All my friends who bought houses before their 30th birthday I loved declare that they no longer “throw money away” by paying rent.
Although I am a homeowner now, when I was a renter, I never felt like It was wasted money. In the end, I traded my rent check for the apartment I needed…
Today I trade my mortgage payment (plus a lot of extra money I have to spend on maintenance) for a home.
Why renting is cool
The financial benefits of home ownership are often exaggerated. But renting has several great advantages that should not be overlooked.
It’s as flexible as you need it
Most leases Only year. So, if you’re not ready to live in one place for five years or longer, renting allows you to stay for as long (or short) as you want.
If you are buying a house, it is very difficult to turn it over and make a profit in a year. Thus, renting will relieve you of the pain.
You are not responsible for the content of the property
It is also worth saying that renting gives you freedom from monotonous and expensive maintenance.
When I first bought our house, I was eager to buy a lawn mower and mow my new lawn. A few years later, I started paying someone to have his hair cut, and if they get sick, it annoys me. On weekends, I have to walk around the yard for two hours.
Since we bought the house, we had to spend thousand for water supply leaks, basement flooding, worn out equipment and other expenses.
Don’t get me wrong, I love our home, but it’s not without a headache.
When I rented, I took the fact that I didn’t have to worry about service for granted. But make no mistake, being a renter is a big advantage.
Renting can bring you financial benefits
Finally, you can make the rental job financially beneficial.
If you live in a market where you can rent an apartment per month for significantly less than you could own a home, you can make the difference. And the difference doesn’t have to be huge to make an impact!
For example: Let’s say you rent an apartment for $ 1,000, but you have to pay a $ 1,300 mortgage payment for a comparable home. That will be $ 3,600 a year that you can invest.
Unlike home equity, the savings you earn from renting are liquid. You can use them to create an emergency fund, pay off student loan debt, or fund a retirement account – none of which you can do with your own capital.
Home is not always a good investment
It’s true: some people make millions from real estate investments. Some homeowners have even been fortunate enough to retire. exclusively from resale of a house 30 years after purchase!
For most, however, the reality is quite different. You shouldn’t think of your primary residence as an investment.
More details: Truth? Your home is not an investment
Yes, a well-kept home in the desired location should be appreciated in the long run. But the numbers don’t always match. The expected return varies greatly from city to city. Thus, while some homeowners are making luxurious profits, others may experience negative returns.f return on the original home purchase.
According to analysis Improvement, the average rate of return for homeowners from 1926 to 2018 ranged from 8.56% to 9.96% per year. However, the stock market slightly exceeded the average annual return at 10.1% per annum over the previous year. same period.
Faced with these numbers the decision to invest or not to invest in mainstream housing hangs on the edge of a knife. Ultimately, the profit you make as a homeowner will depend on many factors, some of which are beyond your control.
Houses are actually money holes
The next step is the undeniable fact that houses are expensive. Homes require periodic painting, landscaping, roofing, heating, ventilation and air conditioning, and many other things. They are also full of expensive devices that break at the most inopportune moment. To illustrate this, my friend had to replace his stove and the refrigerator lived in his house for the first year.
Why do you think the landlord is so slow to answer your call about a leaking sink?
She wants to squeeze as many years out of this shell as possible.
When we own our home, we make repairs and renovations based on emotion, not resale value, so owning a home is much more expensive than renting it.
You can’t control taxes – or your neighbors
When you buy a home, you are making a long-term commitment to your neighborhood, for better or for worse.
If you live in a city with a great economy and school system, chances are the value of your home will go up (as will property taxes). And if your salary is not as high as that of new people flocking to your city, you may not be able to stay there.
I saw how this happened to my parents and relatives on the part of my husband, and this not really…
On the other hand, if your area is deteriorating, you don’t just live there, you own real estate. If you rent, you can move at the end of the lease and let the landlord figure out how to deal with the depreciating property.
The only one real home ownership argument
A huge number of Americans own homes, so obviously there are several reasons why it’s worth it.
You will own once your home
This cannot be underestimated. Some people just want to own real estate. The good news is that when you pay off your mortgage, you will be exempted from your mortgage payments… If you are a renter, you always you need to pay rent.
Yes, with a home you still have to pay property taxes and utilities. but they are significantly less if you don’t have a loan payment on top of them.
You will create justice in your home
Until your property is depreciated, in time you will create justice in your home…
With each mortgage payment, you “save” a few hundred dollars or more in your net worth, which you can someday repay when selling or refinancing.
All things being equal, if you could live in the same home for $ 1,000 a month for rent, or $ 1,000 for a mortgage (of which an average of $ 600 each month goes towards paying off the principal), owning a home seems to have financial makes sense because you’re holding on to $ 600 a month excluding maintenance and other costs.
That’s definitely a good thing, but I don’t think it’s enough to induce people to become homeowners prematurely.
There are just too many other factors to consider, but I think the two most important are:
- If you do not live in your home long enough, most or all of your capital will be erased. by the realtor’s commission and the cost of closing a new house.
- Home equity is illiquid… If you need cash, you will be forced to sell your home or refinance (borrow and pay more interest).
Yes, paying off your mortgage and building your home equity will help you build wealth. But this only works if you live in the same house for a very long time and do not study for it.
Summary
Would you like my simple and serious financial advice on housing issues? Consider your monthly housing costs (whether rent or mortgage) as your rent. Spend accordingly and save or invest the difference.
If you want pride (and responsibility) in home ownership, by all means buy a home – you could even make money from it. But don’t count on your home as an investment.