mage67 (mage67) wrote,

Is it better to rent than own?

I keep seeing articles on which is better. Supposedly rental prices are much better than ever. However, I get better benefits from owning my home than I ever did from renting.

1. The rental price may be lower, but the equity I'm building more than makes up for it.
2. I get a deduction on all real estate taxes when I own. The real estate tax I would pay indirectly when I rent wouldn't be deductible
3. If it's a coop or condo, I can deduct any interest payments the coop or condo makes on my behalf. Such interest I would pay indirectly when I rent would not be deductible.
4. I can deduct any mortgage interest I pay. Such interest I would pay indirectly when I rent would not be deductible.

So in item 1, I'm paying about $200 per month more than a rental, but I'm creating $310 equity per month right now directly. I also make over $100 per month in deductions. I also have an asset I can borrow against if I need to and I have more rights (since it's harder to get evicted and I can do as I please more) and if I own I'm more motivated than a landlord to keep myself comfortable where I live. My equity value increases much much faster than if I put it in a bank account. My property is worth about 50% more than what I paid for it a mere 3 years ago. So even if my property only goes up 10% per year (and it's been going up faster than that in the last 3 years), that's another $700 per month in equity I'm making on top of it all. However all this equity is untouchable unless I sell or take out a second mortgage.

When my mortgage gets completely paid off, I'll be paying rent that's little more than half of what I'd pay on a rental while my equity would still be going up. So for me it pays off nicely. If one can afford it, the savings from owning seems to almost always pay off, unless of course your rent is incredibly low.

I do know people who pay almost nothing for their rent because the owners of their home never file for rent increase permissions. One person I know pays $150 per month on a one bedroom apartment in Manhattan this way, but he's been living there since the 1960s. In cases like this, it's much better to rent. If you live at your parents home, the rent can't be beat if they pay for it completely ;)
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