"If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc. Since you can rent a house for 2% of its price, but have to pay 6% to borrow the equivalent amount of money, it is much cheaper to rent the house than to rent the money."It's true.. you can rent a place to live, or, you can rent money, at a higher cost and alot of risk, to get a place to live.
That's why I sold my pr0perty and now am a happy renter.
1 comment:
Hey Scott, Heather and I have been renting since the day we moved in together just under 14 years ago. It has allowed for a lot of freedom - historically we've moved about every 2 and a half years.
Here are some reasons we're buying our first house:
First, we're buying below our means. Our mortgage payment will be right at our rent price, taxes, insurance, and everything.
Second, we want to be able to bang a hole in the wall (or move a wall) without having to ask the landlord. They get pretty uptight with things like that. Some won't even let you paint the place.
Third, we really think this is a great market for buyers. Sellers are eating years of living way above their means. There is a lot more risk in an ARM or interest only loan (sub-prime) than there is in a 30yr fixed at 5.625% - especially if the payment is at or less than 1/4 of your take home income and you're in the market we are.
Fourth, we've been in a townhouse for the last three years, and while I like our neighbors, not having someone else's bedroom next to our living room will be nice. Granted you get that with renting a house too, but not an apartment.
I will say that the convenience of calling someone when something goes wrong is nice, though you'd better hope the management team (or owner for lots of houses) is responsive. We've had good luck with that, but I've heard horror stories.
Neither option is perfect for everyone of course, but given our financial situation (no debt, and a 3/6 month emergency fund) owning the place should be great for us.
It is the people that are striving to keep up with or leapfrog the Joneses that need to be wary. I couldn't give a shit less about the Joneses or what they think of my 89 Montero. ;-)
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