The Renter’s Manifesto

One of my favorite new websites is called  Basically it is a financial website that allows you to manage your money, but it also has this amazing blog.  I have now vowed to never rent if can avoid it.  I have been there, done that and found it that the outcome was less than desirable especially compared to that of living in a Tiny House.

The bloggers over at Mint have put out an interesting article about renting, they propose that they are in fact better off renting.  The big assertion they make is that if you are modest renter, who can manage your budget, that it is actually better at building equity.  By paying less than a mortgage, saving the difference and not assuming the risks, you can do better.

What do you all think?

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  1. I have to agree with the site. I moved into my first house shortly after the begining of 2006, just before the realestate bubble burst. Now, my home is still completely devalued, and for the past four and a half years I’ve been spending 2.5 times what I paid for my second bachlor appaortment, which was already twice my first. In financial terms, my net value is now negative.

    While my house has many nice extras, and I’m glad that I own, I don’t have more interenal space, and we do spend on average $5K a year on semi-major repairs and updates. If I did have to do it again, I would have stayed in that batchlor pad and started building a tiny house imedaitely after college. You still get to own, at a total cost equal to 4 months of mortage, or 8 of difference between my house and my aparement. That beats only being 4 years into a 30 year mortage….

    Of course, this all completely ignores the issue of property. If you have a tiny mobile house, you have to have a place to park it.

    • very good point about the land. I hope to have this issue solved soon 🙂

  2. I think if the alternative is renting vs. buying a full-size house, renting is preferable. I’m strongly anti-debt, so when I’m ready to buy a house, I’ll be saving to buy without a mortgage.

    Can’t speak much to tiny houses, though, but it seems like if you can own without having to pay rent at all, you’re saving yourself financial trouble and trouble in dealing with the house’s owner.

    • What are you supposed to do while you save up. It can be difficult to save $200,000+ in short enough time to not rent. Unless you go the Tiny House method which you can save up for in a year in many cases (or buy the materials and build as the money comes in)

      • I’d say “don’t buy a $200k+ house”. 🙂 Live someplace cheaper, buy the amount of space you need (even if it’s not a Tiny House, it probably isn’t 3000 sq. ft, either). Taking 3-5 years to save up is preferable to having a 30-year (or even 15-year) mortgage.

  3. I would rent before buying again. Luckily I bought my house before the bubble, but I sold it during the bubble which meant pretty much no profit. If I add in the repairs and projects I did around the house, it was probably a net loss. I had a lower salary and still had disposable income when I rented. To me, the house (debt) was an anchor around my neck in the end. It trapped me in a job (the salary I needed for that house), etc.

    If I buy another house, A) I intend to be there for a LONG time, B) somehow I’ll pay cash. At least that’s how I feel now.

    I can’t help thinking how much more $$ I’d have saved in that decade of owning a house if I had rented a modest apartment and let someone else concern themselves with replacing water heaters, air conditioners, appliances, etc. I think I made myself a little sick thinking of it…

    • The trick is to make sure you are in a very modest apartment, have a budget with a lot set aside for purchase of a house and stick to the budget. The average house costs $265,000 and by the time you pay it off via a 30 yr fixed you will have paid around $800,000!!!! On just the loan, factor in the maintenance, insurance etc. and that’s big money that could be in your pocket!

  4. For me, the decision to rent (for now) is two-fold. Financial, of course. Most folks fail to include the cost of repairs into home ownership. The other factor is time. I don’t care how “maintenance-free” you think your property is, it takes time to maintain. Now, if you really enjoy doing that stuff and consider it a hobby, that’s wonderful. But for me… time is precious, and there are other ways I’d rather spend it.

    • Good points! It gets to what is our time worth and also considers managing our efforts to those we only find valuable/rewarding.

  5. The Mr. and I have rented for our entire adult lives. The cost of maintenance is off-putting – what if the heater goes kaput when it’s 10 degrees out? And the heater *always* goes kaput. *We* would have to pay for it. That being said, it would be nice to have the freedom to do as I please with a property, but $$ issues outweigh everything. We would change our tune if we got a windfall, but not until then.

  6. From a financial perspective, renting may indeed be cheaper. However, I do not feel its worth the trade-off. Once your home is paid off, its yours. No one can take it from you under most circumstances. (there are a few exceptions)Plus, as a renter I’m really fed up with having to ask permission to do something like paint, to plant some veggies or if I want a pet. I prefer being able to do what I want when I want. That’s worth the money to me.

  7. You know, I’ve heard all the usual arguments about owning a home and I’ve heard the many compelling arguments for renting. Basically, I think it all boils down to what works best for the individual. All situations don’t fit all people, so what works best for the individual is the best choice, regardless of what the “professionals” think. 🙂

  8. There’s no right choice. Making a bad decision with real estate isn’t a problem with the system, whether it’s buying/selling at the wrong time or investing in something that isn’t worthwhile. Some of it is bad luck or timing, some is poor judgement. The same applies to renting. Many people I know rented an appt with a pool and gym, and naturally never used either. That ran them about $150 a month extra, or close to $2k per year wasted. If there’s fees for services like security and gardening, thats more money out of your wallet. With houses, HOA fees are a similar money pit. You can rent smart, and you can buy smart.

    Tiny houses aren’t an alternative, they’re just a bite sized version of the same thing. They’re uncommon so you don’t see any for rent, but chances are if you could rent them, they would cost 1/3 of a small appt.

  9. I think it depends.

    If you’re renting a house (for a yard for instance) the actual owner typically is paying the mortgage plus all the trivial expenses, but it’s actually coming out of the rent. If you had the mortgage, sure, you’d have to do the work, but you’d end up paying less. This is assuming it’s the same house you’d rent or buy. Few people will rent a house at less the the mortgage, plus repairs. That’s at a net loss.

    Then there are people who own the house already and are renting it. Typically though they’ll just increase the rent to the going rate, which would be the mortgage plus fixes.

    In those cases, it would in fact be cheaper to buy than rent.

    Yet, there are sweet deals that come up from time to time for renting. Cheap rent, easy landlords, etc. Yet, on the other hand, there are also sweet deals that come up from time to time with buying a house.

    Apartment buildings might end up being a bit cheaper, in general, since many things are shared (like utilities and heating often), but then again, you can’t have a garden (which can lower food costs).

    It’s not so clear cut. It really just depends on the area, what’s available, the mortgage, the condition, what one will put up with, etc.

  10. We are currently in the process of downsizing in the city of Atlanta. We have sold our house and are moving into an apartment in order to simplify our lives. We have the land in NC with the Tumbleweed House and we want to spend more time working on that and less working on suburban house maintenance. The key is to live below our means.

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