I don’t quite understand where all the hate for renting comes from. I read a lot of financial blogs where the authors claim financial superiority because they own places and poo-poo people who rent places.
I don’t think they’re willing to accept that renting is a very appropriate way of living. In todays “as a service” sort of world where you can get just about anything as a service (cell phones, cars, infrastructure, databases, software, books, movies, the list is endless) these finance people object to “housing as a service” (ie, renting) for reasons that seem silly to me.
There are two people in my family who, relative to the other people in the family, would be considered financially savvy; my uncle and my dad. In all the conversations that I have had with them, the only argument that they can make for owning vs renting a place to live is
When you rent you’re throwing your money away
That also seems to be the pillar that many financial “professionals” like to support their arguments for renting vs owning on.
In my experience though this is a fairly baseless argument to make in the conversation around renting vs owning. The conversation is much deeper than that.
In this post I’m going to dip into some of the differences between owning and renting. There are a TON of questions that you should ask before stepping into any housing situation. The following is a brief list of questions that I have come up with per my own dealings in housing situations.
- Do you want a home, condo, or townhome?
- Is the place you’re looking at in an “unincorporated” subdivision?
- Is it part of an association?
- Do you want to own it?
- Do you want to rent it?
- Is the landlord a person or a company?
- If a person, does he/she live on the property with you?
- Do they live in the same city?
- Do they live in the same state?
- How long have they been a landlord?
- Do they have children?
- Do they have pets?
- Have the previous tenants had pets?
I’ll stop there because I could easily go on with more questions.
I ask myself these questions before I sign any rental agreement. Some of them may sound silly, such as “Do they have children” or “do they have pets”. But you would be surprised at how much answers to questions like those can affect you over the course of a year.
I’ve been in rentals where the children…grown children mind you…were total assholes to me. They took advantage of my generosity, and made the rental situation a headache.
Suffice to say, I will never rent a place where the landlord has kids. Additionally I’ll never rent a place where the landlord lives on premises. My last experience with this situation left an impression on me because the dude didn’t maintain his property and it was awkward to have him living upstairs. It always felt like I was the third wheel. That somehow I wasn’t welcome because I expected him to fix things when they broke. Totally awkward. Never again.
It’s a trade-off though. Renting a not as bad as some people make it out to be; even if you’re only looking at it from the perspective of money. Depending on the place that you rent or the place that you buy, some of the following may or may not apply to you.
I compiled the following list by comparing the experiences that I’ve had in renting versus the experiences I’ve had in owning.
- You don’t need to be concerned with any of the miseries of owning a house
- Maintaining yards, cutting grass, shoveling snow
- Replacing major appliances such as refrigerators, water heaters, toilets, etc
- Replacing roofs, windows, repaving driveways or fixing other structural components
- Servicing appliances such as furnaces, air conditioning units, and water heaters.
- Dealing with sewer backups due to tree roots and needing to arrange for having clean-outs run, or calling plumbers to re-route out the backup.
- Following rules of associations you might live in. For instance, being prohibited from putting satellite dishes up, parking cars cars on streets, the number of animals you can own, etc.
- Paying association fees every month
- Paying property taxes twice a year, often a substantial amount, and seeing where those taxes are applied even if you don’t agree with their application.
- Having to deal with politics in the governance of your subdivision. Electing people to the board of directors for the Association, deciding what crap to fix annually, etc.
- You can often find a place for an amount equal to, or lower than, a home
- Many rental areas will share common utilities and charge you based on the size of your unit. This in turn can lead to lower utility costs for you if you choose to live in smaller units. Units that you actually fit in instead of units where you are encouraged to fill with useless crap.
- Your term of residency is not 15 or 30 years. At most it’s 1 year. In fact, it can be even shorter than that if you can pony up the cash to break the lease. While this might look expensive on paper, it’s far cheaper than attempting to break out of a mortgage. Some places will do month-to-month. Some will require an initial 1 year lease but then switch to a month-to-month after that initial year.
- Getting into your living agreement is trivial by comparison. You don’t need to “go to closing”. You don’t need to hire a lawyer to go over documents. You don’t need to hire a real-estate agent to negotiate with a seller. You don’t need to be concerned with PMI or raising the funds to cover a downpayment.
- You don’t need to get a loan or concern yourself with significant proof of income and assets to secure a mortgage that will allow you to get the place you want.
- Most rental places include shared amenities like a pool or fitness center. Contrast that with buying a place where you would need to add those things with your own money and then, in turn, probably never end up using them.
- There’s no need, or even desire, to put money into renovating the place you rent. The most you’ll probably spend on is to add niceties to the rental that you can take with you when you leave.
I should mention that it really depends on the place you own whether or not you’ll have to deal with some of the same issues. For example, I own a town home in an Association. The Association takes care of external maintenance of the property. This maintenance is non-negotiable though and neither is the payment for it; ~$150 per month.
I like to think that the argument for owning instead of renting is the same as the argument for getting married.
Do it so you can join us in our misery.
Same goes for having kids.
Do it so you can join us in our misery.
Misery loves company, and no American would ever truly speak their mind to you. Instead they would be kind and tow the party line of their fellow Americans; home ownership is the “American Dream”, don’t spoil it for me! The dishonesty is remarkable. It’s as if people are afraid to speak the truth. That they might offend someone or scare them off. I’d prefer the brutal honesty because it’s all that you can go on when making real life decisions. If you are sold a fairy tale, then you’re in for a surprise when you are inevitably confronted with reality.
The pitch for owning a home is never the whole story. Just as the pitch for anything is never the whole story; it’s a pitch.
As for what I do, I rent an apartment. It’s the perfect size for myself and my girlfriend. My cost to rent the place is reasonable, and we have the flexibility to get up and leave at the end of the lease if we want to.
I don’t expect that I will ever own a home, to live in, ever again. I may purchase more real estate in the future, but solely for the purpose of generating income to support lifestyle.
Renting, to me, is the perfect option. You’re not throwing your money away. Instead, you’re paying for the luxury of not having to be a homeowner.
If you’ve never actually owned a home though, you wouldn’t understand where I’m coming from and you’re probably enthusiastically ignorant about the whole process.
I suppose that’s OK though. People need to make mistakes so that they can learn from them. I make mistakes and have learned. The trick is to limit the number of mistakes you make over time.