Renting vs Buying a House - Is renting wasting money? Is home ownership even worth it?
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- เผยแพร่เมื่อ 20 ก.พ. 2018
- We are talking all about the pros and cons of renting vs buying a house in this video. Between the two of us we have owned five homes and been renters on 10 different properties. Here are some of the things that we think about each time we've made the rent vs own decision.
Deciding whether to buy your first home (or to buy a house after selling a previous one) isn't just a financial decision. But like most things personal finance, our personal life goals and preferences also play a role.
In this video we are going to be answering the questions that often come up as people try to decide if they want to be a homeowner or not like: Is renting worth the money? And, is home ownership worth it? We lay out the pros and cons of each but how those end up being weighted will vary from person to person.
Stay tuned for future videos where we talk about other home ownership topics like figuring out how much house you can afford, how to buy a house, and how to save money for the down payment.
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We are Tasha & Joseph a millennial couple balancing kids, jobs, money, and life.
One Big Happy Life is our website which focuses on creating a life you love by finding the right balance between your personal and financial goals.
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Disclaimer: This video is for informational purposes only and does not constitute legal for financial advice. Please consult an attorney or certified financial planner who will put your interests before theirs. - แนวปฏิบัติและการใช้ชีวิต
The American mentality towards houses is so foreign for me. Here in Germany we mostly still think about houses in a way of 'Once I got it, I'm planning to die in it!'
You're not alone. Some of us feel that way here also!
It just depends on your finances.
@teddy, I'm so late- but this comment resonates with me so much.. Americans on average live in their homes 10 years before selling. So many people who come from other parts of the world grew in homes their grandparents lived in or grew up in.. Unless you're a wealthy American- you can kiss that possibility good by.
I rented for 8 years as a single woman, got married and then we bought our house. I’ve been a homeowner for almost 8 years. My mortgage is cheaper than what it would cost to live in this area renting. But being a person that can not fix or repair major stuff and being married to someone who pays others to cut grass, rake leaves, fix things etc...does not help. I’m ready to sell and when/if I buy again I want a small yard, no trees which means no leaves, one level living, efficiency living with minimal upkeep. We didn’t realize how expensive home ownership can be (upkeep, repairs, yard work, to name a few). I miss the days of calling my landlord and saying “my AC is not working” or “the toilet won’t stop running”. Now these are MY responsibilities....
MsStacey717 And that’s why I’ve chosen to go back to renting. I’m not handy at all & I prefer to pick up the phone to call 4 repairs. Also renting was cheaper
Sounds like you married the wrong person!
I truly think owning a home is overrated
Most mortgages cheaper than rent but can't forget about all the upkeep and maintenance involved
Men have gotten alot more feminine over time. Cant fix a damn thing
Buy a primary residence that you would rent if you are a tenant. A lot of people buy too much house in the beginning. If your income is $65,000 and you can only afford to rent a 1-bed apartment for $1,100, buy a residence that's equal to that apartment's value. Don't buy a 2 bedroom luxury condo that could rent at $2,500 a month
A home is not an asset unless you own it and rent it to someone else for positive monthly cash flow. If youre living in it, it is most certainly a liability.
Either way you have too pay to live so its not a liability. Dont listen to Robert kiyosaki you started this BS.
I just bought my first home today.
mococaboy17 congratulations! I’m looking at buying in six months and both scared and excited.
Congratulations!!
Congratulations. I am going to purchase a house in a year's time
Just discovered your channel last week, maybe 2 weeks ago and you guys are now my fav! I learn so, so, so much! Thank you for putting out solid, honest content!
Thanks for watching! We're glad you found us. -Joseph
I always love this topic. Its like buying vs leasing a car but the biggest difference is that you can gain equity in buying a home. Great information!
Wow!! This really cleared up a lot of questions i had about Rent vs Homeowning.... RENT IS THE WINNER!!!!
I share a 2 bedroom house with my roommate, and we each pay 615 a month, so it is a pretty easy lifestyle
Love this video! I'm graduating from college soon and I've been thinking ahead about this debate. Thanks for all of the helpful info :)
I am so excited for your tips on how to buy a home and minimize the fees that go along with it
Tasha, thank you for all the great lessons. I love your episodes on The Financial Diet. My question is can you please make a video about the pros and cons for buying a big condo in a rough neighborhood vs. buying a shoebox condo in a trendy/safe neighborhood (with consideration of gentrification)? Thanks! ♥️
Cant wait for your buying a home video!
I'm not even a junior in highschool and I'm already thinking ahead 😂
I am loving this new series! As a young professional in DMV area renting vs owning is a big decision. Definitely would love to hear more On how much should you save for down payment, realtor fees, closing coasts. Also would like to hear on how to choose a good realtor and what are the red flags to watch for when house shopping. Tips on renting please as well!! Big subject with lots to cover!
Absolutely love this video guys! So helpful for me in my life right now!
Yay! Thanks for watching-Joseph
Love all your videos. Great information!
Thank you for watching!-Joseph
Really informative. Thank you both for sharing. Blessings.
Thanks for watching!--Tasha
One con of owning though, on the financial side is that you have to pay all utilities where a lot of time when renting, some or all are included
Thank you for this video! It was nice to see a pros and cons talk about BOTH- most finance info just tells you that owning a house is "better" without ever going into why or discussing how your own personal situation impacts that decision. I'm coming to realize that that advice is outdated and nowadays, it really depends more on you and your lifestyle as to which option is best for you.
Thanks for watching and commenting! You're right that it always depends on your personal preferences and buying may not be a great investment. - Joseph
I've run the numbers several times for my area (homes are very expensive) and renting is saving me money. To purchase an identical home to the one I rent, my mortgage would be twice the amount of my rent not counting high property taxes or maintenance. Oh also, that doesn't include any down payment. If I invest the additional costs I'm saving by renting, I could buy two or more properties by the time a home would have been paid off. :o
The best thing I found about ownership is your mortgage can go down and your value can go up.
Yes, that's very true. The mortgage will always go down (provided you have a traditional mortgage). Ideally the value will also go up, but it may not always. That's why we don't generally recommend that people rely on the value of the house going up as part of their financial planning strategy.--Tasha
Amberez Explain how will your mortgage payment go down. I kinda have a idea but please explain.
Great video! I'm looking forward to the home buying video :-) I love your channel!
Thanks for watching!--Tasha
Thanks a lot for the info
When you are young like y'all it is totally worth it to build equity in propertie(s) - even rent them out yourself. Hubbs Harry and I owned 6 properties (some rented out, some bought and sold upgraded our home, etc.) we sold everything though to downsize for retirement and unburdon and unstress ourselves. Good video - very helpful for the youngers thinking of buying. I say buy thought as fast and as soon as you can. Even if it is only one property building equity for your retirement.
I agree early is better. It isn't guaranteed that you'll have a great return on your home value, but it will keep up with inflation. For most people, it will be a source of great wealth. -Joseph
Yes, home ownership can be a path to wealth, but even if you own just one home to live in with your family, renting for long periods of time is just as good as flushing $$ down the toilet. If you can buy do it - the sooner the better.
The struggle for me is I have no idea where in the country im going to end up. I just know that my current hometown home costs are nearing 800k and apartments are in the 400k range, therefore, I don't wanna be there!
Chelsea Dau sheesh.That's steep.
Kre8iviT27 price of paradise
Same. I live in Bay Area CA and most houses are over 800k. Anything less and it’s usually small and run down. Makes owning a home here impossible for most people, and why I consider renting for the rest of my life is I stay here.
I adore your videos. Unlike pther financial "gurus" you are living in the real world ans weighing out the pros and cons instead of taking one radical "my way or the highway" perspective. You give people a basis to start calculating what will work for them instead of demanding something absurd like only paying for a home in cash or only taking a five year mortgage.
In SoCal right now, renting is quite a lot cheaper than buying. We calculated that investing the money we’d sink into a house is going to be better (for now). Our landlord actually lowered our rent and extended our lease longer term so he didn’t lose us. We moved here after a job change, and sold our home in FL. It’s weird to try to process the idea that buying is a worse financial decision for us right now, but it totally is. Thankfully we love the house we’re renting, the landlords are extremely responsive and sweet and plan to stay here for as long as we can and they also let us paint. :)
In contrast, if we went to buy a place for the same monthly cost, we’d have to buy a place that is way more run down and smaller.
Thank you for sharing this info :) subscribed **
The next video can’t come soon enough.. we put our house up for sale 3 days ago & this whole process is stressing me out!
My husband and i were having this conversation the other day. We have 4 little ones (all ages 3 and under) a lot of people always ask “when are you all going to purchase a house”..... we enjoy moving to different apartments and different communities and buying a house is not a rat race for us. In our particular situation, we want to be 100% debt free before purchasing a home and have a fat down payment for our home and not having to do all the extra maintenance on a house has been lovely... we don’t mind paying that extra for that in our apartment. We are actually going to be moving to a 3 bedroom apartment soon, the amenities are beautiful and it’s very family friendly.
I am glad that is working for you. The only way you can switch houses that fast is if you pay cash for them and don't pay any buyer's closing costs. Are you able to do all the moving yourself? Will you still do that when your kids hit school age, or is that when you'll stick to one location?-Joseph
One Big Happy Life we actually plan to homeschool our kids. But definitely plan to be in our home by then. 😊
LK RealityTV we also have 4 children ages 7,6,5, and 1 (with one more on the way). Plan on homeschooling next school year and i think we prefer renting FOR NOW for the same reasons. Keep up the great work!
Peachy♡ wow! Congrats to you on the pregnancy! And good luck with your homeschool journey with your kids! I love meeting other families with similar situations as us! You should definitely check out our TH-cam channel so we can keep in touch! 😊
Hey what do u guys think of the app fair for leasing cars vs traditional leasing and buying a car
this was really well-done...the only thing is that the title is leading and many of your points are correlated to the house vs. condo thing NOT the owning vs. renting.
I love condo living and would like to have seen OWNING VS. RENTING regardless of the actual home or condo you're buying.
This video was very informative! Would it be possible to discuss comparing buying a Co-op Vs. a Condo Vs. a house? Co-ops seem to be more affordable than condos. However, I have heard that the maintenance is higher. I currently rent and my husband and I are considering to buy. We are not sure which option is best. Thank you so much!
My wife and I are about to buy....we are under a program of rent to own...rent in Los Angeles is ludacris! $1800 plus pet rent takes us up to $2000 for an appartment.
We are about to pay the same amount of money for a house in Lancaster.
Wonderful tips all.
I’m having this debate about home ownership vs renting with myself presently. Thanks for your analysis. Helpful.
The best advice I've heard is to measure the nonrecoverable costs of home ownership against the cost of rent. For instance, to calculate the value of home ownership, you add property tax, HOA dues, estimated maintenance which is approximately 1% of the home value per year, money used to upkeep such as Lawn Care, mortgage interest, and insurance. These are all payments that you will never actually build equity with. They are just as much lost value as rent is. Finally, the money that does go to equity is not really without its costs. Effectively, you are investing several hundred dollars per month into a piece of real estate. Were you to invest that in a retirement account with a stock portfolio, you would get much better rates of return on average. Therefore, the final cost that needs to be calculated is what it's called the cost of equity. Namely, the difference between what you could have made putting of that extra money into a higher-yielding investment versus putting it into a home. In many cases, renting a simply cheaper. It doesn't mean that it's the best option forever but it does mean that a home costs a lot more money than people often realize
Before me and my boyfriend bought our house we rented for a year. It was great having. maintenance done but the house never felt like home and I didn’t like basically paying somebody else’s mortgage. We bought our home now 3 years ago and I couldn’t be happier. I love having ny home and I our mortgage payment is £50 less than our rent was on the previous house yes the house we own is bigger! Xx
Great job. It's good that you got a taste of renting and then were able to switch over. Thanks for watching!-Joseph
Frances Phillips Lol your in the honeymoon stage of buying a house. When things like the roof leaks and pipe break right after the mortgage payment has been made it’s a nightmare. Oh I know your saving will cover that but sometimes what you saved is not enough.
I’m curious as to why you compare renting an apt vs buying a home as opposed to renting a house vs buying a house. The latter would be the better comparison. A few of the cons would be eliminate (I.e noisy neighbors, smaller space) if the comparison were equal.
In the video we do talk about renting both a house and an apartment. This video is just a general overview. It is impossible to cover ever nuance in a single video.--Tasha
We are in the middle of trying to get a house. It cost the same amount for us to rent as it would be for a mortgage.
Buy a bunch of income generating assets, rent in the house you live in, that way you free up your money to make millions as opposed to waste it around four walls.
I wish this channel would give advice about high renting and what to do
Renting,for some,is the only option. It's very costly to own a property,be it a rental,or your own place.especially if you are not handy.
Rent has become way to high.
Such a great video! Thanks!!!
Thank you for watching!-Joseph
It depends where you live. I sometimes need a reminder that renting has its advantages. Some people live where owning is out of reach for most people. Toronto is very expensive. I am lucky enough to live in a big, reasonably cheap rent controlled apartment in an area that works for my life. I can invest money and remain debt free. I am not impressed with what stretching affordability will get me around here.
I reeeeeally wanted a house... But ended up investing because I live in CT, houses and rent are expensive, and I live in an Artspace in a giant loft for a really good price... But I do want to start saving up for a downpayment, while already having a little retirement nut growing... You guys should talk about all the financial prep before buying a home! I'd love some tips as to what should be in place before buying a house. :)
Yes, I second this. Even though I still have debt and am not planning on buying a home yet (nor is it in my goals really), I would really like a video like that.
CosmoHippie Id much rather live in a cool creative loft space than own a home
well, the real estate marker does crash so that is the best time. If you are renting now and considering buying soon I would recommend holding off. Numerous professionals are projecting another crash, and that includes the real estate bubble popping. So just be patient and buy low, sell high.
A great topic I'd like to see: If I buy a home with my husband what documents should I have in place before we purchase? Should we get agreement in place that talks about how we plan to divide the house should we divorce? I'd really like to know since I make more and would contribute more to the home. I'd really like to know about this. Love your videos! I've applied for PSLF for students loans, started using your spreadsheet and I'm actually planning out for my future. This is my favorite TH-cam channel!
Thank you so much! I cannot give you specific advice for the documents you need, but you should discuss things like a postnuptual agreement that would specify what would happen in the event of a divorce. Good luck with PSLF. I have heard that some have people received theirs, so there is lght at the end of the tunnel. - Joseph
One Big Happy Life I will look into a postnuptial agreement. Thanks so much!
One issue with ownership, property tax increases can be highly unpredictable, and especially unwelcome when your kids are grown and out of the school.
Property taxes affect renters too. If property taxes go up, rent goes up.--Tasha
Thanks!
You're welcome!-Joseph
Can you share how you invest? I mean literally how? Is there a website you prefer etc
We're working on our investing series now. We'll get into that.-Joseph
So as a single man with no kids, is worth to get at home for around or under $150000, or am I better off renting? I ask Im seeking on getting myself a house but not a 2 story but a single story home thats a decent size in the future.
You might be better off with a condominium
I prefer to buy a house rather than renting
I have a question: If you want to buy a home should you pay off your student loan first, save for the down payment first or do both?
You do not necessarily need to pay off your student loans before owning a home. The only time you would is if your payments are too high for you to qualify for a mortage. Or too high for your own comfort. You should save for a down payment because you'll need some amount for that and closing costs that the seller may not pay for. -Joseph
Okay, thank you !
I went through this debate with myself too.. I almost payed off my student loan but then I realized I only have 3 years left so instead i saved it as an emergency fund
Nice hair Joseph and love the video both of you but.....what happened to the family vlogs
Thank you. Tasha cut it a new way for me. We are going to wrap up our Singapore vlogs soon. I can't promise that there will be tons, but there will be more for sure. -Joseph
I'm a simple man. If I'm buying a house, I'm living in it. Most people don't have the financial guidance needed or savvy investment hacks to make the money you'd "save" renting to truly see the benefits. Most Americans will almost always benefit from purchasing a house they actually want (not just what they can afford, really save for something thats going to be worthwile) because if you're living in this house for 20+ years, you have go into that purchase like its the end game. Prepare to build it from the ground up(not literally but figuratively), learn the tricks to help with upkeep and finding the best prices. TH-cam everything. You can also save an extra $50's a month to help with any unfortunate housing events that may occur.
Just keep in mind you house could go down in value and any savings on owning have to include mortgage closing cost
That's true. Fortunately, home prices in the long run go up in the long run. Closing costs are a consideration. You either need to bring that to the table, have the seller pay, or roll them into the mortgage to some extent. We've gotten pretty good deals where we've had instant equity and the seller's contributed to closing costs. -Joseph
Another pro for owning a home: inflation. By inflation your mortgage gets lower relatively.
Yes! That is a great pro.--Tasha
surely you can rent a house though? you talk like you can only rent an apartment or condo? As the child of a mum who moved like every 6 months, yet owned most of the homes we lived in, I know she lost money just from being indecisive and always looking elsewhere, i really think she should've rented. However, the security and ownership and fixed-ness thing you mention is attractive to me as I didn't have that growing up. That said, I do move a lot and I might wait until I think I will be somewhere for at least 5yrs before I buy- and I live in a house now, no noisy neighbors, plenty of space, super cheap (I live in the country though- another financial decision because, as a teacher, I get paid a lot to live here because their aren't enough teachers). Renting does not mean an apartment, I've actually never lived in an apartment- even when house sharing, it was a HOUSE.
If you pay more than the municipal assessment, you will lose those equities. Canada spread between assessment and average sold double in 3 years. Sign of hyperinflation: the hype comes from risky passive income scheme to use refinancing and wholesaling. If it is recession your equity will recover but the bubble has been happen for so long we might hv longer recession.
Everyone complaining about maintenance when owning ur home I wonder if you can even change a tire on a car... women men
I would like to buy but I'm no where near having 50k deposit for even a small place so I will be renting for years to come cause I have to live somewhere deposit is the biggest con cause having that huge chunk in your 20s
thanks for the suggestion.i understand one big happy is USA based and there advise is according, but i live in australia, housing in australia is very expensive. my point was a very big barrier to home owning is deposit
Good lord they owned 5 houses.. I make 60,000+ and live in my car most of the year because rent is too high, and I dont like living with people (which is also expensive around here).
When you own a house, you pay rent (property taxes) and the mortgage, and your maintenance costs.
SGspecial84
Property taxes isn't rent where I live.
@@blackworldtraveler3711 Thats nice. It is here in new york, and probably in california.
Wait...can you not own an apartment in America? I don't understand. My mom owns an apartment, like -- I don't understand, why can you only rent an apartment or buy a house? I mean...where I am from, you can just....buy anything or rent anything. Tho it's true that if you rent, you're usually renting an apartment. Because it's cheaper. And those who have enough money to rent a home usually just...buy it. But my point still stands, why not simply buy an apartment, I don't really understand.
You can, we just call those condos in the U.S. To be fair condos are typically a lot nicer than apartments because they are built ownership.
I n Germany The Richest Country In Europe Only 51% Percent Own Homes.In Switzerland Only 43% Percent Own Homes.
That's interesting. - Joseph
It is video mostly about home/house vs apartment...rather then rent vs buy.
A lot of pros and cons are house or apartment specifing and not about buing or renting.
Neighbours, costs of garden work etc.
Ania Krawet I’m guessing they’re coming from a prospective of living in the US. Most renters are in apartments not homes.
In the video we do talk about renting both a house and an apartment. This video is just a general overview. It is impossible to cover ever nuance in a single video.--Tasha
Yes, nearly 2/3 of renters in the US live in multi-family residences (2 or more units).--Tasha
Except if u live in Europe & landlord won't come right away fo fix anything broken
Eek. I'm sure you have landlord-tenant laws to help combat deadbeat landlords just like we do in the U.S., right?--Tasha
@@OneBigHappyLife In England, the dice is really stacked against tenants. You can be kicked out of your home with 2 months notice for no reason. There's no legal requirement for a house to be fit for human habitation and many aren't. Landlords often refuse to fix things and often there's no legal recourse to make them do so. Or you try and you get handed an eviction notice.
Many will find spurious reasons to keep hold of your deposit too. One of the leading causes of homelessness is landlords evicting tenants with no notice.
Deposits on rented property can be thousands and you need to find it instantly. If you can't afford that, then you're made homeless. The local authority has a responsibility to house you, but often that means a bed and breakfast with no cooking facilities, a shared bathroom and only one room for the entire family. It's shit. And there's so many rules about local councils building council homes that only 1500 were built in the entire country last year. There's a million people on the waiting list for one.
Personally, I favour compulsory purchase orders for any landlord who fails to keep their properties to a standard fit for human habitation, with no payment due to the landlord. You want to keep your property? Maintain it to a decent standard. Fail to do so and you've proven you can't be trusted with it. And a minimum notice of 3 months, with a legal duty to find a tenant suitable alternative accommodation if you want them out of the house. That evens it out a little.
Welll if you are under 50yr yes. If you are above 50 and your kids are successful or you do not have kids then to me it’s a waste of time. I am no where close to 50 but I am not young. However, I am a nomad. Moving state to state or out of the country fuels me. I live for his life so I do not think I will be buying a home. If I do it would be a condo max price 105900.00. Lols
You definitely have to do what fits with your preferred lifestyle. And that is an awfully specific condo price, lol.--Tasha
One Big Happy Life In Georgia you can get a nice one bedroom for that price. The south is he best place for bargain home prices
NYCHA AKA (THE PROJECTS) doesn't care about what people do
the government pays my rent
This is off topic, but your husband looks and speaks a lot like one of my cousins.
How is this possible that renting can be cheaper than buying house/apartment as you mention at the beginning?
If someone is making profit on the house you are renting...apart from all other costs the owner is always paying like reapair costs etc.
I don't really get why as you are saying people are renting smaller places than when they are buing. Is it somehow US specific?
Also that you are always saying about "renting apartment" and "owning a house"? Can't you rent a hause or buy an apartment?
Also I don't see how renting vs buying is different with noisy neighbours? You can get noisy neighbours in apartment you own as well...and this is even worse because you cannot move to other one that quickly.
There are several ways that renting can be cheaper than buying. The first is the transaction costs associated with buying. You have to come up with tens of thousands up front in down payment and closing costs vs. first and last month's rent. It can take months or years to recoup those upfront expenses. Next, landlords get bigger tax deductions on rental properties than a homeowner gets on that same property which can then pass through in the form of lower rent. And in the video we mention the possibility of a landlord who has held the property for a a while undercutting the market to fill vacancies quickly.
In the U.S. almost 2/3 of renters live in apartments, which tend to be smaller than single family dwellings.
Yes, you can own an apartment (which would be called a condominium) or rent a house. We mention that in the video when we talked about comparing costs to see which is cheaper.
We listed all potential pros and cons of renting vs buying and did not distinguish between different housing unit types. There is only so much information that can be fit into a single video. And actually, you can move from a condo you own a lot easier than you can leave an apartment that you rent because you can choose to rent out your condo and move elsewhere. If you are in an apartment, you are stuck there until your lease is up unless your landlord lets you sublet.--Tasha
Very obvious things 😒
It's wonderful that you already know these things, but not everyone does.--Tasha
It's good to cover the basics
If you listen to other "financial gurus" they dont even address these things. They tend to give an all or nothing perspective, unlike one big happy life.