Comments about ‘Renting vs. buying: why are you giving away your money?’

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Published: Monday, Feb. 4 2013 10:15 a.m. MST

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PGVikingDad
Pleasant Grove, UT

Why is this "article" not clearly identified as the *advertisement* that it truly is? I have been in financial services for 16 years, and I know a one-sided, self-serving advice piece when I see one. Where is the discussion of risk? As tens of millions of Americans have painfully discovered, home ownership is not the seamless financial panacea this author promotes it to be. Extreme caution should always be used, especially if you lack the discipline or wherewithal (or both) to manage an above-water credit score or even the most modest of down-payments.

RedShirt
USS Enterprise, UT

To "PGVikingDad" what is the risk?

If you are renting a condo, what is the difference?

Maybe on owning an actual home there are some things that people may not understand the first time, but since when have we based our actions on 100% known outcomes?

PGVikingDad
Pleasant Grove, UT

RedShirt, you can't be serious. "What is the risk" in taking on hundreds of thousands of dollars in debt? "What is the risk" in being locked into a 30-year-contract with massive financial, emotional, and social consequences for default? "What is the risk" of owning an illiquid security in a fluid and ever-changing employment and economic environment? Owning is NOT the same as renting. Both have potentially similar-ish monthly costs, but that is where the similarities end. This article treats them as though their risks are on par. They are not.

RedShirt
USS Enterprise, UT

To "RedShirt" you are not locked into a 30 year contract. If you want out of the contract, you sell the house or pay off the loan.

How is it any different than leasing a car?

How about the insecurity of knowing that your landlords can sell the house or apartment out from under you at any time?

The risks are close. I have both rented and owned. Just the simple fact that with owning you can sell it and recover a portion of what you have put into is great.

Also, it depends on why you are buying. If you are buying as an investment, then you accept the risks as you would with your retirement funds. However, if you are buying a house to make it your home, then the financial risks are less because it is not an investment.

Why would I?
Farmington, UT

Why would I not be surprised to learn that buying a home is the best choice, regardless of risk or circumstances? Advising to "buy a home" if you are going to be in the area for such a short time as 2 years is unwise. How long has the recession lasted from when the last housing bubble burst? (HINT: It was well over 2 years.)

Also most folks look at PITI only. (Payment, interest, taxes, and insurance.) Don't forget the true cosrt is PITI+MU+?

MU of course is maintenance and utilities.

? is furnishings, remodeling, upgrades, landscaping, etc.

See, it is going to cost more than just the monthly payment if you want a new washer/dryer and to change the green shag carpet. And perhaps you'll need a lawnmower, snow blower, some flowers to plant in the spring, etc. Expect insurance taxes to go up, too, and rising property tax is a given.

UtMama
Orem, UT

As a tenant you would still have to buy your own washer and dryer let alone paying more in rent to cover utilities.

As a renter do you own your washer dryer and fridge? Would you expect pay more rent for a nicer apartment? Would you expect to pay more for a fully furnished apartment?

The reality is your landlord passes these costs on the the renter. You pay for it no matter what.

toosmartforyou
Farmington, UT

@ UtMama

Some people use a laundromat. Owning your own laundry appliances results in a higher cost because of their cost and the convenience of doing laundry where you live. Plus, you need to transport the laundry to/from the laundromat.

But that wasn't my point. I was trying to get across that home ownership has hidden costs many realtors, brokers, and others don't bother to reveal to a buyer, such as maintenance or utility costs. Unless you ask about property taxes, don't expect to figure those into your costs. A lady said in a public hearing they weren't concerned about property taxes "because they are paid by our bank." (Her husband was embarrassed for her lack of knowledge.)

The difference is with owning you build equity, or have the opportunity to do so, and with renting you build someone else's equity, not yours.

A couple bought/sold a home in Texas a few deceades ago could have lived in a very fine hotel every night for 18 months for less money after they sold their home and suffered a loss, years before the real estate bubble burst.

Be cautious!!

UtMama
Orem, UT

Your still paying for it. Do the Math!

The hidden costs you are talking about are the costs of day to day living. You pay for these things anyway. It's just how you lump them together or break them down. Once you look in to what things really cost you (like the laundry mat) you see it.

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