Learning, Sharing, and Teaching > Ask a Mustachian

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

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monkeytree:
For a small family whose members are a combination of busy, lazy, and totally inept at house upkeep-related activities living in a HCOL region where a decent house in a good school district would start around 300-400k - would there be anything wrong with renting forever?? If you met a family like this, what would you think? Would you start judging? Because I think I would....

So to start with some background: I'm married with a 5-yo son, joint household income is about $130k, the only debt is student loans (about $25k that we'd like to pay off by the end of 2016, and about $150k of mostly grad school federal loans that should be forgiven in less than 10 yrs so just paying the minimum income-based amounts now).

We're renting a somewhat pricey (but not too crazy for this area) 2-br + den apt (~1300 sf) which is in a great location (northern VA), with great schools and community, easy access to public transportation, walkable to a lot of places (so we're hardly ever using our paid off car - we fill up maybe once or twice a month), the management company is awesome about maintenance/responsiveness, grocery store right across the street, gym in building, etc. So basically we've been here a few months but have really, really enjoyed being here. My son absolutely loves the school (and so do we).

Our mid to long term financial goals -
1) pay off $25k student loan in 1 year
2) start maxing out our 401ks (right now, we're putting in about 13% including agency matching)
3) save aggressively for a down payment on a house (not even sure how long it would take us to save up 20% plus be able to afford a decent place....we'd be starting from scratch as we have no real savings (~$1k in savings account, $60k in retirement)
4) Maybe retire early for me, but my husband wants to work as long as he can....so I guess semi-FI would be our ultimate goal

So we're right on track (and both on board) with #1 and 2.

However, a) we've loved living here so much, b) are daunted by the uber high housing prices and c) are kind of afraid of unexpected things that could break and we'd both be clueless as to how to fix them (ie: call a professional and spend more $$$) that we've started half-jokingly discussing the option of just renting forever and just invest our "down payment fund" to build up our savings. Added to the above is the fact that it would take us at least 3-4 yrs to save up 20%, which seems so long!

Based on my calculations, even assuming rent increased 1-2% a year, it would be more affordable compared to a mortgage on a $400k house which would be on the lower end of the spectrum here (and presumably more prone to expenses as opposed to a newer, more expensive house). Space-wise, we do want another child, but that prospect is looking dimmer and dimmer as I get older, so if nothing changes in our family situation, I don't see a huge problem with 3 people living in a 1300 sf space until our son leaves for college. I could also see us renting for 10 years or so and just outright buying a house with cash.

So those are all the pros....which, now that I've written it all out, seem even more attractive.

Now for the cons - the stigma of not owning your own home (even my boy has asked why most of the kids on his bus live in a "real" house and we don't! haha) - is this just something I'm being paranoid about or is it a real thing?  Also, never really having our own outdoor space, garage, basement for kids, etc.; not enough room for guests; never having a paid-off house (and the financial flexibility/security that comes with that, especially when we're older/retired)...what else?

rubybeth:

--- Quote from: monkeytree on October 14, 2015, 11:00:55 AM ---Now for the cons - the stigma of not owning your own home (even my boy has asked why most of the kids on his bus live in a "real" house and we don't! haha) - is this just something I'm being paranoid about or is it a real thing?  Also, never really having our own outdoor space, garage, basement for kids, etc.; not enough room for guests; never having a paid-off house (and the financial flexibility/security that comes with that, especially when we're older/retired)...what else?

--- End quote ---

Well, you may be asking the wrong group, because in general, I think Mustachians kinda don't give a crap about what people think of them. Honestly, you should probably try to care less about what other people think, in general. It will lead to more happiness and freedom. :)

Aside from that, I don't think there's anything wrong with renting, especially when you know it makes long-term financial sense. DH and I have been renting since we got married over 7 years ago, and if anyone gives us crap about not owning a place yet, we can start the litany of reasons why we don't--we're just prioritizing other stuff (travel, education, paying off debt), and renting affords us a lot of freedom (want to be away for the week? lock up and go), and it's kinda been risky to buy a place since we got married in 2008 (hey, remember that fun housing bubble?) and we're never sure that our jobs will be secure (hey, remember the recession after the housing bubble burst?). So maybe to some people, you'll look like those idiots who rented forever, but to those who know better, you may be the genius in the room. I think we're going to happily have someone else assume the risk of housing us for at least a few more years, and I suggested to my DH recently that, before we buy a place (if at all), we should take a sabbatical and just travel for a couple months (or as long as our employers would let us be gone). He LOVED the idea, and said, "hey, if we could do that every few years, I'd be fine never owning a house."

As for your son, introduce him to a magical place where you can ride your bike outside, use all the play equipment of your dreams, and never once have to mow the lawn or shovel snow! I call it THE PARK.

P.S. Lots of older/retired people don't want to be taking care of a house when they're up there in years, they want the freedom from house maintenance, and so many of them end up downsizing into apartments or neighborhoods of houses where somebody else fusses when the roof needs replacing and the snow piles up.

MandalayVA:
I don't see anything wrong with renting long term, especially in Northern Virginia where real estate prices are completely ridiculous.  When Mr. Mandalay and I retire, we're selling our (paid-off) condo and becoming renters because neither of us are DIYers.  I'd wish we'd done that in the beginning because it's NICE to have others put in the hard work.

Mr Money Mutton Chops:

--- Quote from: rubybeth on October 14, 2015, 11:13:07 AM ---
--- Quote from: monkeytree on October 14, 2015, 11:00:55 AM ---Now for the cons - the stigma of not owning your own home (even my boy has asked why most of the kids on his bus live in a "real" house and we don't! haha) - is this just something I'm being paranoid about or is it a real thing?  Also, never really having our own outdoor space, garage, basement for kids, etc.; not enough room for guests; never having a paid-off house (and the financial flexibility/security that comes with that, especially when we're older/retired)...what else?

--- End quote ---

Well, you may be asking the wrong group, because in general, I think Mustachians kinda don't give a crap about what people think of them. Honestly, you should probably try to care less about what other people think, in general. It will lead to more happiness and freedom. :)


--- End quote ---

As I was writing my post, you put that there.... You beat me to it by a second! And honestly, I'm almost certain most people on the forum wouldn't really care, nor do I think you should. If it works for you, then rent. If you want to buy, buy. It's your life, live it as you think works.

frugaliknowit:
The only thing potentially "wrong" is that over time, the (seemingly?) small rental rate increases over time compound, possibly making home ownership more cost efficient in the long run.

If you take $1,000 with 3% increases, in 10 years your rent is $1343.

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