Should I buy a house or continue to rent?

Question

Hello,

I am a brand new to real estate investing and still looking to purchase my first buy and hold. My question is: should I buy or rent my personal home? Some investors have told me buy, and some investors say rent. I'm not sure what is best. Please help!

Josh Mitchell · Answer

@Katrina Lane

Why not do both, and live in your home, while you rent out a room to limit your costs? May be a win-win scenario for you!

Katrina Lane · Answer

Thank you all for your help. I will sit and put all of your suggestions in to consideration. You have all been helpful. Thank goodness for BiggerPockets!

Alexander Felice · Answer

If you can buy more house, reduce or have the same maintenance costs, realize good appreciation, and keep your expense the same then buying is better. Odds are all those things won't add up.

House hacking is ideal, but if you can't do that, then renting is probably better.

It took me a LONG time to understand why buying a personal residence isn't always ideal but the fact is it's an expense, not an investment. It doesn't make you any money, you have little tax benefits, and maintenance is a constant cost.

If you rent, you have little in the way of expenses and many times you can get more house for the money (thanks to accidental and bad landlords or which there are plenty!). Then you sink your cash into investments that actually make you money!!!!

Will Koederitz · Answer

@Katrina Lane

You need to analyze your personal situation.  Does your current home allow you to live way above your means? Do you want to live below your means to begin investing? How would your current home perform as a rental?

If your current home is more than you need, you could rent it and find a smaller place to live in.  That way your monthly living expenses are cheaper and the tenant in your current home will be building equity for you.

Or, if you're comfortable having roommates in your home, @Josh Mitchell's suggestion would probably be best financially.

Steve Vaughan · Answer

Depending on your financial situation and cost of living in your area, a house hack single-family (like @Josh Mitchellmentions) or small plex can be great way to go.  How are our reserve funds? Have a down payment saved? Carrying a lot of consumer debt?   Are rents cheap in your area? Housing expensive? Do you have stable income to support a purchase? A lot of moving parts @Katrina Lane to consider to be able to give quality advice!

Kevin Siedlecki · Answer

Unless you are paying a lot of rent, buying your own house is more of a lifestyle decision than a financial one. Two ideas for you:

1. If you are living in a pretty cheap apartment, use your downpayment money on an investment property.  If you current apartment is expensive, and you're willing to downsize now in order to set yourself up for the future, find a cheaper place and buy an investment property.

2. House-hack.  Buy a 4-unit property, live in one unit and rent the other three out.  There are a lot of benefits to this.  Search for "house-hacking" in the forums and blogs.

Should I buy a house or continue to rent?

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