Rent Versus Owning
Whit Honea has an interesting article in Good Housekeeping titled “I Never—Really, Never—Want To Own a Home.” Many people in Fort Wayne prefer to rent versus owning. After a bad experience with owning a house that became a money pit, Honea then lost the house through foreclosure. He and his family are confirmed renters.
He says, “Owning a house ties one to a place in ways that we don’t care for, which is as close to forever as tax laws will allow. We tend to prefer the open road and the promise of adventure. We traffic in experiences rather than the rote of routine. Not that there is anything wrong with routine, it’s just not our thing.
“Additionally, I believe that renting allows a peace of mind whereas owning creates burdens, namely in the constant upkeep and repair required to maintain a house and the lot that it sits on. When we owned a home, there were things that kept us awake at night, the stream of needs and the price tags tethered tightly to them, not to mention the time and know-how required for each.”
Trulia has a piece about renting vs. buying and it shows that if you rent at $1,500 per month, in ten years that rent will have cost you $232,932. That’s enough money to buy a house.
Still people prefer to rent versus owning. Why?
- Flexibility – if you don’t know how long you will stay in a particular area, renting works well
- Career stability – many young people seem to change jobs frequently, renting works well
- Credit – is either poor or not well established. The good news here for renters is that on time rental payments can establish credit.
- Income instability – It is hard to make a long term commitment on a house when you have worries about a stable income.
- No maintenance expenses – when something breaks, just call the landlord. Maintenance can add significantly to the cost of home ownership.
- No down payment – while zero to three percent down payments are available, is was the usual down payment.
- You may be able to rent an apartment with all the amenities you desire like a pool, gym, social meeting area, and conference facilities.
- The idea that homeownership doesn’t carry a lot of risk with it is wrong,” says Richard Green, a professor at the University of Southern California, Los Angeles. “If you are in a mutual fund with a long-term perspective, it is probably going to grow faster than real estate values. Housing can be more volatile than you think” depending on location.
And the reasons for buying:
- The biggest is equity build. Equity equals home’s value minus mortgage debt. Mortgage payments go to the bank and you gradually pay down the mortgage.
- Landlords generally raise rents, especially if the market for rentals is tight as it is now. If you are already paying a third or more of your income for rent, meeting the rent can get tougher. A mortgage payment is fixed for 30 years.
- A symptom of inflation is housing going up in price over time. Many cities, across the country are experiencing increases each year. A seven percent increase each year doubles the house price in 10 years and increases your equity.
- Rental payments are not tax deductible. The interest paid on a mortgage is deductible on your tax return. You can look at it as Uncle Sam helping you buy your house.
- Creative control – you want to paint a wall purple, tear out a wall, hang every picture you have, no problem. You don’t have to get permission. You also don’t hear foot traffic from a tenant up above you or a stereo blasting.
- A house is your castle, your rock. Ownership is stability. A house is private property and for the most part, we still protect private property rights.
- Think of school. If you have young children, owning a home lets you give the children the stability of staying in the same school district for an extended period.
We are JT Integrity Properties and we are here to help homeowners out of any kind of distressed situation. As investors, we are in business to make a modest profit on any deal, however we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple honest truth about your home and how we can help you sell it fast to resolve any situation.
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