When we grow up our parents, friend and society has instilled upon us the idea of the American dream of home ownership. Investing in your first property creates a sense of responsibility and pride of owning your own place verse living in someone else’s place. You will feel like your monthly payment is going toward your investment to pay down your mortgage instead of going toward your landlord’s mortgage. Over time, you can write offer your interest for taxes through home ownership.
No Responsibility, No Commitment
Many people are very happy as renters and do not wish to have the responsibility of purchasing their own home. When you rent a home or condo, there is little responsibility to the renter as far as upkeep and maintenance of the investment property. If things go wrong or there is a problem, you are free to call the property owner and the problems will be fixed. As a homeowner, the problem is a little bit more involved. The problem must be diagnosed to discover what the problem is, what caused the problem and then you are still responsible for the repairs and costs associated with that maintenance and upkeep.
For the renter, packing up and moving may still be a difficult task. They still have all of the same possessions as most homeowners, but they do not have a thirty year mortgage keeping them in place. With proper notice being given, the renter is able to move freely wherever and whenever they would like. For the real estate investor, it is a little more difficult, as there is often a mortgage to be considered, as well as other factors which only the homeowner can truly comprehend.
The homeowner also has something else that the renter does not. Whether it is real or imagined, being able to return home to someplace that is actually your very own, is a satisfying experience. When the home is owned, there is nobody who can say what modifications to the real estate can or cannot be made. The freedom that owning your own home allows you to do as you please, within reason of course is a feeling that is very comforting to most people.
While not everyone is going to want to accept the responsibilities that come with home ownership and a real estate investment, most people would agree that the benefits are well worth the cost. Investing wisely in a home is a good idea for anybody who truly wishes to understand what that feeling is. The cash value of a good real estate investment is secondary to the rest of the home ownership experience.
With the market disruptions here in the Phoenix area, we saw mortgages far outpace the rents charged for the same property in terms of owning or renting.
So, over time, it became clear to many that instead of paying $2500 a month to own, they could pay $1300 a month to rent. Now, we are seeing the gap far less severe and so a newer dynamic is playing out in the rental market whereby condos and townhomes are seeing weaker activity due to competition from single family detached homes as rentals. Rents for the homes are often comparable now or just slightly higher so that renters have a lot more options for the money.
So, there are many market forces that play out in our local market with respect to the rent vs. own argument. As such, I look forward to a period when the argument is more simplified.
Thanks for the discussion here.