Renting vs. Owning - Primary Residence

[Rob Randle]

I am trying to way the pro's and con's of renting vs. owning.  I rent currently and do not think it as bad as some people think.  I'm looking for feedback and factors that I may be overlooking.  On the investing side I currently have one rental property and looking to acquire more.

Reasons why I currently prefer to rent:

1. I can afford to live in a higher end area at a lower cost.
2. I do not want to settle down.  Read somewhere that it does not make sense to sell your primary residence until you owned it for 5 years.
3. I don't have to pay for any maintenance costs.  This results in less risk and I am never taking large maintenance expenses.
4. I don't want to buy a primary residence without it being a "deal".
5. Where the "deals" are near me are not places where I typically want to live.
6. I can be agile, no commitment except the lease.
7. Primary residences are not typically factored in when calculating net worth.
8. Don't have to worry about depreciation of my primary residence.  This leads to stability and will keep my rental portfolio growing at a steady pace.

"House Hacking" and doing a live in flip interests me.  But I am interested in what other people have to say about this topic.

[Elizabeth Colegrove]

I think it really depends on the area! I love personal properties because they add a top of value for me in the areas I buy. I will write my "rebuttal" to why I buy in black below :) As food for thought.

Originally posted by @Rob Randle:

I am trying to way the pro's and con's of renting vs. owning.  I rent currently and do not think it as bad as some people think.  I'm looking for feedback and factors that I may be overlooking.  On the investing side I currently have one rental property and looking to acquire more.

Reasons why I currently prefer to rent:

1. I can afford to live in a higher end area at a lower cost.

In my area the opposite is true. I can buy a "dream" house for $1500 and it rents for $1850 same day :) 
2. I do not want to settle down.  Read somewhere that it does not make sense to sell your primary residence until you owned it for 5 years.

My husband is active duty military. We don't know the word "settle down". I think in our five years of marriage the longest we have stayed somewhere has been 15 months. We are buying our 4th personal in May. While we don't sell them, we do rent them out! We could sell them all and make 10k or so on the sale but our cash flow is much awesome.

3. I don't have to pay for any maintenance costs.  This results in less risk and I am never taking large maintenance expenses.

True but there are a few other thing to think of. 

*You are reliant on your landlords maintenance to how quickly things are fixed. A dear friends stove has been on the frits for a week and they are barely getting around to dealing with it. Yet she can cook when the "stove" feels like working and she has 3 kids. Where as I can fix it intently based on "my" scheduled.

*You can buy newer houses ones with great bones (newer roof, siding etc) therefore mitigating the risks.

4. I don't want to buy a primary residence without it being a "deal".

This is just a mental thing. Stocks now compared to 3 years ago are not a "deal" yet some compared to years ago are. You need to look relative to now and find what works for the numbers. I am haveing this problem now because the areas I have invested have inflated. The question I ask myself does it make sense.

5. Where the "deals" are near me are not places where I typically want to live.

Than they are not deal :)

6. I can be agile, no commitment except the lease.

We are agile because our only commitment is to find a tenant. Our tenants all pay "more" than the lease so we actually do awesome.

7. Primary residences are not typically factored in when calculating net worth.

True they don't but rentals do. Everytime we are transferred our personal becomes a rental. Our personals were bought with 0-5% down and a .5-1% lower interst rates. So I think those are fantastic deals.!

8. Don't have to worry about depreciation of my primary residence.  This leads to stability and will keep my rental portfolio growing at a steady pace.

True! but you also don't experience appreciation. Our portfolio has appreciated 20% in the least 3 years. 

"House Hacking" and doing a live in flip interests me.  But I am interested in what other people have to say about this topic.

 The thing you need to think of is your earning based on cash on cash. When we only have to put 5% down so a 235k house only costs me 13k . My 300 a month cash flow before expenses after mortgage is 28% not including principle pay down, Pretty cool :) That is when we move out. If you house hacked and lived rent free while principle is being paid down and don't have to pay rent. Plus you bought in an awesome area, even it if wasn't 60% of market (honestly our best deal was 20% but we strive 5-20% and now we almost pay market).  The key for us is still acquiring. Again it is your "choice" and goal! Our portfolio with a mix up personal turn investment and pure investments make 25% gross before maintenance and 42% gross before maintenance when you do principle. Even if we had 10% expenses (which we don't). Those are better numbers than "I" could do in the market.

So again, everyone looks at things differently. That's just why, "i" invest in personals,