I would rather rent a home all my life than build or buy one!

Buying a home (vichie81) - If one considers the pros & cons of buying and renting a house, then it makes immense sense to simply rent a house all the life long.
India
December 1, 2011 10:01pm CST
Yes. I have learnt this the hard way. Unless I had a big inheritance I could use or I bought big loan at high rate/EMI, I cannot think of having own house. But a high return on investment is required commensurate with loan repayment installment to sustain. Rental rates have nosedived. So its a double hit. I think the saying fools build houses and wise men live in them is right. I may not have made an asset, but I have also been free of all the associated pressure & burden. I'll be better off living in a rented house all my life. I can take a house that suits my requirement in terms of style, budget and other parameters. And rents are relatively more affordable. Is your view on this is similar or different? How?
21 responses
@JER616 (545)
• Philippines
2 Dec 11
Push, Your discussion reminded me of a slogan of a real estate firm in the Philippines that goes: "Why rent when you can own?". This slogan prompted my parents to get a house and lot in a rural area that is really adjacent to the cities south of Metro Manila. Their decision was prompted by the escalating rental costs in Manila. At the early years of the amortization period, my parents were able to pay off the property. But when both of my maternal grandparents were hospitalized, they could not anymore pay for the amortization. Until now, we had not been able to pay off the restructured monthly amortization rate. With what happened to us, I am tempted to agree with your argument. Here, aside from the monthly amortization, we are also made to pay for real estate taxes annually for the use of the property, and monthly association dues, garbage disposal and water distribution. Nonetheless, renting a house is more for the unmarried men and women who have a steady revenue source. For a family, I still believe that owning a house is a better option BUT before acquiring one, the couple should have planned in advance how to finance the amortization so that they won't end up similar to what happened to us.
1 person likes this
@ravisivan (14079)
• India
2 Dec 11
Now the market is rising steadily. Flats which were sold at Rs.9000 per sft. is not sold at Rs.12000 sft. If you have surplus money it is advisable to invest in land or house/flat and use after some years in case it is sold you will get higher amount.
• India
2 Dec 11
JER616: I have borrowed home loans twice and survived the ignominy of becoming a defaulter. First I borrowed for constructing my house in 2003. After paying their equated monthly installments for three years, when I wanted to short close the loan, I realized the principal amount of borrowing was just intact at the level of my borrowing. . Yet, I decide to close the account because my employer was giving some additional funding. Today, I'm free of all debt on that house. I wanted to invest my voluntary retirement benefits in real estate [the idea was to buy a good apartment block with required loan, sell the house which is free from debt and square off the loan borrowed for the apartment block]. The borrowing was & EMI were quite high. I could not get a good price for my house, so I was unable to sell at all. The EMI started becoming a big burden. In the meanwhile, there was a total slump in housing market, rates were going up, expected rentals were coming down & it made me realize, there is no economic sense carrying a huge debt/EMI. I decided & was lucky to have come out unscathed the second time, as I could sell the apartment too. This time again, I ended up paying all the amount borrowed after years of repaying to the bank. All the repayment was allocated to interest. . I will now be quite cautious and plan my finances well & if I can retain my first house fine, else, I will live my life in rented houses!
• India
2 Dec 11
ravisivan: good to see you in your original photo! I held on to one apartment for several years in the hope of getting good return/appreciation but it never came about. I have already put in my VRS money in one good site. At this point of time, I will probably adopt a wait & watch policy!
@enelym001 (8322)
• Philippines
2 Dec 11
Hi Pushhyarag, In my opinion it's really hard to rent a house your whole life. Our family has spent a lot of years renting out in different houses. We moved from one house to another and it's really hard thinking where to get the pay when that time came we all don't have a job. We have bought two lands before. But we find it really impossible to put up a house, one is too far from our current place. While some is just nearby but we were short in cash. It's really hard when we don't have enough money to build the house. But finally we bought another one and is currently having it built. All of us in the family is financially contributing on the house construction. If you will really do everything on your own it will be very hard and like you, I will also rent a home if there will no one who can help me build one.
• India
2 Dec 11
Hi ene: The pain of having to shell down thousands every month on rent, especially when earnings are not stable can be quite bothering. I am not sure if the practice of collecting an advance of 10 months' rent equivalent prevails in your country as well. It is also a big challenge mobilizing such huge amount, which the owner keeps for earning interest at tenant's expense. But let me tell you the costs of building material and construction labor are no less either. And you will be fortunate if the builder doesn't drain money which you borrow with great difficulty. yea, every contributing their share is certainly a good collective thought. Building or buying a house is a big desire for most people. Just that the economics are highly unfavorable. My sincere good wishes for you in either case.
• Philippines
2 Dec 11
We have same point of view enelym, I feel right now what you feel before. Renting is really tiring. All Filipino always dreaming to have a Good house and lot. Which is I'm doing my best and work hard for it. That one day we can have our own home. But, still your lucky, because your family have bought two lands before and currently built it,right now. But us still need to provide lands and build a home. We need to save more for many years before we can have own. So my mother and us will finally feel stable life. Push would rather to rent than to have own because the cost of living in India maybe is a quite expensive for him.
@enelym001 (8322)
• Philippines
3 Dec 11
@push, I see now that there are different factors to be considered in different countries. Here the rent is expensive too especially if the house that you've chosen is newly built or looks good. That huge amount of paying 10 month's advance rent will really give you a headache. In my country, the owners of the house we rented before asked us 2 months advance and deposit. So I think it's a little okay to rent here. What about buying an already built house and lot? Would that be so expensive too? I think that will cost millions? If that is, whew that will need to take years to earn such amount. @bashabasha, Yes it is tiring and gave us a some stress too, when we experienced living in a place owned by my mom's friend. She's in US and her sister is the one collecting the pay. The sister of my mom's friend is so annoying and can't wait for our payment. There was a time that we have paid late for 1 or 2 days only because of the delayed salary too, and she started gossiping us to our neighbor, the neighbor told us about this. That's why we really force ourselves to have our own house and lot, so that no one can do such thing to us. I do hope that you can get yours too, it's the only way we can feel stable here in our country.
@vandana7 (98701)
• India
23 Dec 11
My experience has been entirely different. Our fortunes started looking up after I bought me a small single bedroom apartment. What used to be rent went as installment for the loan. Initially it was tough. At least for seven to eight years. But thereafter, things started improving. Today, I live elsewhere. Rent on that apartment fetches me decent rent which covers almost 1/3rd of my monthly expenses. I have also taken additional loan on it, which I have deposited on my papa's name. That gets senior citizen's rate of interest. Effectively, the incidence on me is lower, which I again show in my tax returns to bring down further. So the home loan costs me approximately 7 percent per annum. It is personal view of course. I have not maintained high standards, or style. But now, I can afford to. Would I? No. I would rather clear my dues, and if need be, take reverse mortgage on my home because I am one of those who has not been in organized sectors. So I get no PF, Gratuity, or whatever. I have no other choice but to go this way. I agree rentals have nosedived. But I dont expect anything like that to affect me because of the location of my home and the rental I charge.
@vandana7 (98701)
• India
23 Dec 11
Thank you. :) Hey, but the first house is never the last one. :) It is only to save that rent. The last one is something you build around your retirement. It has all that you want and you know about. Proceeds from the first house get rolled over into this unless you are sentimental about it. I agree with the EMI and c/w of the house. But even so, I hardly have to maintain that flat. I bought it for approximately 2.5 lakhs and today it may be around five times that. So capital appreciation wise, it has done a splendid job without me having to pay any taxes. What more, metro liner is now coming up in the vicinity, so I am told it will double if not triple in the next couple of years. I took my flat in 1990s (1994). I took a home loan on which I paid interest at the rate of 15.5 percent per annum. Compared to that era, the present period seems like a cake walk to me, even though I borrowed almost 14 times more than what I borrowed for the first home. I think borrowing as long as possible is good. It makes me more disciplined. I would be debt free in about four to five years from now. :) As to rent, 6000 pm is what I get on initial investment. :) That is substantially high. Dont you think? And I do have a utility room downstairs. I have placed a whole lot of things that I dont use in that. I have been offered 2000 pm for that but I am not willing. Flats in posh localities, however, do not fetch much rent. They are vacated more often. A lot has to be spent on them because those who come to stay in such homes require certain style. They remain vacant for longer. Eventually the rent that is received is not comparable. Dad bought this flat for approximately 27 lakhs about 8 years after I bought my flat. If we were to let it out it would fetch us approximately 16500 pm. Economics ..this does not work as well. Right? Locality matters. Capital appreciation is also not much merely double may be.
@vandana7 (98701)
• India
23 Dec 11
By the way, my maid is paying 2500+ power and water charges for a single room, which is approximately 14 by 12, and an attached bath.
• India
23 Dec 11
Honestly [the title of this post for stimulating discussions notwithstanding] I see merit in the approach of using what would otherwise be saved as rent, to pay for EMI towards loan. Plus the added benefit of IT reliefs. In fact, that's what I have been able to do. More or less the kind of plans you have set for yourself! I am debt free, after making a reasonably valuable home on which I can earn by reverse mortgage and right now, I'm earning rent too! Having said that, after I consciously chose to live in rented places leaving my own home to, first relatives and then for rent, that choosing a rented house gives me options which I could not foresee or build in my home. That's of course, smaller. The bigger issue is, the whole equation which made sense in the 70s & 80s has become haywire. Costs are high and so are loan requirements and corresponding EMI. The expected rents are quite low & disproportionate to EMI. There is always some or the other recurring expenditure in c/w the house. Considering what I just pointed out above, I thought of proposing this topic to see different perspectives. There have been some very good views, including this one by you.
@zralte (4178)
• India
2 Dec 11
I beg to differ on your idea. As soon as I have enough money for a down payment, I am buying a house. I hate living in a rented house, where they can kick you off anytime. Sure they need to give you advance notice, but in truth, how will I find another house in the one month notice and move out!! Luckily, the house we are in now is on a long lease, so it is alright for the moment. I'd like to have my own house as soon as possible though. If I can have enough for a down payment, getting a loan will not be difficult. So, the amount I pay for the rent will go towards paying the loan off. If I keep renting, I'll have to pay the rent every month; whereas if I take a loan and buy a house, at the end of 5 years/10 years, the house is mine.
@zralte (4178)
• India
2 Dec 11
I do understand your point. But I still prefer to have a house that I can call mine. In a rented house, I can't make any structural changes. Even if I don't like the design or the way they separate the rooms, etc there is nothing I can do about it, except live with it. True, if you have a good landlord, it is almost as if you are living in your own home - like I do now. My landlord rarely comes, even when he comes, he does not complain about anything. He is the most easygoing landlord that I have ever known. Still, it is his house and I have to keep it as he likes it. At the end of the day, all the money I have paid him over 6 years, I could buy an apartment or a plot in some other area.
• India
2 Dec 11
Follow your dreams! Yeah, these are points of view based on each one's perceptions. Wishing everything falls into place as you implement your plan.
• India
2 Dec 11
After the US sub prime crisis which pushed their economy almost to the brink of collapse, several countries felt the repercussions and governments started getting alert. Though India also experienced real estate boom for some time and banks were chasing people with loans, the extent of bad loans for Indian banks was far less. Even then, RBI brought several restrictions on lending by banks to housing sector and banks have become very very safe & selective. In my knowledge they only approve loans as exceptions. Please don't get me wrong-I'm not discouraging you or dampening your enthusiasm but it helps to be informed well. Please weigh all options carefully and tread with everything charted very clearly. A strange notion implanted in every one of us is that money paid as rent is going waste. It is not; if you have a considerate landlord and a good house that is to your liking, you are enjoying large part of your life in those houses. Paying for living well is not a waste of money! But I am not sticking my neck out here! I am also noting for my understanding how different people view things. Thanks for commenting.
• United States
2 Dec 11
My view is very different. I don't know where you live or what the real estate situation is like there, but I'll give you my views as a US resident. I'm young, so buying a house is a ways in my future but you have to think about the long term. What you're saying is that you want to pay all this money over the years but get no return for it. This makes no sense to me. You say you're free of all the burdens but how different is it really? You're still paying money every month. The only real difference is you won't have any debt, but what you need to realize is that when you buy a house that's GOOD debt. A house is an investment. Once it's paid off it's yours to do what you want with it, and believe me, when you're like 80 and suddenly your rent gets raised or something unforseen happens, you'll wish you had your own house that was paid off and something you don't have to worry about. Also, don't you want to have some sort of assets to pass down to your future generations? But for me, I'd rather build and own my house. I don't understand you're saying that fools build houses. That's foolish. It CAN be much cheaper to build a house than it is to buy one depending on the location and what you want. And guess what, after it's built it's YOURS. You'll still need to pay a loan off but it won't be a mortgage. And it's brand new. But yeah, I used to think like you, "Oh I'll just rent forever." But realistically, it just doesn't seem to be worth it to me. After 30 years of payments I'd rather own the place I live in than keep sending in money for the rest of my life.
@Bluedoll (16774)
• Canada
2 Dec 11
I see both sides to this discussion – good discussion by the way. Suppose all the decision just depends on the market swings.? The idea of buying for the purpose of rental income or another way, turning over a property, if it does not have the advantage it once had will resist being a lucrative market. From a personal perspective, the first home buyer or builder too might want to look at all the costs before taking a leap. Financing to the limit is dangerous and prices for everything are ridiculous now. I get the two sides, rent is not throwing money away, it is our life but also it is too bad that money goes into someone else’s pocket. The banks and lawyers stay in business. My story is I bought a fixer upper that didn’t cost very much and sold it privately over time for more than I paid for it then bought another without a mortgage. It was only a log cabin in the wilderness but it was mine. Now I am in the city and pay enormous rent, life changes.
• India
3 Dec 11
Its a good move to have liquidated your debt. Nothing more reassuring than a debt free living as sooner in life as one can manage. That was my biggest emphasis and I'm happy today to have cleared all loans. . Now I know I have to cut my coat according to my cloth.
@mandylee (267)
• China
2 Dec 11
i agree with your view.if the house price is so high,we can't buy one,why can't we think about to rent?it's a terriable thing that we had to pay the debt all our life.life is not so long,we must enjoy everyday
@ravisivan (14079)
• India
2 Dec 11
Yes. Cost of houses is high and under the circumstances it is convenient to stay in rented houses.
@mandylee (267)
• China
17 Dec 11
that's what i want to say.i don't want sth.to bother myself enjoying the life
• India
2 Dec 11
madylee: That's quite my view: one should not part most of the earnings for something over which the full ownership can only be enjoyed almost after old age. By then, we would have deprived ourselves & the family of all simple entertainment & enjoyment. Let those who are blessed with big money build houses. We should be content paying for it to the extent we live. Gone are the days when people would think instead of paying rent, you pay for loan installment to get a property one day in one's name. The equation doesn't hold, at least as I perceive it.
@lisa0502 (1724)
• Canada
2 Dec 11
I do not have a choice as I can not afford to buy a place. I live in a pretty horrible rental place that seems to be falling down around me. We can not afford to move anywhere so we do not have a choice. But if I could I would buy a house. I would like a place that was my own and not someone elses. I do not like that someone else has control over my place.
• India
2 Dec 11
lisa: I wish there will be better times and reasonable finances that may help you make a modest house-rented or owned. Why not wish that you will get a landlord who is very considerate and kind and makes you feel as if you were living in your own home? I don't see it as an impossibility. But honestly, if you have a dream of having a house of your own, I wish you follow your dream-and succeed!
@blue65packer (11826)
• United States
9 Dec 11
I never wanted to buy a house and never will. I can't afford one and I doubt I could even get a loan to buy one if I wanted too. When a person is a home owner you have to do repairs yourself or call a repair man. You have to do all the upkeep. When renting the landlord does it or gets someone to do it for one! That is why I will rent forever!
• India
9 Dec 11
I wouldn't suggest a loan if I were your friend, even if some one offered to lend. Unless you are extremely clear in your mind that it is a sound economic judgment. Enjoy the living while there is someone taking care of the condition of their asset. . Having said that, just to recount some of the responses here, it would seem if you were in your early stage of career and you earn handsomely, you might think it was logical to own an asset now while paying its cost through loan installments leisurely!
• Indonesia
3 Dec 11
The answer is relative. For me, I won't rent a house for the whole year, because I don't have good income or salary. For some other people, they might want to rent a house for their whole life. I think it is okay for a certain reason. If you already are married, you should bought a house for your kids wife. You're sure you don't want to move from one house to another with stuff, kid and your wife. That would cost you a lot of money too to get all your stuff moved.
• India
3 Dec 11
I am willing to take the point that it is relative, probably yes. What I was suggesting though is that if market conditions are such that rentals are preferred both by landlords & tenants and there is a peaceful living for reasonably long periods, rentals are not a bad idea in contrast.
@ravisivan (14079)
• India
2 Dec 11
Availability of land is fixed. Requirement increases day by day on account of population increase. price of land increases day by day. It is advisable to take loan within capacity to repay and buy small property so that its value will rise considerably in the days to come. If one cannot get a loan or is not having adequate cash to buy, it is advisable as you say to stay in rented houses. Sometimes rents are also rising. Your statement is one hundred per cent correct --that pressure is less when one doesn't take loan. Problem comes when calculations go wrong. People working in software suddenly when the job is lost they lose their ability to repay the loan and allied pressure builds up.
• India
2 Dec 11
ravisivan: I don't disagree with the conventional wisdom completely-that deployment of the same amounts of money that we incur on rent could actually help us create an asset if we view the monthly payments as investments for a good asset. I only wish owning a house should be a comfortable proposition.
@Alebelt (86)
• Italy
2 Dec 11
I think you may be right except for one thing: Do you have children or think to have in future? I think it would be a good thing for my children if they could have a "roof over their heads" when I will leave for better life.
• India
2 Dec 11
Alebelt: I have. Perhaps my children will inherit my wisdom rather than my estate!. Just making it a bit light. Yeah, may be that will be an expectation. But I also find that many present generation children do want to & will probably create their own!
@stary1 (6612)
• United States
2 Dec 11
Pushhyarag2000 I think it depends on where you live. In Cal many rented places are going up because the housing market is so slow. Renters can be charged more since landlords know many can't afford or lost a home. The Real Estate market is cyclical..prices over your liftimeine will go up and down and up etc... If you can buy a house and pay your mortage for what you would pay in rent, yoou might be beter off buying. There are times you would build equity. Note too there is a tax write off in mortgage payments but not in rent.
@stary1 (6612)
• United States
3 Dec 11
Pushhyarag2000...You are right the down cycle can be longer than average and we never know. I do think there are times and reasons/circumstances that it is wiser to not buy a house...
• India
3 Dec 11
Hi stary1: with world economies integrated in some way and far more vulnerable to changes happening in one other, the situation more or less is the same in my country-the difference is in degree. You brought up that good point about the cyclical nature of housing market. Those that get caught in the down side for a little longer when hit by any more economic stress, living with defaulted dues sounds nightmare. If things go favorable in terms of timing etc, then of course, building equity proves worth.
• Philippines
2 Dec 11
Well if you consider building your dream house in the coming future then find a cheaper rental house. If you try to rent for long you might as well build a temporary house of your own and renovate later if you have enough money. consider the cost and total cost of house rental than having your own house. I have long been considering this, that is why I have applied a housing finance loan and paying the mortage monthly.I have noticed too that real estate prices were sky rocketing. So it's also an investment to be considered. But rentals now quite higher than before, so try to check your finances and if you can consider buying a house now, why not? than just renting a house that you will not own it on later years.
• India
2 Dec 11
I have no problem in acknowledging your argument or suggestion. Except for the fact that economic policies must support people with appropriate incentives so that it does not become a burden. My only suggestion would be to watch the monthly mortgage rates and the final cost you are going to incur on your dream house. More often than not people overspend and end up looking for additional finance.
@simsim11 (106)
2 Dec 11
I partially agree with you. If we are not in a position to repay the loan never take a risk of raising housing loans. I built my house four years back when the house rents are skyrocketed. The EMI we are paying is less than the monthly rent what we paid. Staying in own hosue has its own advantage in many ways. There will not be any disturbance from the landlord.
• India
2 Dec 11
I would say the loan size as well have been managed prudently if the EMI is lower than the rent you had to pay. May be people should follow this principle of containing their loan limit. In many cases though, people find it difficult to honor the EMI or have to struggle to manage it. Good to hear.
@chiyosan (30184)
• Philippines
2 Dec 11
This is what I think too myself, it is almost the same whenyou are renting and then paying for a mortgage, you pay the amount every month. If you have bigger money to spare then it is okay to spend for the house and use one time payment. housing loans would let you buy house for 30 years of payment and if i am 30 now, that would make me 60 when i am done paying for the house! Geesh!!!
• India
2 Dec 11
If only the economic & market situation turns favorable with boost for housing and interest rates come down to levels that would make earnings from a new house near equal or slightly higher than the monthly payouts, I may re-think; otherwise, I am much rather happy not committing both a big down payment, monthly repayments, insurance risk cover costs, maintenance & taxes on property. I am better off managing a modest home with monthly rentals.
@bounce58 (17387)
• Canada
15 Jan 12
Although I can see all the advantages of just renting, I think owning is still better for me. I have a few friends who rent, and they have certainly lesser living expenses. But I've already re-financed a couple of times, which has helped me pay off a few bills. And I'm thinking of using the equity of the house to further my goals of a business in the future.
@Bluedoll (16774)
• Canada
2 Dec 11
If a man says he is going to build a house and does not have the material means to do so and the foundation ready to make this happen then certainly others will look at him and say what a fool this is. If you want to own a house do you not need equity? It seems to me if the deal is you provide a sizeable down payment with payments equal to or less than what you will pay for renting (keeping in mind all costs involved in ownership, taxes, upkeep etc) then owning can be a good long term investment. It is however about projection. You may need to move. If so, you need to sell to a market that should at the least return your downpayment. The problems begin if the housing market is shallow or the amount of downpayment is not high enough. If people buy homes without enough downpayments they are in a high risk situation. Over the long term owning can actually be profitable. Renting has advantages. It is more adaptable and flexible to changes and does not require as much capital to initiate. If capital is not an issue, there are other long term and short term investments that can be had while renting to compensate for no return on rental payments. Besides strictly financial reasons, there are other more personal reasons for owning or renting.
• India
2 Dec 11
I would do a sizable down payment with small sized monthly payments not in the case of property buying but if I were buying lets say a good car. I would look at as an overall economic decision. The major problem at the moment is total slump in housing market with everything unfavorable. And we don't see any signs of return of boom times. I am happy you listed the advantages of renting. Lets say I have a huge wish list of items to be incorporated in the house but my budget forbids it. If I'm choosing rental option, I get that flexibility of looking at several houses before I settle for one. I also agree personal preferences do play a significant role.
• China
7 Jan 12
I prefer to rent an apertment,because,when it is convenient to live,often shared the way I would choose to live.Because,every time a new check,I have been to a new environment,new place,do not know what people,shared way of living hand to make a lot of my friends.The price,not high.If it is all live or live with friends,and living in the city's work in very stable,and three to five years will not change the work place,I still believe that buying a house is good,because,as their own space would be great,and now the house is an investment,maybe 3-5 years,house appreciation to,the seller may also make some money after.Ha!Of course,I would not buy a lot of house,because I am worried about a housing bubble,I would not buy their own homes together to buy a.Of course,if you have a piece of land where the land is their own property,I think,to build their own houses to live better,if I have something to say,I will be a piece of land for my job,and then buildings cover up,then long-term residence in that.Because of land ownership and right of the house are my own room,I would not worry,city management to demolitions.And,in that case,future generations can live,I can easily handle my house,I can also plant some around my house fruit and plants.To make around a garden,ha!
@lupeng (82)
• China
2 Dec 11
lol,i can't agree with you.i don't think so.i think if i have a house by my own ,i will feel very happines and comfortable.but now, i have to rent a home, and i don't know what time i will move aother place to live.and i think rent a home is very complex.i have to pay a lot of money to pay the rent,and my rent is very high every month.
• India
2 Dec 11
Owning a home is everyone's dream, no doubt lupeng. But the whole economics right now in my country or for that in most countries after the collapse of the US housing market boom is pretty unfavorable for buying a home. If only there is a comparable cost benefit advantage supported by low interest rates, no collateral for loan and reasonable return from investment, then it is worth the while. Otherwise, I will move from one rented house to another after every few years. So what?
• United States
23 Dec 11
I feel you should own a house that you can afford. My house wouldn't cost a lot to buy, but it's very comfortable and keeps me from spending a lot of money on rent. Since I own it I'll always have a place to stay. I owe little enough on it that if I had to I could pay it off right now. Mortgage is usually the biggest monthly expense you have. Think about how your finances would be different without paying anything for housing other than insurance?