[Sabrina]

I’ve heard a few people on here say not to buy a house unless you plan to rent it out. I’m assuming that means you’d be renting the house you’re living in.

Why would this be a better set up than owning the home you live in and putting equity in it?

[Tony]

I’m not sure I’ve ever heard that. Most people when they talk about buying housing either

A) buy a SFH to live in without any catches,

B) buy multi-units as separate investment propertie to rent out without living there, or

C) buy a multi-unit or SFH to ‘house hack’ – either living in one unit and renting out the others or share a SFH and rent out a room.

Whatever path you choose – or even if you stick with renting – depends on your personal and financial goals, risk tolerance for owning/renting, prevailing rent vs own market situations, how easy it is to cover the initial down payment, and how long you plan to stay in one place.

[Jeff]

Take pencil to paper and see which is the better option. Some markets renting is better than owning.

Other markets it’s the reverse.

[Lindsey]

Hm- I’m not sure I’ve heard this specific advice before. I think they may mean don’t buy a house that wouldn’t make a good rental— so you can eventually rent it.

Even without kids I always made sure to buy in desirable school districts, skip the pool, etc.

[Rick]

Hmm interesting.
I would say it may be this instead:
If you intend to rent it one day, buy it as a rental.

If you buy it as a primary residence, you likely shouldn’t one day turn it into a rental.

[Ron]

Many people don’t compare the same type of property when comparing renting versus buying. They’re renting an apartment, but they’re looking to buy a single family home.

Everywhere I’ve lived or looked for properties there are very few one bedroom single family homes.

If you are a single person or a couple and happy to live in a one bedroom apartment, then your monthly cost will probably go up in buying a single family home.

If you buy a condo you’ll probably have an irritating condo fee.

Personally I believe if you are truly comparing apples to apples in terms of property type buying will probably win out most of the time.

But it does depend on market, neighborhood, interest rates, etc.

In the end the numbers will probably be close enough one way or the other that you should do what YOU want to do for your lifestyle.

I have a small single family home. I garden. I compost. I have a place to pass on to my children, who I’m pretty sure may need it.

I have a place to come back to after I travel.

I have rented it out for income, etc., etc., etc. Don’t overfear owning a home. People overdo the “you’ll be constantly paying for repairs.”

I’ve owned homes since the 1990s and it hasn’t been true for me at all. And I have only bought older homes built in the 1950s and 1960s.

Go for the property with the solid four walls over bells and whistles.

Even if a property is new and in tip top shape, remember that even if you sell it 5 years from now those new things are no longer new, and if you sell it 8-10 years from now you won’t get much credit for all those things that were spanking new when you bought it.

[Matt]

“A house you live in is not necessarily a great financial decision, it’s more of a lifestyle choice” is more of what is said.

The reality is that homeownership costs more than most home buyers/owners think, especially including taxes, repairs, interest, etc. etc.

It’s also a SUPER undiversified financial position, after all, “location, location, location” and a single asset.

Between the transactional costs, etc., it can take many years before reaching a “break even point” (or positive ROI vs renting + investing) with appreciation and equity, etc.

As you gain equity, you’re then adding financial factors like less liquidity than being invested in the stock market. There’s opportunity costs.

This is where Dave Ramsey’s “all debt – including low-interest mortgage – is bad”. His math is bad – for the vastest number of people, money is worth much more getting higher returns elsewhere vs having high equity.

Direct real estate investing has many of these same financial aspects, but many costs are actually “business” expenses, able to be written off, so it’s easier to both increase net worth and cash flow.

Yes, it’s still hyper-local and potentially low diversification, and yes, leveraging still amplifies both the positives and negatives.

A rental owner has to deal with bad tenants and vacancy and some other factors.

That’s not to say home ownership is “bad”, it just needs to be taken considered realistically. Sure, it can provide psychological benefits.

It can let you “nest” and increase a sense of stability.

Maybe confidence that your kid/s can stay at the same school/district for several years.

Keep in mind, those are “wants” not “needs”… there are worldschooling families that are constantly nomadic and diplomatic and military families that relocate every 2-3 years, etc.

It can absolutely be career (and related income and lifestyle) enhancing to relocate occasionally, versus be “trapped” by homeownership.

[Karah]

Lots of divided opinions on this subject. Honestly comes down to your personal goals and choices.

For instance, how long you plan to live in it, if you will upsize or downsize in the future, how much money is tied up and what else would you be doing with that money if you put it elsewhere, how much control and responsibility you want of your residence, etc.

I personally am 100% FOR home ownership if you plan to be in it long enough to expect a return and you’re comfortable with managing expenses and resources for repairs, upkeep, etc.

Additionally, if you can house hack, it’s even better A duplex, a home that has an ADU on the property, an area of the home that can be set up for STR, etc.

[Jake]

Owning is usually better than renting. This becomes more true the longer you expect to live in the home.

If you’re buying your first ever home one of the best things you could ever do for your future self is to buy a good rental property, not a home you necessarily like.

It needs to be between 2 and 4 units. It cannot be more than 4.

You can get all you first time home buyer programs and even FHA and rural department or VA loans on these properties, just like a single family home.

If there are leases and tenants in place you can use this towards your income to qualify.

You buy the 2-4 unit apartment building to live in one unit yourself.
Maybe this is what you’re Reading about? Or is it the people I’ve been seeing saying that “renting is cheaper than owning”?

Because that typically comes down to length of time in the property.

[Bill]

The real question is “why do you want to buy a house?” If the answer is that you think homes are great investments or that it’s some type of adulting milestone, then you shouldn’t buy a house.

There is nothing wrong with buying a house, but you shouldn’t buy be getting some real benefit from it in terms of lifestyle because the numbers often show it’s more expensive than renting.

Personally, we own a home but I really like spending time in the garden, woodworking, etc.

and I kinda like working on home improvement projects.

[Gina]

Rent vs own is a very personal decision that depends on a number of factors, not the least of which is location, market conditions, stage of life, family situation, etc.

In some cases, it is cheaper to own and in others, it’s cheaper to rent.

In some stages of life, it makes more sense to rent than own and vice versa, despite the costs.

If you buy, you ARE effectively renting your house to yourself, through the concept of imputed rent.

[Crystal]

Because buying a house doesn’t really make financial sense unless you’re making money from it.

Here’s an example of putting the 20% down into an investment account instead of a 300k house and potential monthly mortgage payments.

After 30 years, it’d be worth 1.8 million at 6%. That’s not even counting the extra costs that go into owning your home(~5k/year).

Meanwhile, if you’re lucky-the home might be worth double after 30 years(super location dependent).

[Author]

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