Revisit Rent vs Own Home

[robnplunder]

Don't want to rent or rent out. It's too much hassle and life is too short.



Eventually, I will downsize and move to a complex with fitness center & jacuzzi. It will also give us a freedom to travel extended period at a time without worrying about watering the plants, etc.. Perhaps, in 5 - 7 years when we reach SS age?

 

[Rianne]

OP-

Of course, you have to weigh your own factors and make your decision based on them. Everyone’s needs and situation are different.

DW & I have lived together in ~16 places (and a few more individually due to school & work). We’ve lived in almost every type of place; SFH, townhouse, condo/flat, apartment; urban, suburban, rural. We owned in about a third of those locations and rented in the remaining two thirds (we moved a lot for work). We made $$$ on the houses we owned. We liked the vast majority of the places we lived, rented or bought; mostly, I think, because we were very careful about choosing where to live. Based on our experience, what I can say with a high degree of certainty is:

- Home ownership is not a good “investment”; in fact, I’m not sure it should be considered an investment
- The cost to own is higher than renting, most of the time
- Home owners are not inherently more responsible, nicer or even more house-proud than renters
- The depth (and length) of our friendships with neighbors has not been determined by whether we owned or rented but, by ourselves and whether we were good neighbors and friends
- Choosing your desired environment carefully (regardless of whether you rent or own) is the most important decision; get that right and good things will follow.

I highly recommend JLCollins posts on this subject; lots of wisdom there.

Best of luck.

Appreciate sharing your extensive experience! That's a lot of moving, both owning and renting. I have to look inward, I don't like hassle and the more I think about it, moving is hassle. And change. Change is good for short periods, like renting in Florida for 2 months. There is something about a "home base." Knowing I'll always have that home. We've moved 6 times and bought every move. Yes, hassle in selling, but we were young and had the energy and enthusiasm for a new city, new experiences.

Every so often it occurs to me, oh crap, a new roof or furnace went out b/c DH bought a cheap filter. And I want to upgrade our front patio and I want a screened in deck in the back and I want a bigger garage and I want a taller fence so my neighbors dogs quits jumping into our yard. But I could have a bajillion complaints about renting. And the beat goes on. Always looking for different opinions and advice. It is free on the forum

 

[Teacher Terry]

We prefer to visit different places so wouldn’t want to own 2 places.

 

[COcheesehead]

A house may not be considered an “investment”, but sometimes it turns out to be a good source of tax free funds. Most of the money that will enable us to pay cash for our retirement home came from equity growth in our prior home. We can leave our investment portfolio virtually untouched.

 

[mexexpat]

We are nesters. Like to fiddle with whatever home we are in, make improvements and upgrades fairly often.

 

[RobLJ]

I think it's fairly unusual vs many other areas, particularly in flyovers, but Reno rents have been rising more than 10% a year since we moved here 3.5 years ago. I'm glad we bought, and since the house is paid off, the housing COL is low & almost fixed (property tax + utilities + some upkeep).

 

[Perryinva]

Tax free gains on all the homes I’ve bought lived in and sold are a major portion of my current NW. Real gains easily outperformed what my investments in the market would have done based on my costs. I guess I like to use other peoples cheap money to make money. Every home Inhave lived in was “bought” with the same original $10k I put down on the first house, and subsequent net costs of owning were far far less than the same in renting. I’m sure it is market and personal preference dependent but it has worked very well for me.

 

[FLSUnFIRE]

I thought of renting (can be cheaper in this market) but assuming rent increases and property values will rise at the same rate over time the longer I am in a place, the cheaper it will be in the future (ownership costs would go up but the capital costs would not). Of course, to be in the best negotiating position as a renter, you have to be willing to move (potentially expensive and disruptive).



The bigger decision maker for me is freedom, I want to FIRE for the freedom and that extends into my life. I don't want to be subject to arbitrary rent increases or being forced to move when a landlord decided to not renew or adds untenable terms. I also want to make my place "mine" for a while and don't want to invest in a property I don't own (be that furnishings with that place in mind or improvements).


There is also security to me in having my living expenses "locked in," as an owner, my property costs are pretty much fixed (Tax increases are capped in FL so I can plan for worst case) and predictable and less subject to market or other outside influences. If I FIRE myself tomorrow and rents rise drastically (which they have here) I could be put in a position of busting my planned WDR or cutting planned expenses elsewhere to stay in my comfort zone.


That said, I view housing as an expense, and think the rent vs ownership should be a conscience decision for one's residence just as any other expense is evaluated. IMO, The conventional wisdom that your home is your best investment only applies to those without the discipline to save/invest on their own (and often those take out HELOCs as soon as they realize they have equity) and I don't think there are many of those types on these forums!

 

[Dtail]

I thought of renting (can be cheaper in this market) but assuming rent increases and property values will rise at the same rate over time the longer I am in a place, the cheaper it will be in the future (ownership costs would go up but the capital costs would not). Of course, to be in the best negotiating position as a renter, you have to be willing to move (potentially expensive and disruptive).



The bigger decision maker for me is freedom, I want to FIRE for the freedom and that extends into my life. I don't want to be subject to arbitrary rent increases or being forced to move when a landlord decided to not renew or adds untenable terms. I also want to make my place "mine" for a while and don't want to invest in a property I don't own (be that furnishings with that place in mind or improvements).


There is also security to me in having my living expenses "locked in," as an owner, my property costs are pretty much fixed (Tax increases are capped in FL so I can plan for worst case) and predictable and less subject to market or other outside influences. If I FIRE myself tomorrow and rents rise drastically (which they have here) I could be put in a position of busting my planned WDR or cutting planned expenses elsewhere to stay in my comfort zone.


That said, I view housing as an expense, and think the rent vs ownership should be a conscience decision for one's residence just as any other expense is evaluated. IMO, The conventional wisdom that your home is your best investment only applies to those without the discipline to save/invest on their own (and often those take out HELOCs as soon as they realize they have equity) and I don't think there are many of those types on these forums!

Bolded
+1 being a Tampa man myself.

 

[Rianne]

Tax free gains on all the homes I’ve bought lived in and sold are a major portion of my current NW. Real gains easily outperformed what my investments in the market would have done based on my costs. I guess I like to use other peoples cheap money to make money. Every home Inhave lived in was “bought” with the same original $10k I put down on the first house, and subsequent net costs of owning were far far less than the same in renting. I’m sure it is market and personal preference dependent but it has worked very well for me.

Great point! As long as the housing market is strong.

 

[Perryinva]

Agree, location location location. So far, I haven’t wanted or needed to move when housing market was down. In fact, in the last house, a few times we thought of moving for an improvement, the cost to benefit ratio was just not there. Then our neighborhood became a red hot sellers market almost out of the blue (over $100k gain in selling price in a year), and I could not see the reason for it. Properties in what I considered more desirable locations and design/age did not have the jump in prices that ours did, so they suddenly became a low priced significant upgrade and we took advantage of it, while rates were also still low. Timing was key for sure, as a 4% 30/0/0 rate is hard to get now and it appears the market in our old location is already cooling. For sure, I have benefited from good timing by accident or by design.

 

[karen1972]

There are definitely places where renting is great. When we first moved to NC, we rented an apartment that had lots of resort amenities and really enjoyed it, until we didn't. Eventually the walls being thin annoyed us, but the rent prices continuing to spike drove us to buy again.

Most of my friends renting SFH are all being notified they have to move due to the places being sold so the pain of moving is making them lean towards buying too.

If the price difference is huge, and you don't plan to be in it that much anyway, renting sure has its upsides, but if you spend 90% of time at home, I'm for having my own home where i can do what I want and make a life.

 

[aja8888]

We are in our mid 70's and DW is handicapped and can't do or go much. I am very healthy and mobile. We own right now (SFH, one level, 2,000 sq.ft.) and that is probably the best for DW. But if I was on my own (again), I would probably rent something with minimal rooms and a garage. I don't really need or care for landscape duties and home repairs.

Actually, I thought about selling and renting now, but DW could not go through a move without a lot of hassle and all that goes with relocating.

 

[W2R]

But if I was on my own (again), I would probably rent something with minimal rooms and a garage. I don't really need or care for landscape duties and home repairs.

I haven't done any landscape duties or home repairs since I bought this house, back in the summer of 2015. My lawn guy and handyman will do these things for me for surprisingly little money, and they appreciate having some work. It helps that I'm a 70 year old lady so I don't feel like anybody expects me to do all that stuff anyway.

 

[Teacher Terry]

We like to own 1 house and it’s low maintenance. My husband is only 60 so does what’s needed. We have Astro turf since we live in a drought area in the West. We don’t like being gone for more than a month twice a year.

 

[W2R]

We like to own 1 house and it’s low maintenance. My husband is only 60 so does what’s needed. We have Astro turf since we live in a drought area in the West. We don’t like being gone for more than a month twice a year.

I think that is a wonderful idea, especially in a drought prone area where others sometimes do that too!!!

 

[NYEXPAT]

I have been renting since 2004 and have lived in 7 different apartments/houses. YW also owns a Penthouse overlooking the Pacific Ocean which we will be moving into the EOM. Next year, we will move to the USA and start renting again at a nice complex in Florida.

 

[Teacher Terry]

Some people xero-scape with native plants but I don’t like the way it looks plus our dogs like grass)

 

[Looking4Ward]

I had posted the same question a couple of weeks ago since I only plan on living in a particular area of Austin for the next four years.

The consensus was mixed, as always. But then I ran across this article today and found it interesting. It mentions Austin as well:

A rise in high income renters is bad news for the housing market:

https://finance.yahoo.com/news/a-rise-in-highincome-renters-is-bad-news-for-the-us-home-sales-market-200817691.html

 

[bjorn2bwild]

Renting is the rational choice when long term plans are uncertain.
Starting in spring 2002, we traded the stability of ownership for location flexibility. There was no attempt at the rent vs own cost analysis as this was a lifestyle rather than economic decision. So far, so good.
The current long term rental is pretty darn nice – 3,800sf, new construction, ideal location and a good relationship with the owner, at about half the going market rate. It could end any time, but that’s OK. When it does, we will take off in search of greener pastures via RV, to short/medium term rental and the occasional long term as opportunity presents.
Sure we have a short list of favorite places, but there are no immediate plans to settle long term in one location.
The general strategy is to live low, play high – meaning keep day to day costs contained while spending up for fun recreation and exploration to new areas of interest.

 

[Scuba]

Interesting thread. We plan to keep our So CA condo that we own long term, but we may decide to put our things in storage and rent the condo out for a couple of years and travel/rent. We could be cash flow positive renting out our home. The main reason we haven’t done this yet is our dog. A transient lifestyle would be too hard on him and some places we’d like to explore make it very difficult to bring in dogs.

 

[FIREd]

I love the convenience of renting (not having to deal with the upkeep). But I live in an area where rents increase faster than inflation and I wouldn't want to have my largest expense be so inflationary. Since I plan to be here for a long while, I decided to own instead.

 

[brucethebroker]

Financially....
Landlords (and to some extent, homeowners) receive numerous federal tax breaks and (usually, for most folks) long term appreciation on their investment (down payment). Renters receive numerous rent increases.

In our area, when there are numerous "we had to move from our rental due to it being sold" situations, it is during a time of rapid real estate appreciation. That appreciation causes a shortage of rentals which increases rents on the remaining rental inventory.

Finally, in 1983, we personally purchased a 3BR/2BA/2gar home in a suburb of a large Midwest city for $62k(great schools, BTW), with a payment (30 yr) of $650 a month. We moved from a 3 BR rental unit (no garage) with a payment of $550. Today, the home is valued at $250k and local rents at similar apartments are $1400 to $1900. Again, this is in the Midwest, not a high appreciation coastal area. Many folks on this blog have a similar story, I am sure.

I am not knocking renters-far from it. (They have been very good for our business for the last 30 years.) But over a long time line, it is hard to beat the value of home ownership/fixed housing costs vs the costs of increasing rents.

If you buy a home, with a fixed rate mortgage, and stay put for 10, 20 years or longer, it is pretty hard to not come out ahead of renting. It is even harder to lose money.

 

[MrLoco]

We currently own and have lived in our home for 26 years. We are both retired now and 60 years old. We want to travel more now and can afford to do so.


Here is the thing. We have a NW just north of $5M. House is worth about $250k ....so essentially the $5M is in a 50/50 asset allocation (equities/fixed income). About 60% taxable and the rest Trad and ROTH IRA's. We will both get pensions and SS and have retiree employer paid health care until we both turn 65.


When we reach 65-70, we will sell the house and rent BUT not from an individual landlord who might change his mind and decide to sell a year later. We only want a large apartment complex with a pool, tennis courts, and impeccable manicured grounds. A 2 BR, 2 Bath unit. There are 2 such complexes in our area with rents for what we desire going for around $1,800/ month. No problem.


I am done with all the maintenance issues....have no desire to tackle them myself. Currently have a landscaper and a plumber, electrician ready and willing to assist. Just don't want to go on a winter cruise for 2 weeks and come back to find the furnace crapped out and the house is flooded.


We could pay cash for a nice condo, but then we still own and are responsible for any interior issues. Plus if we REALLY do not like renting we can always pay cash for a condo in the future...but would not want a single family home just for the 2 of us.

 

[ncbill]

Now that it has no mortgage the carrying cost of my 3BR/3BA townhome (HOA fee + property tax + insurance + electricity/gas) is under $600/month.

With all outside maintenance taken care of via the monthly HOA fee.

I can't imagine living anywhere else as cheaply, at least here in the U.S.