There’s Nothing Wrong with Renting

Nothing wrong with rentingAlthough I’m a homeowner, I’m not one of those people who thinks that you’re throwing away money by renting.  I think every situation is different and you should base your decision of buying a home on your individual circumstances.

Last weekend I was talking to a dear friend and she was telling me that she was getting some pressure from her mother because she was still renting.  My friend’s mother enjoys real estate and has several properties that she rents for income. She’s been doing this for over 20 years.  My friend is not against being a homeowner but she knows that being one is not easy because she has seen what her mom has gone through managing her properties.  In addition, and most importantly she is not financially prepared to be a homeowner.

I told my friend,” there’s nothing wrong with renting, especially in your case”.  She’s been trying to get her financial house in order and trying to become a saver rather than a spender.  She also has a special needs child who requires extra help that sometimes has to come out of her pocket.  Additionally, she really loves the school district that she’s currently in for her son and she would never be able to afford buying a home in that school district. This point alone is worth her staying a renter.

The funny or maybe sad thing is while we were talking about this subject she received a phone call from her mother asking her if she wanted to buyout a leased BMW SUV that her sister was returning to the dealer.  I felt bad for my friend because it’s not easy getting all this pressure from her mom but I told her she was doing the right thing for her case.  Her mom obviously doesn’t get it and is really not giving her daughter the best advice. Mother doesn’t always know best.

I actually have another friend who lives in an excellent school district as well and I told her she should not even consider buying a home there because the taxes are too high.  She’s better off being a renter for now until her daughter graduates high school.  She’s a single mom and she’s doing just fine by being a renter.

Last month I was watching Suze Orman and she spoke about the Financial Lessons of 2013.  One of the lessons was this very point –  there’s nothing wrong with renting.  She explained that just because mortgage interest rates are low does not mean you should be flocking to buy a home.  She said, “remember it was this kind of thinking that got us into trouble a few years ago”.

My advice to my friend was, you’re better off renting. I told her she can continue getting her financial life in order and start saving for the future. In the mean time she’s getting access to an excellent school district where her special needs child can thrive. She made the right choice for her individual situation and she should not doubt that.

What are your thoughts on renting vs owning and have you ever been pressured to be a homeowner?

 

 

Comments

There’s Nothing Wrong with Renting — 41 Comments

  1. I’m a renter, and plan to keep renting for a few more years at least. My boyfriend and I are both seasonal employees only (we work for a college) so we are both laid off each summer. The security of not having to worry about repairs around the house that comes with renting is a major draw for us. We can use our savings and emergency funds for other things. This also gives us the freedom to explore moving to a different city in the future if better opportunities come up.
    Amanda recently posted…January Money RecapMy Profile

  2. I think there is a ton of pressure for young adults to purchase a home while they are in their 20s, or at least 30s. I agree with you, though, that there is nothing wrong with renting and it’s something that shouldn’t be almost ‘frowned upon’ when you reach a certain age.
    DC @ Young Adult Money recently posted…5 Creative Ways to Pay for TravelMy Profile

    • Yes, renting is frowned upon by many people and that shouldn’t be especially if a person cannot afford to buy a home.

    • For many years we rented because it was cheaper for us to rent in our area. Eventually we grew tired of the lack of space but we had saved enough for a 20% down payment and we took the plunge.

  3. Oh I definitely felt the heat when I started renting. My parents and my parents-in-law swore that I was being financially foolish by “flushing” money down the drain by renting. Why not build equity rather than paying someone else’s mortgage? But we just got married, we didn’t know where we would settle down, and my wife was in the midst of a career change. I think renting provides much more flexibility. Now that we’re stable, we’re looking at buying, but those prices in NYC are astronomical. It’s tough!
    Andrew@LivingRichCheaply recently posted…Are You (Financially) Better Off Than Your Parents?My Profile

    • I hear ya. We have a few friends in NYC and they are all renting. It’s almost impossible to own there.

  4. Thanks for the post Raquel 🙂

    Personally, I love renting! My mom raised me as a single parent as well and she always rented. I like the flexibility that renting offers and of course there’s the no hassle issue of maintaining a dwelling. I also never liked the idea that the bank owns your home until every last mortgage penny is paid off in full. But hey, that’s just me 🙂 After all, as you stated, what works for the individual is what’s important!

    Take care and all the best.

    Lyle
    lyle @ the Joy of Simple recently posted…Simple Sunday – 1My Profile

    • Hi Lyle, my mom always rented too. It is completely different to be a homeowner than a renter because everything is on the shoulders of the homeowner. Thanks for stopping by and commenting.

    • It definitely is not for everybody and no one should be pressured into buying a home, especially if they cannot afford it.

  5. I think you gave your friends great advice, Raquel! As you and I both know, there are LOTS of repair and other expenses that come with homeownership that renters don’t have to deal with. Sometimes I sit and dream about how nice it might be to rent, especially when I’m calculating how we’re going to fit a new roof into our budget. 🙂
    Laurie @thefrugalfarmer recently posted…Credit Cards: Did You Know These Truths?My Profile

    • I was always a little leary about being a homeowner myself. But we also got tired of renting due to lack of space and other cons of renting. I think if rents were lower in my area I wouldn’t mind renting again but I don’t think they will decline.

  6. You give a valuable advice to ur friend Raquel.Renting is much better than owing or buying a house or car
    because renters dont need to pay off any repair bill even they dont have any maintanance cost.
    Another obvious benefit that renters have over homeowners is that they do not have to pay real estate taxes.
    In case of home insurence here also renters beat buyers as renter`s insurence is much cheaper and it covers quite a lot.

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  8. I’m a firm believer in renting, if the cost of the rent is cheaper than mortgage repayments. I do however own 2 investment properties and still continue to rent, with the intention of possibly buying 1 -2 more this year.

    Tell your friend that there are other ways to invest to make passive income, owning rental properties isn’t the only way.
    Mr Ikonz @ Project Ikonz recently posted…I’m now debt free! (and have no car)My Profile

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  10. Great post. I hate the societal pressure for home ownership. Home ownership brings with it a required investment & ongoing costs: upfront closing & financing costs, committing to say in one area for a longer period of time (sometimes without knowing if it’s a neighbourhood you will like), a household repair fund for scheduled and emergency upkeep, taxes, significant funds for downpayment and equity over time that you could have invested, and more space than you would likely have chosen if you were renting (homes tend to be larger when owned rather than rented, because with rentals, you are not planning for the future – kids).

    Don’t get me wrong. I’m a home owner myself, but my husband and I often reevaluate our position and we think that, were a few variables to change in our lives, we would sell and rent instead. I think there is no right answer. You have to evaluate your situation independently of what any “expert opinion” has to offer.

    • I can relate to how you feel. I’ve been a homeowner for almost 2 years now and I’m definitely conflicted about it. Some days I love it but some days not so much. Especially when expensive or surprise repairs are required. This is something I am not used to (I had always been renter) and I often think about what else I could be doing with that money.

  11. We’re renting for the moment, after getting burned badly in the real estate crash. In the long-run, buying is certainly cheaper for the tax advantages, appreciation, and building equity — but that also assumes you want to stay in the same house for years and years. A wise man once told me mortgage is french for “death contract!”

    In the near-term, renting is orders of magnitude cheaper. You don’t need 20% down — here in California that’s AT LEAST $60k — and you don’t need to sign a 30-year contract. Could that cash be put to better use elsewhere? Could you invest it in your own business?
    Nick recently posted…How to Grow a Passive Income OnlineMy Profile

    • There are certainly some pros to owning a home as you mentioned, but I don’t think it’s for everyone. And I certainly don’t approve of pressuring people to become homeowners. I don’t understand why some people see renting as something wrong when in reality it is a suitable option for many people.

  12. Couldn’t agree more. While home ownership may be the right choice for many, it’s financially reckless to just ASSUME it’s the right choice for you before you take a look at your particular situation and run the numbers.

    I am a very happy renter. I live in a city where rental costs are out of whack with ownership, making renting a better deal. On top of that, we have great tenancy laws (well, great for the tenants) that make renting even more attractive.

    One of the tricky ways that renting has saved me a BUNDLE over the years is because it discourages you from spending on improvements. If I owned a home I know I would have spent a lot more on furniture upgrades, unnecessary but nice-to-have cosmetic changes, etc. While my apartment is very cute and I’m proud to have people visit, I haven’t purchased many of the expensive furnishings I’d have been likely to pick up if the space felt more “permanent.” This is kind of funny, since I’ve lived in each of my apartments about as long as the average person lives in a home they own.

    • That is certainly an advantage to renting as most rental places don’t allow you to make improvements other than paint (maybe). My personal favorite of renting was calling my building manager when something broke down. No stress of how much it would cost or finding the right contractor for the job.

  13. Many people who should have never purchased a house got caught up in the housing meltdown and ended up in foreclosure. You see it all the time on the house hunter shows where the buyer has no down payment or wants the seller to pay closing costs. I have more respect for those who recognize that renting is the proper option for them at this time in their lives. And good landlords provide a great service to the economy as well, by providing homes for people to rent.

  14. Here’s how I did it…I’m a bit older than most of you. I rented until I married at 30. Loved renting. Bought a small first home, then in line with the american dream, built a huge custom home. Hated it from the day we moved in. Too impersonal. I prefer smaller cozy dwellings. Later, got divorced, and immediately bought a home, thinking that I must provide a “permanent” home for my children. To give them stability, right? What ridiculous thinking. Now I have too big of a house that I will have to sell eventually. (Home ownership makes a HUGE sucking sound on your wallet. Think super powerful shop vac like noise.) And guess what I will be doing? RENTING!!! I actually added up all the home related costs and they would equate to $1350 in rent. And I will be so glad when I am not responsible for the yard care or the home maintenance and repairs.

    • One thing I’m glad I did was buy a small home. Our mortgage and utility bills are low and we did get a low fixed interest rate as well. But like you I don’t see myself being in this house when we get older and no longer can keep up with mowing the lawn and shoveling snow. A rental would be much easier on us.

  15. While renting you don’t need worry about selling the house before moving, You can move any time and choose a home which is better for you. If you don’t like the environment then you can leave.

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