Since I can’t shut up about real estate investing, my friends often ask me why I don’t own my personal residence…
My wife and I currently rent. We live in a small, two-bedroom house which rents for under $1,000/month! We live in a great area so that price seems like a steal for us.Also, the cost of houses in our area is really high, so renting seemed like the better option for now. There are several other reasons why we decided to rent at this time:
Lower cost of living
If we were to purchase a house, our mortgage would be much higher than the cost of our rent. Beyond mortgage payments, there are additional expenses when owning a house (insurance, taxes, maintenance, etc.). So, our current situation allows us to save more money for real estate investing.
Best use of a down payment
Next, we all know (or should know) that purchasing a house to live in is not an investment. Owning a house does not provide cash flow as my investment properties do; in fact, owning a house would lead to negative cash flow. So if I have to choose between investing $100,000 – $200,000 in a few rental properties or investing in a house for my wife and I to live in, the first option sounds better.
Thinking about future needs
I would probably want to purchase something that would work for my family for the next decade or two at least. At this time, a two-bedroom house is enough for my wife and I, but that probably won’t be enough after we have a few kids. With renting, we always have the option of easily moving into a bigger place. If we were to purchase a house today, we would need to purchase a house that is much bigger than our current needs, which would mean even higher down payments and monthly payments.
Those are the main reasons we’ve opted to rent for ourselves and continue growing our investment properties. What are your reasons for making the same choice, or buying instead?
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