Own or Rent your Home

Own or rent your home[cryout-button-dark url=”#”]Do you prefer to own or rent your home?[/cryout-button-dark]

Own or rent, it usually means what you can afford. Can you afford the down payment and monthly payments for a house or do you have enough cash-flow to afford the monthly rent check.

Renting a place is cash out every month and at the end of the day you walk away. You never have equity in the place. However, you don’t have to worry about real estate taxes, home insurance (you should have renter’s insurance), and any repairs or replacement of things that break down. No snow removal, cleaning gutters, cutting grass, or gardening.  This is usually what young people start with as it requires the least amount of capital (none) and you only have to worry about the monthly rent payment. You are subject to the owner’s wishes, you still pay for utilities, you are subject to other tenant’s vagaries and preferences, and you have less privacy.

Owning a home has a set of privileges and responsibilities that comes with them. Usually, the bank has a lien on  the home but you’re building equity in it so that at the end of the mortgage life (15-30 years later) you end up owning the house. You have responsibilities such as keeping it up (both inside and outside), lawn care, snow removal, siding and roof repairs, painting, etc. You also have real estate taxes and insurance payments. You can plan your own garden, have parties, usually have more space for your growing family. You can have your own office or private space to read and meditate. You need to learn several trades, such as, plumbing, electrical, gardening, and carpentry to keep up the house and make sure your investment never loses value. You need to clean your own gutters and the siding, and paint your rooms, to keep the house nice. If you have enough cash flow, you can pay someone else to do all those things for you.

I think given the usual real estate value growth over time, owning a place makes sense as it ends up being a good investment. Probably your biggest investment that will help with having income in your retirement. What most people do, they trade down to a smaller place after the kids are grown and leave home. That way, they unlock some of the value of the house as income for retirement.

Personally, I like the idea of having a home that I can sell someday and have money for retirement. The mortgage deduction on taxes is also an advantage. We probably sell the house when the kids are gone and trade down to a smaller place and save the rest of the equity for our retirement. So we can have income when we can no longer work.

What are your preferences??