Author Topic: Would You Rather...  (Read 2995 times)

Luz

  • Stubble
  • **
  • Posts: 103
Would You Rather...
« on: July 22, 2019, 11:34:02 AM »
If you had to choose between the two, would you rather:
-have a family home with a yard for your 3 kids...
or
-live in an apartment and have extra money for experiences (travel, activities, etc) + enough money in retirement to purchase a modest home with cash (or do something else with that extra ~$250,000)?

I'm sure this has been asked before on this thread, but I couldn't find it through the search engine.

ETA:
The apartment would be a rental

Saving for a down payment and the associated costs of owning a home would divert money from investments to the tune of $250,000 by my super rough estimations.

We also would likely have $5,000-$6,000 less to spend on experiences per year (in order to build up our house-related savings and continue saving for retirement) during that period of time when kids are still at home and our parents are still alive.

This question was inspired by my confusion of where a home purchase fits into the Investment Order (EF, 401K match, HSA/Roth/401K Max...) since it seems to take away from maximizing investments.

I prefer how easy apartment-living is, but it makes me wonder- would my kids miss out on essential childhood stuff if we didn't own a home? And if so, would that be cancelled out by having extra money to go out and do things with, even though we lived in an apartment?
« Last Edit: July 22, 2019, 02:18:46 PM by Luz »

TVRodriguez

  • Pencil Stache
  • ****
  • Posts: 649
Re: Would You Rather...
« Reply #1 on: July 22, 2019, 12:49:10 PM »
So the presumption is that a family home with a yard would cost $250,000 more than an apartment?  Because that is not always the case.  When we were home shopping, we started by looking at apartments.  We ended up finding a house with a yard that was about $100,000 cheaper than the apartments we had viewed.

As a person with three kids, I definitely enjoy my house with a yard, and I think we made the right choice for us.  Sometimes, as a drive past nearby apartments, I have a flash fantasy of living in one of them again and letting someone else worry about more maintenance issues.  But then, nope, I like our house.

A Fella from Stella

  • Pencil Stache
  • ****
  • Posts: 525
Re: Would You Rather...
« Reply #2 on: July 22, 2019, 12:55:22 PM »
Don't be afraid to do something you prefer. If it's the wrong choice you can always get a home with a yard.

I have chosen the home in the suburbs with all of its expenses, like upkeep on the deck, paying the landscaper, etc.

When the kids leave, we are not sure if we'll keep the house for their benefit, or getting a fancy 2 BR apt that will allow us to entertain, but also to take a few trips around the world.

DadJokes

  • Handlebar Stache
  • *****
  • Posts: 1022
Re: Would You Rather...
« Reply #3 on: July 22, 2019, 01:38:39 PM »
Is that a paid-off house v renting but with $250k in the bank? I'll take the paid-off house.

Looking at all of the apartments in my town, the price for a 3br range from $1,170 - $1,700 with the average price being $1,370. My mortgage, including PITI, is $1,665. I think the extra $300/month is worth the price for a nice yard and an asset that will appreciate by $600/month (if it only keeps up with inflation). On the other hand, I hate things like mowing and having to DIY any maintenance. But I would still take that over an apartment.

chemistk

  • Bristles
  • ***
  • Posts: 449
  • Location: Mid-Atlantic
Re: Would You Rather...
« Reply #4 on: July 23, 2019, 06:02:27 AM »
If you had to choose between the two, would you rather:
-have a family home with a yard for your 3 kids...
or
-live in an apartment and have extra money for experiences (travel, activities, etc) + enough money in retirement to purchase a modest home with cash (or do something else with that extra ~$250,000)?

I'm sure this has been asked before on this thread, but I couldn't find it through the search engine.

ETA:
The apartment would be a rental

Saving for a down payment and the associated costs of owning a home would divert money from investments to the tune of $250,000 by my super rough estimations.

We also would likely have $5,000-$6,000 less to spend on experiences per year (in order to build up our house-related savings and continue saving for retirement) during that period of time when kids are still at home and our parents are still alive.

This question was inspired by my confusion of where a home purchase fits into the Investment Order (EF, 401K match, HSA/Roth/401K Max...) since it seems to take away from maximizing investments.

I prefer how easy apartment-living is, but it makes me wonder- would my kids miss out on essential childhood stuff if we didn't own a home? And if so, would that be cancelled out by having extra money to go out and do things with, even though we lived in an apartment?

First off, whenever you're searching (this or ANY forum/community site), never use the built in search tool. Instead use Google to search - "site:www.siteyouaresearching.com/relevantextensions 'your search term' " (so your search would look like site:forum.mrmoneymustache.com rent or buy <- copy that into your address bar!)

Second - that's a highly specific situation that nobody but you could answer and really sounds like the options are limited to an extremely narrow set of houses/apartments.

For me, I am aiming for a house. My kids love to play outside and our townhouse just doesn't have a yard for that. They're also incredibly loud, high energy, and clumsy and I know for a fact that our wall-mates can hear the screams and thuds. I figure we're probably going to lose half our deposit on the place due the the damage they've inflicted. Kids also thrive on stability, so a house would act as a life-anchor for them, as opposed to moving every few years while they're young. So, I want a house.

But, there are serious merits to your apartment option. If it's a safe area, the apartment isn't too high, and there's a park/schools within walking distance, you could spend most of your time out of the house.

nereo

  • Senior Mustachian
  • ********
  • Posts: 11092
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: Would You Rather...
« Reply #5 on: July 23, 2019, 01:03:11 PM »
as others have said, it's an individual decision.

FWIW, we went from an apartment near a very large park to a single-family home, and we vastly prefer the former.  A yard costs money (either in terms of increased rent or increased purchase price) and it takes a considerable amount of time (mowing, raking leaves, etc).  Once we are working less I'm sure we'll gravitate towards having a home with a yard, but for right now... in our current situation... I'd much rather save the money, go to the park on a near-daily basis and have our taxes (and everyone else's taxes) maintain it all.

ketchup

  • Magnum Stache
  • ******
  • Posts: 4055
  • Age: 28
Re: Would You Rather...
« Reply #6 on: July 23, 2019, 01:04:59 PM »
Make sure you don't pretend other options don't exist.  You can rent a nice house with a yard.

KBCB

  • Stubble
  • **
  • Posts: 109
  • Burning to Fire
Re: Would You Rather...
« Reply #7 on: September 24, 2019, 06:34:29 PM »
It depends on the life style you want and what the numbers and actually availability of housing / rentals is.

I lean towards the house because I had a bad experience with a TERRIBLE neighbor in the apartment I lived in. It was one of the main reasons I moved and bought my home. My apartment was super nice and cheaper than anything else I would have needed to switch to. The house was a great find and is everything I need. [Small yard but we make it work anyways :)]

LiveLean

  • Pencil Stache
  • ****
  • Posts: 773
  • Location: Central Florida
    • ToLiveLean
Re: Would You Rather...
« Reply #8 on: September 25, 2019, 12:48:32 PM »
There's no need for a yard for your kids in modern society. Today's kids are either over scheduled with activities or content to stay indoors looking at screens. Sad, yes. I spent my Gen X childhood in the late '70s and '80s playing ball in my yard or any one of my friend's yards, though sadly that no longer exists.

I'd go with door #2 -- save the money and spend it elsewhere.

nereo

  • Senior Mustachian
  • ********
  • Posts: 11092
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: Would You Rather...
« Reply #9 on: September 25, 2019, 12:50:52 PM »
There's no need for a yard for your kids in modern society. Today's kids are either over scheduled with activities or content to stay indoors looking at screens. Sad, yes. I spent my Gen X childhood in the late '70s and '80s playing ball in my yard or any one of my friend's yards, though sadly that no longer exists.

I'd go with door #2 -- save the money and spend it elsewhere.

Maybe we are outliers, but we've still got roving bands of children that play in their yards and their friends yards almost every day.  They ride their bikes and e-scooters up and down our street constantly.

trollwithamustache

  • Pencil Stache
  • ****
  • Posts: 693
Re: Would You Rather...
« Reply #10 on: September 25, 2019, 07:42:38 PM »
For what its worth, we put in a reasonably nice play structure in our decent size yard. when they were young enough, the kids always love to make a trip to the playground a few blocks away. Only the spiders used our structure...

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2261
  • Location: EastCoast
Re: Would You Rather...
« Reply #11 on: September 26, 2019, 08:40:28 AM »
I don't think your either/or options are totally accurate.

- House vs apartment. Have you actually looked at the costs to buy and rent a (large enough) apartment? Including HOA fees (house and apt), taxes, upkeep etc. Sure everyone don't need a room, but family of 5 would still mean a sizable apt.. At least in this area renting is barely cheaper than my full mortgage, if at all. Friends renting a townhouse actually pay more rent than we do for a SFH mortgage! And we have high taxes and HOA fees. Of course we have upkeep, but also some appreciation and equity. I don't think your math is as cut and dry as "$250k more". Some areas it is, others not so much.

- You seem to contrast "play in yard" vs "pay for experiences". OK sure, but I'd argue not totally equal. For one the time. We're busy, so sometimes the kids play outside a few minutes while we make dinner etc. You couldn't really go to the zoo in that time.. You could have a park nearby, but that's still a bigger commitment than letting the kids run outside in a (fenced) yard. And of course you could have a nice playspace outside your apartment as well, so it's not like a house is the only way to have that.

- other benefits of house. House vs apt are very different, than just yard vs money. You probably have more space. For example allows me to easily do woodworking, bike/car maintenance etc. Or any other crafts, toys like kaykas, tents etc (i.e. cheap, wholesome family activities). We work out in the basement, saving time/money on gym. We do our own upgrade and DIY, having fun, learning skills and adding value to our house. You can ofc do this in a apt, but you're more limited.

I see the benefits of both. They are very different. I'd say choose which lifestyle you prefer. Not based on money (which might not actually be a big difference anyway)


HerselftheElf

  • 5 O'Clock Shadow
  • *
  • Posts: 11
Re: Would You Rather...
« Reply #12 on: September 26, 2019, 10:33:29 AM »
Our kids (9, 7, and 7 mo) LOVE playing in our yard and do so morning, after school, and before bedtime about 90% of the year (even when it's really cold!).  I think there is a lot of value for travelling and other experiences but day to day, sometimes I just want to be able to have my kids go run some energy off in our fenced in yard and that isn't an option in an apartment (maybe a duplex with a fence or rented house of course!).  It is definitely a personal preference!

BeanCounter

  • Handlebar Stache
  • *****
  • Posts: 1459
Re: Would You Rather...
« Reply #13 on: September 26, 2019, 10:42:58 AM »
I have two kids ages 10 and 7. From my experience the most important thing is proximity to friends. They outgrow a yard very quickly. Having the ability to quickly get to friends to meet up to toss a football and play video game is PRICELESS. I have time to myself on the weekends (when we're not at sports) because my kids walk or bike to get friends to hang out.

That being said, we have spent some cash on some pretty sweet trips because we LOVE, LOVE, LOVE traveling as a family. IMHO, that is time and money well spent.

ysette9

  • Walrus Stache
  • *******
  • Posts: 5671
  • Location: Bay Area, CA
    • Insert Snappy Title Here (Journal)
Would You Rather...
« Reply #14 on: September 26, 2019, 12:33:32 PM »
We have three kids and the little house with a yard and a play structure. I do love that there are times I can shove the two oldest out the door and tell them to play outside while I <fill in the blank> in the house. They are 5 and 2 so I expect that will only improve with time. However, the requests from the peanut gallery are always to go to a park, and a new park if we can swing it. When we lived two blocks from the park we pretty much never used our back yard except for maintenance and gardening.

So, no clear answer. I think location and amenities matter tremendously whichever option you pick. A modern apartment with nice features and sound proofing that is located close to everything sounds great to me. A house with a big yard that requires a car to get to anything is sort of a bummer.

Finally, millions and millions of kids around the world are raised in apartments and are totally fine for the experience. It is a bit of an outlier American concept that kids somehow require a house with a white picket fence and grass in the back yard and an SUV.
« Last Edit: September 26, 2019, 12:36:22 PM by ysette9 »

RFAAOATB

  • Pencil Stache
  • ****
  • Posts: 602
Re: Would You Rather...
« Reply #15 on: September 26, 2019, 01:07:52 PM »
With three kids you buying the house makes more sense.  Keep looking for opportunities to increase your income to offset any higher expenses.

How much cleaning are your kids responsible for? With one toddler and two working parents we're finally biting the bullet and hiring a housekeeper.  I canít imagine living with the mess that three young kids could create without a stay at home parent or hired help.

Also, are you getting a school district quality boost by moving to a house?  For three kids that might be a deciding factor.

FireHiker

  • Handlebar Stache
  • *****
  • Posts: 1140
  • Location: So Cal
Re: Would You Rather...
« Reply #16 on: October 07, 2019, 05:50:12 PM »
I've had both, although not quite the either/or that you lay out as we own/owned both respectively as opposed to renting: the big, fancy house with private playset and pool, and now a smaller townhome with a fenced patio and community pool. Honestly life is SO MUCH BETTER in the smaller home with money for travel. In the giant house our daughter had no friends within walking distance, everyone kind of kept to themselves. We had our own pool but the kids always complained about wanting friends to come over and swim with them/us to swim with them, while we were busy cleaning the giant house on the weekends.

We moved one mile away (still same overall community and same school) to a townhome community with a home less than half the size and it is completely different. There are ALWAYS groups of kids out playing, back and forth between each other's homes, etc. Our first full weekend in the new house we had 6 kids in our house at one point including the neighbor across the way that we hadn't even met yet... We walk to and from school each day while taking our (large) dog for a walk and there is a park right by the school where the kids stop to play most days. We also have two international trips planned for next year; trips we never could have taken at the old house while also paying for the oldest to go to college (still have kids age 7 and 9 at home).


Laura33

  • Handlebar Stache
  • *****
  • Posts: 2406
  • Location: Mid-Atlantic
Re: Would You Rather...
« Reply #17 on: October 08, 2019, 08:32:51 AM »
The reason that "buy vs. rent" is not in the investment order sticky is that choosing how/where you live is largely a consumption decision, not an investment. 

Which decision is financially better depends on where you live; in some areas, renting is cheaper than buying, while in others the reverse is true.  The most important consideration whether you buy or rent is to focus on the size/features you actually need, and to view anything beyond that as a lifestyle choice that needs to be measured against the additional time it will take you to FIRE.  Just make sure to do an accurate analysis of the finances of your choices -- don't do one-sided math that ends up justifying the choice you wanted to make anyway.  For example:

-- Both buying and renting are going to involve some degree of "lost" money that is simply used to provide a roof over your head:  if you rent, that's your rent payment; if you buy, that's the interest and taxes and insurance you pay.  So don't consider renting "throwing away money" and then ignore the money you're "throwing away" on a house just for the privilege of living there. 

-- If you buy, you build equity that you can cash in if you choose to sell later on; OTOH, renting can be cheaper out of pocket, and if you put that extra money in the market, you will likely get better returns in the long run.  Sure, you might make out like a bandit on a hot housing market; or you could end up like people trying to sell in 2000 or 2008 and take a bath.  Housing markets are very strongly local, and whether you gain tons of equity is entirely a matter of luck and not something you can predict or plan for.

-- Houses come with lots of maintenance expenses that most people undercount.  Renting comes with rent increases.

-- Living in the suburbs often entails extra commuting and more car/time costs.  Living downtown can make frugal shopping choices more difficult and can provide lots of temptation to go out and spend money on temptations, since it's all around you everywhere you go. 

Bigger-picture:  focus on a lifestyle that you want to live and can see yourself living in long-term.  It makes no sense to squish your family into a 1Br apartment so you can save 90% of your income and FIRE in a couple of years if you are then going to want to spread out into multiple bedrooms and a yard.  Your FIRE budget needs to be based on the lifestyle you intend to live on long-term.  So think about that first, then figure out how the costs of those choices fit into your financial plan.

nereo

  • Senior Mustachian
  • ********
  • Posts: 11092
  • Location: Just south of Canada
    • Here's how you can support science today:
Re: Would You Rather...
« Reply #18 on: October 09, 2019, 04:41:01 AM »
^^ Great post @Laura33

Luz

  • Stubble
  • **
  • Posts: 103
Re: Would You Rather...
« Reply #19 on: November 22, 2019, 09:09:53 PM »
-- If you buy, you build equity that you can cash in if you choose to sell later on; OTOH, renting can be cheaper out of pocket, and if you put that extra money in the market, you will likely get better returns in the long run.  Sure, you might make out like a bandit on a hot housing market; or you could end up like people trying to sell in 2000 or 2008 and take a bath.  Housing markets are very strongly local, and whether you gain tons of equity is entirely a matter of luck and not something you can predict or plan for.

I think this is where I'm hung up. Wouldn't just the returns of putting a 20% downpayment in the market for 20-30 years make renting clearly come out ahead in terms of a purely financial decision? That's assuming that money spent in rent increases is a wash to that spent in maintenance, interest, closing/selling costs, taxes, insurance, etc.
And in terms of home appreciation, I read that average home value, after inflation, has risen just 1.5% per year. Whereas average stock market returns are at 7%. But in the same article, the author pointed out that leveraging is where real estate potential lies.... though someone on this forum stated that from a statistical standpoint, leveraging does not lead to significant gains (because of the risk involved?). Ugh, I wish it were more straightforward.

For now, we'll likely rent an apartment for a few more years (since it's cheaper to rent a quality apartment than a quality house in our area). Then move on to renting a house once our income increases... or maybe divert funds from our investment order to come up with a downpayment :).

I was taking a media break for a few months, hence the silence. But thanks everyone, for the feedback despite it!

jpdx

  • Bristles
  • ***
  • Posts: 437
Re: Would You Rather...
« Reply #20 on: November 23, 2019, 12:51:58 AM »
Are we assuming the house and apartment are in the same location? If the house is car-dependent, but the apartment is in walking distance of everything, that absolutely changes things.

I love owning a home, but regarding yards, I think they're overrated. Yards mean yard work. Parks offer better amenities and more social opportunities, without the expense and time-suck of caring for a yard.