Rent vs Buying: Can I Have My Backyard BBQ?

[hyperrun]

I'm with my spouse for 3 years now (we are both ~30 years old), and both of us want to move in together (she rents a small-ish flat, my situation is detailed belowe). Thus, we're enumerating our options. I wanted to share my thought process and would love to get feedback.

Current situation
I'm a postdoc working at a university and living just a 10-minute walk away in a "student dorm" — though it’s more of a small flat (around 30m²) with my own bathroom and kitchen, so it doesn’t feel like a traditional dorm. I also serve as the network admin, spending a few hours each month (usually less than 5) helping students with internet issues. In exchange, I get to live there for free, only paying about €20 per month for electricity. I don't own a car and do most of my errands by bike. I enjoy the financial side of my current situation, but I feel like it's time to move on. I want to grow. Provide a place for "my family". Worry about "more interesting" things, such as getting a solar power system. It's nice to be surrounded with students, but (especially after finishing my PhD) they seem so young and I just feel like it's time to move on.

Background
I grew up in a rural area (although it was just 20 minutes by car / 30 minutes by train to get to the closest city (where most people from this rural area work)).


Location
My gf and I want to roughly stay in our current area. We enjoy having our friends + family close by.

House vs flat
I want a garden and eat vegetables that are grown there. I want to host bbq parties in my backyard. And eventually I want my children to have a similar surrounding that I had. I'd also prefer to have the problems of a home owner rather than the ones of a renter. I want to be responsible for stuff. I want to be allowed to do things (and not e.g. having to ask people if I want to install solar power system on the roof). On the other hand, I feel like there's a hypocrisy if I buy a house. I'm quite environmental-conscious (minimizing using planes, no car, vegetarian (though mainly for ethic reasons), ...). And now I'm thinking about buying a lot of area, which could not be sustained if everyone on the earth decides to want the same thing.

Still, I'm leaning strongly towards buying a house.


Heritage
My family owns three properties: one where my parents and grandparents live, and two others that are rented out—one is a vacation home (which could potentially be developed into a full house), and the other is a regular house ("House A"). I have one sibling.

I’ve had discussions with my parents about how they want to handle inheritance, and they mentioned that starting in September 2026, when the current rental contract ends, it might be possible for either my sister or me to move into House A. My parents plan to finalize the heritage by 2030 (where the properties get transferred to my sister and me). I’ve told them that I could see myself living in House A, and my sibling is also open to it. I have a great relationship with my sister, there will be no fight between us.

I totally accept the decision that my parents want to keep the properties until 2030. However, since I’m in my late twenties and want to start planning for my future, I’m unsure if I want to rely too heavily on this potential inheritance. On one hand, I might need to rent a place until around 2026, which is fine, but still requires effort and might be inconvenient. Then, from 2026 to 2030, it’s unclear whether my gf and I would even end up getting the property—anything could happen in that time (right?).

Because of this uncertainty, I’m leaning towards buying my own home now and treating the inheritance as a potential bonus. If I end up getting one of the properties, I could always rent it out (as my parents currently do). Regarding the current vacation home: I don't feel like building a new house (which would remove even more nature, I'd much rather live in a existing building).

Does this approach regard my heritage make sense?


Finances
Let's talk finances (it's MMM, afterall). I have a net worth of ~180k (invested mostly in all-world etfs). My gf has a similar amount, although ~100k are not accessible until ~2026. I make ~3.6k take-home pay, and have current expenses of ~700€ (although I stopped tracking, I should probably start doing that again) per month.

Our current requirements for a house are: roughly 100m² (not much more), a large-ish garden (300+ m²), be located somewhat close to work + family/friends (bike distance) and the are should not be in a natural hazard zone (mostly flood in my country). The price for these houses are ~300k - 400k (with exceptions, of course), which I feel like would work out with our financial situation. Furthermore, our country has quite a few government incentives (reduced tax + fees, renovation bonus, ...) currently. Also, there would be the option to get a cheap credit (under certain requirements, which I think we fulfill).

I did some napkin math, but I'm not sure if I used valid assumptions:
- 7% stock increase / year
- income + expenses are fixed (3.600 and 700, resp.); furthermore I assume 2% inflation
- fixed operating costs if I buy a house of 300€/month (maintenance, power, ...)
- I assume a house price of 400k (-> 200k for me)
- I assume a rent price of 1.400 (-> 700 for me); is extremely optimistic, there are very little renting options similar to the requirements specified above.
- 3.5% credit costs and 35 year duration

I have 4 scenarios:
1) Current (basically no housing expenses) -> baseline
2) Renting for 1.200€ / month (-> 600€ for me, 600€ for my gf)
3) Buying a house and using as much credit as possible (20% down-payment needed)
4) Buying a house and using as little credit as possible (40k)

The result is that (financially speaking) I should rent, as I would have a stash of ~9kk in 2080; compared to 7.2kk (+ 600k house) if I rent with maximum credit and just 1.2kk (+ 600k house) if I rent with minimum credit.

Here is the full table:


Do you spot any issues in my calculations/assumptions?

I feel like my assumptions are quite conservative for house buying, but even with that the "max credit" scenario is somewhat similar (7 vs 9kk) to the renting scenario. I still find it a bit strange, that buying a house is not (much) more favorable, especially in the long run. But I guess the reason for that are my assumptions, being conservative for the house-buying variables, and optimistic for renting.

I want to emphasize that owning a home would be preferable to me, I just wanted to have a look what the financial sensible action would be. Do you have any suggestions?

[classicrando]

House vs flat
I want a garden and eat vegetables that are grown there. I want to host bbq parties in my backyard. And eventually I want my children to have a similar surrounding that I had. I'd also prefer to have the problems of a home owner rather than the ones of a renter. I want to be responsible for stuff. I want to be allowed to do things (and not e.g. having to ask people if I want to install solar power system on the roof). On the other hand, I feel like there's a hypocrisy if I buy a house. I'm quite environmental-conscious (minimizing using planes, no car, vegetarian (though mainly for ethic reasons), ...). And now I'm thinking about buying a lot of area, which could not be sustained if everyone on the earth decides to want the same thing.

Still, I'm leaning strongly towards buying a house.

To put your mind at ease about this, there are a little over 32 billion acres of land area on earth.  A little under 15 billion acres are undeveloped, and 12.5 billion acres are used for agriculture.  Assuming the undeveloped areas are literally uninhabitable and we don't change anything about agriculture, that still leaves 4.5 billion acres for human civilization.

If we divided it equally, everyone would get 0.5 acres to themselves.  So, if your property purchase is less than 0.5 acres per person in your household, you can buy with the peace of mind that everyone on earth could live that way.  At least theoretically, in the Fully Automated Luxury Gay Space Communism^TM future.

[Laura33]

IMO, buying a home is a consumption decision, not an investment.  So the direct comparison to renting -- measuring the long-term costs/gains of each against the other -- is inherently unfair, unless you are comparing renting and buying the exact same property (which often is not an option).  IMO, the option that allows you to spend the least on your housing is likely to be the one that puts you in the best financial position long-term, because over time and across broad areas, housing generally keeps up with inflation, while the stock market does better (sure, you might luck into a time where one or the other is up or down, but for planning purposes, those sorts of averages are likely the best you can do).

I don't think you should focus on the environmental impacts of owning a home -- at least, not in a vacuum, as buying-vs.-renting.  If you buy an existing home, then there is no direct impact as there would be if you built a new home.  The bigger-picture impact is that if there is a shortage of homes for sale, then builders will build more homes, in which case your taking one home off the market would theoretically require another home to be built.  But the same holds true for renting:  if more people want to rent than there are apartments available, then builders will build more rental apartments.  So really, what matters is the current property market in your area -- you'd minimize your impact if you chose to rent if your area has excess rentals, and buy if there are excess homes for sale. 

Or you could just rent or buy in an area where the market is down, such as in an undesirable area -- if people don't want to be there, then your occupying one unit won't drive any excess demand at all.  But again:  the impact is based on overall supply and demand, not on whether you buy or rent. 

IMO, it seems like you're recently married and recently obtained your degree.  That suggests that you have quite a few changes to adjust to, with likely more coming in the future.  Why not rent for a year or two while you are figuring everything out?  Then, once you guys are used to living together and have a stronger idea what your jobs will be and have had a chance to figure out what you want your future life together to look like, you can make a better long-term decision. 

The best financial decision is not to spend excess money until you have to.  So if you might need a larger space when you have kids, but you don't yet have them, better to rent a smaller place until the kids come along and you actually need that extra bedroom.  Etc.   

[nereo]

House vs flat
I want a garden and eat vegetables that are grown there. I want to host bbq parties in my backyard. And eventually I want my children to have a similar surrounding that I had. I'd also prefer to have the problems of a home owner rather than the ones of a renter. I want to be responsible for stuff. I want to be allowed to do things (and not e.g. having to ask people if I want to install solar power system on the roof). On the other hand, I feel like there's a hypocrisy if I buy a house. I'm quite environmental-conscious (minimizing using planes, no car, vegetarian (though mainly for ethic reasons), ...). And now I'm thinking about buying a lot of area, which could not be sustained if everyone on the earth decides to want the same thing.

Still, I'm leaning strongly towards buying a house.

To put your mind at ease about this, there are a little over 32 billion acres of land area on earth.  A little under 15 billion acres are undeveloped, and 12.5 billion acres are used for agriculture.  Assuming the undeveloped areas are literally uninhabitable and we don't change anything about agriculture, that still leaves 4.5 billion acres for human civilization.

If we divided it equally, everyone would get 0.5 acres to themselves.  So, if your property purchase is less than 0.5 acres per person in your household, you can buy with the peace of mind that everyone on earth could live that way.  At least theoretically, in the Fully Automated Luxury Gay Space Communism^TM future.

Gee, it’s a good thing there aren’t any other critters on earth we have to consider.
/s

[ixtap]

How long is your postdoc for? What are your prospects after? In many fields, being in a post doc means facing transitions in the near future. But I know there are some fields where a post doc is one step away from setting up you own lab at the same university.

[hyperrun]

@ixtap: My post-doc contract is for just 2 years, but I'm in computer science, so I'm confident, that getting another job should be doable. That's another todo: What/where I want to work (I'm also playing with the idea of creating my own little company.

@Laura33: Thanks for making me reflect again. It's a chicken-and-egg problem: Do I first find a house and then focus on finding a job; or the other way around. Since I know that I want to stay roughly in my current area, and most jobs are in this city I'm currently living in, I feel like I can first focus on housing, without limiting my job options too much.

Another reason to first focus on housing is that I feel a bit stuck at my current situation (student dorm) and I'm yearning for 'more'. I want to create something in the long-run and I feel like a good way to do that would be to fix-up a home and make it nice to live in (e.g. solar power with battery for storage, simple things, such as having a compost, ultimately having something I truly own and am able to create an atmosphere I love). I'm not sure if I'm making sense.

This is the reason, why I'm leaning towards buying a house (instead of renting). I guess I've answered my own question: I guess I want to buy a house, finance that with (currently) cheap credits to limit my spending on housing as much as possible.

[classicrando]

House vs flat
I want a garden and eat vegetables that are grown there. I want to host bbq parties in my backyard. And eventually I want my children to have a similar surrounding that I had. I'd also prefer to have the problems of a home owner rather than the ones of a renter. I want to be responsible for stuff. I want to be allowed to do things (and not e.g. having to ask people if I want to install solar power system on the roof). On the other hand, I feel like there's a hypocrisy if I buy a house. I'm quite environmental-conscious (minimizing using planes, no car, vegetarian (though mainly for ethic reasons), ...). And now I'm thinking about buying a lot of area, which could not be sustained if everyone on the earth decides to want the same thing.

Still, I'm leaning strongly towards buying a house.

To put your mind at ease about this, there are a little over 32 billion acres of land area on earth.  A little under 15 billion acres are undeveloped, and 12.5 billion acres are used for agriculture.  Assuming the undeveloped areas are literally uninhabitable and we don't change anything about agriculture, that still leaves 4.5 billion acres for human civilization.

If we divided it equally, everyone would get 0.5 acres to themselves.  So, if your property purchase is less than 0.5 acres per person in your household, you can buy with the peace of mind that everyone on earth could live that way.  At least theoretically, in the Fully Automated Luxury Gay Space Communism^TM future.

Gee, it’s a good thing there aren’t any other critters on earth we have to consider.
/s

Build a butterfly garden on your half-acre, feed a few opossums, set up a bat house and call it good. ;P

[Laura33]

@ixtap: My post-doc contract is for just 2 years, but I'm in computer science, so I'm confident, that getting another job should be doable. That's another todo: What/where I want to work (I'm also playing with the idea of creating my own little company.

@Laura33: Thanks for making me reflect again. It's a chicken-and-egg problem: Do I first find a house and then focus on finding a job; or the other way around. Since I know that I want to stay roughly in my current area, and most jobs are in this city I'm currently living in, I feel like I can first focus on housing, without limiting my job options too much.

Another reason to first focus on housing is that I feel a bit stuck at my current situation (student dorm) and I'm yearning for 'more'. I want to create something in the long-run and I feel like a good way to do that would be to fix-up a home and make it nice to live in (e.g. solar power with battery for storage, simple things, such as having a compost, ultimately having something I truly own and am able to create an atmosphere I love). I'm not sure if I'm making sense.

This is the reason, why I'm leaning towards buying a house (instead of renting). I guess I've answered my own question: I guess I want to buy a house, finance that with (currently) cheap credits to limit my spending on housing as much as possible.

That is a fair assessment.  Just keep in mind that you are still conflating "prioritizing location/housing" with "buy now."  You have a 2-year contract.  You can afford to find a specific area you really like, rent to see if it is all you think it will be, and then buy in that area once you have the permanent job. 

And yes, it is perfectly reasonable to buy now if putting down roots is really driving you.  But there is significant value in having flexibility at this time in your life to go wherever your best options take you.  This is the time to challenge yourself, to grow, to build the foundation for that career you've been working so hard toward.  And we as humans are also very, very bad at predicting what will happen in the future and what we will actually want in another decade.  Keeping your options open now may well better position you to follow one of those unexpected opportunities, or to cut your losses if something doesn't turn out as you hope.

[AMandM]

It sounds like you have good reasons for choosing to own a house rather than to rent, but when to buy is a separate issue. You can decide to rent for now as the best immediate step towards your long-term goal of owning a house that suits your desires. I understand your impatience to get on with the next phase of your life, but make sure it doesn't lead you to make a decision that you might want to undo later, at a high cost.

If House A is a good place for you, and your family are all happy with the idea of you living there, why not rent till autumn 2026 (less than two years), then move to House A? Even though you won't be the owner for another four years, you will have many if not all of the benefits of ownership, such as space for a BBQ and garden.

Finally, on a broader issue, you have not said much about your girlfriend's desires, except that she also wants to stay in roughly your current area. Although you referred to her at first as your spouse, I assume you aren't married, since you are living separately. Does she share your wants for space, for gardening, for responsibility, for DIYing, etc.? Married or not, I think renting together for a while is a good idea, so you can figure out together what you want in a permanent house.