Why I Rent
Posted by Ken | Filed under Ken
In Gail’s book, Money Rules, guess what Rule #1 is…
“RENTING IS NOT A WASTE OF MONEY”
…and I couldn’t agree more. I get into this debate often with friends and family who feel that at my age, I am nearing a milestone in my life: home ownership. I’m told that a mortgage payment is only “slightly” more than the rent I’m paying. But I don’t agree.
Yes, I understand that I would be building equity by paying a mortgage instead of paying rent. BUT I am also fully aware of all the peripheral costs associated with home ownership – maintenance, taxes, insurance, etc.
I have perfectly valid reasons for renting instead of owning:
I don’t want to be house-poor
Right now I live in Toronto and I love it! I love living in a big city and not having to own a car. I love having lots of amenities and social options nearby. I find comfort knowing that there are always people milling about.
If I bought a place in the city, I would almost certainly sacrifice space for location and I’m not prepared to do that right now. Sure I could get a tiny condo somewhere but the way the condo-markets are performing these days, I’m not convinced that the return on my investment would be worthwhile. Could I afford a place outside of the city? Yes – albeit pretty FAR from the city. I don’t want to move to a small town or the suburbs simply for the sake of squeezing myself into home ownership. I’d rather wait until I’m ready. Plus I’d have to get a car, commute, gas, insurance, yadda yadda yadda.
Related Story: Dare I Indulge: Car Quandary
I want some breathing room
I enjoy having the financial freedom to pick up and, say, go on a trip (debt-free) if I so choose. If all of my money is tied up in paying down a mortgage, I don’t quite have that same freedom. I love travel and I’d like to do lots of it while I’m young. I have the rest of my life to own a home. Owning a home carries a huge time commitment as well! Right now, I would rather use my spare time to enjoy hobbies, learn a new skill, or goof off with friends…not mowing my lawn or shoveling snow. I’ll let my landlord deal with that.
I want to save and invest the difference
I don’t want to leap into home ownership with 5% down. Paying mortgage insurance seems silly to me. I want that 20% or at least something close to it. Will I rent forever? Probably not. I’m anticipating that my life situation will change a couple more times before I finally ‘settle down.’ In the meantime, I will act responsibly with the money that I’m not spending on a mortgage, on taxes, on maintenance and fees. Investing the difference allows me to diversify my portfolio by investing in companies and small businesses that I believe in.