Why Spending more than $884/mo on Rent is a bad decision
There are certain things that it's better to rent - rent a big car for a trip, a power tool you only use once/year or a movie from Redbox. I'm a big fan of renting high fashion for events at Rent The Runway.
When it comes to houses, it's a whole other story. There are pros and cons to each, but The New York Times put out a great breakdown, and a calculator that makes it easy to know when NOT to rent. What I love about this article is the BOLD number they came up with: If you can rent an amazing house for $884/month or less, then rent. If not, then it's time to buy.
There are other factors that go into the decision of course. Depending on your specific situation, you may have a strong argument for renting or buying - we are really good at helping our clients analyze that decision. And guess what? If it makes the most sense for a client to rent, that's what we're going to tell them!
Some factors in favor of renting include:
- Not paying interest or property taxes
- The missed opportunity cost of investing the amount you would pay on down payment, taxes, insurance & interest
- When you rent, you don't have to worry about or pay for repairs or maintenance
- You're only committed for a year at a time (or sometimes even less)
- You don't have at least 3% to put down on a home, and some reserves to pay your mortgage for a few months if you have an interruption in employment.
- Easy to relocate.
- Less paperwork.
On the other hand, some factors in favor of buying include:
- Once your home is paid off (or if you pay cash in the first place), you own it. Your housing expenses drop significantly.
- If the home appreciates more than you’ve paid in mortgage, interest, taxes, and maintenance over time, you’ve earned a return, or you break even.
- Tax credits help offset some of the cost of homeownership.
- No landlord.
- Rental properties tend to be concentrated in the same areas - owning a home in an area with a higher percentage of home owners means friendships with more permanent neighbors & better maintained neighborhoods
- Unlimited personalization of your home (within municipal code and homeowners' association covenants)
We have spent over 15 years helping the people of Atlanta purchase homes. In that time we have found that it's almost always better to buy than it is to rent. Even if someone only has $1000 to their name we are still usually able to put them in a house they can call their own.
The Red Door Atlanta Team has one of the easiest tools in the industry when it comes to finding homes. Our search engine pulls the latest properties from the MLS so you can see if there's something out there for you. Once you find a house that works the fun begins!
Keep us in mind the next time you make your rent payment. We promise that owning a house is almost as much fun as owning a cocktail dress!