Freezing in NH

Consumerism Comentary says that renting makes you richer.

I can understand the desire to own your own home (I own mine), and the freedom it gives you.  Changing paint colors and stomping around in the middle of the night are much easier if you own.  On the other hand renting gives you the freedom to move when you want to, and if you’re moving to an area you don’t really know it might be best to rent for a bit until you know which neighborhoods are best for you.

The real reason that renting can save you a bunch of money though is that most people rent a smaller, less fancy place than they buy.  I moved from a small 2 bedroom apartment (and had a roommate off and on) to a 2/3 bedroom house.  Lots more space, so it does cost more.  When I was renting i was happy to have 600 sq/ft, but I probably wouldn’t have purchased a house that size.  More space means more furniture, more windows to drape, etc. 

If you buy a house that’s in good condition, and then choose/are forced to sell within a few years or in a down market, you will lose money.  If you pick a house/town you want to stay in the rest of your life, buying makes sense.  Once you pay off the mortgage, you live your retirement years rent-free.  So my recommendation is to buy once you’re certain you’re staying, but not before.

 On the other hand, if you’re handy, there is a benefit in almost any market to buying something that’s in bad shape and fixing it up.  Someplace that isn’t in a condition to move into is going to be fairly cheap compared to a nice house, because most people can’t afford to buy it and then fix it up before moving in.  They have to sell their old house in order to afford the new one, so they need to find something in good condition.  If they’ve got little kids, they don’t always have time to deal with ripping out sheetrock and refinishing floors.  If you’re willing to work “for free”, you can fix a place up and sell it for more than you paid.  But if you have the option of picking up more hours at your employer, that might make more financial sense than doing work on a house.  In a down market I’m not sure you’d make minimum wage once all is said and done.

This entry was posted on Monday, June 4th, 2007 at 8:14 am and is filed under housing, saving. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.