invest in a house over renting?

Question

I believe paying rent is dumb, I think the better option is to buy (mortgage) what do you think and why? A buddy and I shared a house through college..400/month plus utilities each, what do u think the mortgage was? Obviously they were making money on us...why not pay more and actually own something...or have a large sum payed off for resale should you choose? Pros/cons...all opinions/comments welcome. cheers

Answer 1

It really depends on your financial capability. If you have enough money to pay for an entire house (assuming the real estate market is not hot), then I suggest you purchase one. Renting a house is like flushing water down the toilet. Acquire a house when interest rates are low so that you will minimize your interest expense.

Answer 2

>>what do u think the mortgage was?

It jolly well have been well above 800/month or you were paying too much rent. In most parts of the English-speaking countries, real estate speculation has resulted in real estate prices that are FAR above their rental value equivalent. If yours wasn't, you were probably paying too much and should have looked for a better deal. Although $800/month is very cheap in my part of the world.

Anyway, when you can get relatively a lot of rent compared to the price of the property, that is considered a favorable time to buy. When rents are low relative to real estate prices, that is the time to rent. When you look at a house, figure out how much it would rent for. Be honest, and don't kid yourself. If you are not good at pricing real estate, bring a trusted friend or relative who is. If the rent is comparable to the mortgage payment, it's a good deal. If the rent would be low compared to the mortgate rate, think twice.

In most parts of North America, Europe, Australia, New Zealand, etc, real estate prices are relatively high compared to rent. If that is not the case where you are, there is usually a reason such as a depressed economy. There is always a reason things are as they are; make sure you know what that is.

Housing by the way is a "use asset"; it is not strictly speaking an investment asset, unless you rent it to someone else for the income. One does not get rich by simply buying things. Most people lie to themselves. They claim to have made a big profit on their houses, but they chose not to take into consideration all the interest, property tax, and maintenance that they paid for. Over the life of a mortgage (it doesn't matter if you sell early--because chances are you'd have a mortgage on the next house too), you end up paying typically roughly THREE TIMES the selling price of your home. You think you're getting rich? HA HA the bank is getting rich!

Answer 3

I've rented for one year and then bought a home and lived here for 6 years now...

obviously there are pros and cons to both...owning your own home can bring on alot of unexpected bills...taxes go up, house payment goes up...anything goes wrong and you have to pay for it...in the long run...I think it's nice to own your own home because you can pretty much do as you like to it, decorating or whatever...privacy. Renting is nice though cuz you can just move when you want to and don't have to worry about selling your home first...and all those little things that go wrong somebody fixes it for you.

I like to rent cuz I like for people to take care of things for me...my husband likes to own cuz he likes his privacy...but the way things are now days it is cheaper to own...I believe.