IS RENTING A HOUSE or BUYING BETTER?

Question

I've heard friends who worry all the time about the price of this and the price of that from owning a home... and honestly it makes me worry, which is better?

Answer 1

Owning a home builds YOU wealth. Renting builds MY wealth. Owning affords an opportunity to sell at a later date for a profit and exempting the sales proceeds from a tax gain up to $250,000 (X2 if married).

Your renting affords me the opportunity to sell my investment (that you have rented and are paying the mortgage, taxes and insurance costs for me) for a profit as it is appealing to another investor for the income stream. As in investor I can ether take the net sale proceeds and run paying the capital gain tax of 15% if held over 12 months or using a 1031 tax exchange and rolling the cost basis forward into a new investment that I may like better, tax free with restrictions to use that benefit.

So, as you now see why, I am a home owner. Here is more to ponder.

There are tax breaks like interest deduction off income taxes that comes with owning, but not for renters. In essence the government is subsidizing your house payment via tax deductions when you have a mortgage. The property taxes you pay are deductible on income taxes, too. Plus there are numerous programs out there to assist in buying a home for first timers. Take advantage of them, the government wants you to own a home. Our country was founded based upon its citizens having an ownership stake in it's success. Very ingenious, very effective. Property owners fight to retain ownership, tenants walk away w/o a fight.

The question you have to ask is do I want to build my own wealth or somebody else wealth? I always advise that it is best to build your own. My sons are well on the way to owning their home free and clear by age 35 using the plan I devised for them to become debt free and home owners. Anybody can do it with a plan and action.

Answer 2

If the market is collapsing, renting is best. If it's rising, owning is best.

When you buy, there is always the risk of unforseen repairs. A good inspection will allay those issues most of the time, or at least let you know what you'll be facing.

A smart homeowner will always set aside some $$$ each month for future repairs. For this reason it's critical that you do not buy the most expensive place that you can afford. Always leave room for unplanned expenses and emergencies. If your lender qualifies you for payments of up to $1,500.00 a month, ask them how much house you could get for $1,000.00 a month. Make that your maximum price and you'll never get caught unprepared!

Answer 3

Buying your home is the biggest investment you can make with your money. Although property prices and the buy and sell market fluctuate, you actually will make out in the long term because housing prices seem to go up and up.

With your down payment and mortgage, you will have more credibility as a home owner with equity in your home for collateral on "loans"

I know its nice to rent, if you don't like to do a lot of house work, including roofing , plumbing, ,wiring, siding, painting,
and keeping your house in a1 condition.

However, if you don't like being a homeowner, its yours to sell too. That's all financed with your mortage for risk.

Condo's are great, because someone else does all the work for "home improvement"

Yes, if you buy a house that is over your price limit, you can
be "
house poor" with all your money going into your home and nothing left. So I recommend
a seminar on home ownership in your local municipality.

It's alot of upkeep and you always have to keep the house
up to par in order to get a good sale price if you decide to move.

What kind of lifestyle do you have? Get a starter home, and see
what its like. Good luck.

PS You will never see your rent money again that's for sure
That only makes your landlord rich.

PSS Find a place to buy a home without high taxes.
Find a place where you truly own the home and don't pay house and school tax at all. again, good luck

Answer 4

It is a myth that renting is always worst off than buying.

Rent vs. Buy as Housing Market Continues to Slump

As housing market slump, it is easier to calculate "Rent vs. Buy" scenario. Because "appreciation" is no longer a factor.

Mortgage payment consists of two parts: interests and principal. Interests are like rent, which doesn't add to the equity to your house. It simply disappear as your pay it.

If interests portion of the mortgage payment is roughly equal to rent of equivalent property, then it is a decent buy.

For example, let's buy a $500,000 condo with 0% down and apply interests only loan (just like renting a place). Mortgage payment would be $3250/month. It is a bad buy, because you can enjoy same property for $2000/month.

Please note that I assume the tax benefits from home cancel out fees from home association and property tax. For more accurate calculation, consult with your CPA or accountant. But NOT your realtor, whom will say anything to get the deal to go through.

And again, if you like a particular property, then paying more may be reasonable. You are the only person who can decide how much more premium you are willing to pay.

http://money.cnn.com/2006/09/08/real_estate/caught_in_the_bubble/index.htm?postversion=2006090814
http://money.cnn.com/2006/09/05/real_estate/Ofheo_home_prices/index.htm?postversion=2006090514

Answer 5

buying a house is better. when you are renting a house you are paying your landlords mortgage payment. you have a place to live, but it is not yours. you do not own it. you may live there for ten years and get evicted and you have nothing to show for all the money you have put into the place to make it liveable for you. when you buy a house the money goes towards your equity. you build equity with every payment. you have more ownership with every payment. if your mortgage payment is $800.00 and you pay $850. you just bought an additional 50 dollars of equity in your home. besides with a fixed rate your payments won't get jacked up do to the brand new car you just bought your landlord with your last months rent.

Answer 6

Buying. You can do whatever you want with the place. You could grow grass in your living room instead of traditional carpet if you really wanted. There are tax breaks associated with owning a home, and you are building equity. Renting is like throwing your money away, you get absolutely nothing out of it in the end.

Answer 7

buying a home is better. renting is chucking money down a black hole to pay your landlord, when you buy a house, you're really just paying back yourself when you pay the mortgage. even the interest you pay to the bank isn't that bad if your house price rises, which it usually does.

Answer 8

buying a home is way better, when you rent you are just paying someone elses bills and you never get to sday one day this place will be mine. yes some houses are pricey, but it also depends on where you look and you price range. good luck

Answer 9

buying a house is investing in yourself.
renting is simply making someone else richer.

buying a house entails A LOT of stuff but if you can achieve owning your own house, then you own the greatest piece of equity one can have. with it you can do many things and do these things as you see fit. it's a major investment of your time and money but in the end its all for you, not someone else.

Answer 10

If you can afford it...BUY! It is good to build equity and put money into your own pocket instead of a landlords. It is also a great tax deduction.