For most, housing is our largest monthly expense. It can have a significant impact on our FI plan. Assuming that living under a family member’s roof, paying little or no rent, is not an option, this decision should be deliberated at great length. There is no shortage of articles or blog posts advising whether renting or buying a home is a better option. As with most things, there is no absolute answer as each one of us have our own unique circumstances and personal factors to consider.
Generally, due to the number of responsibilities for which a homeowner can be liable, and a number of other factors like flexibility in uncertain times, it is healthy to default to renting and to consider purchasing a primary residence only when the numbers are overwhelmingly in favor. However, there are other factors to consider than simply the numbers that may justify buying over renting.
This lesson provides a variety of ways to think when contemplating renting or buying your primary residence. It offers solid guidance to consider when making this vital decision. Making a smart decision for housing, one of the Big Three, can propel your Financial Independence journey.
Note: This lesson focuses on purchasing or renting a primary residence. Homes purchased as rental real estate investments should be scrutinized by an entirely different set of standards. It rarely turns out your current ideal primary residence becomes a future ideal rental property. If you do choose to buy rather than rent, you can attempt to mitigate downside risks by screening potential purchases of a primary residence as if you were buying it as a rental real estate investment.
Watch: Renting versus buying a home by Sal Khan of khanacademy.org
Read: Buy or Rent? – All the Numbers Behind Our Recent Home Purchase by Juan of financeclever.com
Read: Renting is Throwing Money Away … Right? by Paula Pant of affordanything.com
Read: See that house over there? It’s an investment! by Big Ern of earlyretirementnow.com
Read: Forget the American Dream—Renting, Not Homeownership, is the Path to Financial Freedom by Brian Davis of biggerpockets.com
Take Action: If you are a homeowner or considering purchasing in the near future, explore The ULTIMATE Rent vs. Buy calculator. If you are renting, enter information as compared to similar housing available for purchase in your area. You may discover the potential for a positive change or you may discover reinforcement of your current housing decision.
Read: How NOT To Buy A House by Joel of fi180.com
Read: How (and How Not) to Buy a House by Pete Adeney of mrmoneymustache.com
Read: WOULD WE BE RICHER IF WE HAD BOUGHT A HOUSE? by FIRECracker of millennial-revolution.com
Quote: “Some people look for a beautiful place. Others make a place beautiful.” – Hazrat Inayat Khan