If you’ve been around the PF block a time or two, you’ve inevitably ran in to an article about Buying vs. Renting. It’s like a right of passage as a personal finance blogger. Today, however, I don’t so much want to compare renting to buying as they both have obvious pros and cons. Instead, I’m simply going to share with you the one and only reason I absolutely, positively, can not bring myself to buy a home.
Our rent is $975/month.
I rest my case. Haha, but seriously. We pay less than $1,000/month for a small one bedroom apartment above our landlords main house. We have ocean views, stainless steel appliances, and crushed marble trim. We live in a nice neighborhood (not an apartment or condo complex), and although space is tight, it’s totally doable for the two of us.
Our rent takes up about 11% of our gross pay. Keeping our housing expenses proportionally low has afforded us the ability to put more of our take home pay in to savings. We’ve made some pretty incredible strides over the not-quite-two-years we’ve been married and I don’t want that progress to stop.
Buying a house would do just that. According to Zillow, a $975 mortgage payment would buy us a $137,000 pad. Seeing that I’m not interested in buying a condo (I hate the idea of HOA’s and Assessments that I have no control over), $137k wont go far in the way of real estate where we want to live.
To be honest, we’d have to be at minimum in the $300,000 price range to start finding 3 bedroom houses in neighborhoods we liked (Yes we could find cheaper houses in other neighborhoods, but remember, if we are going to buy something we want to be happy there. A house is a home first, an investment second.). Zillow tells me a $300,000 mortgage, at 4% interest, with zero down (had to calculate zero down to be fair since renting does not require us to give up any of our liquidity), would end up costing about $2,025/month.
And that is the exact reason we say “Heck no!” to home ownership. For us, it’s an apples and oranges comparison. We are totally fine renting a one bedroom apartment (apple), but if we were buying for the long-haul we’d only be interested in 3+ bedroom houses (orange). Is it fair to make that comparison? Of course not, but that is our reality and it is the comparison we must make.
Renting keeps our costs low and keeps our income more liquid. Before we consider buying anything, our actual rent costs and our predicted mortgage costs needs to be virtually the same. If buying is going to leave us significantly less liquid than renting, I have no desire to drink the kool-aid.