Renting is cheaper than buying in the long run, isn't it?

Question

I think people get caught up in buying a home and don't realize it is the worste investment you can make (other than a saving account).

I pay rent at 725. With an annual increase of 3% per year I will be paying 1795 in 30 years.If I add up my payments for 30 years it comes to about 450K. If I get a house for 200K at 1200/month (minimum for a townhouse where I live is 200K) I am gonna end up paying 432K over 30 years. Plus once you add in insurance, taxes, maintenance I am looking at shelling out about 700-900K over 30 years. Evn if my house appreciates to 900 K in 30 years. I am only making 200K. If I put the extra I would pay for a house into a 401K and IRAI figure that I would end up 1.3 million at a meager average of 7%. If I deduct what I have been paying for rent over the 30 years, I don't see why people are so set on buying is so much better financially.

Other than the feeling of "owning" a house - I think leasing is a better option. No hassle either.

plus that equity in the house is not something that I can really use. I would have to sell my house to take advantage of it. If my house appreciates. so will everyone else's.

I would come out even more ahead with the 10% my 401K has been returning over the last 6 years.

I am divorced with my kids about 4 years out of leaving the house for college. So I don't need the space.

Answer 1

I have owned, rented and now own again
Home ownership is a much wiser financial decision

I paid in renting over the years a total over $115,000 with nothing to show for it

I bet you lease your cars too

Answer 2

I do see your point of view. However, when you own you take advantage of the tax write off for interest payments as well as enjoying the appreciation of the property. When the boom was on many people were making tons of money in a 2-3 years. In NY where I'm from they have pre-construction deals and a co-worker purchased it last year for 500k and the builder is now asking 625k for the same units. Not bad for a years work and he hasn't stepped foot in his condo yet. Even if your property appreciates 5% per year over the 30 years you will get the money back you have put in your house and will have had the tax write off over the years. Renting is good if you have no other choices but if you can buy I would.

Answer 3

Being a home owner, is not only placing a roof over your head but it's an investment. Renting or owning you will shell out money but when you are an owner you have something to show and sell when you decide to leave and with renting you don't. People have received large payments for their property once they decided to move and if hard times ever arrive you have something to borrow against. Being a Home owner is better hands down!!!

Answer 4

I think that if you own your own home the cost of upkeep can be staggering. I think that the financial part of renting my be to some like throwing away money but if you buy a house then you have to keep shelling out money for it even if your not making a payment to the bank.

Answer 5

In a housing environment where property values don't go up, and you plan to never move, then renting may make sense. However, if you rent you're at the mercy of your landlord in terms of rising rent, improving the place where you live, and ultimately getting kicked out when he decides to sell the place or not renew your lease.

Answer 6

to each his own- personally I would rather have the house.

Answer 7

seems like you have it all figured out. i agree with you that renting is better.