What if I Never Buy a House?

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Ganacel
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What if I Never Buy a House?

Post by Ganacel » Fri Nov 07, 2014 11:23 pm

So like everyone who starts their new grown-up job, I've been thinking about saving up a down payment for a house (or probably more like a condo or townhouse since I'm single with no kids). But the more I think about it, look on zillow, etc., the more I'm not sure I really want to buy a house....ever.

First, I am definitely not the kind of person who wants to be mowing my own lawn and fixing my own water heater. I don't garden. I do some cooking, but that can be done in a rental kitchen just as well as in an owned kitchen.

Second, I don't anticipate staying where I currently live in the long term, and I'm not sure when or if I will live in the same place or a long time. So far I've moved every 3-5 years my entire life, both as a kid and now as an adult. I like traveling. I've worked abroad and would be interested in doing that again if the right contract came up. (Maybe what I need to do is buy an RV instead. lol.)

Third, I don't like to be in debt. Even though I understand intellectually that a mortgage is different than, say, credit card debt, I still don't want it. It makes me ill-at-ease to imagine myself owing six figures on a house. I suppose I could save up a couple hundred thousand dollars and buy a house cash though, so this is kind of a weak sauce argument.

Fourth, I don't think I'm a...house person, for lack of a better term, in the same way that I'm not a kid person. I like other people's kids, but I've always known that I didn't want any of my own. I can't really explain why I don't want my own kids; I just know that I don't. In the same way, I like visiting other people's houses, but I don't think I really want to have one of my own. Maybe it's because I don't want the complication and hassles that come with it.

For those of you who are older and wiser, am I making a huge financial mistake by not buying a house? And if I did buy a place, would it make sense to buy one somewhere that I might want to retire instead of where I'm currently living? (The problem, of course, is that I have no idea where I'll want to live when I retire. Or if I'll want to live anywhere in particular; maybe I'll be like these guys: http://homefreeadventures.com/about/)

If anyone cares, the money that would otherwise go toward a down payment would instead go into my taxable account instead until I had enough to retire early (including, of course, paying for rent, unless I really did go with the RV idea!) Thanks in advance for any thoughts.

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CyberBob
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Re: What if I Never Buy a House?

Post by CyberBob » Fri Nov 07, 2014 11:40 pm

No, I don't think you're making a big financial mistake by not buying a house. In fact, I think just the opposite is true. I retired at 42 (almost 51 now) and am firmly convinced that a major part of what made that possible was not buying a house and taking on all the expenses that go along with it. I could easily pay cash for a house now, but still see no compelling reason why. Many people think it a good investment because of the leverage of a big home loan. Others see an investment in the sort of forced savings aspect of a mortgage. I took what I thought was an even better path and bought tons of equities. A house is a lifestyle choice. If that ain't your style, make another choice :D

Here's another interesting perspective from a Larry Swedroe CBS Moneywatch article saying that a house is more a consumption item than an investment: History says home real estate is a bad investment.
Last edited by CyberBob on Fri Nov 07, 2014 11:46 pm, edited 1 time in total.

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Re: What if I Never Buy a House?

Post by Lafder » Fri Nov 07, 2014 11:46 pm

It is fine to not buy a house or condo and pay rent your whole life. It is a financial decision as well as a personal emotional decision.

One of the factors for me is that I would like to some day live in a "paid for" house. Yes I will still have to pay taxes and repairs. But I am betting that will be less than rent.

If renting, you will always have bills of rent. But they should be predictable as just rent without the extras for repairs and taxes.

What is the cost difference between renting and buying in your area? In some areas you can rent a much nicer place than you can buy for the same monthly payments.

You should do what feels right to you!
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JLJL
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Re: What if I Never Buy a House?

Post by JLJL » Fri Nov 07, 2014 11:57 pm

Totally agree, home ownership can be a huge drain and is not necessary for financial success or personal happiness. I like your mindset.

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Ganacel
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Re: What if I Never Buy a House?

Post by Ganacel » Fri Nov 07, 2014 11:58 pm

CyberBob wrote:No, I don't think you're making a big financial mistake by not buying a house. In fact, I think just the opposite is true. I retired at 42 (almost 51 now) and am firmly convinced that a major part of what made that possible was not buying a house and taking on all the expenses that go along with it. I could easily pay cash for a house now, but still see no compelling reason why. Many people think it a good investment because of the leverage of a big home loan. Others see an investment in the sort of forced savings aspect of a mortgage. I took what I thought was an even better path and bought tons of equities. A house is a lifestyle choice. If that ain't your style, make another choice :D

Here's another interesting perspective from a Larry Swedroe CBS Moneywatch article saying that a house is more a consumption item than an investment: History says home real estate is a bad investment.
Yes, I think you nailed it: I don't really want to live an upper middle class lifestyle at all, even though I'm a white-collar professional and that's what I'm "supposed" to do. The thing is, I don't really want to be a white-collar professional either, and when I can afford not to be one anymore, then I'd like to stop being one. Being a starving artist sounds pretty good, except for the starving part. ;)
Lafder wrote:It is fine to not buy a house or condo and pay rent your whole life. It is a financial decision as well as a personal emotional decision.

One of the factors for me is that I would like to some day live in a "paid for" house. Yes I will still have to pay taxes and repairs. But I am betting that will be less than rent.

If renting, you will always have bills of rent. But they should be predictable as just rent without the extras for repairs and taxes.

What is the cost difference between renting and buying in your area? In some areas you can rent a much nicer place than you can buy for the same monthly payments.

You should do what feels right to you!
lafder
I've thought about the issue of not having to make payments when I'm retired too, and you're right that I'd have to make sure I have enough to cover the rent. On the other hand, if I'm not paying down a mortgage and buying accoutrements for a house, then that's a lot more money I can put into a taxable account and use to pay rent in retirement.

Not sure what the cost is to rent versus buy here. I haven't looked seriously into buying a place, because I already know that I don't want to settle down here for the long term. So even if the monthly mortgage was less than my monthly rent, I'm not willing to take the chance on getting stuck with a house that I don't want here when I'm ready to go somewhere else. Regardless of whether I ought to eventually buy a house or not (say, once I retire), there's no doubt in my mind that I should not buy one now, since I know I don't want to stay.

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CyberBob
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Re: What if I Never Buy a House?

Post by CyberBob » Sat Nov 08, 2014 12:19 am

Ganacel wrote:Being a starving artist sounds pretty good, except for the starving part. ;)
  • "I'd like to live as a poor man with lots of money." -- Pablo Picasso

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JoMoney
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Re: What if I Never Buy a House?

Post by JoMoney » Sat Nov 08, 2014 12:26 am

I have similar feelings myself. But I'm not going to set anything in stone that says "never", I'm perfectly willing to concede that someday I might find a "forever home", I might find myself in a relationship with someone who either already has a house or wants to settle down somewhere long term. Having the flexibility of not owning gives you more options down the road.
Every location is different, and some housing markets may have better opportunities for buying/renting, but unless you're going to stay in the same place around 5 to 7 years the costs associated with buying/selling/mortgage origination often eat up any potential gains in owning vs. renting. Life can change considerably over a 5 year period, especially when you're younger.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: What if I Never Buy a House?

Post by jane1 » Sat Nov 08, 2014 12:33 am

We have always rented and pretty much have a similar mindset to yours. To me, homeowners give up time. Financially also I think we did better than we would have.
I would feel chained/tied down if I bought a place :( too much hassle.
Like the freedom.
If at some point in life DH and I want to settle down in a place, we might. Unlikely though. Right now I can dream of living in London, Sydney, Italy, Manhattan, etc and make it a reality too.

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Re: What if I Never Buy a House?

Post by IPer » Sat Nov 08, 2014 12:42 am

No, your reasons sound solid, your options good, and it is your way. Best of happiness and health to you!
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DualIncomeNoDebt
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Re: What if I Never Buy a House?

Post by DualIncomeNoDebt » Sat Nov 08, 2014 12:45 am

Either don't buy, or engage in cost of living arbitrage. That is, find a locale you like anywhere on the planet where it is both cheap yet has what you want. Call it your planetary home base. Then go out and buy an inexpensive place, maybe with a little bit of land. Could be anywhere, either in a no-income-tax state in the U.S. (would be my choice), or any foreign country with sound property rights laws.

So OP, I'm similar to you and Cyberbob. I currently rent. No major obligations. No mortgage. No debts of any kind. No children. Nothing tying us down, at all -- and that's exactly how we like it. We could buy a place for all cash anywhere in the world. We haven't yet, but we are in fact looking at some properties right now where the scenery is beautiful and the real estate is still reasonably priced. If we move forward, we'll get a small place, call it home, and then proceed as we always have.

Because we do not have a large mortgage to pay, and because we did save the difference (mostly in bonds), we now are in a very strong position financially. This includes retiring very early, living wherever we want and changing on a dime if we so choose. And because we saved money instead of over-consuming on housing, housewares and furnishings, no expensive cars, and all the rest of it (plus no children also is enormous), we are making money hand-over-fist on our investments due to the lack of consumption. Liquid living, and we love it. Not having a home, and all the junk that goes with it, has been a huge financial boon for us. When we make a major purchase, it's an investment that pays us -- not cars, or sofas, or pools, or home renovations, or landscaping, or plumbing. Just, no. We get paid, every month and every quarter. Period.

So I say, continue as you are. When you buy something, make sure it is a solid investment that pays you. Stay diversified and follow the good advice on this forum. And if you do decide to set up a home base somewhere on Earth, make it an affordable locale, with favorable tax and income laws, and buy the minimum place necessary for you and your current or future significant other to function, with independent space for each of you. You'll be set and very happy you rejected the lifescript. I wouldn't trade places with anyone. PS I'm writing this from an oceanfront locale, with waves crashing 50 yards from me, the gf is sleeping soundly, the weather is just perfect, the moon is reflecting off the ocean, the stars are out, the wind is blowing softly, and I have no idea what I am doing even eight hours from now, other than breakfast. It's perfect. I tell you this because I and others are proof-positive you can achieve all that you wish without being in mortgage debt to a bank, and in fact not owning a home may well accelerate your independence if you are disciplined about it.

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Ganacel
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Re: What if I Never Buy a House?

Post by Ganacel » Sat Nov 08, 2014 1:24 am

Thanks, Bob and DIND. Your examples are inspiring to me, and I am definitely ok with people thinking I'm a little eccentric. I won't deny it, but I'd rather be eccentric and retired in my mid-40s, than not eccentric and still working until my mid-60s. :sharebeer

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Re: What if I Never Buy a House?

Post by clearwater » Sat Nov 08, 2014 2:03 am

My experience having moved nearly 30 times, is that moving is good for you.

I owned my first house for about five years, and did no work other than rake the leaves and mow the lawn. Not so bad. I sold it essentially for what I paid, and after taxes, fees, and the like, turned out I lived there "rent free" (that is, saved the money I'd have paid in rent). But 60 months times a rent payment, well, no big deal, really.... I didn't save that much money... sure I lost in in the standard maintenance work around the house, as little as it was.

House #2 has been a ten year long disaster of a full gut remodel. I'll probably lose well into six figures at sale. Have never enjoyed a moment here. A disaster.

If I had to do it all over again, I'd have never bought either house.

Consider that large parts of the European population live in a city center and pay rent their entire lives. This "own a home" idea is very American.

You're doing it right. Travel, see the world, own as little as possible. "Home" is a concept, not a reality based on owning dirt. Home is wherever you are.

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Re: What if I Never Buy a House?

Post by seeshells » Sat Nov 08, 2014 4:21 am

On a purely financial level, data shows that, over the long term, houses do not return much above inflation, while the stock market generally does. Robert Shiller has collected home price data in the U.S. as far back as 1890. On an inflation-adjusted level, home prices have not risen much. Success Has Nothing To Do With The House You Live In There are many definitions of success, but the size of your house has nothing to do with it. While life will have its ups and downs, continuous learning, thinking for yourself, developing good habits, focusing on the long term, and having fun on the journey, is what you need to set yourself up for success in life. It’s as simple as that. - W.Buffet

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Re: What if I Never Buy a House?

Post by dolphinsaremammals » Sat Nov 08, 2014 5:08 am

I like knowing my house is mine and I can pretty much have it just the way I want it. There's a degree of control that comes with owning a house that one doesn't have in an apartment. I have never looked on buying a house as an investment.

But you sound like the exact opposite. So, no house for you :D

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Re: What if I Never Buy a House?

Post by FrugalFrida » Sat Nov 08, 2014 6:03 am

I have always rented a small apartment in the city center. Right now I wouldn't buy a home because the prices has gone up a lot, especially in the big cities. Banks has also made large profits in recent years from not lowering mortgage rates when the general rates has gone down. This could be different in the US though.

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Re: What if I Never Buy a House?

Post by livesoft » Sat Nov 08, 2014 6:55 am

We didn't buy a home until we were in our late 30's and already had a child. Before that, we never felt we had to justify to anyone why we rented or why we made any particular financial decisions. Part of being a grown-up is getting to do what you want as long as it is not illegal.
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Re: What if I Never Buy a House?

Post by Call_Me_Op » Sat Nov 08, 2014 7:25 am

dolphinsaremammals wrote:I like knowing my house is mine and I can pretty much have it just the way I want it. There's a degree of control that comes with owning a house that one doesn't have in an apartment. I have never looked on buying a house as an investment.
That's how I see it. The privacy and control are priceless. I don't understand why people see it as a financial decision; it is a lifestyle decision.
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Re: What if I Never Buy a House?

Post by obgyn65 » Sat Nov 08, 2014 7:35 am

To the OP: there is no problem if you don't buy a house. My biggest financial mistake was to buy real estate in summer 2008.
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Re: What if I Never Buy a House?

Post by nisiprius » Sat Nov 08, 2014 7:40 am

Ganacel wrote:...For those of you who are older and wiser, am I making a huge financial mistake by not buying a house?
No. It is people who sell houses, or people who make money out of the process of selling houses, who want you to believe that it is a huge financial mistake.

We love living in a house because of the privacy, control, ownership; because, like having a car, in our milieu is a social norm; and because my wife and I both grew up in houses. I believe it to be true that realtors have a large and effective lobby, and that yes, a small unfair advantage for homeowners has been baked into many laws almost everywhere. There is also in some places a small degree of economic status discrimination. (I remember a selectman complaining that apartment tenants who "don't pay real estate taxes" would be sending their kids to the public schools--as if the apartment OWNER didn't pay them!) These are not compelling reasons for doing anything you don't feel like doing.

Although we did itemize and thus did benefit from the tax break (mortgage interest being deductible), that benefit is often oversold.

An important point is that because renting isn't a long-term commitment, you can temporize. Choosing to rent doesn't make it hard to buy a house later if you decide that you wish to.
And if I did buy a place, would it make sense to buy one somewhere that I might want to retire instead of where I'm currently living?
My instant reaction is no, it doesn't... and it's a weird, if novel, idea.
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Re: What if I Never Buy a House?

Post by Leemiller » Sat Nov 08, 2014 8:18 am

I'll offer some different views.

I've known people over the years who did regret not buying. Mostly people who wanted to retire in place or were renting and at one point could afford to buy in the neighborhood they lived in, but that was no longer the case. Then there is rent control, without it you could be priced out of your neighborhood. If I had to guess the apartment I rented about 10 years ago has more than doubled in rent by now, tripled more likely.

My family and I were renting a 2 bedroom downtown. That payment is looking like it will be about equivalent to our after tax payment for our home, which is a much larger home. I will grant you there are a lot more costs involved, especially since we purchased a fixer upper, but we will builds tons of equity by doing so.

Renting should cost more than buying because you don't have to pay for someone else's profit margin on top of expenses. Buying fixes your expenses and acts as an inflation hedge. Then again, real estate is a concentrated, illiquid investment, which is not appropriate for everyone's plans in life.

Also, I think it's ok to decide what to do for the next 2-3 years and not have to commit for the rest of your life now. :)

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Re: What if I Never Buy a House?

Post by J295 » Sat Nov 08, 2014 8:24 am

You are completely fine financially and otherwise if you don't buy a house.
Good luck.

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max12377
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Re: What if I Never Buy a House?

Post by max12377 » Sat Nov 08, 2014 8:36 am

If buying a house doesn't suit your lifestyle, don't bother! I'm a single guy and likely much older than you. I have owned 2 houses over my lifetime and I live in an area where housing is relatively cheap. Speaking from experience, owning a house had forced my to spend my time doing activities that, quite frankly, felt like time suckers. I always felt that the time I spent mowing my lawn or raking the leaves and so on and so on and so on.....could have been better spent as a day trip to a nearby city or just reading a book in a coffee house. Not to mention all the time and stress that goes into looking for a house..! I have a ton of things I do outside of work so having an apartment has now freed up time for all that and more.

There is nothing inherently good or bad in owning a house. I agree with the folks that say lifestyle should trump the financial aspects of this decision. If I had a wife & kids I would have likely bought a house to raise them - (and then teach the kids how to mow the lawn as soon as they were capable :wink: )

If I do ever buy again, it will likely be a condo or townhouse. But then again - I love the feeling of not having an "anchor in the water" where I live so I'm not sure that will ever happen. It makes me feel better to not have the anchor even though I don't even plan to leave the area :shock: . In fact, that particular feeling feels better to me than knowing I have a paid off house.. But that's me..

I think you're on the right track & you seem to know yourself. Go with your gut.

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Re: What if I Never Buy a House?

Post by cherijoh » Sat Nov 08, 2014 10:45 am

Ganacel wrote:So like everyone who starts their new grown-up job, I've been thinking about saving up a down payment for a house (or probably more like a condo or townhouse since I'm single with no kids). But the more I think about it, look on zillow, etc., the more I'm not sure I really want to buy a house....ever.

Never say never - at some point you may decide to settle down. But it certainly doesn't need to be now.
Ganacel wrote: Second, I don't anticipate staying where I currently live in the long term, and I'm not sure when or if I will live in the same place or a long time. So far I've moved every 3-5 years my entire life, both as a kid and now as an adult. I like traveling. I've worked abroad and would be interested in doing that again if the right contract came up.

Then for sure don't buy a house now. I view homeownership as a lifestyle choice with significant financial implications. I know several people who lost their jobs during the great recession but who had to limit their job search geography because they had a house with an underwater mortgage. Others ended up with horrendous commutes because of the anchor of owning their own home.

On the other hand, you definitely have more control regarding expenses when you own your home. (Of course you have to allow for unexpected expenses too). I have worked with some gen Y's who have become serial movers because their landlords are raising the rent 8 - 12% each time the lease comes up for renewal. Of course their salaries are not increasing by a commensurate amount, so they are forced to find a new, less-desirable place each time. I think the recession slowed down the construction of new apartment units but the demand kept increasing. There are many other potential reasons that the balance between renters and rental units could get out of whack - I would hate to be at the mercy of an external force like this.
Ganacel wrote: Fourth, I don't think I'm a...house person, for lack of a better term, in the same way that I'm not a kid person. I like other people's kids, but I've always known that I didn't want any of my own. I can't really explain why I don't want my own kids; I just know that I don't. In the same way, I like visiting other people's houses, but I don't think I really want to have one of my own. Maybe it's because I don't want the complication and hassles that come with it.

What if you meet someone with whom you want to spend your life who IS a house person; would this be a deal breaker for you?
Ganacel wrote: If anyone cares, the money that would otherwise go toward a down payment would instead go into my taxable account instead until I had enough to retire early (including, of course, paying for rent, unless I really did go with the RV idea!) Thanks in advance for any thoughts.

Wise move - keep your options open.

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Re: What if I Never Buy a House?

Post by DJB » Sat Nov 08, 2014 1:22 pm

I regret not buying when I had the chance. I've had similar thoughts to the OP much of my life - I planned to rent forever and loved the flexibility and financial benefits. I moved to the Bay Area in '08, and was here during the crash. There were all kinds of incentives - first time home buyer's tax credit, super low mortgage rates, and plummeting prices. Everyone told me it was a great time to buy, but I smugly brushed them off and thought things would continue to stay bad. Boy was I wrong. The first time home buyer's credit went away, rates went up (though are still very low), and housing prices in my neighborhood are 2-3 times more expensive now than they were back then. I had to give up my rent controlled apartment, and now I'm effectively priced out of my neighborhood. I know the Bay Area is an exceptional place, but if you find an area you really like, and plan to stay for a while, it may be worth buying to secure your future there.

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Re: What if I Never Buy a House?

Post by Louis Winthorpe III » Sat Nov 08, 2014 2:05 pm

Ganacel wrote:
Third, I don't like to be in debt. Even though I understand intellectually that a mortgage is different than, say, credit card debt, I still don't want it. It makes me ill-at-ease to imagine myself owing six figures on a house.

For those of you who are older and wiser, am I making a huge financial mistake by not buying a house?
No, it's not a financial mistake not to own a house. If you want one and can afford it, get one. If you don't want one or can't afford it, don't. There are pros and cons, but it's no big deal either way, and I agree that you sound like you'll be happier renting.

The only point I will offer is in relation to your comment about debt. As I see it, a never-ending stream of rental payments is essentially the same as a mortgage. Someone with a house has a fixed payment, and you have a payment that will vary (and you do have some control over the size of it, with the freedom to downsize annually or so if you wish), but you both have to cut a check or lose the roof over their heads.

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Re: What if I Never Buy a House?

Post by nisiprius » Sat Nov 08, 2014 2:13 pm

I forgot to add: The Dilbert Guide to Personal Finance, specifically the sixth point, which I've highligted. It's really quite brilliant, it is far more than a joke. It is almost that simple. Maybe it is that simple.
Everything you need to know about financial planning
  • Make a will.
  • Pay off your credit cards.
  • Get term life insurance if you have a family to support.
  • Fund your 401(k) to the maximum.
  • Fund your IRA to the maximum.
  • Buy a house if you want to live in a house and you can afford it.
  • Put six months’ expenses in a money market fund.
  • Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: What if I Never Buy a House?

Post by Grt2bOutdoors » Sat Nov 08, 2014 8:06 pm

So what? As long as you are able to pay your rent, you'll be just fine.
However, sometimes the rents over time exceed the cost of owning a home, if you can believe that and you get priced out of where you want to reside. Places like that today are parts of lower Manhattan and Brooklyn, where 25 years ago you wouldn't be caught dead over there in the daylight much less then evening hours, lest you really wanted to wind up in the cemetery. Now, you can't even get in there without having to cough up $3K+ in rent for a one bedroom apartment.
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Re: What if I Never Buy a House?

Post by CrossOverGuy » Sat Nov 08, 2014 8:27 pm

We're all really renting for the most part anyway in the larger scheme of things! Though, of course, you might want to pass ownership of a house on to another generation or a spouse. In a house ownership situation your payments are building up equity, whereas rent payments just go to your landlord and is never to be seen again (no tax deduction for the most part). But equity in a house can't necessarily be depended upon either, since many people since 2008 (and at other times) in certain areas of the country found themselves underwater in their mortgages, so they had effectively lost what they paid in, including a down payment. But whenever people talk about the very-hyped and publicized "American Dream", home ownership is usually one of the top things people usually cite as a big part of it. For some people, there are bad dreams too.

I rent an apartment, and my building fortunately is well-taken care of. I love to see other folks being paid to blow leaves and do the maintenance of the property. I'm glad I have a super to call if there is a plumbing problem, and I don't have to pay for it to be fixed. I'm in a big city with great public transportation and which is quite walkable. No car payments, car insurance, car maintenance, parking, possibility of parking tickets, etc. The money I save on cars, house maintenance and such I use for vacation travel, investing and other things that matter to me more.

Now if you want to invest in real estate, consider an index REIT (real estate investment trust) fund perhaps for part of your asset allocation -- you might consider it like a down payment for investing in some real estate but without the responsibilities of maintaining it.

You could always change your mind and buy a place later if, for example, you meet someone you want to settle down with, and you find a place where you want to be for an extended period of time. You have that flexibility with renting that you don't have with ownership.

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Re: What if I Never Buy a House?

Post by Leeraar » Sat Nov 08, 2014 11:24 pm

It doesn't matter.

Over time, the Efficient Market Hypothesis says that renting and buying should be equivalent. It may depend somewhat on how you value intangible things like security, flexibility. ...

L.
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Re: What if I Never Buy a House?

Post by Ganacel » Sun Nov 09, 2014 12:16 am

cherijoh wrote:On the other hand, you definitely have more control regarding expenses when you own your home. (Of course you have to allow for unexpected expenses too). I have worked with some gen Y's who have become serial movers because their landlords are raising the rent 8 - 12% each time the lease comes up for renewal. Of course their salaries are not increasing by a commensurate amount, so they are forced to find a new, less-desirable place each time. I think the recession slowed down the construction of new apartment units but the demand kept increasing. There are many other potential reasons that the balance between renters and rental units could get out of whack - I would hate to be at the mercy of an external force like this.
One thing that makes my situation different is that I don't have a permanent job anyway. I sign a contract, say for a year, and when it's done, I can sign another if I want to, either here or elsewhere. So if the rent on every apartment complex in this county went up 10% (highly unlikely since my current job site is located out in BFE, and there are way more apartment complexes here than there are people earning six figure salaries to fill them all), I'd simply go move to a cheaper area.
cherijoh wrote: What if you meet someone with whom you want to spend your life who IS a house person; would this be a deal breaker for you?
If I met someone here who wanted to stay in a house here, yes, that would be a deal breaker for me. I actually don't mind the rural life. I like to hike and run and do other outdoorsy stuff. But I still don't see myself staying here indefinitely.

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Re: What if I Never Buy a House?

Post by Ignatious P. Daily » Sun Nov 09, 2014 7:01 am

There is no issue with always renting. However, in my opinion, that choice does have implications for your AA. I believe those that always rent should have more bonds than those who buy - for any given risk tolerance. The rationale is simple, those who own (payed off house) have lower expenses to meet their BASIC needs. A renter needs more safe income in retirement because a need for shelter is a basic need, and they must pay more each month to satisfy that basic need.

That said, it is perfectly viable and in many ways preferable. Good luck!

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Re: What if I Never Buy a House?

Post by Ignatious P. Daily » Sun Nov 09, 2014 7:07 am

livesoft wrote:We didn't buy a home until we were in our late 30's and already had a child. Before that, we never felt we had to justify to anyone why we rented or why we made any particular financial decisions. Part of being a grown-up is getting to do what you want as long as it is not illegal.
Funny. I am 35, wife is 34. Buying our first home. I know what you mean about feeling you don't need to justify your choices... Our families always treated us like the poor couple in our generation. All of our brothers and sisters own homes, etc. They aren't in bad shape, but they did buy with 5% & 10% down. So when we told our parents we were buying a house, they cautioned us about getting a mortgage that was too expensive and the perils of being house poor. It is safe to say they were shocked that we are buying for cash. :)

I am just very happy that my wife and I don't put off a "i have money" energy. If our families had no clue for years, then our friends & neighbors likely don't either. This is a good thing!

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Re: What if I Never Buy a House?

Post by Talisker » Sun Nov 09, 2014 7:27 am

First House : Bought for 108,000, put 10,000 down, sold for 150,000
Second House: Bought for 139,000, 15,000 down, sold for 170,000
Third house: Bought for 250,000, sold for 300,000
Fourth House: Bought for 369,000, sold for 600,000
Current house: Bought for 900,000
Rental property 1: Bought for 80,000, paid off and annual rent 7,000
Rental Property 2: Bought for 500,000, paid off, and current annual rent 60,000
Rental property 3: Bought for 120,000, paid off, and annual rent 12,000
Rental Property 4: Inherited, house I grew up in, original purchase price 32,000, now producing annual rent of 42,000


If you like real estate, it can be very good.

If you don't like it, probably best to stay away. Similar to equities, a long term attitude works best.

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Re: What if I Never Buy a House?

Post by VictoriaF » Sun Nov 09, 2014 8:21 am

Ignatious P. Daily wrote:There is no issue with always renting. However, in my opinion, that choice does have implications for your AA. I believe those that always rent should have more bonds than those who buy - for any given risk tolerance. The rationale is simple, those who own (payed off house) have lower expenses to meet their BASIC needs. A renter needs more safe income in retirement because a need for shelter is a basic need, and they must pay more each month to satisfy that basic need.

That said, it is perfectly viable and in many ways preferable. Good luck!
I have always been renting and I have realized a long time ago that I needed some additional assets to compensate for my perpetual expense on rent. Initially, I was compensating by buying REITs. Later, I switched to TIPS and I Bonds. According to Shiller's studies, rent rises with inflation, and my inflation-indexed safe assets ensure that I will always be able to pay for a roof above my head.

But there is more to this choice. I can significantly reduce my rental expenses by moving to a different area. Thus, my basic rental needs are met by my investments, and I have the upside potential of moving. For home owners, the nature of the risk is the opposite. While their ongoing expenses are lower than mine, they have a non-trivial risk of catastrophic expenses. These could be regular repairs such as roof, or extraordinary repairs not covered by insurance such as environmental disasters. And a homeowner cannot as easily reduce his expenses by moving elsewhere as a renter can.

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Re: What if I Never Buy a House?

Post by jstrazzere » Sun Nov 09, 2014 8:26 am

am I making a huge financial mistake by not buying a house?
Certainly not.

While home ownership has long been considered part of the "American dream", its financial value is usually overstated - particularly in these times. I know a lot of friends who insisted on becoming house-poor and paid a dear price when the housing market hit a downturn, they hit job difficulties, and they were not liquid.

And it's certainly not for everyone lifestyle-wise anyway.

Work hard to find as stable a rental situation as you can and invest your money wisely. You may very well find that you are better off financially than if you had pursued home ownership against your better judgement.

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Re: What if I Never Buy a House?

Post by AddingUp » Sun Nov 09, 2014 8:46 am

Owning a home is surely a lifestyle choice, but I find it's also dictated by one's temperament. I've never owned a home (or condo or townhouse), and I don't think I ever will. I live well below my means and save, save, save! But I greatly enjoy the flexibility that renting affords me. I can move every four years or so if I get tired of the neighborhood (or neighbors) or just want a change of interior layout. And, I've often been able to walk to work! I, too, share your free-spirit attitude as I've never had my sights set on one particular place. Whenever I move somewhere new, I throw myself into the area and make the most of it, because I know that my curiosity and temperament will have me thinking about new places soon. I'll probably move overseas at some point. It's a huge world out there, and if you're single and have marketable skills, you can go anywhere. I find that exciting!

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Re: What if I Never Buy a House?

Post by epitomist » Sun Nov 09, 2014 10:41 am

Anyone with kids should probably buy a house; the sense of permanence is important to children.

For anyone else, probably don't buy a house. Sure, you could make a killing in the real estate market - I did! Since 2005 I've given about $200,000 of that killing back. I've run the numbers 9 ways to Sunday and the conclusion I've come to is that it is always better to rent unless you have lifestyle considerations that merit buying a house.

As for privacy - you can rent any kind of house you want.

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Re: What if I Never Buy a House?

Post by Louis Winthorpe III » Sun Nov 09, 2014 10:53 am

epitomist wrote:Anyone with kids should probably buy a house; the sense of permanence is important to children.

For anyone else, probably don't buy a house. Sure, you could make a killing in the real estate market - I did! Since 2005 I've given about $200,000 of that killing back. I've run the numbers 9 ways to Sunday and the conclusion I've come to is that it is always better to rent unless you have lifestyle considerations that merit buying a house.

As for privacy - you can rent any kind of house you want.
There are some markets where it's cheaper to rent than to own, and there are some markets where it's cheaper to own than to rent. Likewise, there are periods during which rents increase faster than housing prices and vice versa.

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Re: What if I Never Buy a House?

Post by DonCamillo » Sun Nov 09, 2014 11:02 am

epitomist wrote: As for privacy - you can rent any kind of house you want.
This place https://homes.yahoo.com/blogs/spaces/mo ... 45890.html was being rented for only $500,000 a month. :sharebeer
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Re: What if I Never Buy a House?

Post by TSR » Sun Nov 09, 2014 11:37 am

I agree with everyone else that you're just fine either way. One note: a commonly-cited benefit of home ownership is the so-called "forced savings" aspect. Every month you are making mortgage payments, and at least SOME of that you get to keep, even though it feels like rent at the time. Not so with rent. The first benefit of this is obvious: when you sell, you get all that money back. The second benefit is less obvious, and it likely explains why home ownership is often correlated with wealth in this country. That is, your "forced savings" is much harder to tap than a savings account. Because it is tied up (normally a negative thing), it is not liquid and easy to spend, which can be a positive thing for those people who aren't great with money. Of course home-equity loans can lead to some very bad decisions, but even that is a little harder than just making a withdrawal from an account.

Why do I mention this? Because as a presumably young guy, you may not have a full understanding of your own financial temperament yet (few do). The taxable saving you plan to do outside of the typical home-ownership route is great, but it is NOT great if you start viewing it as a bank account from which you can withdraw money any time you please. Again, you're taking the slight gamble here of not having a paid-off house when you retire, and thus carrying rent as a serious expense for the rest of your life. You need to view your savings as something that will have to pay for that, and thus something that you can't touch, even when you want to take that amazing vacation or whatever.

Sounds like you've got your head on right with all of this, but just thought I'd mention this in case it was an issue for you or anyone else out there reading this thread.

Good luck!

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Re: What if I Never Buy a House?

Post by Ganacel » Sun Nov 09, 2014 10:00 pm

Ignatious P. Daily wrote:There is no issue with always renting. However, in my opinion, that choice does have implications for your AA. I believe those that always rent should have more bonds than those who buy - for any given risk tolerance. The rationale is simple, those who own (payed off house) have lower expenses to meet their BASIC needs. A renter needs more safe income in retirement because a need for shelter is a basic need, and they must pay more each month to satisfy that basic need.
That makes sense.
Ignatious P. Daily wrote:Funny. I am 35, wife is 34. Buying our first home. I know what you mean about feeling you don't need to justify your choices... Our families always treated us like the poor couple in our generation. All of our brothers and sisters own homes, etc. They aren't in bad shape, but they did buy with 5% & 10% down. So when we told our parents we were buying a house, they cautioned us about getting a mortgage that was too expensive and the perils of being house poor. It is safe to say they were shocked that we are buying for cash. :)
I like the idea. Some day when I'm ready to settle in one place, there's no reason why I couldn't do the same thing.
TSR wrote:I agree with everyone else that you're just fine either way. One note: a commonly-cited benefit of home ownership is the so-called "forced savings" aspect. Every month you are making mortgage payments, and at least SOME of that you get to keep, even though it feels like rent at the time. Not so with rent. The first benefit of this is obvious: when you sell, you get all that money back. The second benefit is less obvious, and it likely explains why home ownership is often correlated with wealth in this country. That is, your "forced savings" is much harder to tap than a savings account. Because it is tied up (normally a negative thing), it is not liquid and easy to spend, which can be a positive thing for those people who aren't great with money. Of course home-equity loans can lead to some very bad decisions, but even that is a little harder than just making a withdrawal from an account.

Why do I mention this? Because as a presumably young guy, you may not have a full understanding of your own financial temperament yet (few do). The taxable saving you plan to do outside of the typical home-ownership route is great, but it is NOT great if you start viewing it as a bank account from which you can withdraw money any time you please. Again, you're taking the slight gamble here of not having a paid-off house when you retire, and thus carrying rent as a serious expense for the rest of your life. You need to view your savings as something that will have to pay for that, and thus something that you can't touch, even when you want to take that amazing vacation or whatever.
Makes sense. I don't know what it means to have a "full understanding" of one's financial temperament, but FWIW, I'm a natural saver. I still saved 10% even when I was earning $15,000-$20,000/year during college. If anything, I think I'm going to be the kind of person who has a hard time letting go of the purse strings a little later on, even when I can afford to.

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Re: What if I Never Buy a House?

Post by cheesepep » Sun Nov 09, 2014 11:06 pm

[quote="epitomist"]Anyone with kids should probably buy a house; the sense of permanence is important to children.

For anyone else, probably don't buy a house. /quote]

This. If you have kids, this is very important. I am kind of in the same boat as OP, however.

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Re: What if I Never Buy a House?

Post by Leeraar » Sun Nov 09, 2014 11:37 pm

cheesepep wrote:
epitomist wrote:Anyone with kids should probably buy a house; the sense of permanence is important to children.

For anyone else, probably don't buy a house.
This. If you have kids, this is very important. I am kind of in the same boat as OP, however.
I might agree that a sense of stability is important to kids. But, I will submit that has nothing to do with "owning" vs. renting the place where you live. Most people who "own" are, in any case, renting from their mortgage company.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

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Re: What if I Never Buy a House?

Post by bluejello » Sun Nov 09, 2014 11:50 pm

cheesepep wrote:
epitomist wrote:Anyone with kids should probably buy a house; the sense of permanence is important to children.

For anyone else, probably don't buy a house. /quote]

This. If you have kids, this is very important. I am kind of in the same boat as OP, however.
I disagree. When I was growing up, we moved houses about every 3-4 years. I also have many close friends who had truly nomadic childhoods — for job-related reasons, their parents moved them multiple times to different states or even different countries and continents. Every single person I know who grew up like this turned out totally fine, and we all relish telling stories about the "adventures" we had as kids in different places. It's kind of cool when the question "where are you from" prompts not just a simple answer but a whole life story!

Growing up in one house your entire childhood may give you a sense of stability, but growing up in many different houses and going to different schools teaches you how to make new friends fast and gives you a broader sense of the world. I don't think one is necessarily better than the other.

OP, there is absolutely nothing wrong with renting instead of owning. Sometimes the financials of a particular area at a particular time favor one over the other, but there is nothing wrong from a lifestyle perspective with being a renter even if you have a spouse and kids.

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Re: What if I Never Buy a House?

Post by Ganacel » Mon Nov 10, 2014 12:55 am

Leeraar wrote:I might agree that a sense of stability is important to kids. But, I will submit that has nothing to do with "owning" vs. renting the place where you live. Most people who "own" are, in any case, renting from their mortgage company.
That is an excellent point.

This may be a stupid question, but are property deeds like car titles? In other words, does the mortgage lender keep the deed to your home until you've paid off the mortgage the same way that the car lender keeps the title to your car until you've paid off the car loan? If not, how does the transfer of ownership work, exactly?
bluejello wrote:I disagree. When I was growing up, we moved houses about every 3-4 years. I also have many close friends who had truly nomadic childhoods — for job-related reasons, their parents moved them multiple times to different states or even different countries and continents. Every single person I know who grew up like this turned out totally fine, and we all relish telling stories about the "adventures" we had as kids in different places. It's kind of cool when the question "where are you from" prompts not just a simple answer but a whole life story!

Growing up in one house your entire childhood may give you a sense of stability, but growing up in many different houses and going to different schools teaches you how to make new friends fast and gives you a broader sense of the world. I don't think one is necessarily better than the other.
This was how my childhood was too, and I've continued the same pattern thus far in my adult life. I can definitely see the upsides to staying in one place, but I don't think moving around every few years ruined my life or anything, either.

I confess I don't really understand why some people think it's so important for kids to stay in one place for high school, but maybe it's because I hated the high school social scene and couldn't wait to get out. Plus, my best friends were older than me, so my senior year was pretty lonely anyway since my friends were all away at college. I would have been ecstatic if my parents had decided to move somewhere else that year, especially if it would have meant I could have graduated a year early like I wanted to do.

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Re: What if I Never Buy a House?

Post by mohawkstrip » Mon Nov 10, 2014 1:10 am

On the other hand, you definitely have more control regarding expenses when you own your home.
Not so much. I'm a lifelong renter in a building that includes all utilities in my rent. My coworker, who has owned a home for the past 5 years, has constant maintenance expenses and variable property tax bills and insurance fees. His monthly utility bills are also all over the map and probably amount to at least 1/2 of what I pay in rent every month.

The U.S. economy is supported by new housing starts, so there's a good reason why our culture promotes home ownership. It's not always for the benefit of the citizens.

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Re: What if I Never Buy a House?

Post by Leeraar » Mon Nov 10, 2014 1:13 am

Ganacel wrote:
Leeraar wrote:I might agree that a sense of stability is important to kids. But, I will submit that has nothing to do with "owning" vs. renting the place where you live. Most people who "own" are, in any case, renting from their mortgage company.
That is an excellent point.

This may be a stupid question, but are property deeds like car titles? In other words, does the mortgage lender keep the deed to your home until you've paid off the mortgage the same way that the car lender keeps the title to your car until you've paid off the car loan? If not, how does the transfer of ownership work, exactly?
You have the title to your property, but the mortgage lender has a lien. If you don't pay the mortgage, they can seize the property. It's a little different, legally, than a car lease or loan. Practically, they are the same, I think.

L.
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Re: What if I Never Buy a House?

Post by JoMoney » Mon Nov 10, 2014 1:26 am

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Re: What if I Never Buy a House?

Post by beardsworth » Mon Nov 10, 2014 7:46 am

The idea of renting, or of having a condo, is very appealing to us in the abstract: no yard work, no surprise repair bills, a mostly predictable monthly expense, lock the door and leave town whenever you please.

The reality, however, is quite different. We've never lived in any "attached" housing, rented or owned, where we didn't regularly hear some combination of the neighbors' music, parties, arguments, sex lives, and heavy footsteps.

In addition we ourselves have a substantial audio system, and a large musical instrument. So, on the one hand we don't want to hear and be bothered by the neighbors, and on the other hand we don't want the neighbors to hear (and be bothered by) us.

This choice would be easier if attached housing were built with adequate sound insulation. Unfortunately, it's nearly always inexpensive "stick" construction with little or no protection of any unit from the noise of others.

We might get around this by renting a detached house, but in our area the standard practice is that a house renter (as oppposed to an apartment renter) has to do routine maintenance, particularly including the yard work. And, of course, you still can't redecorate the house as if it were your own. So, to us, that seems like the worst of both worlds.

We figure that, because of our personal space and privacy needs, we are "fated" to be homeowners. In financial terms we've tried to address that by buying a house of reasonable price and size (an pocket of medium-sized houses in a development where most houses are much larger), and making it as pretty and "nourishing" as possible.

There has also never been a year in which the maintenance + property taxes costs of our house, even including years with big ticket items like a new roof, have equaled what we used to spend on rent.

There's no right or wrong on this issue. It comes down to answering the question "How do I want to live?" and the answer to that question, in this and many other areas of life, may or may not be the same as "What is the most financially advantageous way for me to live?"

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Re: What if I Never Buy a House?

Post by Epsilon Delta » Mon Nov 10, 2014 10:42 am

Ganacel wrote: This may be a stupid question, but are property deeds like car titles? In other words, does the mortgage lender keep the deed to your home until you've paid off the mortgage the same way that the car lender keeps the title to your car until you've paid off the car loan? If not, how does the transfer of ownership work, exactly?
This varies by jurisdiction. I've always had the title to my car, it's just marked as having a lien. This is similar to a mortgage. The lender having title was for the shallow end of the lending pool, near the rent-to-own and land contracts (a.k.a. contract for deed).
Ganacel wrote:I confess I don't really understand why some people think it's so important for kids to stay in one place for high school, ... I would have been ecstatic if my parents had decided to move somewhere else that year, especially if it would have meant I could have graduated a year early like I wanted to do.
If you move far enough the curriculum changes. Most courses build on prior years work. It happens in all subjects but languages are perhaps the worst, you can end up with three years of Russian, two of French and one of German. The last three years are a complete waste, you're dropped into the second or third year of instruction without basic grammar and vocabulary.

Some schools are bad at evaluating students. They may drop you in the remedial stream in all subjects because you don't know any French or ancient history. Or they may err the other way.

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