Why I Rent Instead of Own a Home
After I wrote my article, ‘A Little Something Learned About Apartment Living,’ a coworker asked me why I didn’t just buy a house. I got the entire spiel about it being an investment for my future, blah, blah, blah. Well, I have very good reasons, at least to myself, on why I don’t buy a house.
1.) Can’t afford it
I’m a firm believer in living below your means. I’m also not going to put myself in a position that many people find themselves in today. I can’t afford to pay double what I’m paying in rent, and unfortunately, that’s what I’d be looking at to own the house. Plus, the money in my savings account is for an emergency and not for a down payment on a house, or to be used to help make the mortgage payment for six months and then I’m without a ‘what if’ fund. I simply can’t afford a house on my own at this time.
2.) Don’t want the responsibility
As if the first reason wasn’t good enough, I really just don’t want the responsibility. With an apartment, I have a restricted space to work with. Not that I don’t like a lot of room, but what it really boils down to is that I’m lazy. I don’t like cleaning, so why would I add more space to clean. To that end, I’m thinking of reworking the budget to include maid service as it is, think how much more expensive that would be for a house. But, I also don’t want to have to mess with a yard, worrying about my own repairs, or trying to figure out how I’m going to handle a hornet’s nest on the back door. Yeck! It’s not for me!
3.) I don’t know where I want to be
The other problem I run into is commitment. Somehow, owning a home seems very final to me, and even though it’s not, it feels that way. I don’t want to live in Texas forever, probably not even long term. I’d actually like to live in California…and if I can’t afford a house here, then I certainly can’t afford it in L.A. But, I’m a military brat, through and through, so that means I get a little restless when being in one place for too long. I may eventually decide that the East coast is more my cup of tea and want to move there. I just think owning a home limits me in some ways. I don’t have the freedom to pick up and move. My mom tells me this wanderer’s spirit of mine will temper with age…or when I get saddled with a family. Phrased like that, I wonder that’s true. It doesn’t sound like hers was.
4.) Don’t really know the term moderation
When it comes to most things I’m perfectly willing to start small and work my way up, but when it comes to owning a home I’d rather go for broke. I have a house in my mind’s eye that I genuinely want, anything less is simply unacceptable. The trouble is, what I want involves a mansion and a whole lot of money to build. So, being somewhat of a perfectionist, I drag my feet on home ownership because I know it won’t be what I want right now.
5.) Less risk involved
Then there’s the matter of the housing bust that comes to mind. I had initially considered getting into a house back when they had the whole ‘0 down’ promo going on. Lots of people were doing it and I really thought it might be a good opportunity to buy, then flip and make a little cash. But for me, I was considering it for the wrong reasons and I had a feeling that would come back to bite me in the butt later on. As we can see, even the housing market is volatile and can cause people to lose a little money. In the long run, it’s probably a great investment, but coupled with my other reasons, it really does reduce my risk overall not to own.
6.) Insurance is cheaper
Ok, technically this isn’t a reason that keeps me from owning, but in truth, it’s still saving me some money. Renter’s insurance is far cheaper than homeowner’s insurance. I think I paid like $113 for the entire year last year, and homeowner’s insurance can run you $113 per month.
7.) I don’t want to pay property tax
That’s pretty plain and simple. I already don’t like funneling my money into a social program I may never see, I would feel a little annoyed at having to funnel it into property tax. Along with that, I don’t want to have to pay out money to the school district when I don’t have kids attending that school. Call me selfish, but since I work hard for my money, I’d like a little say in what schools or charities I donate to.
8.) HOA
It’s one thing to rent a place and have a landlord over you telling you what you can and can’t have lying around. It sort of comes part and parcel with renting…you expect it and even accept it, despite the fact that’s it is frustrating. It’s another thing to OWN a place and have someone telling you that you can’t have something sitting on your porch or you can’t have a home-based business by ordinance of the HOA. I’d be kicked out of the neighborhood because I’d be all too happy to tell the HOA what I thought of their rules and exactly where they could stuff them. If I own a place, I don’t really want someone telling me how and where I can place potted plants. Now, I’m not opposed to the whole “keep your lawn mowed and don’t have toilets littering the front yard.” Those make sense as they devalue the entire neighborhood; however, it’s the more specific and nitpicky rules that bother me.
So, those are my reasons for choosing to rent, at least for the time being. What do you think? Are you a renter as well? Any other reasons that I missed? Homeowners, is my logic flawed to you?
I’m a homeowner, twice over, but I was a renter for many years. I too got the “you should own” speech many times. The thing is, it has to be right for you. It was years before I decided to buy, and I did only then because it seemed like the right thing to do. I’ll be honest, I wish I was back in my old apartment right now!
1.)
“… I can’t afford to pay double what I’m paying in rent, and unfortunately, that’s what I’d be looking at to own the house..”
That’s odd because I own two properties in my own community which i rent out…one the mortgage payment is 900/month and it rents for 1200 a month and one the payment is 1550 and rents for 2000 a month. I own another one in another state and city that the payment is 700 month and rents for 1000/month. If I rented out the house I own and am currently living in, I would be up about 700/month on it as well. Surely my properties in 2 cities far from each other in different states can’t be the only 4 properties in the country like that. In fact my years of watching the real estate markets tells me I’m right. Perhaps you are looking at buying much higher than what you are currently renting..as in renting an apartment but looking to buy a house? You can buy apartments too….
2.) Don’t want the responsibility
Why not…you will be compensated for it. I don’t like having a job either, but I like the fat paycheck..and I’m sure you are similar. Do I like fixing ovens and trimming the yard? No…do I like having several hundreds of dollars at my disposal later on for doing it…you bet.
3.) I don’t know where I want to be
Me neither..I’m still not totally settled…even which community within the same state…hence owning properties in multiple cities and renting them out.
4.) Don’t really know the term moderation
Actually you do…the fact that you haven’t bought for those reasons means you are sensible about your limits. That would actually serve you well as a house hunter. I am that way as well..I want much more house than I can afford, not so much house, but land….I like vast land. You are ahead of all those idiots out there who DO indulge themselves by buying the house they can’t really afford…
5.) Less risk involved
This is important…I never, ever buy a house with the idea that I will ever sell it. Do NOT plan real estate investment on gains in market prices. Plan on long term equity growth by paying it down and renting it out..nothing else is sound. Might I sell some houses later? Sure..but the only strategy for me is to assume I’ll own every house till I die.
6.) Insurance is cheaper
Think about what you are insuring. Insuring your laptop/stereo is not the same as insuring land and a building. It’s not really a comparison. Its sort of like saying I don’t take flying lessons because having a morning coffee at starbucks is so much cheaper. The overall cost is an affordability issue which you will just have to factor into what house you can afford.
7.) I don’t want to pay property tax
Why are you ok paying sales tax that serves most of the same purposes then?
8.) HOA
Most homes are not in any sort of HOA and you are only limited to local building/safety codes. Just don’t buy in those neighborhoods that have HOA…
That being said…the fact that you have identified personal reasons and financial reasons why it might not be good for you puts you ahead of most others.
It is more headaches for me, sure…but I enjoy being semi retired in my 40’s because of it and being able to tell my 2 kids someday..oh by the way….your college is all paid for and you each have 2 homes worth about 500K total that you outright own. I have selfish reasons for wanting you to buy a home..it is actually good for the economy..and I don’t mean in a superficial(hey I’m in college with no job but bought an iPhone sort of way) but in a good and meaningful and sustainable way. Your growing wealth contributes to your neighbors growing wealth and maybe even to mine and vice versa.
Bob, you have very good points, and I don’t deny that I probably should buy a house. I just don’t want to, and I think getting into something you don’t want is a very bad idea. The reasons above still stand for me. Perhaps I am looking at too much house, which would double my payment, but that brings us back to moderation. I won’t live in a house that is run down and worn out, just so I can fix it up. I’m not that kind of girl…let me be honest, I wouldn’t even know where to begin in a house like that. So, comfortably, I’d have to look higher and I just can’t afford that right now.
I can’t really compare working to owning a home, because the two are vastly different. I actually like work…it keeps me busy and I like having something to do. Owning a home would be work, but not the kind I like. I don’t want to have to mow the grass. I could hire someone to take care of that, but that’s an additional expense. Not to mention what if something breaks down, etc. I DO NOT want to have to mess with that. It comes down to a personal choice on my stress level. I work full-time, write for this blog, and go to school full-time. I have a hectic enough life without adding the stress of homeownership to it.
Insurance, as I said, wasn’t a reason per se. It was just a statement of fact, it is cheaper. And my insurance covers more than just a laptop and stereo. I’ve explained before, I like nice things. There’s also the matter of my DVD collection, which amounts to about $7000. I’d like the money back on that, just in case. Even still, you’re correct that there’s a difference in what is being insured and truthfully, this point I was just being flippant with.
Income tax I can’t control. I have to pay that regardless of what I think, which is also why I don’t ride the toll road even though it would save me 10 minutes driving time. I pay taxes for the roads when I buy gas and when I renew my tags. I don’t feel the need to pay to ride the roads I’ve already paid for, particularly since they took an existing road and turned it into a toll road, but that’s another rant. I can’t control income tax and I need the things I buy, or want them, depending. But, I can control the fact that I don’t pay property tax because I don’t have to buy a house. Not that if I really wanted a house any of these reasons would stop me. It really all comes down to the fact that I am not ready to be a homeowner, despite the benefits to myself and others. Until such time, I’m not putting myself in a position to fail.
I haven’t found a neighborhood around where I live that didn’t have an HOA and I wasn’t being flippant with the examples. The several neighborhoods I looked at when I considered my options literally had issues with potted plants on the porch and home-based businesses - though I’m not entirely sure how they’d know about the business thing, but whatever. The fact is, that’s a bit much in my opinion.
But, I’m very glad that owning several houses for you has put you in a state of semi-retirement and paid for your kids’ college! That’s excellent news, so congratulations to you! I hope your success continues!
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I couldn’t agree more. I posted a blog post on this subject and was given some grief. I guess people don’t understand math. I think happiness without home ownership needs to be based on finding a good property manager to rent from. Renting from a cheesy landlord is not happiness.
Great post!
Great post! I have been writing about the benefits of renting for some time now.
Here are a few of my thoughts: http://thinkingonthemargin.blogspot.com/2007/05/manifesto-for-renting.html
See my other posts on the benefits of renting here: http://thinkingonthemargin.blogspot.com/search/label/renting
You don’t want to buy a home because you don’t want the responsibility, can’t make up your mind, can’t control your impulses, and don’t want to pay taxes.
Sorry but those are some lousy reasons.
Lack of responsibility, impulsiveness,and indecision are three excuses for going nowhere in life, not three good reasons to avoid a good investment.
In terms of taxes,
Homeowners insurance, property taxes, and mortgage interest are all deducted from your gross income for the year so the income tax savings negates all of those you just listed and the Homestead rebate is a nice little check in the mail in the middle of the year.
The market right now is so flooded with inventory and devoid of buyers that it has truly become a buyers market. The only big hurdle is credit. You need a good score today vice a few years ago when they were throwing mortgages out the window for anyone to grab.
Allow yourself to be scared into mediocrity or take an advantage of an opportunity - your call.
Renting is a good bet for a large group of people. There is much more to renting than to get a small apartment with all the homes for rent you can get more property to live in than with buying. When I bought housing prices were lower than rent prices. My rent on a middle of the road apartment was $910. It wouldn’t have been a good pace to raise kids but it worked for the wife and I. I bought with 20% down and pay $800 (including taxes, and insurance). Rent went up 16% in one year. Taxes are pegged to my property value so I can predict that increase. In an apartment property taxes are 3% of the property value since it is a commercial property as a homeowner I pay 1% of the property value.
[...] Your Card presents the benefits of renting. People are in such a hurry to buy a home, but I agree with this post. There are some great [...]
[...] your card tells us why he rents instead of owning a home. i found his 8 reasons compelling. i particularly can relate to not wanting the responsibility [...]
[...] Why I Rent Instead of Own a Home [...]
[...] Master your card tells us why he rents instead of owning a home [...]
[...] Master Your Card: Why I Rent Instead of Own a Home [...]
[...] Why I rent Instead of Own a Home | Master Your Card [...]
linked from squawkfox :)
It’s a personal choice, and if you are not ready for it, you are not.
But NOTHING can beat the feeling that comes with owning your own home, knowing it’s yours, having the mortgage paid off, and never having to pay a property payment again. It’s no landlord to evict you - it’ security - it’s sleeping at night. :) If you are ready to settle down, then I highly recommend it. If you are not, then you would feel it was a millstone around your neck. Whereas, I feel it is the best sleeping aid, relaxer, calmness ever invented :) Nothing gives me greater internal peace than knowing I am in my own home til I die. Settled. Content. Happy.
1. You could afford it - depending on where you chose to live. Here mortgage payments are the same or LESS than rent. My prior house payment with tax/ins was on $510. I paid off the house in 10 yrs. This house was mostly a rollover of the money, with $150/month for a small portion of a remodel/addition loan, that was paid off in 18 months. Now, only taxes and insurance, which on a monthly basis are under $100/month. Is your rent less than that? :)
2. It is a responsibility - and if you aren’t up to it, that’s that. But, being able to grow a huge garden of delicious food, and put in entirely edible landscaping are wonderful things that one cannot usually do with a rental. Or a condo or apt doesn’t require much upkeep.
3. No way out of that one … If you’re not ready, then you’re not ready. It’s wise to know one’s own self and follow one’s heart! No debate.
4. Have you looked at smaller homes and seen all they have to offer? Buying big is a LOT more upkeep.
5. There is less risk involved in OWNING :) No landlord to kick you out. No landlord to quit making his/her payments and you get evicted. There is security in having your own place, once the mortgage is paid off. I never buy worrying about resale - but about the payments being less than rent, and you have to live somewhere :)
6. My house insurance is $338 per year - I was paying $300 for renter’s. Not that much difference here - again, depends on your location.
7. You ARE paying property taxes…it’s just in the form of rent that your landlord uses to pay his/her property taxes. It comes out of the rent you pay.
8. What HOA? None here. None in most of the areas of my county. And why would you want to live in an HOA area anyway? Sure there are city and county ordinances, but those affect renters as well as buyers. And as a renter, you have to adhere to your landlord’s rules, which are sometimes more than an HOA would be. There are always rules…. sorry :(
What it boils down to is that you feel you are not ready nor willing. And it’s always wise to follow your gut feeling. Good luck!
I understand how you feel. I think I had the same list of reasons not to buy for years and I was OK with it. I wasn’t ready, didn’t want the responsibility, didn’t want to feel tied down to Georgia (or Florida), didn’t want to pay the property taxes (which as BRUTAL in Florida), and certainly didn’t know the meaning of moderation (anyone know where I can find a 2500 sq. ft. house in the Tampa Bay area under $100K? Oh, and I want brand-new construction and no condos, townhomes, or HOAs please?).
However, I moved to Florida in January and last week my apartment complex left me a note to tell me that my rent was going up 15% at the renewal. When I considered the fact that I would be paying in rent in Florida what my mother pays in MORTGAGE in Georgia, I couldn’t continue to rent.
So right now I have a contract on a house and am in the middle of negotiations on the house. It took a lot of work to avoid HOA’s with fees equal to 1/4 the mortgage each month, flood plain area, and rapacious mortgage lenders, but I’m still in the game. No one tells you that although the Fed keeps cutting the interest rate, the mortgage interest rate keeps climbing….Nasty little surprise. It’s taking all my savings but I would rather have the tax credits every year than continue to let me money just slip away.
Don’t feel bad. If you’re anything like me, something will happen that will force you to swallow your fears and jump in the home ownership pool.