Renting by Choice
We’re currently renting a house in a VHCOL city. A couple years ago we were looking to sell our condo and move out into a bigger place. We did the math, and it was clearly in favor of renting, even if the rent was quite high. Despite that, we still felt the pressure and momentum to live the American Dream and own a house, so we put an offer down to buy a somewhat smaller home, but (fortunately) we lost out to someone who bid 40k more than us.
Since then, we have been super happy with the decision to rent. We’re renting a much bigger and nicer house than we would have considered buying, and spending less money in unrecoverable costs doing so. We don’t pay for any maintenance. If something looks like it might need attention in a couple years, I literally don’t care. It’s a win-win for us.
On top of that, our net worth has increased far more than it would have if we had locked up a ton of money into real estate equity. In this case we actually have the real alternate reality to compare to: the house we put an offer on has increased 2.5% since then. The S&P500 is up 40% since then. Based on my math, so far we pocketed $300k as a result of our decision to rent.
Of course, renting isn’t all sunshine and roses. Unlike owning a house where your counterparty is commonly a bank with which you’ve signed a solid 30 year contract, as renters we are forced to negotiate both small and big items with our landlord on a semi-regular basis. And landlords can, of course, be assholes. Fortunately we did our homework and read the laws, and we rent in a city (and a state) whose housing laws are extremely pro-tenant. So far it’s been quite preferable to the alternative.
Also:
This is not financial advice.