The ability to own a home is as hard as it has ever been. But many including those in media and the real estate establishment continue to beat the drums of home ownership. But is it the right choice?
These questions of renting and owning come up a lot especially over the last several years what with the Great Recession, et al. I’ve probably rented more than owned homes in my life and for some reasons we won’t go into here.
But what your choice of owning or renting a house or dwelling usually depends on is your financial situation. Great credit isn’t easy to acquire anymore but great credit is what it takes nowadays – and a large percentage for a down payment. No low or no down deals anymore.
I’ve been an entrepreneur almost all my adult life and having the ability of good credit combined with being flush with cash financially, has ebbed and flowed. Yeah, more ebbing than flowing.
With that said, living in California had always offered the dream of purchasing a home in the Golden State and realizing the expectations of value always going up. My father used to tell me (he was a real estate developer) that real estate never went down here in California. But the savings and loan crisis in the late ’80s changed all that.
Move forward to 2007 and the beginning of the Great Recession, which can be argued, hasn’t ended (source – Townhall). Anyway, some business experts were saying not to buy property but instead rent. I looked into it and certain basics became clear – if I own or am thinking of owning, property values are going down. So do I really want to send money down a pit? Purchasing real estate has become like buying a refrigerator, the value goes down as soon as you sign on the dotted line.
Advantages to renting
So I’m a renter. I see owning property as a gamble right now. I’m not particularly happy with renting so the alternative is to own a home but remember this: When you are an owner, the property is yours and you are responsible for any and everything that it needs or goes wrong. When you rent you just call the landlord or management and they take care of any issues or concerns.
Usually when you price out the cost difference, renting is simply cheaper. You don’t have to pay property taxes as a renter and just buying a house costs money like closing costs, insurances, etc.
Here’s something else to keep in mind that I think about. If you rent, you have the luxury of picking up and moving. If I buy a house, I can’t just move if it doesn’t work out. If the neighborhood or neighbors turn out to be a problem, as a renter, you just give notice and you’re out of there. And the money I would spend on purchasing a house, I could be using for other investments. Check here for the pluses and minuses of renting versus owning (source – Smart Money).
There may be one caveat. I’ve discovered this maneuver many years ago but you can try a lease option – like renting to own. But you’re locking into a number that if values don’t improve, you can end up with an overpriced home a few years down the road. You’re still gambling as far as I’m concerned.
When the market finally decides to improve – I mean really improve – then I’ll start looking at purchasing a home again. Yes, every realtor will tell you now is the time. Bless their hearts, but realtors are the most optimistic people in the world. It’s always getting better until it actually is getting better, then they’ll talk about how bad it ‘was’.
But for now, renting is working out better as friends and family who own homes continue to see their properties under water. No thanks.