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What's wrong with renting forever?: Stigma of non-home ownership

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UnleashHell:
I bought my current house two years ago. We have kids and like the school district so were bound by physical location.
Before that we rented - first in an apartment. Couple above us had a dog they only seemed to exercise in the apartment. every night. and liked fighting each other. not a great environment.
after that we rented a house. Rent was a lot more than a mortgage would be. nice house and close to school. We paid the rent. owner didn;t pay the mortgage. house was foreclosed on and we had to move again.

obviously as the owner wasn't paying the rent he also wasn't too hot on doing minor repairs like making sure the hot water worked.


Its not always rainbows and waterfalls.



When the kids are done with school we may rent our place out and travel.

sammybiker:
@OP, is going the multi-family home route any help?  Even in HCOL area, a duplex will greatly help offset the mortgage, provide awesome equity pay down, retirement diversification if you so decide to keep it that long, etc.

Shane:

--- Quote from: clifp on October 15, 2015, 12:22:15 AM ---Look at this way. Most landlords make a profit renting. Who pays for the profit the landlords make? The renters. So why give the landlords profits when you can make it yourself?
--- End quote ---

This may be true in some markets, but it is definitely not true everywhere. In many places real estate prices are so high that its very difficult, if not impossible, for most landlords to actually make a profit.

If you haven't already, please read MMM's recent post comparing renting vs. owning.

Gondolin:
You'll notice that several posters (including OP) have said that they feel or have felt that home ownership was the ultimate sign of success and adulthood. The reason for this is that since the formation of the colonies the "American (or Canadian) dream" has been intrinsically rooted in land ownership. Social mobility meant becoming a landowner - farming was lucrative and owning lands meant you had a real stake in the colony(or kingdom) in a way you could never have back in Europe.

Owning lands = getting rich = greater status

As industrialization occurred, the agrarian lifestyle became less lucrative and less appealing. However, the need to own land persisted - eventually morphing into the idea that owning your own home with two cars and a white picket fence was the ultimate sign that you had "made it". This is the dream your parents and grandparents spent their lives chasing. It was fine for them but, is woefully outdated for the 21st century service economy.

The best thing you can do for your financial future is to give up the definitions of success held by previous generations and redefine it for yourself.

clifp:

--- Quote from: Shane on October 15, 2015, 04:49:54 AM ---
--- Quote from: clifp on October 15, 2015, 12:22:15 AM ---Look at this way. Most landlords make a profit renting. Who pays for the profit the landlords make? The renters. So why give the landlords profits when you can make it yourself?
--- End quote ---

This may be true in some markets, but it is definitely not true everywhere. In many places, real estate prices are so high that it's very difficult, if not impossible, for most landlords to actually make a profit.

If you haven't already, please read MMM's recent post comparing renting vs. owning.

--- End quote ---

I didn't say everywhere, I said most meaning a majority.  Are you saying that most landlords are stupid and lose money, and year after year subsidize the smart renters?  Do you have any data?

Regarding MMM post on Toronto rents, there are definitely some markets where owning is less favorable.  That said I've spent most of my life living in High COL places (California, Hawaii), where it has been very difficult to purchase properties that are cash-flow positive.  Yet somehow lots of people make money in crazy expensive real estate markets (including Toronto). They do this because properties appreciate over time, and through the use of leverage that increases their returns.  Certainly as we found out in 2007/2008 real estate can go down and you can lose money both as a homeowner and a renter. However, over time real estate does appreciate.

The reason I pointed out that most landlords make money was to point out even though there are many distinct advantages for home ownership, primarily tax advantages but also lower interest rates on mortgages, people make money owning homes and renting them out.  So logically the lower cost of owning a home for an individual should widen the profits vs a landlord.

Finally, it is worth considering this factoid.  In Stanley's book The Millionaire Next Door he found that 97% of millionaires own their own home. If you think that emulating the habits of the Millionaire Next Door is worthwhile than I suggest that buying a home is smart.

If people want to convince themselves that there is no financial advantage to owning vs renting, and retiring early is just as easy if you've rented your whole life as opposed to owned feel free. I suspect that there is precious little data to support the position.

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