Rent or Mortgage?

Question

I am 32 divorced and currently renting an apartment for 725/month. I amke enough to buy my own home, but the area I live in has outrageous land values. I think I would end up paying about 1600 for anything decent plus high taxes and insurance. I really think that I would be better off continuing to rent and invest that money rather than put it into a house. Once you take into account the interest, extra bills and incurance, it doesn't seem to be worthe it. I could see if I had a large family, but I only have my kids on the weekends and already creeping onto their teen years. During the week, I spend more time at work than at home anyway.

Do you htink I would be better to rent or invest.

Answer 1

You do not say which country you are in.

Generally speaking property market like other other financial sectors moves in cycles.

Advantage of owning the property are that no one can ask you to leave! If you buy at the right time and in good location value of your property should keep up with the inflation. In other words it should increase in value. Property market also usually is not volatile like stock market. You need not buy big but something big enough for yourself and the occasional guest.

If you did invest in stocks then get ready for a bumpy ride. It can be profitable but you need to know the game. You could make losses.

The bank deposits are safe enough but the returns usually are pretty poor and you would be lucky to keep up with inflation. In other words your money is losing it's buying power.

Disadvantage of owning the property are you can not sell part of your house if you need cash, (but you could rent it) If holding stocks, you could sell some of the stock.

If you are able to do the analysis of cost of renting against owning in detail then you would get a clearer picture. Remember your rents are making someone else rich and keeping you homeless.

Answer 2

hard to say. but financially speaking only, if u plan to live there a long time, then just buy now...in the long run, it is alway better to eventually own ur home then rent. i would also buy because u r able to...what if something drastic changes in ur life?
actually what else would u invest in? will it pay >10% in interest in return? guaranteed? if u invest into stocks or buy a company, would u be ok with the possiblity of losing it all together and still be renting? wouldn't u feel better losing a similar amount if u owned ur home?
if u really can't multiply that money very well (<10% interest per year is not impressive), then ur better off buying for now.

Answer 3

This was my husband and I biggest mistake. When we 1st got married, I told him, lets buy a condo. It's only the 2 of us, both working, decent incomes. He didn't want it. Well, 11 years later, we finally bought our 1st home. Just to think that we were paying off someone else's mortage all these years made my body cringe. If we would've have bought something in the 1st place, we would've had the house almost paid off. Yes, the bills are alot more than an apartment but it's yours and you own it. You can sell later at a great profit. I would recommend getting a house or condo. Real estate is the one of the best things to invest in. If we had the money, we would buy other houses and then rent them out.

Answer 4

Assuming you are in the US, the leverage on the extra money it takes to buy is so well rewarded after only a few years that it will completely blow away renting and investing the difference, even tax free. Interestingly enough, I just wrote an at length article on this very subject here

http://www.searchlightcrusade.net/posts/1153257206.shtml

Answer 5

I work for a very large bank in real estate lending. Given the information you have provided here I would probably advise against buying a home at this time. We work to live not live to work. If you buy this home it sounds like you will be doing the latter....

Answer 6

your financial condation is very much profitable if you'll be here in the Phillipines your c ash amount is like yuore living like a king