Renting Makes More Financial Sense Than Homeownership

[jeffrey]

I have something un-American to confess: I rent an apartment, despite having enough money to buy a house. I plan to keep renting for as long as I can. I'm not just holding out for better prices. Renting will make me richer.

I normally write about stocks for SmartMoney.com, but the boss asked me to explain to readers my reason for renting. Here goes: Businesses are great investments while houses are poor ones, so I'd rather rent the latter and own the former.

Stocks vs. Houses: Returns

Shares of businesses return 7% a year over long time periods. I'm subtracting for inflation, gradual price increases for everything from a can of beer to an ear exam. (After-inflation or "real" returns are the only ones that matter. The point of increasing wealth is to increase buying power, not numbers on an account statement.) Shares have been remarkably consistent over the past two centuries in their 7% real returns. In Jeremy Siegel's book, "Stocks for the Long Term," he finds that real returns averaged 7.0% over nearly seven decades ending 1870, then 6.6% through 1925 and then 6.9% through 2004...

Renting Makes More Financial Sense Than Homeownership - Yahoo! Real Estate

[Madwand]

I am assuming that you don't mean being a landlord or investor.

I have owned 11 houses over the past 6 years and have profited $142,000 plus I have $1,000 per month cash flow off of the properties I still own.

My personal home will be paid off in 4 more years.

I'm sure glad i didn't keep renting.

Scott

[simpleyme]

as a landlord I love the people who choose to rent instead of buy ;-)

[kenny911]

Originally Posted by simpleyme

as a landlord I love the people who choose to rent instead of buy ;-)

Yeah but what about the people that trash the house, the tenants you have to chase for rent etc... Its a lot of work and a lot of headaches and sometimes its just not worth it.

[whitestripe]

wouldn't you rather pay the money to yourself and your own home, rather than someone else?

[simpleyme]

Originally Posted by kenny911

Yeah but what about the people that trash the house, the tenants you have to chase for rent etc... Its a lot of work and a lot of headaches and sometimes its just not worth it.

while that is mostly true I make more off my rents after cost than i do at my job , you learn to rent a dumpster clean it up and do it again, the first couple times made me sick but I once heard the line that horrible smell .... is the smell of money

and I will add people who choose to rent rather than buy are usually much cleaner and that's why I love the trend of qualified buyers renting

[billy1980]

I would tend to agree with you in the current financial climate, house prices falling and places becomming available all over the place make rent drop too. Good times for those who decided to rent. It has been a while coming

[boosami]

Interesting article, though it is obviously very biased against home ownership and a little condescending in the questions/objections section.

Jack doesn't address the benefits of using property equity as a way to secure loans. Or that your landlord can raise rent, sell the property to someone else, or kick you out when your lease is up. This just happened to a friend of mine who had been renting a 2,000 sq ft house, full of family and furniture. Being forced to move your life suddenly is no fun.

At the end, he says he "might buy [a house] eventually" but doesn't explain why. He's just finished trashing ownership, so for what reasons is he considering it for the future?

If he leased a mini-van maybe he, his fiancee, and fish could live in there and really save some serious money for business investing.