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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.
What kind of a renter will you be? If you can put money away invest right you can make more money over time than a house. A house can be a liability for a long time. Your life can change. You may not be living there near your Karen's for 30-45 years. What if you get a job offer in 5 years paying 20-30-40% more than your current wages. But it's in another city 120 miles away.
Lots of the rent vs owning really depends on your financial ability and discipline. There is no right answer. Owning homes worked for us, But it's not for everyone.
If you can save and invest and don't like the typical requirements of homeownership then renting isn't a bad thing. You're throwng money away if you go buy stupid crap instead of saving it and investing it.
IMO buying a home is BS as a young single person. It's pretty simple: you don't need that much space for just one person! With that said, I would recommend checkout the NYT Rent vs. Buy calculator and just running the numbers for your area. It's always best to make a decision based on data.
Remember that owning a home isn't just a mortgage payment, it's property taxes, maintenance+repairs, and a lot of other work (which, if you can't do all yourself, you'll need to hire someone to do). If you take the difference between your rent and what the true cost of owning a home is and invest that money in an index fund, you'll frequently come out ahead. With that being said, be sure you invest the difference.
Renting while you are young is an awesome way to build wealth, particularly if you decide to not live in a super-luxurious apartment. If you are young and single, you will never have a better time in your life in the future to save money, so don't waste the opportunity!
A little about myself - I'm about 2 and a half years out of college and renting a studio apartment, while saving and investing 2/3 of my income. I work at a local high-tech company. The cheapest condo in my area is $300K, so owning a home is just ridiculous. But it's more than just that. I hate having to deal with maintenance, so I just call my apartment's maintenance crew. I like to be flexible in case a new job opportunity comes up, or I decide to move to a different city. I don't like debt either. And honestly, why do I need a house? I'm just living by myself - most of the space would go to waste unless I decide to rent out rooms - which is more work.
I'm actually so disinterested in owning a home that I never intend to buy a home (see Why your house is a terrible investment). I'm building the cost of renting into my retirement plan. I want to have the ability to travel the world at will, rather than being tied down to one place. And in meantime, all my capital is invested in low-cost index funds making a return, rather tied up in a home, which only appreciates with inflation.
Ultimately, buying a single-family home is a lifestyle decision, not a financial one. If you want to live the suburban lifestyle dream, go right ahead. But personally, that's just not for me.
When I was young, I move often because I get tired of being in one place all the time and secondly, I switched jobs often and always wanted to always be nearer to work.
Bought a house in 2010 because I got tired of moving and rent was more expensive than paying a mortgage. So, it makes sense at that time to buy then rent. Even with all the expenses of owning and property taxes, it's still cheaper than renting.
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!!
you need to rethink this statement. You dont want debt on something that potentially can go up in value but you want debt on a car that goes down in value. Huh?
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!!
Have you tried out the New York Times Rent vs. Own calculator? It is quite comprehensive and has been much improved over the past versions.
You put in your parameters for a house you would buy, and the calculator gives you an "equivalent rent" figure - if you rent for less than that, you should keep renting and invest the difference. Otherwise you should buy.
If you don't like maintenance, you can buy a condo where they do most of it for you. If you move frequently, then you can put that into the calculator and it will be taken into account.
The one thing not accounted for is RISK - if you buy with too low of a down payment, you could end up with too little equity to sell when you need to.
I was in your situation about 4 years ago. I am now 26 and own my own condo. However for the 4 years I lived out on my own I LOVED renting! For one, I switched jobs and locations 3 times. I had roommates everywhere I lived which saved a significant amount of money versus owning. It wasn't until I wanted to live alone that I eventually bought, which was actually cheaper than renting for me. The total bills for my condo is $1,232 / month which I can probably get rent of $1,300 or so. My goal is to live here a couple of years then rent it out, hopefully the price to rent goes up even more by then.
Anyway, IMO you are young and just starting off. Go rent and don't worry about the headache of HAVING to pay a mortgage. Save up an emergency fund and play around in the stock market first. After 4 years or so, reevaluate and figure out what you want to do from there.
If you were very smart, you would find roommates to live with.
I'll never understand the "throwing your money away" argument about renting a house/apartment. Throwing your money away, to me, would be spending lavishly on things you don't need. You need a place to live and the rent pays for that. I owned a home and like many Americans lost money on it. I did the math and I'd have ended up much better off had I simply rented for those years.
Like others have said, do what's best for YOU and don't be sucked in by others who seemingly think their situation is a one-size-fits-all.
I'll never understand the "throwing your money away" argument about renting a house/apartment. Throwing your money away, to me, would be spending lavishly on things you don't need. You need a place to live and the rent pays for that. I owned a home and like many Americans lost money on it. I did the math and I'd have ended up much better off had I simply rented for those years.
Like others have said, do what's best for YOU and don't be sucked in by others who seemingly think their situation is a one-size-fits-all.
I think it comes from the realtor industry. They are, for obvious reasons, trying to convince people to buy a house...
A house is only a good investment if you truly want one, you plan on staying in one place for a long time, and/or you happen to live in an area where home prices appreciate considerably. Otherwise you can do just as well as a renter if you don't spend elaborate amounts on rent, and instead invest some of your money for the long term. Sure, a house is yours after you've paid it off, but while you're paying on it, you're also paying all of that interest, and upkeep. A lot of people buy a house for x. dollars and think they came out way ahead because down the road it's worth a lot more. But they don't look at what it actually cost them to buy the house, x+ interest and all the other costs.
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