DELICIOUS
SU
REDDITSource: Craig’s shelter in solo isolation in the jungle
In the early 2000’s, the housing market was doing well and most people who bought a home during this time believed that their homes would be an investment. They assumed they would have a home that would appreciate. Unfortunately though, that was not and has not been the case. More and more homeowners who bought homes in the early part of this decade are finding that their homes are depreciating. Now they are finding it hard to find buyers for their homes.
With that thought in mind, it might be wise to be on the side of caution when considering buying a home. The first thing you might want to consider is how good your credit is. If you have bad credit, it would be in your favor to consider renting instead of buying, especially during a time with so much economic upheaval.
A lot of those owners who now are finding it difficult to sell their homes are willing to rent a home for a $1,000 a month that was worth over $250,000 when they purchased it. In this day and age, $1,000 a month is a far cry from the house payments and interest you would have to pay if you were to buy a home. Not to mention the large down payment that you would need up front to buy a home. You can get rental deals from homeowners that are finding it a difficult selling market and are at least wanting some income from their property.
These days, there are a lot of different benefits from renting instead of buying. You don’t have to pay interest, you don’t have to pay taxes, and it should give you the ability to be able to save money for the future, should the opportunity come up to buy a home in perhaps a better housing market in the future.
Another advantage to renting in this days market is the fact that you’re not going to run into any unexpected expenses forcing you to dig into any reserve funds that you might have. Remember once the monthly rent is paid, all obligations for repairs and maintenance is the sole responsibility of the owner of the property.
On the other hand, if you have very good credit, there would probably be an advantage to buying a home right now. The reason for this would be the fact that going prices on homes right now are much lower than they were a few years. The major advantage for those with good credit to own a home instead of renting is the fact that their monthly payment is an investment and not being thrown away as it is in renting a home. The homeowner also has the benefit that their monthly payments will not increase over the years, whereas the renter can probably expect an annual increase of 5%.
In the end, whether or not you buy or rent, will mainly depend upon just how good your credit is and whether or not you feel secure that your income, where it stands at the time of purchase, will remain the same for quite some time to come.
Good post Craig! Another consideration is mobility. In this economy, that shouldn’t be taken lightly.
A renter can pick up and move on short notice without having the burden of selling a house, or needing to carry a double payment (house plus housing in the new location).
Most careers aren’t as stable as they were, and that isn’t just because of the current economy. It’s a trend that’s been building for at least a decade but it’s become more pronounced in the recession.
Kevin@OutOfYourRut´s last blog ..Face the Future Informed and Without Fear
@Kevin I agree, if you are more settled then buying makes more sense. For those who may be younger or likely to move, renting seems like the better option.
Nice points. We bought our house in 1998. I’m very happy with the decision, but we didn’t go overboard and “buy the max house that you can afford” mantra that was being spread around at the time.
After I get my house paid off in 2010, I’ll just have to work about taxes and insurance (around $300 a month), and of course utilities…
When I was younger, I rented for 10 years. That worked out okay for me, but I would have had made a lot more money today if I would have bought a cheap house, lived in it, then later rented it out.. while I moved into a bigger house.
MoneyReasons´s last blog ..I Am “Greedy When Others Are Fearful!”
@Money Reason Amazing you can pay off your house in full in such short time, it will help you a lot in the future to save for other things you want. I am in the middle of renting and probably will be for some time although would like to take the approach you mention. Could be a good way to then rent out the first house and make some money while moving up. Good idea.
@moneyreasons – You hit the nail on the head with “but we didn’t go overboard and “buy the max house that you can afford” mantra that was being spread around at the time.”
That thinking caused so much of the current problem. People were encouraged to buy more house than they could afford, and then to trade up later on. It played into vanity, and everyone’s eyes got bigger than they needed to.
Kevin@OutOfYourRut´s last blog ..Face the Future Informed and Without Fear
@Craig – Yep, that’s one of my biggest regrets! I wish I would have bought a cheaper house. Then later rent it out… Ahhh if I could only turn back time…
@Kevin@OutOfYourRut – Yep, I agree, and now that mentality has a lot of people that can still afford to pay their mortgage doing something call “strategic defaulting”. Strategic Defaulting just adds fuel to the already roaring fire…
Moneyreasons´s last blog ..Frugal Puzzles, fixing small things can be fun!!!
Gotta say, if you have a 5yr+ time horizon, now is absolutely the right time to buy. I’ve been looking at rental properties in Lake Tahoe for the past 6 months.
What great opportunities!
Financial Samurai´s last blog ..Samurai Predictions And Resolutions For 2010
@Financial Samurai If I had the money, I agree with you it would be great to buy and then rent out.