Renting Vs. Homeownership
69Home sweet home! Buying a home is a wonderful thing for those who have a family or those who just want to stay in one location for a very long time. However, some of us move around quite a bit and/or change jobs every few years, so being saddled with a mortgage would not be a viable option. Do you really want to buy a house and then go through the hassle of moving if a job does work out? Imagine the costs of having to move or deciding to rent or sell your house while before relocating. Some people are not even able to sell their houses and have to relocate anyway, which puts a considerable burden upon an already strained family. Think of the expenses involved with moving a large house full of furniture can become costly than moving a small amount of furniture from an apartment. With the high mortgages payments and the subprime lending crisis, many people have decided renting is an easier and cheaper option. This hub will discuss five reasons why renting may be a good option right now.
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1. I Change My Job Every Several Years
In my grandparents and even to some extent in my parents' generation people were more likely to stay with one company their entire lives. However, today people are more likely to change careers every few years and have several careers over their lifetime. Since I graduated from college I have had several jobs and moved several times, so owning house has not been a viable option during this period of my life. Thus, if you think you may be changing job or relocating over the next several years, it may be wise to consider to forgo buying a house. Ask yourself these questions:
- Will buying a house make my life easier?
- Will I want to sell my house if I have to quit my job and relocate?
2. My Income is Not Large Enough To Cover A Mortgage Payment
What if your income is not large enough to make the mortgage payment? Many people work several jobs to cover a mortgage payment, but what happens if the cash flow is still too low? When my parents first moved to California in the early seventies homes were very affordable, but today even a modest home can cost a million dollars in certain parts of Southern California. Is it worth it if you are slaving away 24/7 only to find out you will lose this house anyway? Here are a few questions to ask yourself:
- Am I making enough to cover this mortgage or is it eating me alive?
- Should I wait until I have a higher paying salary to buy a home?
3. Does My Family Need To Own A Home To Be Happy?
Does your family need to own a home to be happy? Not necessarily and many families are happy renting until home ownership becomes a better option. In our apartment complex most of the events are geared towards families such as the walking club, Easter egg hunts, family dinner night, Mother's Day Tea, and Father's Day Craft Time. Actually there are more events in our complex for families and single people might feel a little left out. During the fires in Southern California in October 2007 my family stayed with us and it was very crowded because my mom, my other sister, her husband, and my niece and nephew were here. However, for the first time I actually went to the little miniature park in our complex and my niece and nephew had a great time playing with the other kids from our apartment community. If I had still been a child I might have been a little jealous because I never had that many kids to play with living in a house that was situated in isolated rural community. I saw parents hanging out and talking about their kids issues, which is a great support system that people may not have if they are living alone in a house.
Yes people can take their kids to the park, but when there is a mini park in the apartment complex parents are more likely to go and see other parents more often. Also, family oriented activities kept my niece and nephew entertained, so during that week they were not as upset about the fire. People from the condo complex across the street from us bring their kids over to the mini park all the time because the home owners' association does not offer anything like that over there. Seeing all the happy kids in the complex playing at the mini park is evidence enough for me that living in a complex with a family can be a very good thing.
4. Where Will You Go Swimming This Summer?
Where will you go swimming this summer? Just the other day someone was complaining about how it costs $450 dollars to buy a membership for family access to the local pool. However, if you live in an apartment complex there is often a pool that is free for everyone to use, which is much cheaper than paying an annual membership. If a home owner has a pool it often takes a large amount of money and time to maintain, so often it is nice to be able to take a book to the pool and know I do not have that responsibility. Also, our apartment complex has tennis courts, a club house, and a workout room, which saves on the price of belonging to a local gym. Thus, there are many amenities to be had by living at an apartment complex.
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5. Living In An Apartment Can Be Cheaper In The Long Run
If people live in a place where houses are reasonable this may not be an issue, but with the cost of California mortgage rates it is often cheaper to rent an apartment if you have a roommate. My sister and I only pay about a thousand dollars per month and our unit has a washer and dryer, dishwasher, and little patio, so we have a home like setting and do not have to pay a large house payment. If you buy a new house and you have to pay for new appliances or repair bills this can become expensive. Also, if your home need extensive repairs then a large amount of money and time will be invested in making this house look beautiful. Our unit has had its issues such as a running toilet and a washer that overfloaded, but the apartment maintainance team came and fixed these issues free of charge. When a home owner's washing machine exploads it may cost near two thousand dollars to have special fans brough in to dry the carpet, but we did not have to pay this rental fee since we lived in an apartment complex. I am not putting down home ownership, I am just saying their are perks to renting and it actually can be cheaper if you move quite often and it certain locations such as southern California. Also, I am glad I do not have to pay for those frequent maintainance repairs that home owners will have to take a care of on their own.
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Renting Is For Those Who Want To Invest Their Time And Money In Other Things
I love to paint, draw, read books, and eventually I am saving to go on another trip to Hawaii. If I was a home owner I would not be able to spend my money on these types of purchases. Also, not owning a home means I have free time to write and pursue hobbies, so right now in this part of my life it perfectly meets my needs. It is good to consider whether home ownership will make your life easier or harder, and at this time in my life I am happier renting. Eventually I may consider buying a small condo, but home ownership would require a financial and time investment that would make me unhappy. Thus, I would like to argue home ownerships does not always equal happiness.
Things To Remember: Before signing a lease make sure you understand what you are signing. Do not agree to a one year lease if you think you may move out within the year. Leasing an apartment is entering into a legal contract, so make sure to consult with professional consul or ask trusted family members before signing a lease.
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Comments
Thanks for stopping by PetMemorialWorld and sharing these points.
Hi sweetiepie I grew up in the country my folks owned the property but I don't own a house even today with a family still what you pay for rent you could buy a house for but not anymore unless you put a very large down payment on the house but i still would like too one day thanks for letting me comment on tis here hub ~cool~from the flooded Iowa cya bye the way did you know I YOUR BIGGEST FAN hahaha cya.
Thanks for stopping by and thanks for being my biggest fan. I am your biggest fan since you flatter me!
Great article. Yes we nearly always bought homes. Ithink we bought 14 int total the first two years is the highest interest that you pay.
We always decided to change jobs after a few years and move about like you say we sold and away we went. So I agree with you if you intend to shift then just rent.
BUT if you think you are settled then buy a home for security in the latter years.
We can now sell our home and use that to travel around australia. Spending the kids inheritance. Just joking. Nearly at that stage now though.
Thanks for sharing this.
Eileen,
My parents also bought home back when prices where lower here in Southern California, so I think that was best at that time. Now though most of the newer homes are between half a million and a million dollars, so I am not sure I will buy one myself. If people are willing to buy an older home this is not an issue, but I see many people struggle because they bought homes when they the payments. However, I do understand the attraction of owning your own home as my parents always have. Being willing to buy an older house that need fixing up can prevent some of this, but everyone seems to want something new and bigger. I think it makes sense to buy a home in other parts of California or the US, I just think it is way too expensive to do it in certain parts of LA of the Indland Empire. However, many people do buy and sell homes and do very well, just not sure it would be for me. Thanks for sharing your wonderful insights on this issue and I always love your comments!
Some great points there, although it depends upon your local economy as you suggest. We rented when we first married and meant that we had no maintenance costs. This was just as well since we had an accidental fire and burnt the kitchen down!
Thanks for sharing your experiences pjdscott, I always look forward to your comments!
I guess I have sort of a hybrid situation - renting a 5 brm house with 4 other people. We're all adults (30-44), but with rents so high in SoCal this is the best way to NOT spend all my time working to pay rent on a place I'm never in (because I'm working OT to pay the rent!).
There are two downsides I can see about renting - one is that you aren't protected against rent going up. Thats not an issue right now because of the economy, but there was a time when rents were skyrocketing out of control - the rent on this house went up $250 PER MONTH - not horrible split 5 ways, but if it'd been just a family renting this place - YIKES! Who has a "spare" $250 in their monthly budget? The other problem is of course that when house prices go up (which they will again) and the value of the dollar goes down (which it's already doing) a house helps protect against inflation. The house that cost my parents $17k in '69 was in a world where bread was 10 cents a loaf, a new car was $2K, min wage was a pittance, and $10 an hour was hangin' wit' da Rockafellers!
Yes renting can be expensive in some places where housing is affordable. However, in Southern California paying rent tends to be cheaper than paying a mortgage, especially if you tend to move a lot. When I mean renting is cheaper I am speaking of the Inland Empire and I am able to work normal hours and afford rent here. Most people cannot afford to buy houses starting at $300,000 plus and those are the affordable ones! I think there are so many nice little fixer-uppers that are being ignored because everyone wants a new, bigger, and better house. This hub was just to show people how they can live frugally, but I can understand people wanting to buy a house. Thanks for stopping by!
I think it's all about the numbers. In my personal experience I rent, instead of getting a mortgage.
For me it is because of psychological issues - I hate to owe money and loans.
And because of business issues - if I have extra money saved, this goes into online business and it makes profits and I am closer to buying my dream estate without any loan money.
P.S. I am not real estate expert, this is just my opinion and experience.
Often renting means you can live where you desire, where often you can not afford the down payment to purchase.
Thanks for a good hub
SweetiePie, you have organized your points so well in this article. This is definitely worth people considering, particularly given what has happened recently with people overstretching themselves with mortgages. You make a great case for renting and the benefits of doing so. Certainly in these tough economic times, people may want to consider ways to get back on their feet rather than go futher into debt. Steph
p.s. Your new avatar photo is my favorite!! Ever!!
We have always rented, usually a house or a duplex; if there are problems, roof, fridge etc; a phone call to the landlord gets it solved at no cost. We lived in a fully furnished apartment, actually the top floor of a house with private entrance for a number of years and did not need to even buy dishes all was included,a great deal.
SweetiePie, what a wonderful and useful hub about why renting is a good choice for people who don't want the constant threat of a mortgage or they are constantly moving round the country. I truly like your own, personal - a family touch to this hub. Thank you!
Sweetie Pie,
You have done a beautiful job of presenting the positives of renting opposed to owning a house. California mortgages can be quite costly to say the least, but in my area, rent is almost as high as a mortgage payment. Home ownership is a commitment, which unfortunately some people have "over committed" themselves to and it has become a burden instead of a blessing. Moderation is the key to all things, and competition is the undoing of many, as they simply try to "keep up with the Jones." For each family, a personal decision must be made for what is right for them. Your information for renting is very helpful when considering every option... wonderful Hub.
Hi SweetiePie,
Great points. I make my living by having my agents sell homes, but can't argue with any of your points in the context of California - where the average mortgage payment can be 3 to 5 times as expensive as renting the exact same home. I give it a thumbs up for that reason alone ;-)
In other areas, however, I think it's only fair to debate a couple other points you made;
"Living In An Apartment Can Be Cheaper In The Long Run"
I think this depends on your definition of "long run". Assuming "long run" is 30 years, you could have a mortgage payment as much as 50% higher as you would pay in rent, and even if your home doesn't appreciate at all, you'd still be better off owning because 1) your tax writeoff would reduce your net payment to the same as a rent payment. 2) At the end of 30 years, you'd own your home free & clear - which could mean you have $100K, $200K, or more than if you rented for 30 years (and paid off your landlord's home for him/her ;-)
"Renting Is For Those Who Want To Invest Their Time And Money In Other Things"
Again - I agree (kindof ;-) in the case where a mortgage payment is 3x as expensive as renting the same house, but anywhere else where the monthly mortgage is only about 50% more expensive, I think you can have the best of both worlds. After tax benefits, your monthly "nut" would be about the same, so you can own a home AND invest elsewhere.
Just my $.02
Nice job on presenting helpful information on such an important decision that people have to make: where to live and whether to buy or rent. I wish I had your article 15 years ago. I particularly enjoyed your photos - they add a nice personal touch. Readers should feel like they can trust the advice you are giving.
Bestimtool,
Thanks for sharing your experiences, I appreciate this.
Mr. Marmalade,
Thanks for stopping by and commenting. I appreciate it!
Steph,
Thanks for stopping by and commenting. Thanks for the compliment on my avatar.
Bob,
I am glad to hear your renting experience has turned out very well. I am very happy you commented on my hub.
Solarshingles,
Thanks for the comments on my photos. I try to use my own photos when I can, so I am glad it ended up having a good effect. Thanks for the comments.
In The Dog House,
This is a good point you make about how moderation is the key in everything. Thanks for commenting and stopping by.
Joel McDonald,
Thanks for sharing your experiences and expertise.
New Day,
Thanks for the comments on my photos and for commenting. I like to use my own pictures when I can, so I am glad it worked here.
SweetiePie, by using your own photos you tell us much more about yourself, your life, your family. I believe, all this make much stronger social connections between people online. And there is another positive side effect: you don't need to care about the copyright, because you are the owner. Once again, a wonderful hub!
very good job. I bought a house 4 years ago and am selling it soon. I don't need 3 floors, or a porch, or grass to cut, trees to trim or heaters to fix. My property taxes are crazy and I dont have any kids so I am going back to an apartment somewhere. Nice work.
Nicely done.
Funnebone,
Thanks for commenting and good luck with your apartment search. Eventually I might buy a condo or a fixer-upper type house, but I do not want to pay half million dollars for something that would cost less than 100,000 in the MidWest or other parts of the country. Some people I know basically just work for that house and they are always complaining about commuting and paying the mortgage. It does not sound fun. I think my parents were lucky because when they bought their house at a time when it was still reasonable. Thanks for stopping by.
Donnaleemason,
Thanks for commenting and stopping by.
I wanted to look at the points of renting than having monthly mortgages since a friend of mine is in that dilemma. I think this hub will help her decide. Thanks :)
Thanks Ripplemaker. Maybe houses are more affordable where you live, I just have found where I live it is too expensive to buy a house for myself right now. Plus since it is just me living with my sister and she eventually wants to move back to the m ountains I find it easier to rent. Hope you enjoy whatever you decide to do.
We are both praying for the best decision. She's renting right now and desires to have her own place. Hmmm buying a house is still expensive though.
I feel buying a house is becoming very expensive everywhere these days, but that is just me. I hope your prayers are answered soon about what she will do. Thanks for commenting :).
This is wonderful post and the comments provide a lot of insight on the choice between renting a buying.
Like Joel, I make my living selling homes, but I also manage about 80 rental units. I agree that if you are not sure you will be staying in an area for at least five years, you are better off renting rather than buying. Traditionally, that is without a local market boom, you need to be in a home for five years to break even.
If you are renting, I advise that you know your rights as tenants as well as the landlord rights. Most disputes with our tenants come from misunderstanding of those rights. Read the rental contract. If you don't understand it, find someone who does or invest in having a lawyer read it. It may seem a little expensive, but there are some landlords who will take advantage of tenants.
If you are renting from large complexes, you generally have less room to negotiate a contract. If you are renting a single family home or condo, you have more room to negotiate. I advise that you negotiate a rent increase cap and include an option to renew the lease. Most landlords will be willing to do this and it protects you from excessive rent increases.
Finally, buying a home is a personal choice. It should be a joy, not a burden. If you are not comfortable with the commitment, renting is the best choice.
Lynne,
I really appreciate all the advice you have given here because of your expertise. I think your comments on this subject might even make an interesting hub, such as what renters should know from the landlord's point of view. Thanks for commenting.
Is renting the modern form of nomadism? Since I tend to collect a lot of junk (a hazard of living in a modern consumer world), my preference is to stay in one place for a long time. I also prefer to fix many of the problems around the house myself; thereby keeping repair costs low and increasing affordability of ownership. If I could reduce the crap that I need to move around then I would probably rent and place the money savings in a long term high interest account. Investing in a property can be profitable, but the profit is very small if you purchase it at retail and sell at wholesale. Factor in all moving costs and the profit is smaller than people are lead to believe.
Thanks for your insights.
Yes SweetiePie I agree that renting is not always the best option for many people. It may be described as the "American Dream" but that's all opinionated. Everyone has to do what's best for their particular situation.
Yes ia gree with your hub. Buying new house is better than renting a house. Its really an interesting hub.
Nancydodds1,
The point of my hub was renting is better in this economy than buying a new house, but you said buying was better. Which did you mean? Just curious, but thanks for commenting.
I buy houses and fix them up for resale. I've been wondering how well I'll do with this now, with the economy as it is, but I think I've still got a fair chance at selling and about six more months work on the house. I agree though, it is much simpler in some respects to rent, especially if you do move around a lot. Just shows how society has changed over the years. Once it was everyone's ambition, once married, to buy and own their own house!
Bob,
Thanks for sharing, but I must add a large number of people stay single for years, or do not marry at all, and for them houses have never been a priority. Some people buy condos and apartments, and some buy house. So I would disagree it was once everyone's ambition to buy a house because not everyone marries.
I am about to sell my home I have lived there 20 years I purchased the home with no help from anyone at age 20 and at 40 I am sick of the strugle and constant black hole of money that is associated with home ownership. I have been prould to own a home because I saw it as proof of my success in life. I have a large mortgage and 4 times the space I need just keeping it clean and neat looking inside and out is continious. I own my own business and work all the time and in the past few years the upkeep has gotten away from me I no longer entertain sinc my home is never manicured enough for my taste. I reciently considered selling my home and moving into an apartment, something I never had imagined I would ever do. The apartment I looked at was very nice a beautiful pool and work out area as well as 24 hr office facility and gaited access the prospect of doing nothing when I got home was very attractive I now have my house on the market.
Good luck with selling your home.
PetMemorialWorld says:
17 months ago
Renting as the first choice for couples is a growing trend as the cost of house ownership rises. We chose to rent as a matter of lifestyle preference.
Ultimately we would like to own our home, but not if it means the kids don't have a parent at home with them in their pre-school years.
Good topic!