What’s the reason for not just renting housing till the end of time and dumping my excess savings into REITs? Is there a big difference in outcomes vs buying a home?
In: Economics
Cons of renting:
1) Your rent money just disappears. Compared to owning where when you pay off the principle you can sell it and get that money back. Or take another mortgage out.
2) You have no control in rent. You might find your rent increases 20% when the lease expires whereas with a fixed interest rate loan, you always pay the same monthly bill when owning.
3) You have to deal with the landlord’s restrictions. That might be you can’t put your own appliances in, you might not be able to hang things on the wall, you can’t change that carpet you hate, color of the walls, whatever. You almost always won’t be able to get an extension to the house built or tear down a wall to combine two rooms! You might not be able to have a pet or put up a fence for the pet.
4) You might have to deal with a really bad land lord.
5) You have no guarantee your landlord will renew your lease and you might be forced to move.
Pros of renting:
1) You can generally move a lot quicker and more hassle free. You might have to pay a penalty for breaking the lease early, but you can at any point. You don’t have to worry about selling the house before moving or dealing with the hassle of doing so.
2) Most maintenance work is your landlords responsibility including replacing/fixing appliances. Honestly I could put this in the cons as well, as a bad landlord can be terrible at getting things fixed!
Yea that’s about all I can think of. In the end owning is a lot better especially if you are planning on staying in the same location for more than 5 years.
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