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Own or rent?
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Common sense here in the States is to rent if you're thinking of moving in the next 5 years; buy if you're planning to stay longer. When I rented, I felt that I was tossing money to the wind, but I also knew that I wasn't ready to settle down. Once I had a child, I wanted to stay in one place in a good neighborhood. I wanted a yard and neighbors and safety. Took me several years to save up a down payment (this was before the crash, when you actually had to secure a loan). It's great to own a piece of the earth (as far as anyone can own anything), but upkeep is a bitch.
So at least we have one renter turned owner -:) Who else?
I am with Scout. When younger, I first rented, not so much because I could not afford to buy, but because I did not know whether I would stay in that place for long (and I had already moved countries four times. But once I decided that I was happy here, and got married, we bought. In NZ it helps to purchase if you want to stay in the same place because you could always be forced to move if the owner sold up.
Buy, buy, buy. As long as you're up for handling the maintenance rather than phoning the landlord.
But! It may depend on how expensive the property taxes are, or the cost of homeowner's insurance versus renter's insurance. Or HOA fees. Here, the property taxes are probably some of the lowest anywhere. I think on both coasts of the US property taxes are very high. I have no idea about the rest of the world....I assume there are property taxes everywhere?
If I add up what I've paid in rent over the past 20 years, I could have bought a really nice house for that. In fact, I could have had one built to my specifications.Only problem is, I need a place to stay while I save up for a down payment, and as rent costs money, there goes my down payment...
That will be great, Denise, picking out your piece of land and building the house you want. My advice would be to keep your costs down so that you can take out a shorter term loan - mine was 15 years - and pay a little more each month but save overall in interest. My plan was to have my house paid for when I retired. Now, I only have to pay taxes. Just something to think about.
Just be sure you don't go for an adjustable rate. The interest rate can go up several points depending on the economy. Lock in your rate when you get the loan - with no balloon payments. Hope you get your dream home :)
We own our house. Prior to living here, we lived in a remote area mining town where the mining company owned all the housing, but we 'bought' into it - it was a scheme that was effectively enforced savings, as the company guaranteed a buy back. Meant that we had a great deposit on our current house.
In theory, buying is the best option as the cost of a mortgage, over time, shouldn't be any more than rent and you end up owning an asset and you don't suffer from inflation. However it does normally require cash to start with to pay for deposit and transaction costs and you do have responsibility for maintenance.It's down to circumstances and because of transaction costs and taxes it's less likely to suit those who are likely to want to change property and/or location within short to medium term.
Here, in the Montreal area of Canada, the prices of homes and rented dwellings are still fairly reasonable, compared to Toronto (outrageous) and Vancouver (through the roof). I own a home on Montreal's South Shore, in Boucherville (named nicest little town to live in Quebec Province in 2017) and am only two years away from finishing to pay the mortgage. Actually, the cost of renting is about equal or higher than buying a comparable facility, so renting here is not really a good solution, unless you are unable to save enough for the minimum down payment legally required to buy a house. There are also all these horror stories about landlords who ignore requests to repair obvious defects and do zero maintenance on their properties.
For business, rent is usually desirable for tax reasons, or for lack of cash, but in these virus times, when income takes a dive, it will send many to the wall.
I was thinking about this today. My shop in the back yard may have termites. I talked to the guy today, and he wants me to invest in their Sentricon system. Just another cost of home ownership and another decision to make, in addition to taxes and maintenance. It's a lot. When I rented, it was someone else's problem, yet I like having title to my little piece of earth, not having to ask permission for anything. And I can pass it down to my son. It's a trade-off and maybe one option isn't better than the other - just a matter of preference.
UK is very into ownership with lack of rental options is often remarked as issue for starting on housing ladder. My son last year took out a mortgage with his partner for their first house after 4 years of renting in London. Mortgage and run costs is cheaper even with commute cost to London jobs
The other side is exemplified by when I bought our house. The cost of renting and the cost of serving the mortgage wee very similar, but at the end of the mortgage schedule, we had a house, whereas had we opted for rent, we would have nothing. Of course, if you are not going to remain in the same place, renting makes a lot of sense because you lose a lot of money moving house if you own it, and it can be stressful getting the timing right.
That's the thing. Buy and you have all the headaches but own something of value. Rent and you have no headaches and own nothing of value, but you're free to move.
I speak from a business background and my advice, if you can afford it, is BUY. Speaking purely as a living arrangement, renting is increasing someone else's net worth while buying can be an investment and can serve to increase your net worth over time.
Own. My 1st husband was a private contractor, so he did all the work on the house we bought. The 2nd house, after divorce and remarriage, I only owned for 2 years and we decided to move from Phoenix to WI. I broke even considering the purchase price, sale price, and savings on tax deductions. The 3rd house, in WI, and 2nd husband was an electrician. We sold it for what we owed on it. So no profit, except for 6 years of income tax deductions. This is my 4th house, no husband, so I have to pay for maintenance and repairs. (Though unlike the 1st husband, the 2nd did my electrical work in return for me cooking.) I just refinanced so from 5.5% to 3.5%. I still make the same payment so as to reduce the principal. I have put a lot into it over the past 10 years. Remodeling a 1970s house. I switched over to a heat pump system with a/c which is much more energy efficient but will take me 10 years to recoup my cost for it. I still have the 2nd bedroom and bath to redo. I need to redo the roof too soon. I also consider, which is often forgotten, that I have had the benefit of the things I have upgraded or remodeled.
Rent here is more expensive than paying my mortgage and that's for a lot less space. I have a living room, family room, laundry room, den, 1 car garage, 2 bedroom, 1 full bath and 1 3/4 bath. I have a clothes closet the size of a 3 piece bathroom. I also have another area that used to be part of 3rd bedroom, so now is storage. I am hoping to eventually make it into a full walk-in pantry (it's 8 feet wide). My yard is pretty good size. I put in a garden on the side of the house.
A rental in the same price range, I would have smaller rooms, less rooms, little storage, no garage, no yard. If something breaks, I don't have to pay to fix it, but often getting landlords to pay to fix things can be difficult. Getting your deposit back is also difficult around here.
I bought this in 2010. So I could sell it for at least what I paid for it. I expect the market will come back and in another 10 years it will be back up to appraised value, which would give me a 25% profit, less my improvement costs. Once again, I benefit from the tax deductions for mortgage interest and property taxes. Property taxes aren't expensive where I am. If I were in NJ or CA, my response would be different as their property taxes are extreme.
In the USA, it really depends on where you live as to the cost/benefit ratio of owning vs. renting.
Lizzie wrote: "I bought this in 2010. So I could sell it for at least what I paid for it. I expect the market will come back and in another 10 years it will be back up to appraised value, which would give me a 25% profit, less my improvement costs. Once again, I benefit from the tax deductions for mortgage interest and property taxes. Property taxes aren't expensive where I am. If I were in NJ or CA, my response would be different as their property taxes are extreme."Amazingly calculated deliberations, detached from emotional interference :)
Nik, never thought of it as calculated without emotion. Just experience based conclusions both personally and professionally dealing with housing issues as part of divorce situations in family law.
Lizzie, are you still getting a tax deduction for mortgage interest?
Lizzie wrote: "Nik, never thought of it as calculated without emotion. Just experience based conclusions both personally and professionally dealing with housing issues as part of divorce situations in family law."I guess some people view purchase of a house as putting down roots somewhere. You sound more pragmatic and able to keep on the move when circumstances change
Scout wrote: "Lizzie, are you still getting a tax deduction for mortgage interest?"I did in 2018, haven't done them for 2019. I didn't have enough to itemize for my taxes as to donations and medical for 2018, but those things still reduced my state taxes.
Nik wrote: "I guess some people view purchase of a house as putting down roots somewhere. You sound more pragmatic and able to keep on the move when circumstances change.."I get it. And yes. The 1st house I bought, children, husband - that was about roots. Then when he decided he wanted a divorce I lost the romantic perceptions of the whole thing. I did everyone else's divorce. Until then, I didn't expect it to happen to me and it did. Since 1999 I bought 3 houses, sold 2 and rented for a period of 3 years. Those decisions were generally based on rational rather than emotional considerations.
I have done both and I own. When you rent, you are always under the lion's paw.
Right. And I will never rent out a property; I'd rather sell. Too many headaches with tenants destroying property, which they feel free to do, since it's not theirs. I watched my parents go through those headaches, and I'll never do it. I'll sell and invest elsewhere.
Scout wrote: "Right. And I will never rent out a property; I'd rather sell. Too many headaches with tenants destroying property, which they feel free to do, since it's not theirs. I watched my parents go through..."What J SAID!!!
What about you: would/do you rent or buy and why?