice night out in return, and just because there’s no ‘keepsake’ per se, it doesn’t mean its throwing money away. I have the same gripe with people whose houses are underwater. To me, what does that matter? If you could afford it in the first place you can continue to afford it. Just because if you sold it now you wouldn’t get the same amount of money you paid for it seems pretty odd. In the meantime you have a place to live. Isn’t that still worth the same amount of money you paid for the house?

To me, the big counterargument to buying a house and ‘building equity’ is so what if you build equity? Its not like its spending money you get to put in your bank account. Even if you sell 10 years down the road and you have some equity in the house, all of the other houses in your area will likely have risen in price too and you’ll need to spend that extra equity to buy a new house. The only thing it really helps with is a home equity line of credit which seems fairly inconsequential in the whole scheme of things.

I do understand the more emotional arguments in terms of being your own landlord, setting up a household, stability, etc… but the financial arguments are pretty far from clearcut to me.

9 Kevin @ Thousandaire.com

I feel the exact same way. I’ve looked at buying houses and the only time it’s ever even kinda made sense is when I found a house that was selling well below market value from an extremely motivated seller. And both times, the house was under contract when I called on it. I think it could make sense to buy now if you find the right deal, but I haven’t been able to find the right deal in the last three years.

10 Jeff @ Sustainable life blog

Dont listen to the people who say you’re “throwing money away” – you’re not building equity, that’s true (but for those who purchased anytime in the last 10 years, they didnt either.
You need a place to live, no matter if you own or rent. You’re not “throwing money away” if you’re keeping a roof over your head to keep the rain out and bird poop off your stuff.

11 Julia

Love this comment!

12 Austin

Renting is losing its appeal to us, but recently we have thought of more advantages of renting than buying (flexibility, etc.) – As I’ve commented before, I’m not so sure I’m a huge fan of putting 20% down. I’ll have to crunch the numbers for myself, but if I had $100K in the bank I could probably think of 100 things to do with it rather than give it straight to the bank. Houses are good financial vehicles to guard against inflation, so the “investment” side of owning is pretty dead in the water, IMO. We’re ready for more space, too, and that’s worth quite a bit in our eyes.

Austin

13 spiffikins

Your arguments are exactly the ones that I struggled with when looking at buying my first home, which I finally did last November.

In my case, I was renting a 2 bedroom townhouse, and had a housemate, so my portion of the rent was $850, plus half the utliities, say another $125/month. However, I really wanted to a)live alone and b)have a separate bedroom/office for my computer so that it was not in my bedroom.

In order to rent a 2 bedroom place in my area, the cheapest would have been about $1500 a month, or I could have stayed in my current place, for $1600/month. Paying all the utilities myself would have added another $250 for a total of 1850 a month or so in rent.

The place that I ended up buying, with a hefty downpayment, is a 3 bedroom townhouse. My mortgage is $978/month (no pmi), I have an HOA payment of $275 a month, and my property taxes are just under $450 a month. Utilities are coming in about $200 a month in this place – so my total per month is just over $1900 a month.

Obviously, this doesn’t take into account that I’m responsible for things that break now – and I fully expect my water heater to die on me at some point in the next year or so :D

But overall, I’m in the ballpark for what I would have paid to rent a 2 bedroom townhouse – plus I have a 3rd bedroom. If things get tight money wise, I can rent out a room if I need to, which would bring in between $700 and $900 dollars a month in this area.

Plus, my computer is no longer in my bedroom!

I choose to look at it this way – I need a place to live, and yes, I’ve gone from paying under $1000 a month for living expenses to just under double that – but my living situation has improved, and I’m happier now, having accomplished my 2 goals.

14 Jen

I never understood how renting was “throwing your money away”. Sure, you aren’t left with any physical property when your lease is up, but the descriptor of throwing money away would be more applicable to paying rent for a place in which nobody lives. You do get something out of renting – the flexibility to have somewhere to live without being tied down for a decade or more!

My husband and I have been renters for a while – we moved out to Phoenix just as the bubble burst, and everyone kept saying we should buy a place while the housing prices were so low. But here we are, 2 1/2 years later and moving to Pennsylvania, while housing prices have dropped another 20% or so in Phoenix (and there’s no sign of improvement yet). The flexibility to just pick up and leave when we were ready to move is worth the lack of equity, especially considering selling houses/condos is very difficult in Phoenix right now!

We’ve recently begun to bring up the topic of a timeline to have kids – this might be the only reason to consider buying. In our new city, my husband will be getting a new job and renting makes sense until his income is stable. But once it is, we’ll be looking into 2+ bedroom townhomes, instead of our current 1 bedroom apartment. In the mean time, we won’t be throwing money away, because we’ll be doing “research” to find what areas of the city we like best, so we don’t accidentally buy in an unsavory part of town.

15 LLF

Spork and slug are right in that you are comparing apples and oranges. If you were to own something smaller, you could potentially have a mortgage of $1200 (possibly even with tax and insurance included). If given $1200 in mortgage or rent, mortgage makes more sense since you can deduct the tax and interest. Plus you are not looking at the potential in rasie in the rent. If you have a 30yr fixed mortgage, that’s $1200 for 30 years, while rent likely go up every year. If rent goes up $50 a year, in 5 years you’ll pay $1450 if you rent vs still $1200 mortgage. For real estate, you can’t look at year 1 or 2 unless you are flipping. Real estate is like stocks. They will LIKELY gain value over a longer period of time. Plus who says you can’t have a starter home? When you want to upgrade, you can sell the starter or rent it as extra income. If you sell the starter, you could potentially gain more than you bought it for. Even if you sold if for the samke amount, you still have some equity that you have been paying down. If you rent it out, it could pay for itself and you still get the equity.
Of course, renting has it upside as well. You never have to worry about fixing stuff around the house. You just call your landlord and they’ll fix it. You can move anywhere at anytime and not worry about paying the mortgage or looking for a renter. If you don’t plan on being somewhere for more than a year, I wouldn’t own. It takes a while to get to know a place where you really want to live.

16 Tristan

I think renting gets such a bad rap because it’s the “American dream” to own a house. It’s also just the expected thing to do in society once you get to a certain point. I have a friend about my age (I’m 25) who is single and never holds down a job for more than 6 months. Yet her parents were encouraging her to buy a house. This was the dumbest advice I’d ever heard! Why would you buy a house when you’re single, when you move around a lot anyway, when your employment is inconsistent, and when the alternative (renting) is so extremely cheap here? It blows my mind.

17 Mer

The economic situation has made me completely rethink the “American Dream” and I’m convinced that I’ll never own a home. It’d be too hard to move if necessary and with our generation switching jobs every 2-3 years, I think being tied down to a mortgage would be more detrimental.

Here’s a good post about home ownership: http://www.jamesaltucher.com/2011/03/why-i-am-never-going-to-own-a-home-again/

18 Laura

We are in a very, very similar situation and people keep giving us a hard time because we have no real timeline to buy a house. We’re saving like we’re going to buy a house, but we’re probably going to resign our lease for the 3rd time in July 2012 (yeah…we’re planning ahead!). Our rent is cheap, and we love our apartment. People kept saying that once we got married we would want to buy a house…well, that hasn’t happened yet. Since we live in a 2 bedroom, we kind of like the idea of having a baby in the apartment and only buying a house when we outgrow our apartment (hopefully by then we would have 20% to put down). It’s very appealing to us to not have to worry about home maintenance when we first become parents. We don’t want to do maintenance on the weekends, we’re happy “nesting” in our current place, and we’re able to put a lot of money away for retirement while we’re young. It works for us, and we don’t really care if people think we should go buy a house.

19 Paulette

Mortgage Payment
PMI
Down payment
Closing costs
Inspection cost (better do it)
ad nauseum
Now add the new curtains, new carpet (you probably won’t like what’s there), paint, painting supplies, new furniture for the two extra bedrooms (whether they are used as bedrooms or otherwise), additional cleaning supplies for a larger space, lawn care equipment (mower, blower, edger, rake, shovel, etc), yard stuff (table and chairs, umbrella, grill, what-have-you) tools (you have to fix things now), tool box, ladder, step ladder, ok… I’m getting tired. You get the idea. No one mentions all this crap.
AND – your newest savings account. The home repair fund. How old is the roof? the siding? the water heater? the driveway? What did the inspector say about the sewer system? Did he inspect the electrical and plumbing? What kind is it? Do you have a septic system? How old is that?
I am not anti-homeowner, I am just on the side of full disclosure of all the costs. The things I have read say to add 10% of the cost of the house to your yearly expenses to account for maintanance.
Keep thinking and keep crunching the numbers.
p

20 Alotta Lettuce

Renting gets a bad rap because RENTERS get a bad rap. Renters are perceived as figuratively and literally “un-invested” in their communities – a label that is simultaneously unfair AND well-deserved. Because of the emphasis that’s typically placed on home-ownership in the US, extremely long-term renters are a scarcity outside of major, price prohibitive cities like NYC and San Francisco. The truth is that renting IS inherently transient, with tenants sticking around for a year or two before moving on to greener pastures. And AS a renter, it IS difficult to invest in ones community or even one’s home – financially or otherwise – when you know you’ll most likely move on and never reap the rewards.

Some of this is also tied up in how taxes are perceived in the US. In a country where one should do anything in their power to get a tax break, it’s easy to get suckered into homeownership and it’s promise of tax deductions, even if you ultimately pay for them many times over in order to get them – as is the case in your example.

I’m not a renter any more, but I LOVED those days and look back on them fondly. The idea that one is “throwing away money” by renting just never landed well with me because the bottom line is that unless you’re comfortable with homelessness, you HAVE to live somewhere and if you’re a grown-up, you probably have to pay for it yourself.

21 Financial Samurai

When you get into the 33% or 35% tax bracket… definitely buy. For now, renting ain’t so bad at all.

22 JBlue

The “American Dream” is pretty much dead. I have other dreams and for now, I enjoy knowing I don’t have to worry about a mortgage or selling my home in these times.

23 krantcents

Your result may be the same, however compare like items. If you rent a 2 bedroom, you need to compare a similar home or find out the rent for a 4 bedroom home.

24 Ninja

I disagree. We can rent a two bedroom apartment because that is all we need right now. I can’t compare that to a two bedroom home, because we would never buy a two bedroom home. When we buy, it will be for the the long haul, so we need something with three or four bedrooms. I know that the comparison is not equal, but it 100% applicable and the reality we’d face.

25 slug | sunkcostsareirrelevant.com

Buy a 2 BR Condo and keep it as a rental when you decide to upgrade. Or sell it and use the equity to increase your down payment in the upgrade. It’s not as all or nothing as you are portraying it.

26 Ninja

Nor is it as easy as just buying a two bedroom condo and selling it 2-3 years later, or renting it out at full value. You make the assumption real estate appreciates in the “short term” and if the last few years has taught us anything, it’s that you better not put all your eggs in one basket. I’m surprised you would argue short term home ownership is as convenient as your last comment made it seem.

27 spiffikins

I’m with Ninja on this one – I would never consider buying anything less than a 3 bedroom – I’m looking for something that will be the easiest to resell when I get to that point. And, even though I was living in 1 bedroom of a 2 bedroom condo, I wanted a 3 bedroom so that I have the option of renting out a room and still having a room for an office.

I completely understand why Ninja isn’t comparing renting a 2 bedroom condo with buying the same thing – for me, buying was going to increase my costs – so I wanted to be sure to get something that worked for me long term, as well as achieving my goals – otherwise I could have stayed where I was, paying $850 a month in rent and socking away the difference into my savings.

28 Lysander

It is an apple-to-apple comparison for the Ninja household. This is what we would rent vs this is what we would want to buy. Just because what they would rent and what they would buy are not the same does not make the comparison invalid, just that it applies to what this household would chose to do.

The problem with buying something smaller would be what happens within the next 5 years when they want to move up? Seems like the lessons of the last few years should be applied here: don’t buy a house unless you are planning to stay in that house long term. Looking at a smaller house would also have to consider all the costs associated with buying and selling the house in such a short window (inspections, commissions, closing costs, etc), added into that would have to be some measure of the risk of having that property decrease in value over that time span (it isn’t clear that the housing market has reached a stable equilibrium state yet).

That said, I think that the assumptions that go into the house purchase assumption are worth further investigation into what is available in the Seattle housing market and refining what your house wish-list is and how much each of those items would cost long with what the current actual financing costs would be.

It would be nice to see how quickly the mortgage would be punched in the face.

29 Financial Success for Young Adults

I completely agree. Especially since you are not in need of a larger space right now. I think there’s a little bit of home ownership brainwashing that led to the crisis. I’d rather rent and not pay all the extra upkeep costs for owning a home. One thing you could think about is a rent to own deal. Then you would at least have an “option” that you could sell once you decide to move.

30 Jenna, Adaptu Community Manager

Additional costs that come with home ownership, fixing bad pipes, getting a new roof, upgrading appliances, higher utility bills, etc.

31 Alotta Lettuce

Regarding the issue of making apples to apples v/s apples to oranges comparisons: It’s easy for you to make the decision to rent right now for all of the reasons you outlined in your post. Apples are what you need and want at this point in your life, and financially, it makes more sense for you to GET them by renting.

But when your needs and/or wants shift to oranges, you will quite likely feel very differently about renting than you do now. If you’re ever feeling bored and want to delve into this issue even further, I encourage you to do a little digging around to determine how much it would cost you to rent RIGHT NOW the home you’d like to have when you DO decide to buy. Chances are, it will make A LOT more sense to buy than to rent a home for a growing family.

32 Kiwi

I think you are right, assuming that you would have to buy a house for $400,000 – but I’m sure if you look around, you would actually be able to find something less, maybe that needs a little work. In my opinion, once the interest you are paying on your house is about 80% of the amount you are going to be paying, it is probably (assuming you stay in the house for a reasonable period), going to be worth thinking about buying because – unless there is another recession, in which case you would just stay put, you should start to recoup some of the costs of interest in the form of capital gains. Also – for my family, it really was about security and freedom – we know that unless we decide we don’t have to move, and we are able to do what we want with the house (have you considered somewhere with a garden to put a vege patch – it pays dividends (and so reducing the cost of food that you would be paying if you were renting). If I were in your position, I would start doing a lot of market research (going to open homes to see what is availabe, finiding out how much houses are selling for, getting to know what you do/don’t like) on housing in the areas you would be looking to buy.

33 Ghengy

I figure the big thing people mean when they say “renting is throwing away your money” is that 30 years from now, you can either own your place free and clear, or still be paying rent until the day you die. It’s pretty much a guarantee that rents are going to go up over that time frame, but your mortgage will never change (stay away from adjustable rates!). Also, adjusting for inflation, that mortgage is going to look smaller and smaller over time. My parents tell me that when they bought their house, they really had to scrimp and save to make ends meet. By the last few years of their mortgage, that same amount was about how much my husband and I can drop on a nice dinner out. Also, they now have an asset they can draw on should they ever need the money (rent out part of the house, do a reverse mortgage, or sell it and move to a cheaper place). Had they never bought the house, their financial picture today wouldn’t be anywhere near as nice or secure.

Still, it’s a matter of timing. Don’t buy until you are settled location and job-wise, have a decent down payment with some savings left over, actually WANT to own, and are ok with the idea that you may end up staying in that property for a very long time should declining property values lock you in. It’s your life, do whatever works best for you.

On a side note, I’m amazed that you could go from a 2 bedroom apartment to a 4b house with an increase of only $450/month. Either that house is a screaming deal, or your apartment is really expensive, or I’m showing my bias from living in a place with incredibly high property values.

34 Ninja

The house isn’t $450/month more, that’s how much “extra” I’d be throwing away. My total monthly payment on a 4bdrm house would be about $2,500, which is basically double our anticipated rent expenses. I think if you re-read the post, you’ll see what I’m talking about.

35 Paul

Good points Ninja,

This is one of the most well thought out arguments against home ownership I’ve ever read. I wanted to also point out that home ownership also comes with a lot of hidden fees like repairs and maintenance. In addition, if you factor in the time to take care of these minor inconveniences over a 30 year mortgage period, everything really adds up.

Plus, you can’t really quantify the flexibility you have by not being tied to a 30 year mortgage. Having the majority of your savings as liquid assets allows you to take advantage of better opportunities that might come along, such as business investments or new job opportunities.

It would be interesting to see how you could quantify all of that, but in total I’d say you’d be throwing away alot more than just $450/month.

36 Rafael @ Reis Financial

Great article. I am definitely a fan of renting. Currently I live in downtown Vancouver and I rent a one bedroom apartment with my girlfriend. The problem with Vancouver is that there is 1) a shortage of affordable real estate and 2) their public transportation is mediocre at best. I also do not own a vehicle as it is not necessary living in the city center.

I have posted this link before, and I hope Ninja does not mind. However, I am confident it supports his position of renting vs. buying. I have an “apples to apples” comparison for all those renting naysayers with regards to my situation living in an overpriced market like Vancouver. The following is a comparison of renting vs. buying in Vancouver:

http://www.reisfinancial.ca/1/post/2011/03/renting-vs-buying-in-vancouver-part-1.html

If you want a comparison that is fair with a proper (but unrealistic) down payment, check out this comparison:

http://www.reisfinancial.ca/1/post/2011/03/renting-vs-buying-in-vancouver-part-2.html

I agree with Jeremy and I love Paulette’s post as well too. To all those who posted (Ninja has said this as well too in the past): “If you do not foresee yourself living in your current location in the long term; don’t own!”. At the moment, my partner in crime is finishing her apprenticeship to become a master chef; however, after her apprenticeship we are considering leaving Vancouver.

37 Glen Craig

It’s all about your personal situation. Right now rates are low but if it’s still too expensive and you don’t have the full downpayment then it may be best to wait. If you could afford the house payment, take the difference in your current rent and your calculated owning and bank it. This gives you a good idea if you can really hack the expense.

You also don’t have kids right now. For us, finding a house in a great school district was an important factor. Where we live there isn’t a lot of rentals. On the other hand, a good portion of our taxes go to the local school district. Without kids, we’d be paying a lot of taxes for a school district we weren’t using. But with three kids who will use the system it’s well worth it.

We rented for a bit between living in our co-op and buying our house. We hated it. It’s hard to find a 3-bedroom where the owners want kids there. Where we did find a rental, the neighborhood had terrible parking and we had to deal with neighbors below us and next to us on each side. We got all sorts of noise and smells. People were way too close. It was ok in the long run since we rented knowing we were going to buy a house. We have a beautiful home in a great neighborhood now and we’re real happy with it. We’ve also come upon all sorts of little expenses that add up ( I swear buying a home is like getting a line of credit to Home Depot).

There are lots of platitudes about personal finance – you have to do this and that’s a waste. But in reality, not every situation works for every person. It’s about your personal situation and finding what works for you.

38 Mary M

Rent as long as you can. You are young, gone are the days when a couple or individual stays put in one town for their whole life. You could get a job offer that is too good to refuse and move cross country in the blink of an eye. Home or condo ownership ties you down. Talk about throwing money away, try coming out of pocket over $400 a month to cover expense gap on a condo you have a tennant in.
I suggest that you and GN look for a house to rent instead of an apt. If you love it you won’t feel like a transient tenant. It doesn’t have to be the 4/3 at this point. Go for a 2/2 or 3/2. You’ll come out better than getting locked in to something.

39 Honey

My fiance and I never plan to buy a house. We love the flexibility of being able to move wherever and whenever we want (and in fact it is one of our hopes/main goals to never live in the same city/state for more than 10 years, we plan to retire out of the country to Belize or a similar expat destination), we are not close to our families, we never plan on having children, we can think of better things to with 20% of a home’s value than investing it in a durable good that history shows “appreciates” at the rate of inflation (which is to say, doesn’t appreciate), we are NOT do it yourselfers and have ZERO interest in maintaining, let alone renovating, a home.

The bummers of renting are that while you actually aren’t responsible for repairs, etc., there’s actually no guarantee your landlord will make repairs as appropriate. That’s what’s going on in our current place. We’ll move right before it falls around our ears and leave the mess for the owner to clean up, however, which is kind of satisfying (and yes, we do inform her CONSTANTLY of all the things that needs fixing, she chooses not to address any of them).

40 Miss T @ Prairie Eco-Thrifter

My brother in law makes this argument all of the time. He does have a point but there are advantages to buying too. I think it all depends on your income level and what your future plans are. If you plan on not staying in the same place very long then renting is the way to go since you will lose on your house purchase. If you don’t plan on moving for a while, a house would be a better investment of your money.
I not only like the investment opportunity a house brings but I also like that it is something I can call my own and do what I want with without having to clear it with a building manager.

41 Sara

One thing you didn’t factor in is home upkeep – when you rent, you don’t need to pay for sudden $2,000 bills to fix the roof, etc etc etc! I couldn’t agree more on this whole point, although I will say that it totally depends on the area you live in & how much home prices are. We live in San Diego, and as I’m sure you know, you pretty much can’t buy a house in central SD for less than $550,000. We want to live as central as possible, so we choose to rent because there’s no way we can afford $550k, and anything we can afford (i.e. less than $350k) is not what we want. I hate that everyone seems to think buying is ALWAYS better, or that renting is ALWAYS better – they’re both based on so many factors, it’s ridiculous to say either way is the best option for people. I’ll rent the rest of my life if our situation doesn’t change.

Also NYT has an awesome rent vs own calculator here: http://www.nytimes.com/interactive/business/buy-rent-calculator.html

42 Melissa Z

One of the points you mentioned is interest rates. Have you considered how much more you will pay per month/year/life of mortgage if you wait to buy? If you’re fairly certain that you will want to buy in the next few years, that might be something to consider- you might be paying an extra $444 per month for the house (as opposed to renting) for a couple years, but a higher interest rate over 30 years may have a much bigger impact. Just something to consider. Plus, if you start shopping for a house now, as opposed to waiting until have 20% down, you can afford to be very picky on price, size, & location. If nothing comes up that suites EXACTLY what you want, you keep renting & since you don’t mind renting, you’re out nothing but the time you spent looking. One other thing to consider is how long you’d be paying PMI. Where I live, you’re only required to buy PMI for the first two years. After that, if you have 20% equity (either make extra principal payments or house appreciates, or both) you no longer have to carry the PMI- you do have to get an appraisal done to prove the 20% equity.

We bought a house right after getting married & have done a ton of work on it (we knew when we bought it that we’d be fixing it up). Now we’re moving so husband can go to school for physical therapy. We are definitely looking forward to renting for a couple years. Both renting & owning have their benefits & drawbacks.

43 First Gen American

I think it’s a waste of money to live in more house than you need or want. If kids are a few years away, then why not wait? What if you have trouble having kids? You may not be 2 years from needing a house, you might be a decade away. Fertility is not something that everyone can bank on.

44 Buy and sell online

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45 South County Girl

I hear you on this. For me, I rented with a roommate and I was fed up with the drama of wondering if she’s make her rent payment. Since i was at the point where I was considering renting a 1 bedroom by myself instead of a 2 bedroom with a roommate I started looking into buying because I wasn’t comfortable throwing 1100-1200 down the toilet for a One Bedroom apartment in Orange county. .

For me I wanted to buy what I could afford. I could stretch to a 2 bedroom and have no money to fix it up and a high monthly cost… or I could comfortable afford a one bedroom condo and pay cash for some repairs… after a bunch of offers and a bunch of calculations I bought a fixer upper one bedroom because MONTHLY it was cheaper than renting a one bedroom, Including MIP, Taxes, Homeowners insurance, earthquake insurance, Principle, interest, and HOA fees.

Right now I’m a bit in the hole for repairs I made initially to make my place my home, but its slowly getting to the point where I think in 3 years i’ll break even and see a profit because RENTS ARE RISING and my payments are stationary.

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