What about if you want to upgrade anything in the house? You mean I cant and just have to live with whats there unless I want to lose all the money I put into making my living space nicer? YUP. You dont own the house so any money you put into upgrading and making your quality of life better is gone the moment you move out. That’s not mentioned either. I would much rather own and have the possiblity be wide open for anything that I want to make my quality of life better.

And when we did the math on our last place place, we realized finally that our 10% down on a $350K condo meant we’d pay nearly $900,000 total in interest, principal, and taxes in 30 years. Not to mention home repairs.
And if we lost our jobs, what then? Not only might we lose a place to live, like you do with renting, but we also might lose OUR ENTIRE INVESTMENT during a foreclosure. If you are renting and can’t afford it, you can pick up and move somewhere cheaper. Heck, you could move into a campground if you have to. And if you have money in the bank, no one can touch it if you owe it to no-one.
But once you are chained to a house, you have to sell it or lose out big time – on your investment, your credit, and your good name.
No thanks.
We are saving $1000 a month by renting. In a nice place, downtown, where OWNING the same property would cost us between $800k and $1.5 million.
If someday we can raise the cash to buy a single family outright ( a decent one starts about $400K here) then perhaps we’ll revisit.
But for now we are reveling in the freedom of being a renter. The world is large, and we love thinking we can go anywhere.

Say you just retired, and you have the same time horizon to consider (5 – 7 years). How would you treat the portion of funds you expect to use over that same time frame? My bet is that it would be rather conservative…a mix of cash, high interest savings accounts, CDs, Treasuries, Bonds, etc. That is, mostly liquid assets. This follows sound advice one can find from several sources.

However, given many (most?) of us (knowingly or not) face the same time horizon (5-7 years) for home ownership, we turn that thinking on its head and roll the dice with housing. Can we really afford to tie up our funds into an asset that is: 1) illiquid; 2) risky; and 3) has a high transaction cost associated with it?

Illiquid. If your 5-7 years comes up in an average or buyers market, expect to wait days or months for a sale, unless you aggressively price (in which case, your agent will love you – then, be sure to ask them to take a 4% commission). Hopefully, you don’t also have to take a hit. Hopefully, you don’t need the cash immediately.

Risky. We’ve all been fooled into thinking housing is virtually risk-less. I think we all learned the real truth over the past couple years on this. With a 5-7 year time horizon, there is not enough time to ride a full cycle to put you on the right side again. I doubt anyone truly has the skill to time the market, and if they did, think about it…where do they go for housing? Know anyone that is selling high, renting, then buying when the market is low…thought not.

Transaction Cost. What kills you are transaction costs (6% “non-standard” commission, and up to 1% closing costs, not counting any possible taxes, costs associated with moving, and with locating and financing your next home). Remember, this is a leveraged asset, so divide that cost by your equity to find the real %transaction cost. With 20% down and with just 7%, in your first year that would be about a whopping 35% transaction cost! It improves with time, as you build equity, but not much, unless you are in a 2004 to 2006 bubble cycle. If this was your 401K/IRA, you’d puke at that horrific transaction cost.

Sure, the tax benefits mitigate some of this, but, as others pointed out, you need to factor in the maintenance, HOA fees, Property Taxes, etc. for the big picture.

I think folks should think long and hard before automatically assuming that buying a house is the right thing to do, like our parents and generations past did. It may have worked for them, but it is a different world. With job security on the decline, mobility has now become important, and it seems to me that you need to be nearly as conservative with your commitment to housing as you would be on investments you’d be living off of for a five to seven year period, since you are likely to need those funds for your next move.

Something to think about.

My wife and I still live in our Luxury Rental at the Beach paying the same $750.00 per month and LOVING it more than ever. I drive around now and notice all the foreclosure signs everywhere on the mini mc-mansions that I would shake my head wondering how anyone could afford a $1,000,000 house. Now you see the reality of all that No Money Down nonsense.

We just renewed our lease for another year and Once Again, our rent has NEVER INCREASED even now on our FIFTH YEAR. Sure, the current economy has something to do with our rent not going up a single penny in 5 years. Some of these units here are renting for lower than the $750 we pay but I don’t want to move because I have my own furniture and electronics and most of the other rentals are all furnished. I love unfurnished apartments because it fells more like your space when you have your own furniture suited to your taste.

The Key to renting is to rent a Very High End unit that is managed by a big corporation with deep pockets. The nicer the community the better when it comes to renting. Of course you don’t want to pay too much, don’t rent a bigger place than you need but the key is go upscale because they will really take care of the tenants.

I thought I would update, We recently had the Washer+Dryer in our unit go out. Did I have to buy a new one? NO, I simply make a call and we have an Brand New $1000 Washer+Dryer delivered and Installed FREE OF CHARGE.

I love renting.