Own or Rent When Approaching FIRE?

[karen1972]

This is why we are in a brand new townhome with HOA, so it pretty much guarantees a fixed amount for maintenance of which we don't have any involvement in. Other than changing out the furnace filters and fixing some caulk.

With the new construction and new appliances, our utility bills are actually less than they were in a previous property that was half the size.

To rent a townhome in our subdivision costs $2200, to own w/ 20% down costs $1575. $7500 a year buys a lot of buffer. Granted the investment crowd is making a killing here especially since on top of that home prices are skyrocketing.

Obviously many don't like townhomes or the HOAs that come with them, but thats exactly what they are designed for, the I don't want to deal with maintenance crowd.

 

[EarlyFIRE]

This is why we are in a brand new townhome with HOA, so it pretty much guarantees a fixed amount for maintenance of which we don't have any involvement in. Other than changing out the furnace filters and fixing some caulk.

With the new construction and new appliances, our utility bills are actually less than they were in a previous property that was half the size.

To rent a townhome in our subdivision costs $2200, to own w/ 20% down costs $1575. $7500 a year buys a lot of buffer. Granted the investment crowd is making a killing here especially since on top of that home prices are skyrocketing.

Obviously many don't like townhomes or the HOAs that come with them, but thats exactly what they are designed for, the I don't want to deal with maintenance crowd.

That's a great idea. We looked at some townhomes, but between COVID and the hot market, we couldn't meet anyone and couldn't even get the sales person to take a call with us. Will keep trying. There's almost no inventory of townhomes in our area except new construction at the moment.

 

[Big_Hitter]

I've found that our cash flows, in combination with our lifestyle, are much more predictable owning a home in retirement

 

[Ramen]

Nothing wrong with renting if it makes your life easier. I've been renting happily (for the most part) since 2011 after owning for 15 years or so. Got tired of maintenance, repairs, snow removal, etc. I needed to move for other reasons too and learned how frustrating it can be when you're at the mercy of a slow housing market. It took eight months to sell when I wanted to be gone ASAP.

The house was paid off, though, so despite my urgent desire to sell, it was hard giving up the peace of mind of having no mortgage. However, in retrospect, I realize that my opportunity cost during those years was relatively high and the paid-off house was not as great a deal as I'd assumed at the time.

I just moved from an old and very cheap apartment to a luxury condo that's more than twice the price and size. I'd have to buy about a $350,000 home to match the square footage, quality, and monthly expense of the rental condo. A cheaper house in this area would be smaller and/or need many upgrades. The luxury condo is at the top of the local rental market, so I can always downgrade if the expense gets uncomfortable.

Below are my two favorite rent-vs-buy calcs. They require a lot of assumptions, but they make it easy to see how you can make a strong case financially for either owning or renting, depending on the numbers you provide:

https://michaelbluejay.com/house/rentvsbuy.html

https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html

So yeah, it's not all financial. It's mostly lifestyle choice. I like freedom to move when I want and freedom from maintenance hassles, so for now I'm opting to rent. Maybe not forever, but it suits me for now. As for being a landlord, not for me at all.

 

[Birdie Num Nums]

According to a June 10 New York Times article, renting is cheaper than buying these days: https://www.nytimes.com/2021/06/10/...er-than-buying.html?smtyp=cur&smid=tw-nytimes