Renting vs Buying: Weighing the pros and cons

[Kjmack]

People do you realize every cost you talk about when owning a home compared to renting is obviously built into rent ? There is no way out of it . Grown people take on responseabilitys . No free ride in life . You live once why be contained in a apartment or in a house that you cant even change a wall color or pound a nail in a wall . TAXES ARE BUILT IN THE RENT PRICE SAME WITH INSURANCE ESTIMATED REPAIRS ETC.

 

[SwampSurvivor]

Originally Posted by Kjmack

People do you realize every cost you talk about when owning a home compared to renting is obviously built into rent ? There is no way out of it . Grown people take on responseabilitys . No free ride in life . You live once why be contained in a apartment or in a house that you cant even change a wall color or pound a nail in a wall . TAXES ARE BUILT IN THE RENT PRICE SAME WITH INSURANCE ESTIMATED REPAIRS ETC.

That's correct, however, a lot of people believe that the monthly mortgage is what one is building up in equity. It is not. Reality is, it's only a few hundred a month being built up in equity. You build up no equity with renting. You build up the principle in equity with a mortgage. Taxes, interest, PMI, insurance, while often included in the mortgage, are not building equity.

 

[Kjmack]

But you have tax deductions

 

[gfh77665]

Originally Posted by RDY4WAR

As far as down payment, PMI, and loan length, as a disabled veteran, I can get a VA loan that requires no down payment, locked in their rate for a 30 year loan, and they cover PMI. Financially, we bring home about $65k/year, the majority of which isn't taxed. (VA) Our vehicles are paid off. We only have 1 credit card that we keep 99% open for emergency use. Other than utilities, that's all we pay. The military paid off our student loans and the VA covers our healthcare.

With all that in mind, its beyond a "no brainer" to buy a home. Take advantage of the circumstances you are blessed with!

 

[Kjmack]

Originally Posted by gfh77665

Originally Posted by RDY4WAR

As far as down payment, PMI, and loan length, as a disabled veteran, I can get a VA loan that requires no down payment, locked in their rate for a 30 year loan, and they cover PMI. Financially, we bring home about $65k/year, the majority of which isn't taxed. (VA) Our vehicles are paid off. We only have 1 credit card that we keep 99% open for emergency use. Other than utilities, that's all we pay. The military paid off our student loans and the VA covers our healthcare.

With all that in mind, its beyond a "no brainer" to buy a home. Take advantage of the circumstances you are blessed with!

Absolutely buy a house , you joined the military to protect the American dream now its your turn to live the life you sacrificed for .

 

[KrisZ]

There is also a profit margin built into the rent fee. What most forget is that they compare the rent fee of some crummy and small apartment room to a mortgage payment of a whole house.

 

[Wolf359]

Originally Posted by KrisZ

There is also a profit margin built into the rent fee. What most forget is that they compare the rent fee of some crummy and small apartment room to a mortgage payment of a whole house.

That assumes everyone is charging market rent. Some people bought their houses 10-15 years ago or more and the prices were lower then so they have a smaller mortgage. I used to get people who would call me up and ask about the rent and once I told them, they said that there was some other place they just saw that was a few hundred dollars cheaper. I told them to go there because there was no way I could rent it to them at the price they wanted. Either the lower price was a scam, a short term thing or someone who didn't have a mortgage. Up to the renter to find them.

 

[BMWTurboDzl]

Originally Posted by RDY4WAR

My wife and I are both flipping back and forth on this decision. We didn't buy for a long time as I was in the military getting bounced around. I've been out of the military for a while now, and our 2nd daughter was born earlier this year. We've been renting a small 2-bedroom house. It's close to my wife's work and it's all the house we've really needed until now. With the little one getting big enough to need her own room/space, we're discussing whether we should become first time homeowners or just try to find a bigger 3-bedroom house to rent for a few more years and then buy. I've had people tell me that owning your own home is very rewarding. However, nobody has been able to tell me why it's rewarding other than "well, because it's yours". My answer to that is "no, just instead of paying a landlord, I'm paying a bank, but now also liable for maintenance." I've had others say "you can build equity/value with the home" but if we buy a home, we're doing so with the intention of living in that home the rest of our lives so why should I care about resale value? Financially, buying isn't a concern. We have good credit. I'm a 100% disabled veteran so I qualify for the veterans home loan with 0% down and fixed 30 year rate. They also cover PMI. In my area, a 10-15 year old, 1500-1800 sqft, 3 bed, 2 bath house, not in an HOA, will sell for $140-170k. What I don't know is about the market. Is it a good time to buy right now or is it not? Better yet.... just tell me what's the pros and cons of buying vs renting. What is the reward for buying besides equity? What the cons? Convince me that it's a good idea to buy a home.

Pros of Renting a house are cons of owning so here goes: - Flexibility; It's easier to move especially in a down market. Promotions, schools, elderly parents, etc, - Someone else is responsible for repairs and maintenance. Pros of Homeownership. -Equity via "forced savings". Living in Georgia your equity gains aren't going to be as great because there aren't that many other states which have such a low cost of living. For example you won't be able to sell a 3 brdm 1500 sqft cottage for $1MM and retire into a 4 bedroom 5k sqft house for $350k. - Nest building. Owning for the most part gives you free rein with regards to making your houses "yours". - Monthly expenses are basically fixed and you'll generally be able to afford more/higher qualify space per $ spent. Rates are still near all time lows, but sellers are beginning to feel pressure in some markets (California). It's usually better to buy in a high rate environment because you more or less protected from being unable to sell in a downturn. The real estate market is local/regional. As around for a Realtor and see what they say.

 

[philipp10]

Originally Posted by alarmguy

Originally Posted by philipp10

One item people seem to miss in housing calculations is the time value of money. An example, I own a home worth approx 275,000. That money is sunk in my home (it's paid off). If I sold my home, I could make 4-5% per year off than money (that's $11,000 to $13,750) per year. That should come into your analysis also.

Yes it should, however the OP has not paid off a home yet, he is just wondering if he should buy one or rent. So, he needs to buy one, then, once it is paid off and has a HUGE asset, he can determine what works best for him. In the meantime he gets HUGE tax advantages, as you did, for purchasing a home. and of course, even though you say you can make 4 to 5% per year off the money (equity inj your home) that is speculation, you do not know what will go up in value more, your home or your investments. Never mind if your sold your home, you would no longer get tax break for property taxes.

the tax breaks you mention are highly over-rated. You already get a 12k standard deduction so you need significant interest costs to benefit. And for the sake of argument....you don't know if the original poster is getting a mortgage OR paying cash for said house.

 

[gfh77665]

Also keep in mind that one day down the road you will want something to pass on to your children. Rentals = nothing for their eventual inheritance.

 

[RDY4WAR]

I spoke with the mortgage person at Navy Federal this morning. I'm fairly confident we'll end up buying instead of renting. In fact, we are going to look at a house this evening. https://www.zillow.com/homedetails/...JuJ_Cc6_QFrbYOIPRNUsfbEu1BtXBImtaxxe76GY

 

[hatt]

I see people are comparing the cost of renting a 1-2 bedroom apartment to the costs of a much larger single family homes to try and make the math work. Apples and oranges.

 

[Mr Nice]

Originally Posted by hatt

I see people are comparing the cost of renting a 1-2 bedroom apartment to the costs of a much larger single family homes to try and make the math work. Apples and oranges.

I agree. Also comparing $1M or $2M houses has nothing to do with the OP's thread / question...

 

[javacontour]

oilBabe and I were talking of renting in the next 5-7 years. Our kids are all adults and the last will soon (hopefully) be out of our 4 bedroom home. The timeframe above is when she'll retire from her school district. But I have a few more years, so I won't be retiring yet. So in the interim, we are looking at selling out home about the time she retires, and renting a smaller home for the few years until I retire. THEN we look for our retirement home. I don't think we could recoup our purchase costs for a short term stay. Especially if the real estate market slows. Now if the market appears to be heating up, or we think we'll be there longer, we may buy a smaller 2-3 bedroom home until retirement. But of course, we have to run the numbers. We certainly don't want an apartment. We want a stand alone home. We did the apartment thing for 9 months while selling my old home so we could be in the community where we wanted our children to go to school. But now that they are finished with school, not a fan of paying the outrageous property taxes here for any longer than we must. So renting is on the list of possibilities.

 

[JTK]

Originally Posted by WagonWheel

Having owned a total of 4 primary residences over the past 18 years, I will say that "joy" is not one of the words I have uttered in the same sentence as "owning a home".

Same for me, but it's only been 3 primary residences in 18yrs. For your day to day dollars, renting is always cheaper IMO. For your long term financial health? Who knows. Which ever route you choose, your costs are always going to go up. The P&I on my mortgage is about $750/mo. Because of taxes and insurance I'm at $1400. It goes up every year.

 

[Jarlaxle]

Originally Posted by hatt

Cool story but you aren't renting it for the property taxes.

About 15% more. If you don't like it, you are cordially invited to sit on a post and rotate.

 

[Jarlaxle]

Originally Posted by Miller88

Originally Posted by dogememe

If I could afford to buy a home I'd buy one in a heartbeat vs renting. Renting is just throwing away money.

it may be, but not as bad as one would think Here's what I have that doesn't go to my principle ; the equity I am not building Water+Sewer: 650 Tax: 2600 PMI: 400 Mortgage Interest (est) 1505 Insurance: 520 5675 / year , thrown away 472 / month , thrown away The water and electric bill for the house are significantly cheaper than my one bedroom apartment, so I save maybe $60 a month there

Wait...your water and electric are LESS in the house than in a 1BR apartment? Say WHAT?!

 

[Jarlaxle]

Originally Posted by Kjmack

But you have tax deductions

Naah. Interest rates are so low now (I recall mine was 4.15%) it's frequently not even worth itemizing.

 

[Kjmack]

You really need a new tax person .

 

[Wolf359]

Originally Posted by Kjmack

You really need a new tax person .

He really needs a more expensive house. If you have a 150k mortgage, the interest isn't even 6k a year.