As we approach our upcoming move back to the greatest state in the nation this summer (Virginia is for lovers!), my wife’s hints of revisiting home ownership again are getting harder and harder to ignore…
“Wouldn’t it be nice to finally settle down once and for all?” she likes to sneak in…
“Don’t you just hate waiting on people to fix stuff in our house all the time?” A problem we’ve been having a lot recently for some reason…
“How nice would it be to have the kids grow up with the same friends and go to the same schools and feel like they have a real “home” to come home to every day?” Well how can you argue with that??!
And then her favorite line which I never have a good rebuttal for – “Remember that time when we got kicked out of our place when I was 7 months pregnant??”
Haha… “YES! But what about all our *freedom* we have right now?? And not having to worry about all that plumbing and flooding and everything else that happens when you own a home? And don’t you just love being completely 100% DEBT-FREE like we are?? How beautiful is that?” I try retorting back… While throwing in a “and what are the odds we’re going to have another baby again anyways?” for good measure :)
*Knocks on wood*
But no matter what I throw back to her recently, she just smiles and nods as if humoring me, and then ultimately responds with something along the lines of, “All of those things are nice too, but I’m ready to have a home again. I think it’s finally time.”
And seeing how this will now make our 6th different home in 7 years, perhaps there’s some merit to this. Especially as she’s used to growing up in one consistent house her whole life, unlike me who comes from a military household.
So now, after 6 years of blissfully renting and being its #1 fanboy, I have to reconsider my marriage views on things and come to terms with the idea of possibly – just possibly – being a homeowner again. As much as it kills me to say that…
But after a multitude of walks trying to wrap my head around it so far and heavy contemplating, I’ve come to a few realizations that’s helped me keep some sort of inner peace.
#1. It’s no longer just about *me* and what *I* want anymore. Yes owning is not my preference, but if it’s in my family’s best interest and truly makes my wife happy, can I really stand in its way? (And would I really stand in its way?!)
#2. I’m a much different person than I was 10+ years ago when we first bought a house. I now know very much what I like, and what I don’t, and even more importantly than that – my overall view on life has expanded too. I’d have to think I’d be much wiser about making decisions when it comes to owning again than I was a decade ago, right?
#3. Our finances are a lot different nowadays than it was back then too! We couldn’t even afford a down payment the last round, and now we could probably put down 50% if we had to. On top of that, our careers are much more stable and generates more income than they were back then too.
(Fun Fact: when we bought in 2007 we put 0% down and bought a house at the max of what we were approved for!! We didn’t even have a budget!!)
(Fun Fact #2: not having a budget was what actually got me stumbling onto the blogging world when I googled, “how to budget”, haha… And now here we are 11 years later!)
#4. There really are a lot of pros to owning a home if done right. Maybe instead of focusing on all the negatives as I do, I’ll find just as many – if not more – positives to owning a home? There’s no way it’s that bad if people have been doing it for centuries after centuries, right?!
#5. It sure would be nice not having to make rent/mortgage payments ever again! Since of course we’d have to try and pay it down as fast as possible similar to our first go at it ;) Any one here remember the days of the $2,000 a month Mortgage Killer Plan??
(And note that I said “rent/mortgage payments” vs “no payments at all”, since you’ll ALWAYS have some costs to cover whether it’s maintenance, property tax, HOAs, etc. Something people like to forget when doing rent vs buy comparisons.)
#6. I haven’t had a good mission in quite some time now… And I’ll admit I do much better shooting for something than when I don’t!
#7. It would probably be smart to diversify a little more. VS having a majority of our assets all tied to the markets like we do now.
#8. And lastly, when I put things in more perspective – owning a home isn’t the complete end of the world… I know I like to get dramatic up in here and say my piece, but if there’s one thing I’ve learned in my 39 years it’s that you can ALWAYS find a way to be content no matter what’s going on in life. So long as you’re *open* to it and give it some valiant effort.
So that’s what I’ve promised my wife here at the end of all this – to remain open and *positive* throughout the next few months of hunting – and if it turns out we don’t find the right house at the right price at the right time, well, at least it won’t be ME who stood in our way, and we can go back to renting for a while longer until we do find that place.
Something my wife has also agreed to on, and she even pinky swore on it so you know it’s legit ;)
We’ll see how it goes, but for now wish us luck and that I don’t have a Freak Out Fest any time soon!! It’s only the most expensive decision you can ever make in your lifetime!! Haha…
I’ll keep you posted as we go along, and in the meantime I’ll gladly welcome any advice you may have :)
Ironically, I just emailed ownership advice to someone here recently, and after reviewing it again I can’t say it made me feel any better:
- Make sure you really REALLY want to buy a home! (There’s nothing wrong with renting)
- Make sure you’re going to live in it at least for 5-7 years
- Don’t buy anywhere close to the amount you’re approved for (banks always want you to spend more and they don’t know your budget/lifestyle)
- Be ready/okay with making repairs/upgrades
- And realize a home isn’t an investment, but rather a place where you live.
I can cross off a couple from the list confidently (#2 and #3), but it’s the rest of it that scares me!
UPDATE: We bought a house!!!
PS: If you’re new to the site and couldn’t tell, I very much love being a renter :) And if you’re bored one day you can see the progression of how that came to be over time by checking out these 11 pages of archives tagged “home ownership.” But in a nutshell: we tried home ownership a while ago and didn’t enjoy it, so we turned it into a rental property a few years later and enjoyed that even less!, then we went back to renting again and I’ve been in heaven ever since, haha… Although apparently not my wife anymore, even though I swear she was right there with me until recently!
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Also remember that when you leave the People’s Republic of Maryland for Virginia your taxes will go down, significantly. MD’s taxes are crazy.
Yet another excellent reason to come home!
That’s the Democratic People’s Republic of Maryland, thank you very much…
I myself have been thinking about moving from Maryland to a suburb of Atlanta. My family is mixed heritage and race and one think that is important to me is diversity, which I why I have stayed always adjacent to the Columbia area. But from what I hear ATL suburbs are similarly diverse, and honestly if the goal wasn’t to get a cheaper mortgage I could easily snag a 5200 sq ft mansion in GA for the price we paid for our modest 4 bedroom house in MD. Also, access to jobs is pretty high there, I just am not sure why prices are so cheap based on that criteria… maybe its a god time to get in… I would need to spend more time there to feel comfortable though. I’m very protective of my family and want my kids to have a great childhood that isn’t full of bigotry, which is truly 99% of the reason I still live in this area. Hard to beat the diversity of DC metro and surrounding. Just very weary of moving to a state which proudly displayed the civil war battle flag as part of their own flag for ~50 years…
My folks made a concerted effort to bring me up that way — they bought in PGC in the 80s, my church growing up was equally black/white, I was majority-minority in schools until college. I don’t have a control to compare, but I suspect it made a difference. Kudos for factoring that in; your kids are luckier than they yet know.
As someone who lives in a suburb of Atlanta, it’s widely varied in terms of which suburb you are choosing in terms of diversity and everything else. BUT! Things have changed dramatically just in the past two decades and the suburbs are no longer the white flight zone that they used to be. House prices are really low compared to other large cities, not sure why but they have been for quite a while, though they’ve been rising again since the recession. The politics aren’t great (I’m not a fan of our governor or quite a few state officials), but things are changing in what I consider to be a positive direction.
This thread is great!!!
A hot topic for many for sure but I think your #1 point above sums it up well. It’s you and your family’s choice. Others can talk until they’re blue in the face (including me), doesn’t matter. I enjoy it myself and the fact it will be paid off soon (thanks to you and MMM). My only downside is maintenance. A month or so ago I told you I had to get the furnace fixed ($1,000.00), BUT, I chose WHO and WHEN (Immediately) did the work. Now I have two windows leaking (this home was built new in 2013 mind you) and my first quote to fix was $3,000.00. A stinger for sure. The materials are cheap, but working 50 feet above the ground on a ladder doesn’t appeal to me. So, yes, if you can’t fix something yourself, every now and then you’re going to have to pay to have it done.
I’m making notes of all these costs and forwarding them over to her in case it changes her mind ;) So thanks for helping ME out today! Haha…
I should add, the maintenance is not all bad. Personally I enjoy the pride of ownership and working on things like landscaping, improvements, decorating and have taught myself to repair things like major appliances. It’s a challenge and you feel accomplished when you can say I fixed that, or when you pull up and see a beautiful lawn and know that you did it. But yes, no matter what age the home, every now and then you’ll get thrown a NAUSEATING repair moneyball and you just got to suck it up. Again though, in those situations YOU are the boss so you can interview as many contractors YOU want and hire the one YOU want based on quality, price, etc.
Totally – I can see how rewarding that would be. I feel like I already get that from maintaining a rental since you still have to do a lot, but probably not to that degree.
I had been a renter since late 2008, but lack of reasonably priced apartments in my target commute area & an eviction scare got me on the path to buying.
The apartment complex managed to assign my rent payment to someone else’s account, and with no other issues on my account, I came home to an eviction notice on my door. They had already charged everyone a late fee the previous month, because the main management office in Arizona assigned it automatically if the deposits weren’t in by a certain date. Except the delay was due to their in office check machine being down & them having to go to the bank. *sigh*
I really like where I’m living and due to the influence of blogs like yours, and down payment help from my parents (paying it forward from help their parents gave them) got something for a good price.
I still dream of my tiny house, because I want to design the living space as it works for me. For now I’m enjoying this place and saving for the tiny, :)
That will be a most wonderful day indeed when you get your tiny :) If that was the path we were on I’d be 100% excited and on board!! Haha… I’d even consider a mobile home if my family was up for it!! (They’re not)
See, this is what I like so much about you. You have an opinion, a very strong one they’ve written lots of blog post about, but at the end of the day being married or in a serious partnership means that more than one person gets to have a significant say. I commend you for prioritizing your marriage over wantng to do things the way you want.
Personally, I’m where your wife is. My DH and I both have owned and sold for a decent profit. We’ve been renting for awhile. But I want a tub! And a DIY greenhouse! And an office! And roots. (I don’t really want all the expenses, but…)
Appreciate the kind words :) Still working hard at it, but having kids def. forced me to think of others first more! Haha… I only wish it came more natural :)
And yes to that greenhouse and office! I’d love to get one of those Writer’s Cabins you can have built in your back yard one day – that would be so inspirational!
It’s funny because right this second I’m waiting on both a plumber (to finish up last week’s job) and an HVAC crew (to hopefully one-and-done me a new furnace), and between the two of them they’re gobbling up just about a year and a half of discretionary spending. Fortunately it’s elective rather than emergency, but still… ahh, homeownership.
Through dumb luck we bought in the trough of late 2010, and even dumber luck we managed a dozen FANTASTIC neighbors on this block. This place now would be significantly harder to afford. So at least we’ve got that going for us.
The pinky swear was a vital component — it’s good to see you’re doing it right. Good luck with your decision and the hunt!
That first paragraph there is exactly why I throw up in my mouth every time I think about it, haha… But at least the next paragraph made up for a little of it! ;)
This article from Investor’s Business Daily says owning a home is cheaper than renting one in VA–see the chart! https://www.investors.com/etfs-and-funds/personal-finance/surprise-paying-a-mortgage-is-cheaper-than-renting-in-42-states/
I’m sure it does as most # based comparisons paint owning better (which I agree it is if we’re talking *long term* and you stick to something affordable, etc etc), however there’s also the equally as important value of *emotions* and *freedom* too that can’t be overlooked :) For most it may not trump the $$$, but for those of us that are more affected it could be the nail in the stress coffin.
I have to say I laughed when I saw the title. I find that great, however, that you’re so willing to adapt to your wife’s wishes.
On that particular topic, I probably wouldn’t be. I’ve been evicted once by a crook landlord and I’ve been dead set on owning ever since. Don’t want that to happen to me again.
Yeah – there are a slew of a-hole landlords out there for sure. We’ve gotten lucky over the years to really only have to deal with one of them, but maybe that’s another check mark to add to my wife’s list – we’re due for more! Haha…
Dude, if you hate maintenance either #1. Learn to do things yourself (I Know, Blasphemy)… You’ll save at a minimum 50% and I would think you would be in an ideal situation to work on your house. and You could start a whole fixer upper series on the blog, and write all of those repairs off as a business expense. OR #2. Buy a house that is less than 5 years old. I wouldn’t recommend buying new as you get hosed by paying double closing costs but I suppose it has its advantages in that you get to basically design your house.
Also, if you are buying a house and moving to VA. If your wife still works in DC you are likely not moving further than Prince William County at a Maximum, I’m guessing Loudon or Fairfax. You are basically going to get an $800K shed if you stay close and those trips to Starbucks will take you 45 minutes to drive 3 miles. I biased as in I despise NOVA with a passion, it seems like one of the worst places in the world. Just embrace your new found Maryland roots and move to Frederick since its still relatively affordable and has everything you could ever need. You can still get a big house there for in the 400s and it has a big group of DC commuters that live there.
Haha…. you convince all my friends and family to move to Frederick and I’ll be there in a heartbeat – I love that place! And totally cheaper than NoVa for sure – that place is nuts. (I did once live in Fairfax though – the Fair Oaks area – and loved it! We were right on the golf course there and was so beautiful, although as early 20’somethings it did nothing for our nightlife and we ended up spending too much time/money heading into the city all the time ;))
Your family will come visit, and this will be a good opportunity to figure out who your real friends are and who were just proximity Acquaintances. Good that you feel that way about your family though. That would be an item for the “cons” side of the list for me.
Given that you’ve had 2 rental experiences that were not optimal (forced to move & deferred maintenance), I would think having control of your living arrangements would be a priority. The only thing worse than having to move when your kids are already in school would be having to move when you were 7 months pregnant. ;)
I think you’ve covered the important parts about getting into home ownership, but personally I can’t imagine renting when you have school-aged kids (unless you have no other options).
I will say the one thing owning has going for it that I do like is that it does make more financial sense *long term* if you’re indeed staying in one place for a while… We’ve been moving so often that it would have cost us 10s of thousands in transaction costs had we been buying/selling all over the place, so now that we’re ready to settle down and lay down roots for sure I’m more open to owning than previously. Though I still contend that you can rent for a long time too in a house if you really wanted to and got lucky with your landlord (which would be a dream for most – having long term tenants like that!). Something tells me though that this will not be a battle I’ll win if I wanted to put my foot down ;)
Here’s a fun fact about home ownership which snuck into mine a couple of years after I bought.
Check your homesteading tax laws. I bought from a elderly person who had lived in this home for 50 years, and in my state, home owner taxes DO NOT INCREASE from the amount you paid when you were 65. So, the taxes I expected on my home were 30 year old tax values. On reappraisal, my taxes went up by 400% because I am not elderly. This drastically increased my home payment even with the option to lump sum escrow.
WOWWWW Is that really a thing??? I have never heard of it before!! Excellent tip, geez!
J I think you are missing the bigger picture. I love real estate especially the hunt for the perfect property and the negotiation process. While most people hate this part I have found that each property I have purchased, I have been able to close with a significant amount of equity. Your net worth calculations could be through the roof after a solid purchase.
I have many friends who I recommend being renters for life but based on the amount of your articles i have read, this is going to be a great new adventure for you and your family. Take what you learned from past purchases, do some area research and then negotiate like a madman.
Good luck!
You’re right on that one – it def. gives me more blog fodder, haha… And I have been looking for a good adventure lately, so there is that!
I’m not a fan of owning a home but I did it for my wife. And, as much as it pains me, I have to admit she was right in that we can’t afford rent prices up here in far northern California. We bought at the bottom of the market, got a very low interest rates at 3.5%, and put down about 33%. So we have a very low payment, which is better than paying 3x in rent. I HATE all the maintenance that comes along with a house and I’m not a handy person. ☹️ But my wife is happy and we have a low payment we can afford!
That does give me some modicum of hope actually – thank you :) It’s kind of a 2 out of 3 win, really. Wife is happy, $$$ is happy, and only one minor part is not happy – husband, haha… But hopefully with the other two going so positively it does lessen the sting :)
Welcome to the Dark Side, J$!
I’m only visiting right now – I’m not a member yet!!
I’ll be anxiously watching to see how this shakes out for you. Our housing story pretty much mirrors yours, but on the west coast (bought a house without any research, ended up underwater and renting it was never as simple as they say it should be). I find myself in your wife’s shoes, feeling that itch to have a family home to call our own. But we’ve got a great rental house that we’ve been in for years and a rent that’s considerably lower than the going rate now so it’s harder to justify. Especially since if we bought, it’d likely be in the same neighborhood. We’ve basically settled on the same conclusion as you. If the perfect fit comes along at the right price, we’ll consider it. Good luck with the move!
Awww, well good luck with your potential move too! I think that’s very smart to keep your eyes open like that and being ready to pounce *if* that place does come up that you can’t say no to :) I’m hoping we get hit with a powerful surge like that too so I’m not dragged kicking and screaming, haha… If I have to have a lot of debt again, I better at least enjoy the place!
Just take your time to find the right home. Also, talk to a trusted real estate agent to see the market condition. It seems like some markets are going down.
Anyway, I’m a big fan of owning a home. We just moved and we’re selling our old place. The price didn’t increase much, but we should get some money out. It’s a form of forced saving. If we rented, we wouldn’t have come out with anything. Well, renting is a bit cheaper so I guess we could have saved a little more.
Oh nice – congrats on your move too then! Hope the old place gets sold quickly so you don’t have to manage too much! My wife is so over moving which is another reasons he wants to finally stay put once and for all… It was do-able with just the two of us, and maybe with our first kid too, but with each additional move we’ve had an additional child and it’s just become BONKERS trying to pack and move things with all that going on, haha… And every time we move we produce another kid so hopefully this will slow that down as well!!! :)
So many pros and cons to both (although I have never been a homeowner myself) to both! But to point #1, it’s about a family decision now. But you still don’t have to rush into anything. Just take your time!
Totally… Half the battle is deciding what’s best, and then the next is the implementing of it all… and if this one takes longer than usual to pull off, well I am completely okay with that, haha…
“It’s only the most expensive decision you can ever make in your lifetime!!“ Hey, a lot of people say that about having kids! ;)
Bright side, you’re not moving to somewhere like California. I love owning our home here, but $2,000 just covers our mortgage, forget about killer repayments.
Oh, it’ll be very similar here too unfortunately… especially as we’ll prob opt for a 15 year mortgage than 30 :)
The best thing about a 15 year mortgage is seeing that, even in the first payment you make, the amount paid towards principal is more than the amount paid towards interest. The equity builds up so much quicker. I’m loving my 15 year mortgage.
I should add my interest is at 3.625%.
Excellent!! Interestingly I’m getting some backlash on that 15 vs 30 idea in today’s post comments, haha…
https://budgetsaresexy.com/home-searching-advice-for-first-time-buyers/#comment-275549
I’d have thought $$$ people would totally be up for it but apparently the flexibility of 30s are of more interest? That was nice when we had it the first go at it, but now i’m kinda itching for a challenge :) (and also since we’d have padding unlike the old me who had zilch in his bank when he decided to buy a third of a million home with no money down – hah!!)
It all depends on your specific situation and how you want to attack it. I personally just feel better knowing that I’ve already got myself on the 15 year track and reduce it from there.
Hey, how about considering a duplex where you live on one side and rent out the other? You may be able to live rent/mortgage free by having your tenant pay for you.
Strongly consider a 15 year mortgage instead of a 30 year. There are plenty of free loan amortization tables on the web – see how much of your payment goes to principle in both scenarios.
Don’t forget that you may able to deduct your mortgage interest and taxes now (I think up to $10k).
Good luck!
Yes to the 15 – that’s high on our considerations!
Not sure that duplex/rental part will work with all our kids, but we’re not ruling out much yet… Kinda just getting started with things and seeing what’s available so far and how it makes us feel, etc.
Happy wife, happy life, brother! There are definitely upsides and downsides to renting and buying, and at the end of the day it really comes down to what you’re comfortable with, where you live, personal preference, etc. I’m a notoriously light sleeper so the quiet of my own house made it pretty much a necessity – far too many nights of far too little sleep.
Where I live, my mortgage payment would get me a dingy, bottom of the barrel apartment (I literally lived in one before buying) or a 2-story house. And the principal and interest payments stop after another ten years. I would’t hesitate to buy again. I also live within biking distance of my downtown and my job, and do so frequently when it’s not eleventy-bajillion degrees below zero. In a big city like DC I would probably rent.
Good luck with the buy!
Thanks! Awesome you can bike to downtown!! That would be a dream!!
Yassss move back to Virginia! Way cooler people live there than silly Maryland ;) (she says as she is in the middle of moving from NoVA to DC proper) Prices are high but you are in a much better place moneywise than you were.
Also how have I lived here almost 4 months and not seen you? We need to change that my friend!
If that’s an offer to babysit, you’re on! ;)
I recently (at 42) became a first time homeowner, and I have to say though I love the house and don’t regret the decision, there’s more than once that I’ve wondered why exactly people do this! For me, I was tired of multifamily living, and didn’t like the idea of finding a rental single family—I think good ones in the area can be hard to find. I also recently got married and the hubs wants a dog (and okay, so do I)—not a possibility where we were living. I had a moment or two of hyperventilating prior to signing the papers and handing over a wad of cash (though via wire transfer which makes it less of a physical shock!)
Before we moved in, we did some repairs recommended by our inspector. That was the real wake up call. New water heater and a few other various plumbing fixes, a chimney liner, electrical work, drywall repair and painting post-electrical work…I’m not even sure off the cuff how much we spent but it was north of $5k, and this was all for a house that was in really good shape for its age (midcentury). We of course also keep finding little things that will need to be addressed too. I haven’t enjoyed shoveling the little bit of snow we got, and am not looking forward to grounds maintenance. We also had a lot more furnishing expenses which I didn’t really even think about. Like window coverings—I think that was the biggest sticker shock, because of the size of the windows.
I don’t nearly have the net worth you do, and I never made all my money work for me (Kept the down payment in low interest bearing accounts…stupid) so it probably was a better move than what I was doing, but I hold to the idea that renting tends to be a better choice in many places! Oh and whoever said Maryland taxes are high…yep, that!
Well at least you’re onto a new adventure and I’m sure will find other things you like about it as the years progress! Especially if you make it to Mortgage Pay Off Town which is the one thing I’ll be focusing on if we end up pulling the trigger, haha…And nothing says you can’t go back to renting too if you just find it flat out sucks ;) You’re always allowed to change your mind no matter what people say/think!!
I too made a terrible buying decision about 10 years ago! After getting kicked out of our last rental (no fault of our own) we decided to buy. We’re coming up on 3 years and it’s really nice knowing this is where my husband and I, future kids, and dogs will be for a long time! Upgrades and repairs haven’t been too crazy and it’s SO NICE being able to make the space our own and buying the *perfect* furniture for the place instead of living with things that are less than ideal.
I’m with your wife on this. :)
*makes note to pass along to wife*
Owning a home and settling down is great for your children. I grew up in an 1800’s farmhouse on several acres. In my childhood, we only had one address and one phone number. It was nostalgic.
I encourage you to watch Father of the Bride with Steve Martin if you haven’t already done so.
That does sound majestic :)
Sounds to me like your wife wants stability and maybe buying a home will somehow have everyone stay in one place for a while. Just a guess…. I’ve lived in homes and apartments when the kids were very young and we finally settled into a home where the kids went to preschool and other local schools. We got to know the neighbors (good and not so great), the parks and the local eateries.
That was 18 years ago. The kids still live at home. We have remodeled and fixed stuff and we know it’s the place to be after a long day of work/school. We told the kids that we won’t live here forever but we were informed by the oldest that he plans on living here for several more years. Why? Because he’s saving his money to BUY a condo, not rent one. A real estate mogul in the making…..
Good Luck in your search.
Heyo!!! Looks like they’ve learned from their savvy parents!
I love being a home-owner.
It’s the security. When you leave your husband with $60 cash and you have 4 kids under 5, a secure and stable place to raise those kids becomes very important to you!
That was over 20 years ago and I’ve been a homeowner ever since.
It also allows me to have my dogs. I don’t know about the US, but here it’s really hard to find a landlord who’ll allow pets.
Good luck with your search.
Oh yeah – pets are tricky here too. We’ve had to expand our search a number of times due to our cat before – not ideal, but also not a game changer either (at least for us)
My family has rented their entire lives from moving to America, to raising children, to having kids move out, etc. Some of us do better at it than others but it’s always been a totally valid life-long choice in our family.
Of course they always think of home ownership as the prize and not the soul-sucking moneypit that it really is ;D
LOL @ SL’s point. Our laws in CA are different of course, we bought from someone who hadn’t triggered any changes to their prop taxes in a few decades. Our taxes must have looked like a BOUNTY to the city, 12x what they were previously getting a year! Thankfully, igh, I know my money stuff enough to have already factored that into our new budget but dang it wasn’t fun writing those new checks.
Good luck with the house hunt!
I still can’t get over that!!! No way I would have known that until now!
Virginia is where it’s at!! My girlfriend is trying to convince me to move into DC proper with her when my rental lease ends in August, but I much prefer it over here :)
Good luck with the potential homebuying process and looking forward to following along!
I will say I enjoyed my time living in the Georgetown area, but would be too stressful now being so close to night life and not being able to partake, haha…
Knowing how strong your opinion is on home ownership, I got a good laugh reading the title of today’s article. On a related note, there has always been something that has always nagged at the back of my mind when someone uses the debt-free label but rents a home (or leases a car), and I think I just figured it out. A shelter (home) is a basic survival requirement. It isn’t tied to personal consumption or modern day living standards (you can live without electricity). So what we are looking at is a situation where someone is not necessarily “debt”-free, they have just re-characterized the debt. (Bare with me here I’m about to go all accountant) The arrangement you have now is basically the same as when a company enters a leaseback arrangement to avoid showing the asset/liabilities on their financial statements. All they show is rent expense on the books, but based on the principle of the transaction they essentially have an off-balance sheet liability. (I won’t go into the details of the old Bright line test under the old leasing standard). For decades many companies did this to look better. That is actually how Walgreens, for example, expanded their stores (buy land/build store/sell store and land to landlord/rent it back under a 15yr contract). The FASB didn’t like how the old standard was creating situations that were not transparent enough to financial statement readers so they recently replaced the standard to require most leases to be brought onto the books (report the asset/liability). I would say that is essentially what you have done here by renting (i.e. – re-characterizing the nature of the transaction). I would posit that you are not necessarily “debt-free.” There will always be another rental contract for another year. That being said, it does not invalidate your feelings on wanting to rent vs. buy, but I wouldn’t get too hung up on that debt-free label as being a part of your identity that would be lost if you chose to buy.
You lost me at “Bright line test” but I’ll take your word for it since you definitely seem smart, haha… I guess all this stuff is really a matter of how your brain interprets it. I can’t explain a lot of the feelings I have but I know they’re strong enough where it changes my quality of life for one reason or another… Not saying owning a home will do it if I keep staying positive here, but there is a slight chance of it and I’ll lose a part of my soul.. i mean happiness ;) On the flip side, maybe the opposite happens and I become a total convert?! chances are we’ll find out sooner than later, haha…
Whatever decision you and your family ultimately decide to make I hope it all works out for the best. :-)
I just bought a brand new house 18 months ago. I can say that while I have never been 100% happy about owning a house and the maintenance tasks, there is NO WAY I would willingly go back to renting! I just got tired of the cheap kitchen appliances, the cheap brown carpet, tiny bathroom, plain beige walls, noisy neighbors, trash in the parking areas, weird cooking smells in the halls, and monthly “furnace filter checks” (aka check if you are trashing the place!) Also the rent just automatically went up each year and the quality of people moving in was steadily decreasing. That being said, this is the third home I have owned. The first house I bought was a major mistake I broke even on, and the second house was a slightly smaller mistake that turned out okay in the end. I made a list of what I wanted in my third home and what mistakes I had made in the past. That seemed to work pretty well and I am fairly content now. Best of luck to your house hunt!
Congrats on the new home!! I laughed out lout ad the “furnace filter checks” haha… I was actually thinking about that the other day that of all the homes we’ve been in and out of lately not one landlord has ever stopped by to check on anything? Unless they’ve done it when we weren’t home? As a landlord I’d want at least a bi-yearly check in to make sure the house hasn’t exploded, but def. not cool to do them constantly…
Our historic home requires a minimum of $20,000 per year in maintenance. It can’t be avoided unless you allow the property to degrade. All tolled it costs over $40,000 when all (taxes, utilities, insurance, maintenance etc.) is factored in (not counting any interest – that’d be on top of the $40,000).
I’d like to rent but Her Ladyship does not agree. So we own.
Oh wow! Okay, maybe i’ll check “cool old house” off the list then haha… As I do tend to veer towards those guy :)
I’ve been in the DMV (DC, MD, VA) area for a long time. I think you should take your time and find what you would be happy to be in for a LONG time.
When I bought my house, that’s what I did. I also think looking in the winter is a good time because there is less competition than in the spring or summer. You could also do $0 down or 20% and still avoid PMI from a bank/credit union that offers a conventional mortgage without PMI.
Good Luck!
Oh yeah, we’re definitely putting enough down to avoid PMI for sure – and possibly even more to save on all that interest…. Very true on winter searching too, though on the flip side there’s also not nearly as many homes to choose from :(
As the saying goes “Happy wife…”, well you know the rest! One little correction though…NOVA is definitely not Virginia dude! I’m guessing work is keeping you guys in the NOVA area, but when you really decide to retire, try the “REAL” Virginia, and come further south/west to the mountains! You can have a 4,000-5,000 sq ft McMansion on serious acreage on a beautiful mountain lake down our way for what you’re going to spend in NOVA on a 1000 sq ft. town house. But hey, I get the whole “I gotta be near work” thing…for now… But real estate is why I’m early retired, so I love Virginia real estate! Congrats J. Money, and welcome back to “almost” Virginia!
Tell me you’re around the Charlottesville area and I’ll REALLY be jealous!! More so than the early retired part, haha – it’s so beautiful there!!!
I was about to do a long mathematical argument in favor of buying — and not rushing to pay off your mortgage — but realized that the numbers I was using would likely scare the beejesus out of a debt-free person.
So let’s talk theory….The net cost of buying is simply the differential between the rent you’re paying vs. the mortgage and other home ownership costs (taxes, maintenance, etc.), plus the “opportunity cost” of locking up the downpayment money in the house, rather than the market. Those costs may not be that significant in today’s low-rate environment. (The rate on 30-year fixed rate mortgages are right around 4% now, which means you pay about $478 per $100,000 of mortgage.)
Between the mortgage and the maintenance you’re still going to pay more than rent? Sure. But you get to live in the place you want; and fix it the way you want; and live in it as long as you want. We’re willing to pay for some luxuries, right?
Meanwhile, you’re also building equity in the home. AND the tax breaks for home ownership are pretty darn substantial. I’m not just talking about the write-off of mortgage interest expense, though that can save you a few bucks each year.
You also get a tax exclusion of up to $500,000 in profit when you sell. Exclusion…not deduction. That means you pay no tax at all on that first $500,000 in profits (for a married couple, filing jointly). So all things being equal, earning $500,000 on the eventual sale of your home is better than earning $500,000 in the stock market because you get to keep the whole $500,000, vs. paying Uncle Sam $100,000 of it.
And, did you know that you can rent out your house for 14 days of the year and pay NO TAX whatsoever on the proceeds? Cool, eh?
Besides, what else are you going to do with your millions?
I’ll have to take your word for it as it’s still not enough to sway me ;) I’ll pay good money for peace of mind!! Haha… But I hear you. Financially it prob does make more sense in the *long term* (ie not moving every year or two like we have), and the odds are e’ll be seeing those benefits sooner than later at this rate. So hopefully it does take the sting away a little!
Even though renting might make more sense for some, I LOVE having my own house. We rented an apartment for a few years and it was fine, but once we bought our house, I just feel like the quality of our family life has improved in a lot of ways—our new neighborhood is cleaner and more private, we have easier access to parks, we have our own yard (which has been one of my favorite things about buying a house!), and at the end of the day, I like feeling that someday (hopefully much sooner than the 30 years our mortgage is written for), it will totally be ours and we won’t have to worry about paying out that monthly amount to anyone.
I lived in El Salvador for a year and a half, and I’ll never forget an older couple in their 70’s who were forced to keep working (even though they really shouldn’t have, due to their health) simply because they had never bought the house—they had literally been renting for decades. Now, I know that the U.S. is a LOT different than El Salvador, but I guess I like that feeling of security that one day, this will be ours. I also like the feeling that our monthly payments are actually going towards SOMETHING TANGIBLE. We rented for over 6 years, and I once calculated that we’d spent over $40,000 in rent. WHOA! That was all money that could have been going towards a house the whole time.
I do see the argument for not owning a house, though. It IS a lot of upkeep, and it’s hard when maintenance/repair expenses come up, just because there’s no one else to cover them, ha ha. But whether or not house ownership makes the “most” sense, I will always be glad for our decision to buy a house!
And that right there is the key to it all! Being happy with your decision!! Who knows why some of us get happier with things that might not make the most sense (FIRE anyone?? Haha…) but so long as you can sleep peacefully knowing you made the right decision for YOU, it’s hard to go wrong.
I can only hope I’ll be feeling something similar in a few months from now :)
100% agree man. Sometimes I’m guilty of letting my own goals interfere with what is best for the family, even tho unintentional, as we are in the same process of saving hardcore for a house instead of hardcore investing that I want to do. But to look at the bigger picture I have to do what’s best for the family. Either way, you can’t go wrong when the wife is happy haha
Here’s to both of us then! :)
Can you remind us when you guys sold? We’ve come along way over the past 10 years, and many markets are rolling over. If you by now, there is a very good chance you might experience déjà vu and go through the whole thing again from last time. Beware!
Sam
I KNOW!!! Another thing I’m worried about and totally forgot to mention!! That crash is coming and I’ve already proven I cannot time the market worth beans… (we bought in middle of 2017, right when it slightly dipped (thinking we were okay!) and then BAM! Crash and burn! Haha…. Although oddly that’s not even the real reason I hate home ownership – it’s all the responsibility of it :))
I did bust out laughing at “I have to reconsider my -marriage- views on things”.
In a good market home ownership can put you ahead, as Big ERN has pointed out. https://earlyretirementnow.com/2017/11/15/that-house-over-there-is-an-investment/
At least for the last six years in the booming crazy market of Socal I’ve come out ahead of renting by quite a bit. Would I buy here again, now? Weeeelllll……dunno.
My house is only 1/3 of my net worth but I’m on the fast path to pay it off and be FI. At least here it’s a tossup, renting this house vs paying it off would put my FI net worth in precisely the same place.
There IS something to be said for not being at the mercy of a landlord. There is also something to be said for being able to move whenever you feel like it.
Good luck! Love the blog!
Yup to all! Thanks! Going to check out that article by ERN here shortly! And congrats on being on your way to FI – many routes to get there! :)
we’re not in the US but one thing we really noticed was how much easier it is when you have a deposit (down payment) the banks are way easier to deal with we got a better deal and there were way less hops to jump through to get a mortgage. Rents in this country are getting crazy we are at the point where a mortgage and maintence on our house costs less than it would rent for. Of course it always pays to get a building inspection.
Same here w/ the down payment! Not only do you get better rates (less risk), but it also looks better on the offer to the sellers too :) And of course you save mad interest money too!!
Being someone else on the pro-rent side, I feel ya here. Those reasons for wanting the stability for kids are hard to ignore though.
One thing that came up when I talked to some people at FinCon about renting vs buying was that some people owned their home, but hired a property manager to keep it up. That’s very anti-DIY, but depending where you like spending your time, it could make more time for kids and relationships and ease stress of the switch for a time.
I’m not gonna lie – I do like that idea haha… But I always thought it was for *rentals* vs houses you actually live in? But I suppose you could prob hire one for any house!
One thing I found funny was the comment about always waiting for people to fix stuff all the time. Try replacing that with “Don’t you just hate waiting for people to fix stuff all the time and all the bills they leave behind?” :) Are you looking in northern Virginia or other parts of VA. My friend actually demolished their whole home in Arlington and built a larger one on the lot(The lot alone was worth more than the house, ugh)
WOW!!! That’s a project! And of course I agree with the “bills they leave behind” part haha…
I did a 40 year review of all my house-ownership costs v renting, a couple of years ago. House ownership won!. However, there is a huge consideration about what stage you are at in your life. I’m now considering renting, as I am retired, and want a lock and leave place, so I can do lots of travel! (No garden, no worry about burst pipes etc…Oh, yeah, and I have had to pay to get a new boiler fitted this week! ) If you’re interested in the article you’ll find it here https://www.crackingretirement.com/house-costs-buy-or-rent/
Fascinating!! Totally going to check out – thank you! And congrats! That’s a stage I very much look forward to going back to someday, haha…
The issue about owning (especially since we paid off our mortgage a few years ago) is that we live in a high rent area and I have seen people kicked out of their apartments/houses because the building is sold and the new owners want to make “improvements” so they can up the rent. Owning your own home is a kind of personal rent control. But, of course, we are probably older than most on this blog and we REALLY like where we are. Although we would get easily twice what we paid for it if we sold (or more), we don’t think of that as an investment (because you still have to live somewhere), we think of it more as rent control.
I think that’s an excellent way of looking at it :) And how wonderful you enjoy you area so much! That’s the one thing I already know I’ll love so everything else (even this buy/rent debate) is secondary… Just get me to my beloved place in Virginia and the rest will fall in place! :)
I’m in favor of ownership – for a lot of the same reasons your wife is.
Plus, I feel more connected to the community that I’m in than when I was a renter. Yeah, your responsible for the maintenance and repairs, but you get to do it YOUR way instead of your landlords way.
I loved being a homeowner, even though it turned out horrible in the end with a foreclosure. Obviously, I didn’t do it with the same financial sense I have now, but all my past mistakes have shaped my now financial sense.
That being said the things I loved about being a homeowner compared to being a renter are:
1. I don’t have to wait on the owners to fix things (granted I have to pay for them).
2. I don’t have to get permission to paint a room.
3. I don’t have to be concerned with rent prices rising each year.
4. A sense of pride that someday it will be paid off and be completely mine.
5. Stability.
It sounds like you guys are in a good position financially to buy. It will certainly bring a level of stability to your family. My only advice is don’t fall in love with a house before you buy it. Falling in love can make people do dumb things like failing to negotiate and/or going after it at any cost. Keep level headed and know there are a ton of houses out there! Since there are two of you in this decision, one of you should remain level headed while the other can be the dreamer. Best of luck!!
Haha amen to that last one! And since this has to be a house I’m super excited about to jump on board, I’m going to take the “dreamer” role here and let my wife continue being the more practical one ;)
I desperately wanted to rent in retirement! Keep our options open, no maintenance costs or unexpected repairs, etc. Unfortunately pets and way too many possessions (read “tools”) made that impossible and we paid all cash for this home we love. Despite no mortgage we’ve had to replace windows and doors (work in progress), the roof (super expensive), a long stretch of fencing that required a concrete retaining wall, and we continue to battle water intrusion in the below grade walk out four year after closing escrow. Would I do it all over again? Some days yes, some days no, but this I can say for certain: the repair and maintenance costs, plus insurance and taxes, have been staggering.
I would say you’re scaring me, but I’m already scared of all those things :(
I do hope it all gets better soon, though!! And at least you’re mortgage free which is more than others can say!! So there’s that! :)
Late to this post but had to post my opinion . I bought a “starter” house in 1999, wanted to upgrade in 2005. Dodged that bullet in 2007. Failed to buy multiple properties during that bust. Bought a dream home in 2016 at a substantial price which feels close to the second bubble of nowadays (2019). Never thought I would enjoy an upper class neighborhood as much as I do now. Expensive to maintain (high property taxes, mainly). But for some crazy reason it’s worth it to have such a high quality of life a nice neighborhood provides…
Hey you!! Always love seeing you pop by! Very interesting indeed how much you appreciate that these days :) Maybe it’s because we’re getting older and more okay with spending money on such things than in the past? When we were in more of an “accumulating” stage with money? Either way – glad you’re happy with your new place! I feel like another bubble is on the horizon/here too, but I’ve never been good at timing stuff so not going to try now, haha… Sometimes you need a place when you need a place :)
Haha ya been out of the PF world for a while after finally coming to terms on that spend/save balancing act…glad to see your blog is still going strong along with your mega net worth! Don’t stop
XOXO
Housing prices are above pre-crisis highs even after adjusting for inflation. There’s more data to feed your confirmation bias.
Thank you for that.
#NOT
;)
I’m glad you are finally coming around to owning a home. It is understandable to be skittish after you’ve been burned but it is better to build equity and pay a mortgage then make rent payments; as well as enjoy an increase in property value as time goes by. If one plans to stay in a home for a good period of time then it is a better way to go. In the past you have been adamant, so no point in posting why I disagreed.
I’ve never participated in the rent vs own posts before because each person makes their own decision based upon their own situation and there is no point in debating certain topics. Some plan on moving regularly or others have bad credit and need to wait a few years before they can borrow again so in many circumstances it is better to rent. Whatever their reasons; its personal. I think in the long run though owning is better. And yes it is always good to diversify; Stocks, bonds, cds, property, gold etc. Good luck on your house hunt.
Thanks Jen :) I agree it’s very personal!