Owning a home vs renting a place

[mjb2124]

Re: Owning a home vs renting a place

A lot of this depends on where you live. In the surrounding Pittsburgh areas, the housing market never really boomed so there was never a chance for the bubble to burst as it has in many other areas turning housing prices upside down. I bought a townhouse for 140k in 2001. Sold it this past year for 185k. With the money I saved and the money I sold on that house, I was able to put down 100k on a new house my wife and I built this past year (there are a few pictures in my arena...haven't updated those pic's recently though). We plan on staying here 10-15 years before we build an even bigger house to retire in...it should appreciate a lot in that time which will help fuel the down payment on that house.

I put money into the townhouse that I owned. I probably put a total of 5-8k into the place in the years I was there (everything from painting, staining the deck, fixing the A/C, cleaning the carpets, adding a laundry tub in the basement, fixing the toilets etc...). I did most of it myself, but parts cost money.

With all that said, I'm a big proponent of buying...especially right now and for someone who is going to stay in that area for a few years. The housing bubble burst and a lot of very good properties can be found for good prices. When the economy returns, the house will appreciate considerably...a house is one of the few things one can purchase that will appreciate over time.

EDIT: If someone does choose to buy, put 20% down to avoid PMI insurance (which is a complete ripoff). If you can't afford 20%, wait until you can. Of course, this is easier said than done in an area like Pittsburgh compared to NY or CA. In Pittsburgh a 400K house gets you something very nice (the house my wife and I built that's in my arena is a few thousand short of 400K) while in CA or NY, a 400K house is pretty tiny.

[JohnnytheSkin]

Re: Owning a home vs renting a place

My wife and I will never own again.

[Scottdau]

Re: Owning a home vs renting a place

At this point though the market has already bottomed out in most areas so anything you buy over the next year or so likely won't depreciate unless you don't take care of it. Anyone who bought four or five years ago (especially condos) has taken a hit. It's going to be a buyer's market for a good while longer and if its affordable and makes sense for you then owning is always better than renting.

True, I made a killing though. My old house sold for 750,000 about 5 years ago. So we rented for 2 years and the market had a big dip, so we bought the same kind of home in the same area for half that. It was a great deal!

[thegoat30]

Re: Owning a home vs renting a place

EDIT: If someone does choose to buy, put 20% down to avoid PMI insurance (which is a complete ripoff). If you can't afford 20%, wait until you can. Of course, this is easier said than done in an area like Pittsburgh compared to NY or CA. In Pittsburgh a 400K house gets you something very nice (the house my wife and I built that's in my arena is a few thousand short of 400K) while in CA or NY, a 400K house is pretty tiny.

An alternative to putting 20% down to avoid PMI is to have a 2nd lender cover the amount that you are short. Not many lenders do it, you have to have great credit, & the loan is for a shorter term.

I do agree with your thoughts on PMI being something to avoid if you can.

[Jonesy]

Re: Owning a home vs renting a place

One thing i love about buying a home is that it is basically forced saving. If you have to make mortgage repayments you make sure you get it done whereas if you are saving it's easy to say "i won't save anything this month and might pickup that flat screen tv i've been looking at instead".

You can do just as well renting and investing heavily in the stock market etc but people aren't as disciplined so buying a house is great for that.

My wife and I have bought and sold 4 properties and have made a decent amount out of it over the years so i love property but there are other options for creating wealth that are just as good.

[elgreazy1]

Re: Owning a home vs renting a place

If you are responsible and can afford it: owning.

I've been on every end of the subject: rented, subleased, owned, foreclosure, rented, owned again. In the end, it's always better to own because it makes it your property in which you can do, basically, whatever you want.

In our case now, my fiance and I bought a beautiful completely remodeled 1940's home outside of Austin and our mortgage is $600 a month. Yeah, you read that right! Literally our biggest bill outside of mortgage is our cable bill. I am so thankful for it everyday, too.

[KingV2k3]

Re: Owning a home vs renting a place

Depends where you'd be buying, but for the most part 'equity' is a myth...

I have a beautiful pad in the city that costs less than my friends pay in annual property taxes...

Mortgage is NOT the equivelent of rent...

Mortgage + taxes + repairs + time spent doing repairs and maintainance = rent...

[stewaat]

Re: Owning a home vs renting a place

Own & have a roommate who pays you rent!!!

Life is good

[mjb2124]

Re: Owning a home vs renting a place

Depends where you'd be buying, but for the most part 'equity' is a myth...

That's exactly it...it depends on where you're buying. Equity is far from a myth in my area, but I do realize it is in other areas. Just have to be smart with where and what you buy. You don't buy the house, you buy the neighborhood when you look for a house. That way the house will always be appealing. Heck, the townhouse I sold I put up for sale when the economy and home sales were doing terrible....it sold in 1 week at my asking price. Great area, great shape etc... It's funny, but so many people will spend days/weeks/months researching their next HDTV or video game system, but will jump into a home purchase too fast. The house purchase is 100x more important than the HDTV (it should appreciate afterall), but some people can be very foolish with their money.

[Jdurg]

Re: Owning a home vs renting a place

There are definitely positives and negatives to owning a home. I bought my first home about 2.5 years ago after saving up for a great amount of time while still living with my parents. Below are some of the positives and negatives to owning.


Positives:
The house is yours and if you are paying your mortgage on time each month, it really helps build up your credit.

If you want to change something about the structure of your house, you don't need to get permission from a landlord to do it.

You aren't tied into any contracts so if you want to just up and leave, you're able to.

You can sell the property and the money you get from the sale, after your first mortgage is completely paid off, is yours.

Tax Deductions.

Don't have to worry about a lazy neighbor lighting his apartment/condo on fire and causing your home to go up in smoke.

You can have friends over whenever you want and not have to worry about being too noisy.

If you have extra space in your home, you can rent it out to a friend and take in the rent money.

You can do home improvements and make updates to your home that will increase the value of it.

If you live in your home long enough, or you put a big enough downpayment on the house, there will come a time that you don't have to pay a mortgage each month anymore.

You can personalize it to your heart's content.

Negatives:
You are responsible for all of the maintenance of it.

If something breaks, you are responsible for replacing it. (I had to replace my furnace/boiler this January and it cost me $7,000).

If you have to move frequently, you can lose money on the investment depending on how the market is doing.

Utilities are not included in your mortgage payment, so you have to pay for electricity, garbage removal, telephone, television, phone, and unless you have well, water.

You have to pay property taxes and have homeowner's insurance.

If you live in an historic district, you may not be able to make modifications to your home depending on local rules.

When you do make modifications to your home, you are required to get the proper building permits and pay the associated fees.

If you don't do your research, you can financially ruin yourself for the rest of your life.


Buying a home is the most important, and research intensive thing you will ever, EVER do. You MUST do a ton of research and NEVER rush into it. It took me three years to finally find a house that I thought suited me, and to be honest, I wish I had waited another couple of years as there are some things about this house that are kind of annoying. It is important that you have a very detailed inspection done before you buy a house. Make sure the roof is in good shape, that the basement doesn't flood when it rains, that the siding on the house is in good shape, that the plumbing is solid, that if something does go wrong there are proper access points in the house to allow you to fix it, that the house is properly insulated, etc. etc. If you take care of all this stuff before purchasing the house, you can ask the current owners to correct them for you before you move in, or ask them to lower the price if you would then do it yourself. If they really want to sell the house, they will oblige.

To reiterate what others have said in this thread, whether to rent or own depends a lot on where you are in your life, where you are in the country, and what the next couple of years will hold for you. If you are in a dynamic situation where you don't plan on being in the same spot for a while, then renting is probably a better idea for you. If your job is not stable and you don't know if you'll have it in a couple of years, taking out a 30 year mortgage is not such a great idea. But if you are stable and will have your job for a while and enjoy doing housework and home improvement projects, then nothing beats owning a home.

[bkrich83]

Re: Owning a home vs renting a place

Curious as to what you guys' stance on home owning is. Right now I'm in college and currently renting an apartment, and probably will have to rent for a while. I haven't really thought that far into the future about owning a home or anything.

Anyway, my mom told me that she actually thinks renting is the way to go. She talked about how one of our cousins who is a politician in Boston had something break that would cost $3000 to fix, and she still hasn't got it fixed, it's been a few years. I suppose one of the benefits of renting is maintenance and not having to be responsible for that type of stuff.

Thoughts?

Owning without a doubt. Tax break alone makes it well worth while. Not to mention the long term investment.

[bkrich83]

Re: Owning a home vs renting a place

Depends where you'd be buying, but for the most part 'equity' is a myth...

I have a beautiful pad in the city that costs less than my friends pay in annual property taxes...

Mortgage is NOT the equivelent of rent...

Mortgage + taxes + repairs + time spent doing repairs and maintainance = rent...

Equity is not a myth. At least not for me.

Property tax is deductable by the way. We saved like $8,000 on our income tax this year thanks to owning a home. Owning a home, is a major break on your income tax.

[bkrich83]

Re: Owning a home vs renting a place

EDIT: If someone does choose to buy, put 20% down to avoid PMI insurance (which is a complete ripoff). If you can't afford 20%, wait until you can. Of course, this is easier said than done in an area like Pittsburgh compared to NY or CA. In Pittsburgh a 400K house gets you something very nice (the house my wife and I built that's in my arena is a few thousand short of 400K) while in CA or NY, a 400K house is pretty tiny.

Completely agree on the 20%.. Avoid PMI if at all possible.

[Jdurg]

Re: Owning a home vs renting a place

Owning without a doubt. Tax break alone makes it well worth while. Not to mention the long term investment.

Hell yeah. I typically take in about $4500 each year, total, from the state and feds. (And let's not get into the "You're stupid if you get any tax return debate here." I don't give a damn what anybody says, my mind will NEVER change about this). So while I did have the sad event of the furnace/boiler dying on me and costing me $7,000, because of my nice tax return as a result of all the credits when filing my taxes, the overall expense to me didn't kill me. I just had to dip into my "emergency reserves" in my bank account, and put a little bit on my credit card in order to maintain some emergency funds. (Since I was about 18 years old, I have ALWAYS set a fake floor to my bank account. Basically, when I get down to a certain point, I will assume that I have zero dollars left and I basically don't spend any money until I get back up above that floor. This way, if something like my boiler dying comes up, I will have money in my bank account to take care of the emergency. Doing this has been the greatest thing I ever started doing. Yeah, people think I'm crazy that when I have $4,000 left in my bank account I behave as if I have nothing, but because of this, the furnace dying didn't truly put me into financial ruin).

[Hassan Darkside]

Re: Owning a home vs renting a place

Pretty informative thread.

I'm still probably a decade away from being in the position to buy a home, but it's definitely something in the back of my head and I'll keep all this stuff in mind.