Rent or buy?

[Dr.Suave]

Im undecided between buying or renting a house. Im leaning more or less 50-50 atm, but my fiancee is gently pushing for buy (with my money of course, she pays for our meals and pays her own way but she doesnt have money to significantly contribute to buy a house, she cant even replace her 10 year old car that keeps breaking down).

Im thinking if I buy a house I apparently like but then once I move in I end up disliking something about it and/or my marriage goes south, Im gonna be stuck for a while with the house and lose some money when selling (the house would be in my mom´s name to protect it in the event of a divorce). If I rent and something happens the contract ends up in a year.

Im sure there are a bunch a pros and cons on the subject of buying vs renting I havent even considered yet. I would appreciate your advice/input bros

 

[Bible_Belt]

I hope mom is in good health. There is always the risk when putting the house in her name that she could fall ill, rack up big medical bills, and you could lose the house that way.

 

[AmsterdamAssassin]

Rent. Buying is not worth the trouble, it's not a sound investment, and nothing to leave your children (who won't want to live in your house anyway). Plus you don't just buy a home, but you are responsible for the upkeep and if you don't have the proper insurance, you will have to have to have money set aside for (emergency) repairs.

 

[FlexpertHamilton]

It comes down to life goals and lifestyle preferences. The meme is that buying a house is always a better financial investment, this is simply untrue. There are numerous, ongoing sunk costs to owning a home that no one ever seems to want to address. Realtor fees, closing/escrow fees, mortgage interest, HOA fees (god forbid), property tax, homeowners insurance, and the amount of money and time it takes for upkeep (lawncare, flooring, appliances, water heaters, plumbing, etc) can be staggering.

Do you value the security that a paid off home provides, and plan to stay in one place? Then buying a house is be better. Do you value freedom of movement and eliminating burdens from your life? Then renting is better. And if you're married...man, owning a home together just adds another layer of complexity.

Look up the 5% rule for renting vs buying, in some cases it can actually make more sense financially to rent. Some financial advisors even say to rent where you live and rent out what you own. But I won't even argue which is a better decision finacially, the only point is that it's not as clear cut as people make it out to be so you might as well decide which decision fits your needs first.

 

[BillyPilgrim]

Beware of excess deaths affecting the housing market Suave. Naturally I expect your girl to be plugged in to the Narrative that denies this.

 

[mbc0029]

Rent in my opinion. I don't think buying is worth the hassle, single or married.

 

[Slowhandluke]

With renting you can "buy" the perfect size place. When people buy a house, they buy in anticipation for something that may or may not happen - -another baby, guest room, appreciation etc. Plans that could be derailed by a divorce, being layoff, market forces, etc... A lot of people are paying more house than they actually need. This is wasted money on average.

The biggest pro of buying house is that it forces people to save money. A lot of people are not financially disciplined. Having a mortgage is in a way "forcing" people to save; putting money ("equity") in their house.

I used to own a condo. When I sold it 12 years later, I did the math and it was on par with renting. Because of this, I'm not a big fan of owning. However, I did buy a condo in a very nice area. If I bought a condo by the housing project (cabrini green) instead, I would have made $400k easily. However, at the time, I didn't want to deal with the crime even though the housing project was in the process of being demolished.

There is a saying, "if you think an investment idea is a good idea -- ask your gardener, ask your dry cleaner; the common person; if they agree, then the time to invest in that idea has pass"...

Realestate I don't think is a good investment anymore. Yes, there will continue to be people making money from it, but it's like the lottery. I don't like to play the lottery. Those that make money from it, I'm happy for them. It's just not my cup of tea.

 

[corsica]

Real Estate is in a bubble. Just compare the type of place you want to buy VS renting. You can rent and save a lot of money every month. And with the down payment giving you +5% APY, there's not much do discuss.

When interest rates were at zero, it was understandable. Now at normal levels, prices should come down. Save money and use for a down payment IF you see a good deal. Otherwise, wait.

Renting will give you more and better options. Not to count flexibility to move away (bad neighbors, job offer somewhere else, etc).

 

[BeExcellent]

I rent where I live and rent out what I own. Like what @FlexpertHamilton said. That way I’m not tied down. The issue with that of course is that rents go up over time.

If I buy I buy in an affluent area in a midsize (for the area) house, where the values are most stable due to demand for the area.

Frankly before my daughters came to live with me a couple of years ago I did a roomshare situation. I liked that a lot. I had a bedroom with en suite and a garage for my car, big walk-in closet and private entrance from the pool. This in a 2M house in a prestigious area (for a fraction of the cost to own), and it was all bills paid.

I’d do it again in a heartbeat if I didn’t have a high schooler or all my stuff out here now.

I could leave for weeks without consequence, something you cannot do easily with a house & yard.

 

[Westminster]

I rent where I live and rent out what I own. Like what @FlexpertHamilton said. That way I’m not tied down. The issue with that of course is that rents go up over time.

If I buy I buy in an affluent area in a midsize (for the area) house, where the values are most stable due to demand for the area.

Frankly before my daughters came to live with me a couple of years ago I did a roomshare situation. I liked that a lot. I had a bedroom with en suite and a garage for my car, big walk-in closet and private entrance from the pool. This in a 2M house in a prestigious area (for a fraction of the cost to own), and it was all bills paid.

I’d do it again in a heartbeat if I didn’t have a high schooler or all my stuff out here now.

I could leave for weeks without consequence, something you cannot do easily with a house & yard.

This is interesting. I'm British and owning property is a bit of a fetish here in te UK - 'an Englihman's home is his castle' being an oft used saying here. But what you're describing sounds attractive as it gives you flexibility.

Would you be as comfortable with such an arrangement if you didn't have your own place to fall back on though? (the one you rent out).

 

[ThisIsSparta]

Im undecided between buying or renting a house. Im leaning more or less 50-50 atm, but my fiancee is gently pushing for buy (with my money of course, she pays for our meals and pays her own way but she doesnt have money to significantly contribute to buy a house, she cant even replace her 10 year old car that keeps breaking down).

Im thinking if I buy a house I apparently like but then once I move in I end up disliking something about it and/or my marriage goes south, Im gonna be stuck for a while with the house and lose some money when selling (the house would be in my mom´s name to protect it in the event of a divorce). If I rent and something happens the contract ends up in a year.

Im sure there are a bunch a pros and cons on the subject of buying vs renting I havent even considered yet. I would appreciate your advice/input bros

Dont get married....... that said, of course your fiancee wants you to buy a house.....

I dont know about family laws in Mexico, but you better be sure you (or your mom) can get her out if neccessary under any circumstances (pregnancy etc.). In a lot of countries you cant just put your (ex-)wife out on the street, much less likely if she is pregnant or with kids.


So, if you should rent or buy a house depends..........

*Can you afford to buy it without a (big) loan? I dont know about interest rates in Mexico, but they rise dramatic in Europe.
*Are you connected to home/settled down or do you like to move a lot?
*Can you sort the legal issues out, meaning can you cut your future wife out of any claims on your property? (DONT GET MARRIED!)


I wouldnt rent. I´am quite happy at the place i grew up and wouldnt wanna move anyway. US-Citizens might see this different and feel "stuck", but i guess this is a cultural thing.

I also dont see any financial advantage in renting a place. You pay the rent AND you are still paying for the upkeep of the house. Its just semantics. In the end your landlord will charge you for wear and tear in one way or the other.

Another point is, once you live in a payed off house, that is owned by you and you alone, it is a place of financial security.
YOU decide if you want to put in money for new windows/doors/floors/whatever or not, or later. You have a home that you can operate at a relative low cost if you ever need to cut down on expenses.



PS: dont get married

 

[CAPSLOCK BANDIT]

Getting a mortgage right now? Seems very shady, interest rates and market are both high at least in Canada

 

[Kotaix]

I also dont see any financial advantage in renting a place. You pay the rent AND you are still paying for the upkeep of the house. Its just semantics. In the end your landlord will charge you for wear and tear in one way or the other.

Another point is, once you live in a payed off house, that is owned by you and you alone, it is a place of financial security.
YOU decide if you want to put in money for new windows/doors/floors/whatever or not, or later. You have a home that you can operate at a relative low cost if you ever need to cut down on expenses.

Paying rent means that the landlord is liable for repairs. Things like appliances, roof leaks, insurance, all that is up to the landlord to keep up in the US.

In the past 2 years, we've had to replace the furnace and heat pump ($12k) and other smaller expenses have been in the order of $4k. The house also needs to be re-painted.

Also, you don't own your property in the US. The government does. If you stop paying your taxes, they will find a way to get it. Property taxes are not cheap in many parts of the country.


That said, rent is going absolutely insane in my area. This housing bubble needs to pop and houses need to go back to families, not corporate interests.

 

[Modern Man Advice]

As you said, both have their own pros and cons. Just like @BeExcellent, I rent where I live and rent out what I own.

I think it is so subjective, the right move will change from person to person. So much of it depends on where you live, your goals, your finances, etc, etc. It''s tough to say what is best for a given person without a proper dive 1 on 1.

Therefore, I guess all we can do is share our own experience, and here is mine:

It's all about leverage and liability. Renting will definitely give you the freedom to save (if you budget yourself) and come/go as you please. Rent is freedom. I personally move quite a bit which is why I ultimately rent. But I also want to diversify my portfolio and think long-term which is why I bought a house.

As long as:

1) If you plan to live in it: You can cover the mortgage comfortably (educate yourself on income vs spend ratios).
2) If you plan to rent it out (like I do). The rent market will cover the mortgage. Even better if it leaves you with some passive income.

I will however say, yes 100% buying is a hassle and it is stressful. I often regret buying and second guess whether was the right move. My only hope is that it will pay off long term. That is my only hope, that long-term it will pay off. But owning the house, especially the first year took my peace of mind and I absolutely hated that. And now, I still know I have that responsibility.

With rent (especially month to month), as I said before, I have the freedom to come and go. To not be tied down.

But I will finish with this, I think a big part of true manhood is sacrifice and adversity. We, as men, cannot seek a life of comfort. Seek the path that will give you the most hell, because you will come out like a champion at the end. Think about that.

 

[BeExcellent]

This is interesting. I'm British and owning property is a bit of a fetish here in te UK - 'an Englihman's home is his castle' being an oft used saying here. But what you're describing sounds attractive as it gives you flexibility.

Would you be as comfortable with such an arrangement if you didn't have your own place to fall back on though? (the one you rent out).

I actually own 25 or so units, mostly single family homes, although I have had apartments in the past. My units are not in areas where I live but if necessary I could take up residence in one of them.

@Kotaix is correct about both repairs and property taxes. Last winter I had 4 houses with frozen pipes during a serious cold snap. That is an emergency for the renter and must be addressed quickly. There is always something. Right now I need to roof a property and insurance is getting harder to obtain in parts of the US because severe storms do lots of damage and insurers are pulling out. I expect we will see subsidized wind/hail insurance along the lines of flood insurance soon. Florida has been adversely affected by insurance companies pulling out.

You have to understand that insurance companies are in the business of collecting premiums and paying as few claims as possible. Big weather events can sink them if they’ve not been good stewards of the premiums paid, and if they have high exposure in effected areas. Ergo they pull out of areas statistically likely to have damages. They have actuaries constantly calculating this.

So for me @Westminster this is what I have done to establish retirement income & build wealth. Homeownership in my view is a horrible investment unless you are going to live in a duplex you own whilst renting out the other side. That is what my 21 year old son plans to do. Purchase a duplex and have the renter pay rent that covers the majority of the nut.

It’s a very different way of looking at property ownership than a narrow homeowner perspective. Homeownership, when you take the emotion out of it, is poor as a financial vehicle once you tally taxes, insurance, maintenance, homeowners association, lawn & pool maint etc. It makes sense if you are free and clear moreso, but if you are free and clear then you rely on appreciation to grow your principal.

Look there are risks no matter what you invest in, no matter where. I have more control over my RE portfolio than I have as a tiny investor in a company through the stock markets for example. It’s risk that I’m more comfortable with.

But that is for each person to decide.

 

[Westminster]

I actually own 25 or so units, mostly single family homes, although I have had apartments in the past. My units are not in areas where I live but if necessary I could take up residence in one of them.

@Kotaix is correct about both repairs and property taxes. Last winter I had 4 houses with frozen pipes during a serious cold snap. That is an emergency for the renter and must be addressed quickly. There is always something. Right now I need to roof a property and insurance is getting harder to obtain in parts of the US because severe storms do lots of damage and insurers are pulling out. I expect we will see subsidized wind/hail insurance along the lines of flood insurance soon. Florida has been adversely affected by insurance companies pulling out.

You have to understand that insurance companies are in the business of collecting premiums and paying as few claims as possible. Big weather events can sink them if they’ve not been good stewards of the premiums paid, and if they have high exposure in effected areas. Ergo they pull out of areas statistically likely to have damages. They have actuaries constantly calculating this.

So for me @Westminster this is what I have done to establish retirement income & build wealth. Homeownership in my view is a horrible investment unless you are going to live in a duplex you own whilst renting out the other side. That is what my 21 year old son plans to do. Purchase a duplex and have the renter pay rent that covers the majority of the nut.

It’s a very different way of looking at property ownership than a narrow homeowner perspective. Homeownership, when you take the emotion out of it, is poor as a financial vehicle once you tally taxes, insurance, maintenance, homeowners association, lawn & pool maint etc. It makes sense if you are free and clear moreso, but if you are free and clear then you rely on appreciation to grow your principal.

Look there are risks no matter what you invest in, no matter where. I have more control over my RE portfolio than I have as a tiny investor in a company through the stock markets for example. It’s risk that I’m more comfortable with.

But that is for each person to decide.

Thank you for your thoughtful and fulsome response, Ma'am. Food for thought.

 

[FlexpertHamilton]

One other comment on this decision that has little to do with finances...

Most houses (at least in the most of North America) exist in soulless cookie cutter surburban dystopias with single family zoning. Just a sea of homes in the exact same socioeconomic class, and literally nothing of interest for miles. I walk through these neighborhoods and it's usually completely dead. There's no liveliness, no vibrance, zero, none. Even most kids aren't seen outside because it's "unsafe". Sure, there are houses that exist in vibrant communities but these are typically in the more dense "historic" regions where these absurd zoning laws didn't exist, and are generally more expensive. Rural houses (and truly rural, in the wilderness, mountains, etc) could be great though, and if you can find one all the power to you.

Nice thing about apartments is that many of them exist in mixed-use walkable neighborhoods with considerably more vibrance and soul. I've lived in places like this before without even owning a car because I could just walk everywhere. Great for pulling women too if your place is within walking distance of bars, restaurants, venues, etc. I had a FWB last year who could literally walk over to my place in 10 min through our small downtown district.

 

[jnMissouri]

Im undecided between buying or renting a house. Im leaning more or less 50-50 atm, but my fiancee is gently pushing for buy (with my money of course, she pays for our meals and pays her own way but she doesnt have money to significantly contribute to buy a house, she cant even replace her 10 year old car that keeps breaking down).

Im thinking if I buy a house I apparently like but then once I move in I end up disliking something about it and/or my marriage goes south, Im gonna be stuck for a while with the house and lose some money when selling (the house would be in my mom´s name to protect it in the event of a divorce). If I rent and something happens the contract ends up in a year.

Im sure there are a bunch a pros and cons on the subject of buying vs renting I havent even considered yet. I would appreciate your advice/input bros

I own a lot of houses, I wouldn't be buying anything right now if I were you...

Also, regardless of who's name the house is, if the down payment and payments are traceable to you, she can get the money....a judge will see through attempts at shielding assets. My advice. Don't get married. If the chic leaves, she wasn't for you...

 

[jnMissouri]

I actually own 25 or so units, mostly single family homes, although I have had apartments in the past. My units are not in areas where I live but if necessary I could take up residence in one of them.

@Kotaix is correct about both repairs and property taxes. Last winter I had 4 houses with frozen pipes during a serious cold snap. That is an emergency for the renter and must be addressed quickly. There is always something. Right now I need to roof a property and insurance is getting harder to obtain in parts of the US because severe storms do lots of damage and insurers are pulling out. I expect we will see subsidized wind/hail insurance along the lines of flood insurance soon. Florida has been adversely affected by insurance companies pulling out.

You have to understand that insurance companies are in the business of collecting premiums and paying as few claims as possible. Big weather events can sink them if they’ve not been good stewards of the premiums paid, and if they have high exposure in effected areas. Ergo they pull out of areas statistically likely to have damages. They have actuaries constantly calculating this.

So for me @Westminster this is what I have done to establish retirement income & build wealth. Homeownership in my view is a horrible investment unless you are going to live in a duplex you own whilst renting out the other side. That is what my 21 year old son plans to do. Purchase a duplex and have the renter pay rent that covers the majority of the nut.

It’s a very different way of looking at property ownership than a narrow homeowner perspective. Homeownership, when you take the emotion out of it, is poor as a financial vehicle once you tally taxes, insurance, maintenance, homeowners association, lawn & pool maint etc. It makes sense if you are free and clear moreso, but if you are free and clear then you rely on appreciation to grow your principal.

Look there are risks no matter what you invest in, no matter where. I have more control over my RE portfolio than I have as a tiny investor in a company through the stock markets for example. It’s risk that I’m more comfortable with.

But that is for each person to decide.

I hear ya on the frozen pipes. Been there, done that. 15K repair to re-pipe with PEX. Couple years ago we had -6 degree F weather and I left my gf to go to four of my vacant rentals to open the faucets to drip, open the cabinets under the sinks and make sure the heaters were on...

For some reason I thought you were in Cali but with frozen pipes now I know you're not. But I echo what you said, as a landlord with a portfolio of single family houses myself, being a landlord sucks. Homeownership seems great at first, but I remember all the people I ran into who sold and rented and were happier for it since they had to do NO maintenance. After 15 years of being a landlord, I understand where they are coming from. To top it off, I'd have left the state (one of the most expensive housing markets in the country, top 6) if I didn't have all this property here to manage. And before anyone says "just hire a pm!" they don't understand I'd be paying six figures for what is part time work with their ridiculous fees. But I did find a company that does it cheaply and am trying them out before hiring them for all of them and bouncing out of this state.

 

[jnMissouri]

Paying rent means that the landlord is liable for repairs. Things like appliances, roof leaks, insurance, all that is up to the landlord to keep up in the US.

In the past 2 years, we've had to replace the furnace and heat pump ($12k) and other smaller expenses have been in the order of $4k. The house also needs to be re-painted.

Also, you don't own your property in the US. The government does. If you stop paying your taxes, they will find a way to get it. Property taxes are not cheap in many parts of the country.


That said, rent is going absolutely insane in my area. This housing bubble needs to pop and houses need to go back to families, not corporate interests.

My tenants don't realize it's actually cheaper for them to rent my houses from me than for me to own. They pay half of what it costs me to own them, when you factor in opportunity costs. Depreciation and expenses alone eat into cash flow. Depreciation isn't a phantom expense, eventually the roof, paint, appliances, etc. need to be replaced...factor that in with a 160K down payment for each house and the opportunity cost of that...it's cheaper to rent. And you're not stuck holding all these houses in this high interest rate environment....