Is Renting Ruining your Finances?
My husband and I became homeowners (well, condo owners) at 23 years old. I don’t think there’s a perfect age to buy a house. Some experts suggest by age 30. Some say wait until after 30. Some say buying a house is no longer the American dream.
Do you have to be a homeowner to be financially well off? Is procuring a house such a major financial milestone these days? I don’t think so. We had a lot of other factors pushing us to buy so soon. While I felt renting was throwing money away, I also understand all the perks of renting and why people opt to do it for so long.
Why did we buy so soon? We loved our condo. We had been renting it for over two years when the owner told us she was selling and we couldn’t renew our lease. I cried. We were going to lose our home. The little condo we rented for just a few short years felt more like home than my parent’s houses every did. My husband was distraught as well. We had been saving for to buy a place, but we wanted to wait until we had a 20% down payment. We weren’t ready to buy.
We also always thought buying a condo was a dumb move, but we wanted to stay in Nashville. I’m not sure why the Nashville real estate is heating up, but damn, it’s hotter than lava right now. We had been passively looking with no luck and resigned to thought we’d be 30 before purchasing a property.
But, then we got lucky. 100% luck. The owner sold the condo at a price point we could afford. She shaved 15k off the asking price just so we could afford to buy.
So, with the price point brought down, we evaluated if this was a smart idea. Emotionally and financially.
Emotionally, we knew we wanted to purchase this place. We liked the space, the location, and the quiet neighborhood. We had enough room for kids if that ever happens. We are close to every neighborhood of Nashville and most suburbs, so if we switched jobs, the commute wouldn’t kill us. We also reflected back to how we felt when we were told the condo would no longer be ours. Sad, angry, and upset. My husband and I were super upset at the thought of leaving. We knew in our guts that this was meant to be our starter home.
Financially? That was a little harder to justify. Property is expensive. I still had a little bit of student loans left that I wanted to conquer before jumping in bed with a mortgage. We luckily had saved every cent from our wedding money and tax refund, so we had a tiny down payment. We also knew we planned to stay for at least 5 years. But still, housing is expensive, we didn’t have 20%, and we weren’t in a financial position in our eyes to buy a place. That was when the owner came down on pricing for us. Pure luck.
We got lucky. That’s the only way I can sum up our buying experience. Luck.
The stars aligned, we somehow had crammed together enough of a down payment to qualify for a loan. The owner was a family friend. We were emotionally attached to our place. And so, to us, buying made sense.
Our story is vastly different from the norm. We rented a place we fell in love with, knew the owner well, and got a major discount in a hot, hot, hot real estate. We also just had a wedding and tax refund come through. There was a surplus of cash readily available. In a nutshell: LUCK. We would still be renters today if the owner didn’t knock down her asking price, and that is TOTALLY OK!
Does that mean you have to purchase a place? Nope. Does that mean your financial life goal should be buying property? Nope.
Renters, rejoice, you’re not doing anything wrong. And I sometimes am jealous of our renting days. It’s a blessing and a curse we found our perfect dream place on our first go. Why should you chill out on buying a home? What good reasons are there to rent?
3.) RENTING GIVES YOU FLEXIBILITY.
You have the flexibility to break a lease early, albeit at a cost, or to not renew your lease at the end of the term. The world is LITERALLY your oyster. You can pack up and move whenever. It is a freeing feeling knowing you can move across the country, or move to a different part of town, at the end of your lease. When you buy, that flexibility goes out the window.
2.) RENTING ALLOWS YOU TO SHOP AROUND.
Did you just lose your job? Take a giant pay cut? Jerk landlord double rent prices? Did you find a new neighborhood you’re in love with? You can easily move! You can compare prices and jump around when places get too expensive. In high demand areas, that is easier said than done, but it is doable! Whenever I visit East Nashville and see a reasonably priced place for rent, a little bit of regret pangs me. I could be living there, what am I doing?!?! If we were renting, it would be way easier to shop around. Take advantage of your flexibility, and shop around!
1.) RENTING = LESS RESPONSIBILITY.
The cost of home ownership sadly does not end once closings costs and the down payment are settled. The DAY AFTER we bought our place, I came home to our foyer flooded from heavy rains. The door seal had not been properly fixed, and water was gushing into our newly purchased place. As a homeowner, we had to actually give a shit about this kind of stuff. As a renter, this wouldn’t have jarred us. We would’ve just contacted the property manager, and had it fixed without any cost out of pocket.
Once you’re a homeowner, the amount of responsibility you have is suffocating. My husband and I had to learn how to navigate home repairs, home maintenance, and various other home tasks we never once worried about in our rental days. We have a mini heart attack when a toilet doesn’t work properly, our ice machine acts funky one day, or any other expensive appliance acts up. It’s a hassle!
Should you really buy a house?
I think renting definitely offers A LOT more pros than what I outlined, but those are the main 3 big differences I’ve noticed since buying our property. You don’t need a house to be happy or be wealthy. I know people that rent that have huge net worths. I know people that own that have negative net worths. If the only reason you want to buy a house is because all your friends are doing it, then you’re probably not really ready to buy. Besides, you do not know all the circumstances and luck (like we had) your friends had surrounding their purchase. Don’t compare your progress to anyone else!
You can be happy in a rental! Enjoy the freedom and flexibility of renting while you can! You have your whole life to be shackled to a mortgage.
What are your thoughts on buying vs renting? Do you think homeownership is the only path to wealth?