OK Boomer: Renting is Better than Owning

renting is better than owning
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10 Responses

  1. Love this article. It backs up what I teach in my book The Doctors Guide to Starting Your Practice/Career Right. I am adding it to my Fawcett’s Favorites next Monday.
    Thanks
    Dr. Cory S. Fawcett
    Financial Success MD

  2. Most rents will increase in time. I have never seen a rent stay constant for a decade. Assume 3% growth annually.

    • Lisa says:

      Sure, most things increase in cost over time. The question for me was, do I want to risk $300,000 to try to mitigate against a potential $600 annual rent increase? You can answer that question differently, but for me, it was too risky. And when I run the numbers, homeownership would have left me $100k poorer. It can work out for other people, but it wouldn’t have worked out for me.

  3. Steveark says:

    To me the advantages of buying include locking in most of your housing cost at a fixed rate. Rent will go up over time. The other benefits are emotional. Knowing you own your house, there are no restrictions. But it’s not much of a financial investment.

    • Steveark, the costs of owning go up overtime as well. Only the principal and interest costs were locked in, until you refinance. The property taxes, insurance costs and repairs costs keep going up with time. The reason rent goes up over time is because the landlord, who owns the property, is also paying those escalating expenses and passes them on to you. I have owned my home mortgage free for the last 20 years and it still costs me about $20,000 a year.
      Dr. Cory S. Fawcett
      Financial Success MD

      • Lisa says:

        Very good points. So many people erroneously state that homeownership means you don’t have to pay anything when your mortgage is done – not true!

    • Lisa says:

      Locking in a fixed rate is good if you get a good rate and want to live there for a long time – big “if’s.” I agree that it’s a dicey financial investment. Also most places have HOAs/restrictions even if you pay for your house. My friend had to hire a lawyer to petition her HOA to renovate her house. Eventually, it became too much trouble and she just moved.

  4. my favorite line here comes near the end. what does anyone care what i choose or you choose for housing? go ahead and wring your hands over someone else’s choice. doesn’t matter to me. they’re not writing the checks and their blowhard opinion doesn’t matter.

    i’ll agree with you on timing and price. we got our massive stone house over 20 years ago. the mortgage payment (excluding taxes which we paid separately) was $520. maintenance is kind of expensive but we swallow that in order to live within an historic piece of art. plus, we have no HOA to tell us what we can and can’t do with our property. back to timing: the place is worth at least 4x what we paid and i’m pretty sure we would not pay the present day price if we were buying today.

    • Lisa says:

      Exactly! This is one of the pieces of advice I get all the time, and I think, why does it matter to you? (Actually, homeowners need renters to idealize homeownership, otherwise their investment would fall apart). I’m very happy that your house worked out for you! It’s good advice in some areas and less so in others.

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