Author Topic: did you buy a house or did you pay rent  (Read 2550 times)

TellisaW

  • 5 O'Clock Shadow
  • *
  • Posts: 4
did you buy a house or did you pay rent
« on: November 12, 2017, 08:32:12 PM »
For those of you who retired early, did you buy a house or did you pay rent? And, what made you want to do one or the other? Also, did it save you more money if you did not choose to own a home?

Cossack

  • 5 O'Clock Shadow
  • *
  • Posts: 44
  • Location: Brisbane, Australia
    • finance liberation
Re: did you buy a house or did you pay rent
« Reply #1 on: November 12, 2017, 08:46:22 PM »
We bought a house even before we were married. I bought it at an auction. DW (my fiance at the time) was overseas and only seen pictures (that was a real test of our trust in each other). The house needed a lot of work but it had great potential. That was back in 2001. We were thinking long-term to when we had kids. Pretty soon after we were married we had three Chinese student homestays come and live with us. They helped to pay for everything (including the mortgage). We later converted the house to 2 units and added bedrooms to gain a better return. We have that place as a rental generally unless we want to spend some time in Auckland.

We started renting in 2008. We had a business and accommodation in the same building. We stopped that business around 2012 and rent because we travel a lot. We always rent furnished places (some are much better than others). We find that the prices for furnished can be similar to the general market for unfurnished houses. We tend to rent just outside of the hotspots, but still in major centres.
« Last Edit: November 12, 2017, 09:10:41 PM by Cossack »
FIRE'd at few years ago. I am 43, DW 39. 5 young kids 10,8,7,4 and a newborn. We have lived in Auckland, Melbourne, Guangzhou, Zhuhai, Suva and currently living in Brisbane.

My new blog lives here: financeliberation.com

Cookie78

  • Handlebar Stache
  • *****
  • Posts: 1802
  • Location: Canada
    • Cookie's Goals
Re: did you buy a house or did you pay rent
« Reply #2 on: November 12, 2017, 08:53:34 PM »
Bought two houses before I knew anything about FIRE. Rented 1.5 of those houses. Pain in the ass, but it built a lot of equity at a time when I knew nothing about investing. Now that I am FIRE I want to sell those houses sooooo bad and invest said equity. Hoping everything is finalized with house #1 by August 2018.

englishteacheralex

  • Handlebar Stache
  • *****
  • Posts: 1103
  • Age: 38
  • Location: Honolulu, HI
Re: did you buy a house or did you pay rent
« Reply #3 on: November 13, 2017, 12:06:24 AM »
Sorry, I have nothing to offer, since we are nowhere near FIREd yet. I find this question really interesting though, so I am PTFing.

We bought a condo in a HCOL. From all the numbers we ran, it seems like a wise financial move. Different early retirement folks sure have different things to say about owning property, though.
I journal at https://forum.mrmoneymustache.com/journals/the-aloha-journal/msg1267277/#msg1267277

Tales of a haole teacher whose futon washed up on Oahu over a decade ago.

Financial.Velociraptor

  • Handlebar Stache
  • *****
  • Posts: 1208
  • Age: 45
  • Location: Houston TX
  • Devour your prey raptors!
    • Financial Velociraptor
Re: did you buy a house or did you pay rent
« Reply #4 on: November 13, 2017, 04:15:55 PM »
I bought a house in  Houston.  It was hard to pass up.  1950 sq ft, 4 bed, 2 bath, 2 garage for 97,000.  The Houston market is very affordable.  I probably would have saved a little by renting but the house is paid for now and serves as an inflation hedge.
Achieve Financial Escape Velocity - Financial Velociraptor

lhamo

  • Walrus Stache
  • *******
  • Posts: 7519
  • Location: Seattle
Re: did you buy a house or did you pay rent
« Reply #5 on: November 13, 2017, 05:04:00 PM »
We rented for almost two years while waiting for the sale of our Beijing condo to finalize/proceeds to be repatriated, and then spent about a month looking in a very hot RE market.   We wanted to buy because the rental market here is expensive/fickle -- many landlords are deciding to cash out and rents are going up at an even faster rate than selling prices.   We may have bought into a bubble and probably paid too much for our house -- time will tell.  We will likely be here for at least 10 years until our youngest fully launches, though, so we can weather a downturn in the market.
Wherever you go, there you are

HawkeyeNFO

  • Bristles
  • ***
  • Posts: 289
  • Location: Moose Scrotum, Alberta
  • Retired at 44
Re: did you buy a house or did you pay rent
« Reply #6 on: November 14, 2017, 08:55:29 AM »
Bought a house in 2012, FIRE'd in 2017.  It has gone up in value by somewhere between $150k-$200k, but sometimes I wish we were renting. 

If we didn't own the house, I don't think we'd live in it anymore, but the kids are doing well and the schools are top-notch.  So for now we are staying.

soccerluvof4

  • Magnum Stache
  • ******
  • Posts: 3336
  • Location: Artic Midwest
  • Retired at 50
    • My Journal
Re: did you buy a house or did you pay rent
« Reply #7 on: November 15, 2017, 08:54:06 AM »
Actually housing was part of us being able to be fire'd. We have pretty much always owned our homes so we sold our Mini-Mc Mansion and our Vacation home we were never using anymore and downsized from a 7200squ foot home to a 2700 square foot home in same area/school district etc..and invested the difference. I think in 3-5 years we will downsize one more time to half the square footage. Just depends on kids and stuff
" In life you don't get what you deserve you get what you negotiate"

TheWifeHalf

  • Bristles
  • ***
  • Posts: 457
Re: did you buy a house or did you pay rent
« Reply #8 on: November 15, 2017, 02:12:30 PM »
We are FI but not retired(health insurance reasons)
In 1980 we bought a 1915 house because the original owner was moving to a home and my husband had the ability to do all the work it needed.   It had not been remodeled, it was like 1915 again. There were never any kids in it, the oak woodwork had never been painted - our dream house in the making. The school system is the same my Dad went to, the same I went to, and later, the same my 3 kids went to. It is on 1 acre of land with no one ever being able to build behind us.
We married in 1981.

If we had not been able to do the work ourselves, and paid the mortgage in 1990, I bet we wouldn't be FI, but who knows? We definitely saved money by buying, even with the mortgage rate being 12%
We plan to be here until life makes us move - hopefully not until we die.

nottoolatetostart

  • Bristles
  • ***
  • Posts: 427
Re: did you buy a house or did you pay rent
« Reply #9 on: November 16, 2017, 04:52:27 AM »
We are FI (DH loves his job and would do this for free) but own a house. Though we could payoff mortgage, we opted to keep a fixed 30 yr mortgage.

Dicey

  • Walrus Stache
  • *******
  • Posts: 7936
  • Age: 60
  • Location: NorCal
Re: did you buy a house or did you pay rent
« Reply #10 on: November 18, 2017, 11:38:27 PM »
PTF. My story's a little atypical, because my answer is "both". I'll come back tomorrow when I have a little more time.
I did it! I have a journal!
A Lot Like This
And hell yes, I am still moving confidently in the direction of my dreams...

Goldielocks

  • Walrus Stache
  • *******
  • Posts: 5350
  • Location: BC
Re: did you buy a house or did you pay rent
« Reply #11 on: November 19, 2017, 12:31:22 AM »
I am FIRED with a huge mortgage.  So "neither".


Financial Ascensionist

  • Stubble
  • **
  • Posts: 104
  • Location: San Francisco Bay Area
Re: did you buy a house or did you pay rent
« Reply #12 on: November 19, 2017, 08:30:45 AM »
I have always rented. I like not having capital tied to real estate and I took advantage of the mobility many times to gain access to better job opportunities. Now that I stopped working, I am very nomadic and I don't see myself settling in any particular location for another few years, but it is conceivable that I will buy a house and use it as a home base at some point.

Dicey

  • Walrus Stache
  • *******
  • Posts: 7936
  • Age: 60
  • Location: NorCal
Re: did you buy a house or did you pay rent
« Reply #13 on: November 19, 2017, 11:48:33 PM »
PTF. My story's a little atypical, because my answer is "both". I'll come back tomorrow when I have a little more time.
Oops, it's the end of tomorrow and I'm pooped. I want to look up some numbers and dates before I reply. I'll try to get it done tomorrow, really*.

*Except that I'm FIRE and have no respect for deadlines, particularly self-imposed ones. I know, I'm a loser ;-)
I did it! I have a journal!
A Lot Like This
And hell yes, I am still moving confidently in the direction of my dreams...

Cashonda

  • 5 O'Clock Shadow
  • *
  • Posts: 29
Re: did you buy a house or did you pay rent
« Reply #14 on: November 24, 2017, 05:33:48 PM »
Both.
I rented for many years then bought a house with my darling significant other and put a pile of money and effort into renovating it and as soon as it was completed we split up and I went back to being a renter. :D I didn't have any plan to retire early at that time, I was trying to be a normal boring person.
Then I rented again for several years until I realized that where I live now it is much cheaper to own than rent, so I bought a tiny apartment with cash.
Now I am thinking of selling and putting that cash somewhere it can earn dividends and going back to being a renter. I like being nomadic. But to be honest I never really liked being a renter. About 50% of my landlords were crooks, unfortunately! That's what makes me nervous about going back to the renting life.

Bicycle_B

  • Handlebar Stache
  • *****
  • Posts: 1817
  • Mustachian-ish in Live Music Capital of the World
Re: did you buy a house or did you pay rent
« Reply #15 on: November 24, 2017, 06:30:41 PM »
I bought a house long before FIRE and have lived in it ever since.  Made lots of money on the deal but cannot say that others will do the same.  My story depended appreciation that may not repeat, and unusual life choices.

Bought home as 20something for peanuts, watched home prices soar (mid 1990s to today, Austin prices up 6x to 7x). Borrowed against it to finance midlife graduate degree, then borrowed more prior to 2008 crash because I thought cash might be handy.  Rented out rooms the whole time, essentially living free for most of the years in addition to gaining appreciation in house value.  Prices (including tax and insurance) in my city have risen to the point where it's not free any more if you account for the investment value of the equity, but owning is still as cheap as renting for me as a part landlord.  At this point I'm ahead over 200k and am able to continue living pleasantly in it without losing money compared to renting.  It's a substantial part of my FIRE equation.  I left my last good job about 4 years ago and have just enough $ to loaf around indefinitely. 

I've had about as much loafing as is good for me though.  I plan to work again soon, so arguably will be SWAMI. 

SD70

  • 5 O'Clock Shadow
  • *
  • Posts: 7
  • Location: PA
Re: did you buy a house or did you pay rent
« Reply #16 on: December 20, 2017, 07:57:10 AM »
Honestly, it depends on your unique situation and includes factors such as where you would like to live, the cost of purchasing vs. renting in your area, how nomadic you are, how disciplined you are with saving and investing, etc. You need to sit down and do the math, as well as take your personal desires into account.
 
I have been a homeowner for a while now. As a bachelor, I had a larger home that I home shared.  It worked out well for the most part and helped pay the mortgage and maintenance of the home. Ironically, after I married, we downsized significantly and currently have no mortgage. This really accelerated our path to FI, more significantly than any other factor. Well, having two household incomes was a large factor as well.

Many home buyers fail to realize that with the purchase of a home comes a myriad of other costs that go beyond the mortgage payment. The typical ongoing costs of a home look something like this: Mortgage + Fees + PMI + Property Tax + Insurance + Maintenance + Repairs + Remodels + Association Fees + Utilities = a Big 'ol Hunk of your Monthly Income and Time. All or most of these costs can be avoided by renting. Typically, with the exception of utilities in some cases, the total cost of renting is your monthly rent + renters insurance.

Also keep in mind that every time a home buyer "upgrades" and takes out a new mortgage, the amortization of the loan starts over. In addition, the selling and purchasing of a home can come with a lot of fees and taxes. As a result, it is very expensive to keep moving and purchasing homes, thereby reducing your ability to build equity and prolonging the process of becoming debt free.

Oh, and don't forget about opportunity cost. Opportunity cost is income you are not earning because a portion of your stash is tied up in a home instead of making investments elsewhere, such as the stock market.

With all of this said, to many, home ownership is not solely a financial decision. Most of the positives for owning a home that hold any merit for me have more to do with lifestyle choices than finances. For example, home ownership can provide you with more options regarding the type of home and area in which you would like to reside, especially if rental options are limited. If you happen to find your utopia, your home base, and plan to stay put, then home ownership becomes more valuable and may actually provide increased benefit.

If you are the type of person who finds a sense of security in "owning" your home, or you are uncomfortable with a landlord having any degree of control over your life, then home ownership may hold more value for you.

Finally, if you have already gone down the path of home ownership and your mortgage is either paid or almost paid off, home ownership may hold some value here as well. Debt free and rent free is a good place to be, both psychologically and financially in some cases. Just remember to account for the other expenses of home ownership as mentioned previously.

In the end, whether you rent or buy, the bottom line is to make a choice that enables you to live well below your means. Just be realistic and do the math so that you purchase or rent a home that doesn't make you feel imprisoned by debt and allows you to maintain a VERY high savings rate. This calculator at Financial Mentor is one of the better ones I have come across: https://financialmentor.com/calculator/rent-vs-buy-calculator. Not only does it consider opportunity costs, but it comes complete with terms and definitions at the end of the article. Start by running the numbers and take it from there.

I hope this long drawn out post was helpful.
« Last Edit: December 20, 2017, 08:02:24 AM by SD70 »