Rental Property Investor · Bridgeport, CT · Member since 2018 · 49 posts · 20 votes
Should an investor own there home or rent it ? I’m hearing a lot about renting your home and not owning it , it’s good to just own investments that make you money !
I know nobody likes hearing this answer but.. it depends! I personally don't plan on renting in the near future. I lived in my first investment property as a "house hack". Now I'm currently doing a "live-in-flip" and when I sell (or rent) this house I will move into my next investment property- preferably multi family.
I personally am doing this because it's pretty easy for me. By that I mean I'm young and single with no kids. I don't mind living in a construction zone or living with my tenants if it gets me where I'm going. Not to mention that its easier for me to get a loan when I move into a house IE: lower down payment/better interest rate/long term fixed rate financing.
Also being able to get loans is muy importante to me- and debt to income ratio is a big part of that. If I were to rent a house now that would just hurt my DTI and keep me from where I want to be. Same thing if I were to finance a car or something like that.
As I get older and progress with my investing I'm sure I could end up renting. But for now it's cheap used cars and house hacks.
I will eventually try to own my primary residence. After 15 years, I want to only pay for taxes and insurance. But if you want to frequently move around, I can see why renting may be a better option.
I know nobody likes hearing this answer but.. it depends! I personally don't plan on renting in the near future. I lived in my first investment property as a "house hack". Now I'm currently doing a "live-in-flip" and when I sell (or rent) this house I will move into my next investment property- preferably multi family.
I personally am doing this because it's pretty easy for me. By that I mean I'm young and single with no kids. I don't mind living in a construction zone or living with my tenants if it gets me where I'm going. Not to mention that its easier for me to get a loan when I move into a house IE: lower down payment/better interest rate/long term fixed rate financing.
Also being able to get loans is muy importante to me- and debt to income ratio is a big part of that. If I were to rent a house now that would just hurt my DTI and keep me from where I want to be. Same thing if I were to finance a car or something like that.
As I get older and progress with my investing I'm sure I could end up renting. But for now it's cheap used cars and house hacks.
Do what works best for you. Some people live in areas where the price of owning a home is prohibitive, but they can afford to buy a home elsewhere the rent it out. If you can afford it and are planning on staying in the area, I think it makes sense to buy your own home. One main benefit is you are building equity and when it comes time to retire, your house will be paid off and your living expenses will decrease because you aren't paying for a mortgage or rent.
This has been debated many times here and ultimately most agree it depends on where you live and how expensive housing is there. Where I live, I would be crazy not to own. But even if I lived in a much more expensive place, I would still own. I've stated many times here in the forums that the life of a smallholder hands-on landlord like me can be psychologically destabilizing. I think you can say the same of most real estate investors -- by definition, we're doing what most people aren't doing, and that tends to isolate us. I derive a great deal of peace of mind from owning my own home.
BTW, if you can househack, in my book that's invariably a far better financial decision than owning your own SFR.
Agreed in a low priced market like our area only a fool or somebody going through a really hard time would rent .i mean geez it’s not uncommon to find a nice livable 3 bed for 25k .. or pay 700$ a month . Makes no sense
Like everything else , it depends on the numbers .
I live in a rent stabilizated apt in Manhattan . If I bought the any apt here I’d be paying 5 times what I’m paying now , for mortgage and maintenance , so I rent.
It’s what I love about real estate -
do the numbers and you know how to proceed . Numbers never lie .
Also, it all boils down to what you are comfortable with doing from a lifestyle point of view...
I think Grant Cardone has made the statement of "never own an SFR", but you have to try to understand his perspective.
For most investors, I'm guessing over 50% will probably own their SFR just because life happens (you have a spouse and then the kids come, and then you need a good school district... etc).
@Ola Dantis I remember Grant’s podcast abt that! Buy the apartment complex and move into a unit!
As for me, my current situation is renting a 1/1 for $600/mo after a divorce and needing to live off of cc for a few months ruined my credit.
Next step is a $400/mo loft rental above an office of real estate investors (very excited abt this opportunity coming up in a couple months.
Next step after that is househack a MFR, which will probably be my first deal. I'll need some time to rebuild my credit, build relationships with lenders/re investors, grow financial iq, and increase my income through other ventures.
I’d like to end up living in a tiny home on a few acres that I own, growing my groceries and possibly hemp!
@Charles Bruce I house hack, so I own and rent out my duplex. Seems to be great, I bought another house so I can move on to the next project. Different strokes for different folks...
We rent because buying a house would cost roughly $1,500 more per month, and that’s after 20% down. I don’t want to sink all of our capital into a down payment on a home. We are moving forward and growing the portfolio. Adding $1,500 to our expenses, and depleting our savings account by a ridiculous amount is not the move right now.
@Charles Bruce - Hard to say honestly. It would depend on where you live and what your family/work situation is like.
Owning a home is nothing but expenses unless you're able to rent it out AIRBNB some of the time. You're responsible for fixing and replacing anything that breaks. You're responsible for your mortgage, taxes and insurance. You're responsible for maintaining the yard, shoveling the snow, and protecting the area from safety hazards. At the end of the day, your only recoup on the investment is if you buy in an appreciating area and sell the house at some point.
But, at the same time. Owning your own house means you get to do whatever the F you want in it(within the boundaries of civil behavior). That, in my opinion has it's own value. It just depends how much value to you and your family.
I agree with Marci Stein. I lived in South Florida prior to the crash and I rented a 3 bedroom 2 bath home for essentially the cost of the annual property tax bill. The owners had to pay for insurance and maintenance and repairs, not to mention the mortgage. If I had bought the house, it would have cost me at least 3 times as much. Rather than buy the house, I used my capital to buy a rental property that gave me positive cash flow as well as price appreciation.
Should an investor own there home or rent it ? I’m hearing a lot about renting your home and not owning it , it’s good to just own investments that make you money !
I am an investor in Multi-Family and I rent my home. I prefer to rent my home. I have done some of the math and it is a lot cheaper. I come and go as I please.
My thing is I hate being told what to do and how to do it so not having full control agitates me !plus we grew up poor ( I know that sounds like an excuse) and for me there’s a negative psychological background that’s part of me that makes me abhor not owning the place In which I live.as a kid I always had a fear we’d be kicked out of our modest 200$ a month rental or not be able to pay for it and ultimately be on street which thank God never happened .
It blows my mind working folks that make 30-40k a year in my area would even consider renting a house that can be purchased for the same Or less as their yearly salary .
Like everything else , it depends on the numbers .
I live in a rent stabilizated apt in Manhattan . If I bought the any apt here I’d be paying 5 times what I’m paying now , for mortgage and maintenance , so I rent.
It’s what I love about real estate -
do the numbers and you know how to proceed . Numbers never lie .
In your situation the numbers are not based on reality. How much is rent in a market rate unit compared to buying? How much of a discount from market rates are you given?
People doing what you are doing is exactly why I hate rent control.
@Charles Bruce the Grant Cardone gurus would say no. I like it and own mine outright worth $545k. Some say that is dead money which maybe true, but I like the zero mortgage! If I was a single guy I would want to buy and cosmetic fixer every few years as when you sell its tax free money! Tell me where you can live in a house and have a tax free investment? Wife on the other hand is not a fan so we keep our place and stay put
Also, in my case, I have a 90% LTV HELOC where I can access my equity for RE investments which I use and pay off many times. Very convenient and you can ONLY do this if you have equity! Its a win win for me.