Renting or Owning... What's REALLY the best way to go?

Question

I always hear how owing is so much better than renting, but now I'm having my doubts. I'm shelling out Property Taxes, Higher Insurance, and the cost to maintain really adds up to a lot of money. I know I'm building equity, yet the cost to maintain is staggering: paint, upkeep, new roof, furnace, having to purchase tools, lawnmower, snowblower, home improvements, etc...I'm beginning to think the public is being deluded that owning a home is so great, while I could have greater peace of mind(and less expense renting.) I would like to hear from Realtors and Homeowners what is Really the best way to go.

Answer 1

renting or owning Depends.
YES the public in getting a biased opinion about owning over renting.
Not everyone should own property. most buy based on false or over hyped nearly valuable ideas presented buy sellers agents bankers.
most people do not know the expense of a "house" and over buy , that's why i got plenty of work last two years.
most buyers are sold 'tax break' 80% can't use.
sold P&I without related expenses known.
buyers are under and falsely educated about "house" owner ship.

Answer 2

The renting vs. owning debate involves everything you have mentioned, plus more. Interest payments on the home, taxes, building insurance, and maintenance costs. You have to take into consideration the equity you're putting into the home by paying down the principal on your mortgage, as well as the appreciation in value of the home over time. Another advantage of owning is the tax benefit of mortgage interest.

Usually, owning is not the best way to go if you're going to own for a short time, especially under two years - due to tax law, and the fact that there are transaction costs to purchasing and selling a property - Real Estate broker commissions, title company fees, etc.

However, if you are in a hot real estate market, buy low and keep the property in good condition, real estate can be a very good investment.

The other part of the equation is to determine how much you are willing to have a place that is YOURS that you can do whatever you want to... choose your wall colors, your flooring, your counters, etc. I have lived in rentals and owned 6 properties. To me, there is a difference living in a place you own. Also - in general, people don't respect property they are renting as much as property they own. So if you are renting and you are in an area where there are a lot of rentals, the area (community or building) will likely not be kept up as nice as an area with zero or very few rentals.

Remember also, there are a lot of condo buildings and single family homes in patio home communities where the community takes care of things like clearing snow and mowing the lawn for you... and you still own the place you live in.

I am a Realtor and Homeowner, and those are some of the things I think about when deciding whether to rent or own.

Answer 3

It depends on where you live and what kind of house you can afford. If all you can afford is a 70 year old house that needs contant maintenance, then you may be better off renting than spending money to replace the roof, furnace, etc. Although keep in mind that every time you replace something big like that, your home's value goes up with it. So you're paying down the loan, getting regular property value appreciation, AND increasing your home's value on top of that. So your equity should be growing by thousands of dollars a year.

Also, I live in a condo (a lot like an apartment) and so I don't need to upkeep anything really. No big lawn equipment or replacing roofs required. I do pay monthly HOA fees so other people can do that, but my mortgage, insurance, HOA dues, and taxes cost just as much as renting does in this town for a comparable apartment (in Dallas). So I'm paying the same amount each month but gaining thousands a year in equity. Pretty sweet.

Answer 4

Of course there are always exceptions to the rule, but in general owning is a much wiser decision. The question is based on the long term, not the short term. In thirty years, you will have a place that is worth 5-10 times what you originally paid for it. If you rented, you have nothing. Just ask anyone who purchased in Southern California in the 80's, thier retirement is paid for. Ask any successful financial planner if they own thier own home and you will always get a yes.

The problems and exceptions come from buying, not from owning. Buying out of you price range will leave you strapped. Buying a house that needs constant repairs will test you as well. Buying for a high price will leave you with much less appreciation in the long run. And finally buying a house instead of a condo when you do not have the tools or efforts to maintain it, will leave you questioning your decision.

Answer 5

Interesting you should ask this - as just the other day I was reading an article written on this very subject...and believe it or not there was no one pat answer.

MORE AND MORE people - even people of so-called 'means' opt to rent to alleviate just what you described and let someone else worry about maintenance and upkeep and still reap benefits from certain amenities not always found with a home.

My own parents owned for many years, then tired of the upkeep issues and sold their properties - invested the monies and rented from then on.

A lot depends on you and what you prefer at this point. It's not a do or die situation - you can always buy again down the road or continue to rent.

Answer 6

It all depends on your lifestyle. Say you don't want to do snow removal, yard work or any upkeep on your home. Then renting would be a little more ideal.

Or it would depend on what your financial status is. Do you need the mortgage interest deductions on taxes? Or how about property tax write-off? If not, then again, renting would be more ideal.

Renting is great for people who don't want or can't commit to a property more than 3 years. It offers remarkable flexabililty to just go and not worry about leaving your investment behind.

The question doesn't have a right or wrong answer - just what works for you.

Answer 7

Cap,

I owned a condo on the East Coast and I loved it. Everything outside was taken care of by the Homeowners Association via my condo fees. I had very few repairs to make, but I did a lot of upgrades, by choice. My mortgage, condo fees and taxes were cheaper than my rent.

I now live in Los Angeles. My rent is $1450 for a 2/2 in Beverly Hills, which I love. The only places that I could barely afford to buy would be 1 bedroom condos in VERY bad neighborhoods. A condo next door to me (2/2.5) is on the market for $748,000. That mortgage wouldn't include inside maintenance and upgrades, condo fees and everything else that goes with.

For me, it's cheaper to rent. I'd rather "throw my money away" renting than end up on the street buying.

Answer 8

well if you buy a piece of crap you have to pay to bring it up to make it presentable.
When you rent all you have to show is your rent receipts.
When you own you build equity every year. I came to NA with $10 and today I own over $4M worth of real estate.
Buy now before its too late man!