Are you a renter? Or were you in a past life? Then let me take a wild guess that you’ve had someone tell you that renting is like throwing your money away at least once or twice. I’m right there with you and am even embarrassed to admit that I used to be that person preaching the virtues of owning over renting.
That is…until I bought my first home. Only then did I see renting in a whole new light.
Renting Isn’t Like Throwing Your Money Away at All
It’s easy to nod and agree with the popular belief that owning your own home is a better investment than renting. But it’s also completely ridiculous to compare renting to throwing your dollar bills into the trash.
Before I bought my townhouse, I rented for over 6 years. I rented because that’s the only way I could afford shelter and live in the city. Would I have preferred to own my own home like some of my friends did at the same age? Sure! But I also didn’t want to be drowning in debt and chained to a mortgage in my 20s like they were either.
You see, renting isn’t just about having lower monthly bills (though that is a big upside). It’s also about having flexibility. Want to move to a new apartment, city or country after your lease is up? No problem. Want to do the same as a homeowner? Well, you better hope you don’t have to sell in a buyer’s market, because that could cost you thousands of dollars, not to mention your realtor fees.
You also have the flexibility to do what you really want with the extra money you could save. Because I rented and kept my cost of living low, I could afford to go back to school, eat baguettes in Paris for a week, and aggressively save and invest for my future. I’m not sure I would have been able to make the same choices (without getting into debt) if I also had a hefty mortgage to pay down.
Homeownership Does Have Its Advantages Though
Then again, there are a ton of benefits to being a homeowner too.
First, gone is the fear of being evicted because your landlord wants to renovate, sell or charge a higher rent for your place. Even though I’ve never experienced this when I was renting, this is more common than you may think. It may also be why no matter how long I lived in one place, there was always a sense of impermanence when I rented. I know it sounds crazy, but it wasn’t until I bought my first place that I finally felt settled.
Is that worth shelling out the extra money just to own, you’re probably asking? No, but luckily I didn’t have to.
Because I took my time, saved a sizeable down payment and waited for the right opportunity to buy, I was able to find a townhouse in the same neighborhood as my apartment with mortgage payments that matched my rent. So, not only was I able to upgrade into a bigger, newer place without having to move to the boonies, my cost of living stayed almost exactly the same.
Why I Consider Myself a Pro-Renting Homeowner
This may sound contradictory to you, but I’m not the only pro-renting homeowner around (just ask the guy who wrote The Wealthy Renter. He preaches the pros of renting while happily paying down his own mortgage).
Even though I’m now a homeowner, when I’m asked whether renting or buying is better, my answer is always the same: renting, unless you can afford to buy for a similar cost.
Most people who buy a home, buy too much home. They get so wrapped up in the excitement of becoming a homeowner and seeing their Pinterest inspirations come to life, that they forget to buy something that won’t make them house poor.
Buying a home is only a good investment if it doesn’t mean it’s your only investment. If the only way you can afford to buy is sacrificing the financial freedom you have as a renter, then I suggest keep renting until that’s no longer the case.