Is renting an inevitable waste of money?

[Ultegra134]

If you're young and haven't inherited a property from your ancestors, chances are that you're forced to rent. Personally, I've been renting for over 6 years and have been living with my girlfriend for the last 4, sharing rent and utilities. Overall, we've both spent over €25,000 together, and after spending all this money, you're practically left with nothing and may be subject to looking for a new house at any moment.

The average rent for a one-bedroom apartment is between €300 and €400 at best; thus, I was thinking that taking a loan is as costly as paying rent per month, but after 15-20 years, you end up with a house. My main concerns are the following: First, if you're in a long-term relationship like myself, you can never be 100% sure that you'll be with that person in 20 or 30 years from now, which might prevent you from opting for a loan. Secondly, you need to be certain that the location or city of the property to be bought is convenient for future job offers and so on. Thirdly, because a loan is a many-year commitment, there's no guarantee that you'll be able to afford the monthly payment 15 years from now.

On top of that, finding the ideal house as a renter is almost impossible; there's a lack of housing, and rents are extremely expensive and unreasonable at the same time. We had a difficult time finding a house recently, and it's far from ideal. There is now a new government-funded loan program that is about to start, funding up to 75% of the loan interest-free while the rest is funded by private banks and is subject to a relatively low interest rate. This led me to think about taking a loan and purchasing an average two-bedroom apartment, but I have the concerns that I voiced earlier.

[1714591825]

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[1714591825]

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[kryptqnick]

You're clearly in a country with pretty low rent price. I don't know which country that is, but I'm also from a country like that, and I can say that I'll keep renting in the near future for several reasons, but a very big one being that we don't have a good well-developed mortgage system with adequate interest rates and long-term contracts (like you say, 15-20 years). My friends in Scotland opted for mortgage because to them, it was cheaper to pay the monthly mortgage than a monthly rent in the same district of the same city, so this way you both pay less and are living in basically your own flat. And the sum was very reasonable per month for that city, something a lot of people can afford, especially if it's a couple with both earning money. In my country, you'd need to pay around 3 times more for mortgage than the monthly rent, and you'd still find it very hard to find a mortgage deal. It's very unpopular, the interest rates are some of the worst I've seen looking at many countries, and it wouldn't be for 15 years because there's no trust in long-term economic stability (for good reasons) but instead, like, 5-8 years to pay for the whole flat.
So you need to investigate the country you're in, its situation and deals, the safety and reliability of mortgages there, and then make an informed decision.

[DaveF]

It's a big it depends. Are you handy enough to fix things at a place you own or is every little thing going to require you calling in a repair person?
How secure is the area in terms of home prices. In *general* home prices will keep going up. But you can ALWAYS point to areas some large some small that were hit hard for one reason or another in a real estate downturn that DECADES later are still below value.

What about selling it if you have to change jobs and so on.

The standard reaction is yes, get a house don't rent.
Then you see people who are just walking away form a home for various reasons destroying their credit and finances for years, when renting would have obviously been the better option from the beginning.

So as I stared with, it's a big it depends.

-Dave

[NeuroticFish]

There are pluses and minuses in absolutely all cases.
If you want to buy a place:
* you will most probably buy it a bit farther from where you'd work (so you can afford to buy it), meaning you lose a lot of time in commute (no matter if it's car, bus, train or whatever)
* taking a loan is, as you said, something not too easy to take and may need certain advance planning
* even if you buy a place, it won't be like you have no other costs than just paying it back, maintenance and utilities are to be paid
* if you lose your job you may be forced to quick-sell your place, possibly even at a (great) loss
* you may end up - sooner or later - with neighbors you simply don't want to live near them (stinky, noisy, whatever)

On the other hand:
* even if the place is bought with a loan, you can still sell it if your relation doesn't work out or you want to go working in another city or country; though it may worth it selling only after at least 3 years
* the prices for houses/flats tends to go up - actually it's a sinusoidal with higher and higher ups - but it doesn't hurt watching the market and don't buy at top and sell at bottom; still it's usually a good long term investment.

Staying in rented place:
* no need for commitment
* it can be near (or at least not too far from) the work and the fun places
* you have the flexibility to easily go rent somewhere else if you change work or you don't like your neighbors


It's up to you to weight the pluses and the minuses; I' might have even missed some. In theory buying your own place is a great investment; in reality, not all cases/situations are that nice.
However, my analysis is valid for my country. Some points may differ in yours.

[Die_empty]

All the points or the limitations you raised are just fear of the unknown. Nobody knows the future that is why there are no perfect decisions. Life itself is a risk and it is riskier not to take risks. If you think house rent is eating your finance deeply and making you not have personal savings, it might be good to take the loan a get a house.

It might also be possible that you might remain with your girlfriend for life because she might end up exceeding your benchmarks or expectations as a husband. It can also be possible that the house location might become a megacity that would make the price of the house appreciate, that you might decide to sell it, get a new home and make a huge profit. There are also possibilities that you might get a better job that would give you the financial strength to repay the loan even earlier than the maturity date. The truth is that your concerns might not even happen in the future.

[pixie85]

My main concerns are the following: First, if you're in a long-term relationship like myself, you can never be 100% sure that you'll be with that person in 20 or 30 years from now, which might prevent you from opting for a loan. Secondly, you need to be certain that the location or city of the property to be bought is convenient for future job offers and so on. Thirdly, because a loan is a many-year commitment, there's no guarantee that you'll be able to afford the monthly payment 15 years from now.

Problems of the first world citizens. "I don't know if I should buy a house here because I'm not sure if I want to live here in 10 years" while in poor countries people save up to get central heating so they can stop with chopping wood once and for all.

I had 2 friends who rented out and they kept doing it until they got married. Once they did they took a loan and bought apartments because they both said that the installments were almost the same as the monthly rent but at least they live in their own place and will have something to leave their children when the time comes.

[Ultegra134]

~Snipped~

The minimum wage is at €620, with an average of €700–€800; thus, a rent of €400 is prohibitive if you're planning to live by yourself. Even a couple may struggle. With this upcoming loan program that I mentioned, the monthly payments are actually a little cheaper or approximately the same as renting.

~Snipped~

Certainly, there's no direct answer to the question, but yes, the general rule is to avoid renting if possible. I'm generally quite handy when it comes to house repairs; I'd be able to repair a few things that may occur, but it doesn't apply to costly appliances such as a fridge or an oven.

~Snipped~

Definitely, both options have their benefits and drawbacks, but some of those you mentioned apply to both renting and buying. For instance, at least in my case, finding a house near the center is a huge issue for two reasons: higher rent costs and a lack of parking spaces. However, the largest issue with a loan is commitment, whereas in renting, you can practically leave whenever you want.

[uneng]

The ideal is to acquire a house, but sometimes we have no choice besides renting. Like myself, I've been always against renting, but now I had to go for it, paying 135$ monthly in a suite, in order to be able to seek for a higher educational level in another city. I concluded we can't be too strict on our views in a way it's going to paralyze us in life. Life is constant movement, and if we have to "waste money" renting a house or apartment to advance in life and persue goals, that we do it without regrets!

Also, if you live somewhere precarious and non-promising because a temporary job, better that you just rent, as the investment there will be lost, since these areas don't make your property gain value on long term.

[Mahanton]

This led me to think about taking a loan and purchasing an average two-bedroom apartment, but I have the concerns that I voiced earlier.

When we do talk about the future then it is something that cant really be known due to no one really knows on what would happen ahead and this is something makes it even more harder.I do love the idea
or thinking on having advanced and its true that we cant really be sure that we would really be lasting up for so long into that person you are living with or the one you do love.This is a matter of risk
taking because if you are really that eager to have your own house or apartment then it does really need up some ample time to make out that consideration and the best thing to mind off
is that you should really obliged yourself on paying it up no matter what because it would be a long term payment duration which something that you should prepare.

[stompix]

First, if you're in a long-term relationship like myself, you can never be 100% sure that you'll be with that person in 20 or 30 years from now, which might prevent you from opting for a loan.
Secondly, you need to be certain that the location or city of the property to be bought is convenient for future job offers and so on.
Thirdly, because a loan is a many-year commitment, there's no guarantee that you'll be able to afford the monthly payment 15 years from now.

I don't see those as problems, and even if considered such you can easily go over it
- if you apply for a loan you simply write down both you and your girlfriend as partners, and you split the future property 50/50 or 25/75 how you want via a simple contract, every bank here accepts mortgages from two individuals that are not married but are copayers
- the same problem with rent, I can rent a flat in the city center but it will cost me 3 times more, the same if for the price of the mortgages, there is not much difference between them unless there is something really specific in that area, I find it unbelievable for a situation where apartment that are 3x different in rent have the same value in the overall price.
- there is no guarantee that in 15 you could afford rent either.

However, my analysis is valid for my country.

The country with the largest percentage of homeownership in the world?
I guess nobody listens to the cons there, your first wage comes with a mandatory mortgage or how do things work there?  

[alastantiger]

In the country where I live in the past, the government used to have a low-cost housing scheme for public servants. They are allocated a 3 or 2-bedroom apartment and they start to pay-off monthly. That is some percentage of their monthly income will be deducted. After a couple of years when they have completed the payment, the deduction stops. Nowadays, things are so tough that even the government cannot afford to do that anymore. When citizens calculate the cost to buy a plot of land, build materials and paying for labour, they resort to renting. Is it a waste of money? Not really if you are saving towards building or buying an apartment.

[coupable]

I don't understand why rent is a waste of money.  If you do not own a private home, you pay the accommodation price on a monthly basis, at least until you own a home. The rent is also for those who are used to move to work from a city to another is freedom of movement.
The matter cannot be discussed without taking into account that today buying an apartment in any country has become a difficult mission. If you do not inherit it, you are lucky to have a home.
Renting and owning each have their advantages and disadvantages, the choice is always the result of circumstances.

[ChiBitCTy]

Renting versus Buying is an age old "debate" but which you should do lies somewhere in between the two.  Sometimes renting makes more sense and sometimes buying makes more sense.  It just entirely depends on where you live, as in what country and what city.  There's some good articles out there online that talk about what to look for when you're deciding on renting versus buying.  Here's a pretty good article that shows some key reasons why renting might be the best bet for some- https://www.investopedia.com/financial-edge/1112/reasons-renting-is-better-than-buying.aspx

[Rikafip]

There is now a new government-funded loan program that is about to start, funding up to 75% of the loan interest-free while the rest is funded by private banks and is subject to a relatively low interest rate. This led me to think about taking a loan and purchasing an average two-bedroom apartment, but I have the concerns that I voiced earlier.

We have something similar to that in Croatia going on for years, and unfortunately all that achieved is that real estate prices went up so in the end the only ones who benefited from it were people selling apartments/houses while government keeps losing money. All the experts warned them not to meddle into market as they will just pump the price, and of course they didn't listen as they saw it as another way to buy votes with someone else's (ours) money.

Buying your own place is certainly a risk and it depends on the number of factors like what kind of job you have/how easy is to find another one, where do you live etc. For me personally it is worth a risk and basically all people I know are choosing that option rather than giving someone else your money for 30 years and not owning it in the end. I don't know how big are pensions in Greece, but in Croatia 95% of pensioners are not able to afford the rent so that's another reason to get your own place while you can.

[Oilacris]

I don't understand why rent is a waste of money.  If you do not own a private home, you pay the accommodation price on a monthly basis, at least until you own a home.

Not all would really be to those who rented ending up on having their own house because there are people who pays rent for their entire life.Why? because they dont have the chance on building one

its because their earning isnt really that sufficient enough for them to step aside some amounts for them to save up or simply their income isnt really that enough.This is why its really that situational

if we do speak about this matter on which not all people does have the power or ability to save up and does have opportunity to take up some loan or been approved with those
housing or whatsoever correlated to this.

[darkangel11]

I don't understand why rent is a waste of money.  If you do not own a private home, you pay the accommodation price on a monthly basis, at least until you own a home.

It is because of how expensive the rent is when compared to loans. This assumption is unfortunately flawed because not all of us can get a loan. You need a high paying, stable job to get a decent loan.
That said, most of us have families and I know a number of people who received help from their families when they got married and could afford their first apartment.

This is a problem with no real solution. If you earn 2k a month and and your rent is 500 you'll never be able to afford your own place, unless you inherit it or get a better job.
I was fortunate enough to have my own place in my 20s, but I paid for it in a different way because my parents split up and didn't know how to split it so they left it to me.

[Hydrogen]

I think there are variables factoring into the viability of home property rental markets.

We know that the value of real estate exhibits consistent growth on a historical timeline. How this contrasts with wage growth determines viability of rentals. Population growth factors in as a factor of demand growth. Real estate construction represents supply. In terms of supply versus demand, population growth is rising at a faster rate than development and construction of living space, resulting in scarcity.

Rental markets were more viable in past decades when the proportion of wages to rental costs were better proportioned. Population growth was also in better proportion to home construction for living space to not be so much of a scarce and overpriced commodity.

In some respects, housing and real estate markets are becoming deflationary in nature. In terms of supply (home development and construction) not maintaining pace with demand.

[jackg]

It probably depends on how strong the rental market is wherever you're buying or renting. If you can get somewhere good to buy, you might be able to buy it and rent it out and afford your own apartment too (or live in part of the property and rent out the other part).

There's another factor of how much it costs to buy and rent wherever you are. If it €400 to rent or €500 to mortgage, it'll be less worth it than if it was €300 mortgage. If you break up, there's different types of mortgage contracts you can sign depending on how things should be split (ie if it's equal or proportional to the investment each of you has made). You'll have to pay high legal fees though often if you don't agree with a solicitor on how much each of you should be paid (and even then the solicitor will probably take a big cut too).

[philipma1957]

A good question.

Renting only works if it lets you save on the side to have enough to buy a house.

A single couple like you ( the op ) Should be able to save side money as you split the rent.

Buying a house can yield big money. I paid 147k in 1992 my home is worth 660k now.

Kind of beats inflation But we are talking a 30.5 year time frame.

BTW a 1992 dollar is worth 1.00/2.12

or it grew 2.12 x 1

my 147k house should have become 311k

So I beat inflation pretty well.

At least on paper.

add in property tax 30 x 5k = 150k
heat is more say 360 x 100 = 36k
improvements say 100k      = 100k
total 286k

286k + 311k = 597k. and my house is worth about 660k

so I am around 63k ahead. over a 30 year time frame.

what other gains did I have. I live in a low crime neighborhood.

town of 70k in 30 years only 5 murders

So 1 every 6 years.

I lived in New York City about 700 murders a year on average

fast math is

murder rate in small town 419,991 to 1

murder rate in NYC is  11,428 to 1


So I feel my purchase is worth it. Safety alone helps the move being worth it.

[libert19]

People take loan for houses, live rest of their lives paying for it. Renting is wiser choice imo. But, if you have means do get a house — you'll have roof to sleep under.