Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I'm financially ready to move out of my parents house and live on my own. I want to rent a nice apartment and not have to worry about maintenance, property taxes, and the expense of owning a home. I keep getting mixed feedback about my decision. My parents tell me that i'm not going to be investing my money, just throwing it away and by the time I retire, I'll still be paying rent.
I'm a stickler about the area of town that I want to live in. I want stay where I grew up and near my parents (we're a close family). The problem is, homes in my neighborhood are about $300,000 and up and that's way out of my price range. If I rent, I can stay in the area that I want to be in and still afford it.
Here's my argument..
I'm putting money into a 401k and building an 8 month emergency fund. Also, if I want to get into investments / stock market in the future, I'll have that too. Isn't the house just an additional investment? Is it necessary if I will already have retirement and savings and possibly stocks? A mortgage is a 30 year commitment and I don't want that kind of debt. Really, the only debt I want is a car, I'll always have a car loan .
I may change my mind in the future, but right now, it's what I see fits my lifestyle. I work for an excellent local company which is growing by leaps and bounds in the IT department and ive already been given several raises in the 2 years I've been there. Money isn't an issue right now.
I appreciate any input.
Thanks!!
that $300,000 figure you cite is only the tip of the iceberg. you also have:
-mortgage interest
-property taxes
-maintenance
-homeowner's insurance
-high opportunity cost and lower social mobility
-utilities
-realtor/closing costs
not worth it, at least where I live. even buying a house and renting it out is a lot of work that many aren't committed to doing.
I will probably rent until the day I die. while I am young, I will get roommates to split the rent
Why do people say you have no social mobility when you
own a home. If anything you have much greater social
mobility because your money isn't being used to pay
someone else's bills like renting does.
Why do people say you have no social mobility when you
own a home. If anything you have much greater social
mobility because your money isn't being used to pay
someone else's bills like renting does.
How are you paying someone else's "bills" when renting? Are you referring to their mortgage?
How are you paying someone else's "bills" when renting? Are you referring to their mortgage?
Social mobility - as in, I want to pick up tomorrow and move to Florida. As a renter, it's quite easy. As a homeowner, it's more difficult. You have to sell your house usually, or rent it out. That is much more of an involved process if you do that every time you want to move. Some people have jobs where they move several times, or they just like to move around to experience life in other parts of the country or world.
Why do people say you have no social mobility when you
own a home.
Obviously because most people can't afford to move unless they can first sell their house. They can't afford two mortgage payments and either can't handle or don't want the hassles of being a long-distance landlord.
All a renter has to do to move is not renew the lease. That's several orders of magnitude easier than selling a house.
I think your parents aren't seeing the entire picture here. There is this knee jerk reaction that renting is always throwing away money and this isn't necessarily true. From their perspective I'm sure that buying did turn out great for them over the years if they held on to the same place for a long time. But it doesn't sound like you are at that stage of your life yet. You are still young, and probably still at a very transient period in your life where you could likely move or get married and suddenly need to change your housing situation, etc. Buying doesn't typially make sense for a short time period, so make sure you consider that as well. I would just start saving and put yourself in situation where you are ready to buy should you decide to, save up a significant down payment, and pay off any debts. Your parents mention retirement only in relation to your home, but you are making a much smarter choice at this juncture by saving money and investing heavily. As others have mentioned, you don't want to buy more house than you need at this point.
it is only because i am renting and didn't have the money tied up in a house that i was able to take part in some amazing commercial real estate deals here in nyc netting 7 figures for us.
renting is not throwing money away if the money is invested elsewhere.
your resources to invest elsewhere , ability to invest , discipline to invest and pucker factor will all weigh in on whether renting is a benefit to you or just throwing money away.
anyone who right off the cuff says renting is throwing away money ,you know has little knowledge about the different types of renter situations and opportunity costs.
Social mobility - as in, I want to pick up tomorrow and move to Florida. As a renter, it's quite easy.
Well, it's not quite that easy. If you've recently signed your lease, you could have to wait for almost a year before you could move. (Or take the financial hit to break the lease.)
Quote:
Originally Posted by mathjak107
renting is not throwing money away if the money is invested elsewhere.
That, of course, assumes that there is excess money to be invested elsewhere. If it costs the same amount (or even less) to buy as to rent, then you have no extra money to invest.
Quote:
Originally Posted by mathjak107
your resources to invest elsewhere , ability to invest , discipline to invest and pucker factor will all weigh in on whether renting is a benefit to you or just throwing money away.
anyone who right off the cuff says renting is throwing away money ,you know has little knowledge about the different types of renter situations and opportunity costs.
Absolutely agree. In many circumstances, renting definitely can be better than buying.
it goes without saying , you need money to invest elsewhere , in fact having the resources was first on my list. unlike homeowners renters are a mixed group containing very poor and very wealthy as usually homeowners are a wealthier group since they could afford to buy.
inheritance , lawsuits, buyouts etc all give folks working funds sometimes well before they can even save up that much.
in my case we were lucky enough to buy our apartment as an insider when the building went co-op back in the 1980's. paid 25k and sold it 3 years later for 95k when the co-op craze took hold.
rented and invested that money elsewhere. today the apartment is work 2.5 x what we sold it for and the investments 20x that amount. even the s&p 500 is up 15x.
you can subtract out decades of rent and still buy many apartments or homes .
Last edited by mathjak107; 01-16-2015 at 06:22 AM..
Well, it's not quite that easy. If you've recently signed your lease, you could have to wait for almost a year before you could move. (Or take the financial hit to break the lease.)
Even with a freshly signed lease, the penalty to break the rent is rarely as high as the closing costs. If you were selling a $200k house, agent commissions could be 6%($12k). If you rent was $1k/month, you could ride out the entire lease and break even right there.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
.
