Buy or rent a house?
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Buy or rent a house?
I've been reading more about how it may make more sense to rent as oppose to buy. What are your thoughts?
Re: Buy or rent a house?
Depends on many factors:newinvestor2017 wrote: ↑Mon Nov 20, 2017 8:11 am I've been reading more about how it may make more sense to rent as oppose to buy. What are your thoughts?
1. The market in your area (present and future)
2. Your financial situation, including taxes
3. Your family situation and plans
4. Your employment situation and income
Over decades, in most markets and places - for those that can stay in the same home for longer periods - buying (in my opinion) has been the clear winner.
Re: Buy or rent a house?
For the most part it is a personal/lifestyle preference.
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
Re: Buy or rent a house?
Go back and add up all the money you've put into that house (property taxes, insurance above what you would have paid for renter's insurance, repairs, upgrades, maintenance, new appliances, new HVAC, new carpet, yard care). Assume tax deductions for mortgage interest and property tax. Even without pricing in your own labor associated with above you've incurred hundreds of thousands of dollars of expenses that you wouldn't have paid had you rented. Assume you had invested that money instead in a 70/30 asset allocation. Of course rent goes up 2-3% per year as well. You might still be ahead in some real estate markets but its closer to a wash than it appears.
Warning: I am about 80% satisficer (accepting of good enough) and 20% maximizer
Re: Buy or rent a house?
Here's a buy vs rent index for the top 20 metro areas. Dallas, Denver and Houston really favor renting.
https://business.fau.edu/departments/fi ... nd-graphs/
Over long periods of time, houses roughly hold their value and have a lot of carrying costs. Folks on this board who bought their house decades ago have benefitted from a long period of falling interest rates that increased home prices, and/or lucky geography. Don't let their outcomes determine your strategy without careful analysis of your specific market and desired shelter.
https://business.fau.edu/departments/fi ... nd-graphs/
Over long periods of time, houses roughly hold their value and have a lot of carrying costs. Folks on this board who bought their house decades ago have benefitted from a long period of falling interest rates that increased home prices, and/or lucky geography. Don't let their outcomes determine your strategy without careful analysis of your specific market and desired shelter.
Re: Buy or rent a house?
1. Back when we purchased - rent were not that much more than the net mortgage costs for similar homes.stan1 wrote: ↑Mon Nov 20, 2017 9:16 amGo back and add up all the money you've put into that house (property taxes, insurance above what you would have paid for renter's insurance, repairs, upgrades, maintenance, new appliances, new HVAC, new carpet, yard care). Assume tax deductions for mortgage interest and property tax. Even without pricing in your own labor associated with above you've incurred hundreds of thousands of dollars of expenses that you wouldn't have paid had you rented. Assume you had invested that money instead in a 70/30 asset allocation. Of course rent goes up 2-3% per year as well. You might still be ahead in some real estate markets but its closer to a wash than it appears.
2. Today, rent on similar, modest houses in our locality are much, much higher.
3. House has not had any significant modernization/upgrade.
4. Our purchase price in 1978 was $76,000. Today, it is worth about $600,000 (or more) in a very hot seller's market. It is a 3 bedroom, 1300 sq ft house (2 floors plus unfinished basement). We know folks who purchased a nearby duplex, TWO bedroom house - smaller sq ft for $475,000.
Our market is not typical of all areas.
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Re: Buy or rent a house?
I agree with it being a lifestyle choice. When you own your home you also are in control of a very important part of your life, where you live. But your house does own you back as you have to maintain it and there are significant transaction costs to selling it. I don't like the thought of someone else being able to tell me I have to move or being able to raise my rent significantly so its an easy choice for me. Yes your taxes can go up but its not usually the same volatility as rent.
Re: Buy or rent a house?
OP: maybe you can give this thread some direction by posting your own details?
Re: Buy or rent a house?
Before I was married, I liked living in single family homes - but shared with 2-3 others. A real, net, bargain.
Landlords, though, frequently (in my case) either moved back to the rental house or decided to sell - so I had to move 2 or 3 times in a 4 or 5 year period.
Also, depending on the locality - there is often a real difference between the homes for sale and the ones for rent - in both directions.
Landlords, though, frequently (in my case) either moved back to the rental house or decided to sell - so I had to move 2 or 3 times in a 4 or 5 year period.
Also, depending on the locality - there is often a real difference between the homes for sale and the ones for rent - in both directions.