Why do some people consider paying rent throwing money away?

[⠀X ⠀]

That’s like saying that buying food, is throwing money away.

 

[winb83]

cause it is. I have elders in my family who still rent. its going to put all of us in a bind.

There's a difference between renting out of necessity because you can't afford a home and renting as a choice. Renting (at least right now) is cheaper than buying a home. What you do with that difference makes all the difference in the world.

As a renter I simulate life as if I was having a mortgage payment. So monthly I take a mortgage payment and subtract my rent from it and save the difference.
On top of that I also invest about 70% of what I feel a mortgage payment would be monthly.

Problem is a lot of renters aren't doing that. They rent and live at the edge of their means and build equity in nothing or maybe a depreciating asset like a car at best.

 

[Toe Jay Simpson]

It’s a hard call man. I know people who have had to take out a second mortgage to make necessary repairs on their home.

I’ve seen renters though have tens of thousands of dollars of stuff fixed with no sweat off their brow.

I look at a house like a luxury car. If you can’t afford the maintenance keep renting. If a pipe burst underneath the house living pay check to pay check is gonna ruin you.

 

[Dave24]

As a renter I'm getting exactly what I'm paying for a place to live. I may not be building equity in my home but it leaves me with lots of free cash to invest in the stock market and save.

When you have a mortgage people almost never factor in the real cost. It cost you money to live in a house. It cost maintenance, you have to pay annual taxes (which can go up), you pay interest on the mortgage. For me personally I'd rather continue to build my investment portfolio than buy a home right now. In about 5 years I've gone from $0 invested to about $165K in just my taxable investment account I toss extra money in. My rent payment is like $640 a month for a 1br 600 sq ft apartment. If I got a mortgage and home my cost of living would more than double and I'd spend the first 15 years of a 30 year mortgage paying mostly interest on that payment.

So as a renter I have an asset I can sell it's just not a home it's stocks. I have enough liquid cash for at least a 15% down payment on a home in my price range but that's not appealing to me right now. I will continue to rent, save, and invest for the foreseeable future.

Good points

 

[maxamusa]

There's a difference between renting out of necessity because you can't afford a home and renting as a choice. Renting (at least right now) is cheaper than buying a home. What you do with that difference makes all the difference in the world.

As a renter I simulate life as if I was having a mortgage payment. So monthly I take a mortgage payment and subtract my rent from it and save the difference.
On top of that I also invest about 70% of what I feel a mortgage payment would be monthly.

Problem is a lot of renters aren't doing that. They rent and live at the edge of their means and build equity in nothing or maybe a depreciating asset like a car at best.

I get it....but my elders literally came up in a time where real estate was super cheap.

and they were giving out loans to anybody.


now the game is different.


I had to grind FR to buy.


Its just a bad philosophy to be a renter; because eventually you are going to stop working.


The greatest thing you can do as an elder is have something to pass down to the next generation.


If I inherited a home I'd be a thousand steps ahead.


I just don't understand why so many people are cool with renting and will justify it because of hook ups. its so self serving.


And now me and my generation are gonna be stuck footing the bill and have been. and the game is more fierce than ever.

its beyond frustrating.

 

[maxamusa]

It’s a hard call man. I know people who have had to take out a second mortgage to make necessary repairs on their home.

I’ve seen renters though have tens of thousands of dollars of stuff fixed with no sweat off their brow.

I look at a house like a luxury car. If you can’t afford the maintenance keep renting. If a pipe burst underneath the house living pay check to pay check is gonna ruin you.

I was actually going to buy another toy this year and do a foreign vacation. that shyt got scrapped cause I had to dump mad $$$ in the crib.


that shyt does happen.

but still I have children and work a physical job I know I wont be able to pay rent forever.

and I'm a knucklehead.


never thought of the future. at least I had that foresight.

for the pipe burst thing they have insurance with the city to cover that shyt. a lot of people don't know about that.

 

[Shadow King]

As a renter I'm getting exactly what I'm paying for a place to live. I may not be building equity in my home but it leaves me with lots of free cash to invest in the stock market and save.

When you have a mortgage people almost never factor in the real cost. It cost you money to live in a house. It cost maintenance, you have to pay annual taxes (which can go up), you pay interest on the mortgage. For me personally I'd rather continue to build my investment portfolio than buy a home right now. In about 5 years I've gone from $0 invested to about $165K in just my taxable investment account I toss extra money in. My rent payment is like $640 a month for a 1br 600 sq ft apartment. If I got a mortgage and home my cost of living would more than double and I'd spend the first 15 years of a 30 year mortgage paying mostly interest on that payment.

So as a renter I have an asset I can sell it's just not a home it's stocks. I have enough liquid cash for at least a 15% down payment on a home in my price range but that's not appealing to me right now. I will continue to rent, save, and invest for the foreseeable future.

There's a difference between renting out of necessity because you can't afford a home and renting as a choice. Renting (at least right now) is cheaper than buying a home. What you do with that difference makes all the difference in the world.

As a renter I simulate life as if I was having a mortgage payment. So monthly I take a mortgage payment and subtract my rent from it and save the difference.
On top of that I also invest about 70% of what I feel a mortgage payment would be monthly.

Problem is a lot of renters aren't doing that. They rent and live at the edge of their means and build equity in nothing or maybe a depreciating asset like a car at best.

Where do you live? $640 a month is goldmine cheap and there's a reason renters aren't doing what you do with your money. They can't.

 

[Elim Garak]

It's not since it's the only option for much of the population. However if I had the power for example if I was president I would find some way to build a bunch of public housing on a rent to own system.