Renting vs. Buying a home make an intelligent decision this is a current debate and I will tell you that some of the data may surprise you. We will explore the pros and cons so that you can make an intelligent decision!

You must buy a home, renting is just throwing money away. Have you heard this statement? Heck that was my first investment. Or was it? Is buying the most intelligent course?

Renting vs. Buying a Home: Make an intelligent decision!

Advantages of Renting

• Low investment to rent a home or apartment – no large down payment needed. Generally requires a deposit and the first and last month rent. If they allow pets and many do an additional deposit may be needed?
• Renting may cost less per month – the cost to rent may be less than owning. A number of factors can have an impact on the monthly cost. Some utilities may be included, such as electric and water.
• Limited responsibility for repairs – often repairs are the responsibility of the owner or landlord. If the heat or air conditioning goes out this is not your issue. If there is a plumbing or electric problem call the landlord.
• Not directly responsible for property taxes – While you will not be directly responsible for property taxes a piece of your rent will go toward it.
• Insurance costs will be lower – Homeowners insurance is much more expensive than renters insurance. As a renter you only need to insure for your personal belongings and please make sure that you do. As a homeowner you also have to insure for the dwelling itself especially if you have a mortgage, the bank will insist upon that.
• Place to live – you have a place to live a roof over your head.
• How long will you live in the place – it is easier to move, provides flexibility. You don’t have to find a buyer or become a landlord.
• No exposure to the real estate market – you do not have to be concerned with the real estate market fluctuating. No worries about being underwater on a purchase.

Renting vs. Buying a Home: Make an intelligent decision!

Advantages of Buying

• Buying may be less cost per month – Some locations have higher rents and the cost to own may be less.
• Build equity – each month your payment goes toward paying down the mortgage building equity. There is also the increase appreciation in the value of the home.
• Possible tax deduction – the interest and property taxes can be tax deductible reducing your tax liability.
• More freedom – you are not restricted in what you are able to do. You can have as many pets as you want. You can put in a pool. It is up to you what you want to do.
• When you pay off the mortgage the house is yours – You become the owner once the mortgage is paid off. The entire value of the house is yours. If you sold it you would pocket the value of the house in cash.
• Freedom from a monthly payment – Once you have paid the mortgage off you are now free to use the payment of principle and interest and invest it in something else. Either a mutual fund or another real estate property.

Renting vs. Buying a home what is a better Choice?

 Let’s continue our journey and apply a few more pieces of data. 

For most folks the most important financial decision they make is whether they should buy a home or rent. The cost to buy is much more complicated than renting. Here is a calculator to help you compute which may be better. Calculate your results here.

What was the outcome? Should you Rent or Buy. Here are a few more things to consider.

Is your purchase of a home an investment?

The wisdom is that you need to live the American Dream, buy a home in the suburbs with a picket fence and live happily ever after.

Can youA home should never ever be bought as an investment it is a place to live. The reality is it is just a house. There is no perfect house, no such thing as a forever house.

So the answer here is if you are looking at a home as an investment you will be disappointed.

Let’s turn our attention to owning and how considering it an investment you will be shocked to learn that the data points to renting.

“Why I may Never own a home Again”

This article discuss buying a home at the peak of real estate prices in 2007. Further discussion about interest, taxes, repairs and other homeownership related expenses. Remodeling, landscaping and other up keep expenses. All sunk costs. The author makes a good argument against homeownership. He now lives in a fully owned RV and has become a landlord by default because he is underwater in his home.

This is an interesting article give it a read.

“To Retire in Style, Ditch the House”

Need further evidence for not owning. Here is an article that could very well be part 2 of the above. This article discusses what may be the result of not owning. All the added costs of renting invested instead of spent. Over 30 years this could be worth over $1 million. Read the detail here. “To Retire in Style, Ditch the House”.

Still want to buy? Or do you now feel better about renting?

“Why the Rent vs. Buy Debate is Completely Pointless”

Renting or Buying either way the choice is yours and this is a debate that neither is wrong. There are good arguments for both sides. There are many gray areas and some of the decision is personal. Here is an article that discusses this debate. “Why the Rent vs. Buy Debate is Completely Pointless”

 Here is Ramsey’s “Should you Rent or Buy a House?”

Financial expert Dave Ramsey makes it a point that your quickest way to wealth is to own a home. He does however make a point that you need to be completely out of debt and if you do not pay 100% cash your mortgage should not be for longer than 15 years and your total payment should not exceed 25% of your income.

Ramsey says that the best way to buy is 100% down which changes the equation a great deal since interest does not come into play. He also keys in on the fact that once you own your home you have significantly reduced your living expenses and free up those payments for investing.

I hope you find this information helpful. Either way it becomes important that you create a financial plan for yourself.

Prepare for your journey get your financial house in order!

Create a budget and follow it. If you need help in preparing a budget here is our article “10 Easy Steps to Creating a Budget that will put you on the Path to Financial Independence”

A budget is the foundation to building a path to financial independence. It will help you in your decision making.

The next step in preparing your financial plan is getting out of debt. All your debt student loans, credit cards, personal loans and car loans. If you need some guidance on getting out of debt our article “How to get out of Debt: Three Popular Plans”

Once you have developed your budget and have gotten out of debt the final piece is to put an emergency fund in place. Think you don’t need an emergency fund think again. Not having one and owning a home is the quickest way to turn homeownership into a nightmare. Here is our article “Emergency Fund: Six Reasons why having one is Important”.

So to sum things up Home ownership may not be for everyone. There are definitely pros and cons to both. Neither is correct and each must be taken in context of your situation.

I have been a homeowner for most of my adult life and have never paid off any of my homes. I have always paid extra to amortize the mortgage faster but never got them paid off.

When I was young home ownership was a rite of passage and part of the middle class dream. There is  a sense of pride in owning.

There was a point where we rented, our living expenses were less during that time even with paying for storage units. It did feel different in that it seemed more temporary.

Either renting or owning neither is wrong and they both put a roof over your head.

You need to decide this very complex decision for yourself. I hope I have given you enough information to make an educated decision.

Renting vs. Buying a home: Make an intelligent decision. What do you think? Can you make an intelligent decision? I hope you enjoyed this debate!

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