Rent Vs Buy?

The first thing to keep in mind is the decision about whether to rent or buy is an intensely personal one, and there is no right answer. There is no one-size-fits-all solution for every person or every family. I am not going to try to persuade you that you should buy a house. The fact of the matter is that there are times when it doesn’t make any sense, and there are people for whom it doesn’t make sense. For example, my brother-in-law doesn’t want to own a house because the idea of being responsible for maintaining frightens him. He prefers being able to call the landlord, and the landlord sends someone to come and fix it; he doesn’t have to worry about it.

Financial Aspects

The other thing is that deciding if you want to rent or buy is both a financial decision and an emotional one. The New York Times has an excellent calculator about the financial aspect of renting vs buying. Rather than me trying to re-create something less effective, you should just go use their tool. If you have questions about any of the numbers–what you should plug in–please get a hold of me, and I would be glad to get you the information you need; let you know what average house prices are, or current property tax rates are, for example.

The link to that calculator is here: New York Times Rent vs Buy Calculator

Lifestyle and Emotional Aspects

The lifestyle and emotional aspects of renting vs buying largely boil down to where you want to live, how long you plan to live there, how much control and responsibility you want to have over your home, and the predictability you want to have.

Where you want to live

The reality is that for most people if you want to live in a big city like New York, LA, or SF, you are probably going to need to rent. And if you want to live in the middle of nowhere, you may have a hard time finding a place to rent. So, there is this spectrum of availability of housing that can dictate what your options are. The more urban, the more likely you are to need to rent, because the cost to buy is so high. The more rural the more likely you are to need to buy, because there aren’t any rentals available.

How long you plan on living there

Generally speaking, it doesn’t make sense to buy a house if you aren’t going to be there for at least 5 years. There are costs associated with purchasing, and not just financial ones, that make short term stays unpalatable. Buying a house is really stressful. Selling a house is even more stressful. If you can avoid that stress, I suggest you do. The one big exception to this is if you are in the military, or want to be a landlord*. But if you are in a career field that is going to require you to relocate a bunch, renting may make more sense.

Control and Responsibility

One of the big advantages of renting is that the landlord is responsible for all of the maintenance. One of the big disadvantages of renting is that you usually can’t personalize the house very much, sometimes including not being allowed to paint. So, you don’t have very much responsibility for the house, but you also don’t have very much control.

Owning is exactly the opposite. You are entirely responsible for the upkeep of the house, but you can do anything you want to it. You can make it bigger if you want to. You can even make it smaller. If you want to paint pink stripes in your bedroom to make it look like a Victoria’s Secret bag, that’s an option. (My younger sister did that to her bedroom in high school.)

Predictability

One of the largest advantages of buying a home is that you can–and should–get a 30 fixed rate mortgage. Once you do, your monthly expense for owning the house will never go up. You can re-finance for a lower rate if they go down. But if interest rates go up, you never have to re-finance. You might have increased insurance costs and property taxes, but the base cost of the house will never increase, even if the property doubles or triples in value.

The same is not true of renting. If property taxes go up, your rent will go up. If insurance costs go up, your rent will go up. You should anticipate that your rent will increase every year.

Ultimately you have to decide what kind of lifestyle you want, and how much you want to and can spend to obtain that lifestyle. I think homeownership is one of the greatest drivers of wealth, and not just financially, for ordinary people. It’s part of why I’m a real estate agent. But homeownership doesn’t always make sense. It’s not for everyone, and it’s not for everywhen. Sometimes renting makes more sense. And you have to do what is best for you and for your family.

If you aren’t sure what makes sense for you, I’d love to have a conversation with you about it. I’m here to provide clarity and guidance. Discussing your personal situation could help you determine which option aligns best with your lifestyle and financial objectives. Consider setting up a time to chat with me. This conversation will be a straightforward discussion about your needs and the practical steps you can take towards making an informed decision. No pressure, just the information you need to make the choice that’s right for you and your family. If that’s something you want to do, click here to schedule that conversation.

*If you are in the military, I strongly suggest that you buy a house everywhere you are stationed. With a VA loan, and appropriate seller concessions you can buy a house with less than $1000 out of pocket. When you move to your next duty station, you keep the house and rent it. Over the course of your 20 year career, as your tenants are paying down the loans, you can easily have a million dollar real estate portfolio, that you can keep scattered throughout the country, or you can sell and re-invest wherever you decide to retire. If this idea interests you, let’s have a conversation about what that could look like for you.