Why do people say renting is throwing your money away?

Question

Okay, I understand that when you are buying a house it's nice, because you'll actually own something in the long run (like 30 years). But, everyone says that rent is throwing your money away. Um, you're paying to have a roof over your head. You wouldn't have that if you did not pay rent. Why is that a hard concept to grasp? Not everyone is ready to buy. You have to consider several factors. Do you have a fall back plan when something breaks-and oh, it will. Is this the state you are going to live in for a while? If not what if property values go down, etc.

Answer 1

renting is like throwing away money because it is a myth. buying a house is not a good deal look at how many foreclosures are increasing, bankruptcies and debt CONsolidation are up.
the only ones who really make money are people involved with the sale.
most people buy because it is sold to them as a good deal. the 'tax break' is bull c..p most home owners can't qualify to take it. (IRS fact)
the rent being equal to mortgage is an other bull. cr.p people don't factor in taxes insurance repair upkeep yard costs window treatment increased electric gas water bills transportation costs and filling the empty house syndron.

Answer 2

For some people it is throwing away money and for others it isn't.

There are a lot of financial factors that go into renting vs. buying, and anyone who gives a flat-out blanket answer to renting vs. buying without knowing all the facts and figures involved in that persons own unique financial, tax and rental situation is an idiot. It's not a one-size-fits-all situation.

That being said, your view of the situation is overly simplistic. Over the long run, property always goes up. It can go down from year to year, but nothing ever sells for less than it did 10 years ago.

Many things have to be considered in making that decision. For some people it is throwing away money ... but for other people, it's an extremely smart move that puts them way ahead.

For me personally, a mortgage would be more than 3 times what I now pay in rent, plus taxes, etc. Including appreciation on the house I now rent, my tax bracket and deduction for interest and taxes, owning it would cost me over $100,000 MORE than just renting it for the next 7 to 10 years. I wouldn't save (or potentially earn) a single dime by buying here and now.

If the numbers change, then I will change my plan. But until then ... my money is going into my savings account.

Answer 3

I have been renting for years. People ask all the time why I do not buy. The last time I owned a house the roof, air conditioning and the
heater all went in a 2 year period. It was way to much for a single person to cover. I rent a small apartment and like the lower stress of it. People arguee about taxs savings and equity. I argue back included heat, and propety taxes.

Answer 4

I agree. There are expenses you pay on top of your mortgage that is considered "loss" money too, for example, property tax and association fees. Here in Texas, property tax is outrageous. Most people I know pay on average $400 for property tax. If you were to include other expenses like insurance, higher utilities, upkeep, etc, it would add up to a decent apartment. So I dont think renting is throwing your money away, unless your rent is really high.

Answer 5

They say you are not building any equity by renting. this is BS if you are building net wealth.

Let say you buy a house for 100k after 30 years you pay over 300k and have a house. Then you have a old house.

let say you rent and save 300 per month after 30 years you will have 108k and that is if you put it in your mattress. buy some thing like bonds or even a saving account you will have over 375k. with 375 k in the bank you can almost retire and still rent on about 2k each month.

Answer 6

It isn't a "throw away" for everyone- you're right! We've been where we are so long that our rent would have to double before we would break even on a mortgage- even considering the tax breaks from interest write offs. You're definately right- as long as the rent is really cheap, it is better to rent!

Answer 7

You're throwing your money away because you're not building any equity by renting. It's like leasing a car vs buying a car. If you buy it, you have trade-in value for the next one. If you lease it, you have nothing at the end of the lease but an empty driveway.

Answer 8

Some people can't afford to buy- they do not have the down payment nor good credit. If you buy house you need also to pay property taxes and repairs as well and it can be very costly if you live from pay check to pay check.

Answer 9

If you can save the difference between what owning costs and what renting costs it isn't a bad idea to rent. If you blow the difference buying is better.

Answer 10

You sound like you know the answer to your own question.

Considering the way the market bubble is popping, a renter might look pretty smart right now. I think anyone telling you that should just keep their financial advice to themselves. There are many people who own ARM mortgages and they can be worse than renting.