The 50/50 Split: Renting versus Buying

The 50/50 Split: Renting versus Buying

This is the future M$M castle if anyone was wondering.

(I’ve got another CRAZY good post for everyone this week!! My good friend Alyssa at is going through what a lot of what the rest of us are going through right now: Do you keep renting or buckle down and buy that house?? If you don’t usually sound off on the blog – today is the day to jump in and let people know what you think. And yes, that is my future castle if you were wondering…dream big homies.) – M$M

Sitting on a wraparound front porch, an iced tea in my hand. The condensation running down the sides of the glass as I take another satisfying sip. My wonderful husband on my left, sitting content as we watch our kid(s) play with the family dog running in tow. A lush yard & wonderful neighborhood in front of our eyes…

How do you envision your future home to be? Or for current Millennial homeowners, is your first home shaping up to be exactly what you thought it would be?

It’s a mind struggle. This match in my thoughts of renting versus buying clamors back and forth like a tennis ball striking the rackets of those in the last match at Wimbeldeon. Sometimes I desire the reality of the serene story I depicted above, but I just cannot quite fathom homeownership just yet. The idea of taking on a mortgage for 30 years weighs heavily on me. That’s 30 years of principal, interest, taxes, insurance and life changing events all wrapped into one complete package of the largest amount of debt I will potentially ever take on (granted, I know there are ways you can accomplish paying off a mortgage in less than 30 years, but speaking hypothetically).

I slam numbers into the calculators that depict renting vs. buying, and somehow I always end up with a different result of what I would like to see. One moment, I am fed up with paying out of pocket a rent expense that does not build equity, that also faces surmounting increases from year to year. The next, I feel glory behind the flexibility of taking on new adventures without the burdening thoughts that my water heater, roof, or a large appliance of the like is about to bust. It’s difficult to comprehend the following financial obligations tied into the responsibility of paying off a mortgage for 30 years.

I may not know the complete intricacies of real estate, and all that home ownership vs. renting can truly offer. Advice in regards to home ownership comes from multiple angles when you’re in your 20’s. Yet, there are a few things as a Millennial that I’m experiencing when tackling whether to rent or buy at this given point in my life. In a condensed list I’m going to depict my mental 50/50 split:

Reasons To Continue Renting

1. Freedom and flexibility

Want to get out for the weekend? Great! No yard-work, or fixing up around the house is put off that I couldn’t quite get to during the week. Ready to take on that next step in life that requires moving to a new city? Awesome, no need to worry about getting the house market ready to sell. Feel like traveling for more than a few months? No worries about a home being left vacant, or looked after. Renting provides much more flexibility to experience life than being tied to a major asset.

2. Glorious amenities

Oh, so you would like a pool, built-in WiFi, gym, air conditioning, and access to various community relaxation centers & events? You’ve got it! All of these amenities are typically built into rent expenses at various complexes and neighborhoods. No need to add on to your monthly list of expenses when it’s already offered where you live.

3. Monthly fixed expenses

Depending on where you rent, most instances your utilities are offered at a fixed rate (or taken on by your landlord in some cases). This means no ghastly surprises when certain winters experience subzero temperatures, or summers turn out to be scorchingly hot. When utility expenses are fixed it makes it more feasible to budget accordingly without fluctuating utility surprises.

Reasons To Consider Buying

1. Building equity

No more paying off a landlord’s mortgage, or sending a check to a property management company. Instead, I could be building equity into an asset that serves as one of my biggest investments. For once, I could experience an appreciating asset (when the housing market, or my chosen location is doing well), versus depreciation.

2. Starting a family

Digging roots into a city I truly want to call home. My living situation could finally experience a sense of permanency. No more renewing/signing leases, putting down security deposits, or incurring moving expenses every 1-2 years. I can truly live in a place where memories can be created with my family just like my childhood days.

3. Ownership Pride

I imagine standing outside in the front yard holding the keys to our first new home (my fiance/soon-to-be husband and I!) with silly little grins on our faces. The pride of owning a home that is yours to make memories, decorate, and update however you please.

The 50/50 split of renting versus buying will continue to be an ever-increasing match in my mind. When it comes down to it, the idea of taking on a huge amount of debt to purchase a home is challenging to grasp. Yet, the payoff could be incredibly amazing.

What do you think about home ownership and taking on a mortgage? Do you prefer renting or buying, and why? Let’s discuss in the comments below!

Live differently, your bank accounts will thank me later. ~M$M


If you want to see the total opposite situation from the M$M castle, check out last week’s really popular post about a couple living in a camper to pay off debt!

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22 comments… add one
  • Caitlin Aug 31, 2015, 10:16 am

    A 30 year mortgage should make you pause! If it didn’t…you probably wouldn’t be ready to buy a house.

    My husband and I chose to buy earlier this year. The spread between house payments and rent was ridiculously low – something like $50-100 a month – and interest rates were laughably low as well. Instead of “throwing away” money every month to rent, we’re investing in our future and equity.

    In the six months since we closed on the house, the property has already increased in value by 20k if Zillow estimates are remotely accurate.

    Re: 30 years – with a bit of budget wrangling and strategy, you can pay off your debt far more quickly. I used to calculate how quickly I could pay off the house debt just by adding a bit more money every month to the principle. If we stick to our budget, we’ll be completely debt free in 16 years. If we tightened the belt a bit more, we’ll be able to pay it off faster and knock off almost 100k of interest.

    So for us…buying made sense…and cents.

    • Millennial Money Man Aug 31, 2015, 10:25 am

      Ha nice play on words! 🙂 My wife and I are about to start looking, but I’m a little weary of the Houston sellers market right now. Houses seem to be way overpriced, but the last I heard builders were starting to catch up to demand. Hopefully we can time it well before interest rates spike!

    • Anonymous Aug 31, 2015, 11:30 am

      Fantastic strategy! The low interest rates are definitely appealing. My fiancé & I were actually prepared to buy because interest rates were so low, but due to unforeseen circumstances of our landlord selling our rental property extremely fast, we only had 30 days to find a new place to live. We’re still contemplating buying, but it’s taking a bit more time now. Having a game plan to pay off and be debt free in 16 years is incredible! Saving over $100k in interest is incredible. Thanks for sharing! Definitely strong points to consider buying.

      • Millennial Money Man Aug 31, 2015, 12:34 pm

        Yikes, sorry to hear about your landlord situation. Let us know if it works out!

      • Caitlin Aug 31, 2015, 12:43 pm

        Yikes! That doesn’t sound like a fun situation. Did you get into another rental?

        • Alyssa @ Generation YRA Aug 31, 2015, 1:59 pm

          I just realized my comment posted as “anonymous” up above, when I thought I had my information filled out – whoops! Yes! We were able to find a new rental fairly quickly, although rushed. We ended up moving into a new apartment complex that cost less monthly than where we were prior, and now have access to all of the amenities I had listed above. We’re loving it right now! It will be interesting to see how the rent hikes after a year, and after we regroup from moving we may start looking at buying after our year lease is up. 🙂

          • Millennial Money Man Aug 31, 2015, 2:01 pm

            At least you got to save some money on the deal! I’d love to have you back on the site after you and your soon to be husband buy! (Congrats in advance by the way).

  • kirsten Aug 31, 2015, 6:47 pm

    I just bought a year ago after renting for 7 years, and I love owning. The yard work is a little much at times but other than that no drawbacks so far. We were finally able to get a pet too which was a nice bonus!

    • Millennial Money Man Aug 31, 2015, 6:55 pm

      That’s awesome! We are waiting to get a dog until we buy…sticking with the cat for now 🙂

    • Alyssa @ Generation YRA Oct 2, 2015, 8:48 am

      Kirsten, that’s great! Buying after 7 years of renting would definitely be a change of pace. My fiance & I were actually able to find an apartment that’s pet friendly, so we are contemplating getting a dog in the future. 🙂 Although, having your own yard is a definite plus!

  • Michael Sep 1, 2015, 8:18 pm

    I am currently renting even at the age of 24. I can afford to buy the house, but there are other factors besides financial at points. The biggest piece people need to think of is will they stay in their house long enough for it to appreciate after all the closing costs and interest they will pay versus renting? Second is the importance of having a steady job for yourself and maybe your significant other. Third though and is the reason I am still renting, is I can invest my money for the long-run and get 8-10% return versus historically 3% if buying a house. 4th and finally the FREEDOM of being able to move at anytime to any new place without the worry of selling a house and potentially losing money or paying more fees.

    • Millennial Money Man Sep 1, 2015, 8:28 pm

      All good points, I hadn’t seen that 3% number. I wonder if that changes based on the housing market that you’re in?

    • Alyssa @ Generation YRA Oct 2, 2015, 8:51 am

      Michael – all incredibly valid points! My fiance & I are renting at 25 & 28 even when the rest of people we know seem to be buying (except in the city of Portland, because that market is way more expensive than where we’re at right now). The freedom is definitely a huge aspect for us right now. We will be newlyweds next year and also do not have kids as of yet, which means we like to take off quite often! Also – we feel our careers could potentially take us somewhere new where buying right now wouldn’t be the most beneficial idea.

  • Jim Sep 2, 2015, 2:40 pm

    Living in a house, beats living under the bridge down by the river.
    Face it you have to live someplace, why not own it?

    • Claudia @ Two Cup House Sep 4, 2015, 3:08 pm

      I’m assuming by “own it” you mean that you’ve paid cash for the house? In my opinion, I don’t “own” my house because I’m paying a bank for the mortgage. If I didn’t pay the mortgage, I wouldn’t have a home–doesn’t really sound like ownership to me. Regardless of one’s decision, I think the most important point is that you do the research first and make an educated decision rather, especially if you choose the mortgage route! 🙂

      • Jim Oct 6, 2015, 2:34 pm

        Well I did not pay cash for my first house, like most people I took out a 30 year mortgage. I also did not do any research. I just knew that I had to live somewhere and I did not want to live ” in a van down by the river”( Chris Farley SNL if you are too young to remember) I think what is important is that a person only buy what they can afford. Renting is just throwing money away, at least by paying a mortgage one is building equity and the faster one can pay off the mortgage the faster one comes to true ownership. I remember the first month that I did not have to pay a house payment was a great feeling and it only to me seven years, but I DID NOT buy a more house than I could afford…

    • Alyssa @ Generation YRA Oct 2, 2015, 8:55 am

      Hi Jim – can you elaborate? I completely understand that owning a place you live in is definitely fulfilling. The biggest concern (as Claudia mentioned as well) is taking on that 30 year mortgage, even if we are putting a size-able down payment down. Also, once we put that down payment down – do we have a large enough emergency fund/savings to cover any unforeseen & given expenses along the way (maintenance, property taxes, etc.). We would like to get to a point where it doesn’t take several years just have equity in the home we are living in.

      • Jim Oct 6, 2015, 4:36 pm

        I an not sure how much I can elaborate, that would take a whole book! What I can say is that you are right, you must have an emergency fund in place and be debt free (including student loans and cars) before you can even think of property ownership. Property taxes will be included in the mortgage payment and maintenance can be taken care of with an insurance policy.

        Once again, only buy what you can afford. A good rule of thumb is a payment equal to 25% of your monthly take home pay (less is obviously better).
        There is only one answer: Pay off any debt that you have, and use the money that you were paying towards debt and pay yourself. That will give you money for a large down payment and will give you equity from day one.

        I believe some young people jump into property ownership too early and are smothered with debt, and THAT is what gets them into trouble with home ownership.

        Besides, you do not want to “live in a van down by the river”! ^^^See above for quote reference 🙂

  • Ian Oct 5, 2015, 1:10 pm

    I finally caved due to the diversification of owning your house/condo in addition to stocks and bonds. By age 31, I had amassed over 200k in Investments. A condo provided a separate asset with separate growth potential. I chose a 15 year loan with 20% down to minimize loan interest/pmi. I build equity at about $400/mo on a $1050 mortgage payment.

    Also, the 3% growth rate is not accurate if you’re using leverage (a mortgage). Your return on equity is much higher if you only own 20-30% of the unit.

    • Millennial Money Man Oct 5, 2015, 4:05 pm

      You’re right – cash on cash return is much higher than 3% with leverage. What do you think about the condo investment? I’ve considered it before, but was worried about no control over the monthly maintenance fees.

      • Ian Oct 5, 2015, 8:38 pm

        My mortgage broker investigated the condo associations before they would lend and denied several. I’m confident the condo fees are being used appropriately here. It’s a gamble, but it helps having their seal of approval.
        Overall, it’s worth it to buy in my neighborhood (Milwaukee) if you’re staying 5+ years.

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