Buying vs Renting - Give me your opinion please

4 Replies

Hey all,

I'm 27 and at the point in my life where half of my friends are renting and half of my friends are buying houses. I'm doing neither, because I live in my parent's basement due to my upcoming wedding on June 23rd. I'll be moving out with my wife at that point.

I understand that buying vs renting is a heated topic and both camps have their valid arguments. Based on my research on the topic, I've formulated the following statements:

Buying: In exchange for heavily decreasing your cash flow, you're able to secure more square footage to live more comfortably. At the end of the day, buying a house is just a forced savings plan. Appreciation, principal pay down, cosmetic updates, etc. only add to your "savings" account. While, paying property taxes, closing costs, realtor fees, paying interest, paying for the materials for those cosmetic updates, etc. only decrease the value in your "savings" account. At the end of the day, all you can hope for is that the market is on your side and that you net out positively. 

Renting: In exchange for a lower down payment, typically only a security deposit, you're able to secure a more flexible lifestyle. You keep your cash flow higher for potential life opportunities that may present themselves. Your monthly rent payment is the highest you'll pay for your housing situation, due to you not having to worry about repairs, updates, etc. However, by renting, you give up the ability for the market to be on your side and grow your "savings" account with appreciation and principal pay downs. You also give up some peace knowing your lease may not be renewed next year or that your rent payment will increase dramatically.

Just curious, based on your life experiences. Are my overall statements correct? Would you have done anything differently than how you did it?

Thanks,

Chris

@Christopher V.

Seeing as you posted this question in THE Real Estate Investing MECCA, I am fairly sure no one is going to say that renting is a better option.  You would literally be throwing money away and helping someone else grow their wealth.  Buy a house if you have the ability to. If not, find a way to. Offset the higher mortgage payment by house hacking and renting out a room. Get in the game, brother! 

So my opinion is that, it depends. Generally, apples to apples, renting is more expensive for the same property (otherwise why would anyone be a landlord), so if you have a family and need a larger house, buying with an FHA loan or "house hacking" is probably a better option. But, if you're single, don't need a lot of space, don't want to house hack, and can get into a studio or 1 bedroom for significantly less than the mortgage of a small house, it may not be a bad idea. A house is a liability just like a rent payment, so it depends on which is more of a liability.

@Christopher V. I'm taking your specific situation out of this comment, since I don't know it anyway.

A personal residence is nothing but a liability. UNLESS you can make money from it. House hacking provides a way to do that.

If I were you, I'd look into house hacking for sure.

IMO paying mortgage is cheaper than paying rent. Even you are not going to make money with the house but at the end when you are retired, your house is paid off so you dont have to pay for a place to live anymore.

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