Renting vs Buying in your 20s

March 9, 2012

Your 20s are the time where you start thinking about setting up a base. This is where we start thinking about, or should start thinking, retirement, starting a family, setting up a business,  buying property etc. When ?t ??m?s t? moving house th?t age ?ld question k???s rearing it’s head: ?s ?t better t? rent ? h?m? ?r ?s ?t m?r? cost effective t? buy ?n?? ?h?r? ?r? m?n? factors t? consider, h?w?v?r th? decision ?v?r t? wh?th?r t? rent ?r buy will l?rg?l? b? ? personal one.

Of course th?r? will b? v?r??us economic factors th?t will play ? ??rt wh?n ??u ?r? considering purchasing ? h?m?. Interest rates will fluctuate ?nd real estate values ?nd concerns ?v?r job security ??n determine wh?th?r th? current climate ?s r?ght f?r realistically considering ? purchase.


There ?r? ??rt??nl? plenty ?f advantages wh?n ?t ??m?s t? renting ? h?m?. ?f ??u ?r? moving t? ? completely n?w area th?n deciding t? rent ? h?m? ?r apartment th?n th?n th?s will offer ??u ?s mu?h time ?s ??u n??d t? grow accustomed t? ? n?w location ?nd ??u will ?ls? h?v? th? freedom t? move ?ls?wh?r? ?t short notice ?f th? situation arose wh?r? career opportunities arose ?ls?wh?r?. ?n?th?r advantage ?f renting ? flat ?s th?t apartment complexes will qu?t? ?ft?n offer health ?nd fitness facilities. ?h?r? ?s usu?ll? th? ?dd?d benefit ?f n?t h?v?ng t? worry ?b?ut th? cost ?f property maintenance, property taxes ?r homeowner’s insurance.


?t w?uld s??m th?t renting ? h?m? offers plenty ?f advantages; h?w?v?r th?? ?r? m?stl? short term benefits. People wh? decide t? buy ? house g?t th? opportunity t? accumulate equity b? paying d?wn principal ?nd ?ls? thr?ugh ??ss?bl? real estate appreciation. ?n ?n economic climate wh?r? th? market appreciates rapidly, ??u will b? staggered ?t th? gains th?t ??n b? m?d?. ?t ??n b? argued convincingly th?t w?th th? additional deductions th?t ?r? allowable f?r mortgage interest, owning ??ur h?m? ?s ??tu?ll? n?t th?t mu?h m?r? expensive th?n renting ? flat wh?n th? markets ?r? rising. ?h?s ?s ??rt??ul?rl? true wh?n interest rates ?r? low. ?h?s? factors ?s?d?, th? ?th?r appeal ?n buying ??ur ?wn h?m? ??m?s fr?m th? pride th?t ??m?s w?th owning ??ur ?wn property ?nd th? freedom th?t ??u h?v? t? m?k? changes wh?r? desired.


Your ?wn personal financial circumstances ?nd th? current st?t? ?f th? market will determine wh?th?r ?t ?s m?r? cost effective f?r ??u t? buy ?r rent. ?h?r? ?r? plenty ?f websites ?v??l?bl? th?t will help ??u w?th th? relevant calculations th?t ??u n??d t? m?k?. ?f ??u perform ?n analysis ?f ‘rent Vs buy’ th?n ?n ? climate wh?r? th? marketing ?s appreciating moderately th?n ?n average ?t works ?ut ?t ?b?ut 5-6 years b?f?r? th? buyer gains th? financial advantage, s? ?f ??u ?r? w?ll?ng t? t?k? th? long term advantages ?nt? account th?n ?t ??uld work ?ut better f?r ??u ?f ??u buy.


An excellent alternative t? ??th?r ?f th?s? choices w?uld b? ? rent-to-own arrangement, ?h?s ?s ?s?????ll? us?ful ?f ??u ?r? ?t ?ll undecided ?b?ut th? area th?t ??u ?r? choosing t? live ?n, ??ur career choice, th? possibility ?f prices falling ?r ??rh??s ??u n??d t? accumulate th? money t? buy. Y?u st?ll g?t ?ll th? advantages ?f renting s? ??u will ?lw??s b? ?bl? t? move ?ut qu??kl? ?f ??ur circumstances suddenly change.


Ultimately ??u h?v? t? consider ??ur personal long-term goals ?nd lifestyle. ?f ??u feel happiest renting ?nd n?t h?v?ng th? pressure ?f h?v?ng t? maintain ? property th?n th?s will ?r?b?bl? b? th? correct move f?r ??u.



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  • Modest Money March 10, 2012 at 12:07 am

    I just rented properties throughout my 20s. Partly I didn’t know where I wanted to ‘settle down’. Also I just didn’t have the 20% down payment saved up. If you think you are emotionally and financially ready, you should at least look into buying a home. With rent you are paying money just for a temporary home with nothing to show for it at the end.

  • Michelle March 10, 2012 at 1:05 am

    We bought a house. At first it was scary but it worked out well.

    • Marissa March 10, 2012 at 1:35 am


  • MyMoneyDesign March 10, 2012 at 4:17 am

    The rent to own strategy is great suggestion if you can negotiate it! I’ve lived in many apartments and I can tell you that it can be fun to live in new places. But that’s because “where I lived” wasn’t quite a priority yet. Once you settle down, the house is the way to go.

  • Paul @ The Frugal Toad March 10, 2012 at 5:43 am

    I think it can make a lot of sense to rent while you are young. It will give you time to save up a nice down payment and you avoid the added expense of owning a home.

  • MyCanadianFinances March 10, 2012 at 2:31 am

    I would personally love to buy a house. Something extremely small. But at least it would be something I am putting my money into. Unlike renting where you are losing 100% of the cash you pay. At least a house (hopefully) holds its value.
    But despite wanting a house badly I know I cannot afford one. I will probably have to wait 3-4 years before I can build up a decent down payment.

  • Mikhaila March 12, 2012 at 1:39 am

    I feel like the old ideal of owning a home to show that you’ve “made it” should be re-evaluated. There are so many different things to save for (retirement, emergency fund, even travel) that coming up with a 20% down payment (which for a decent house here means $70,000) is pretty difficult. Personally, I can’t see it for me, but with the rates & market the way they are it definitely can be cheaper to buy.

  • Rafiki March 12, 2012 at 10:57 pm

    Island life is so much different to life in the big countries. On an island as small as my own, it’s hardly a worry about where you live in relation to your job. It’s pretty easy to get anywhere although we still think 30 mins drive to work is far. Complexes that offer fitness and other benefits aren’t common place either. The market is now opening up for those things.

    As much as things are different though, things are still the same, we still worry about the neighborhood you live in and mortgage rates and that stuff plays a big factor in the decision. I love post like these because I get to do a comparison and I still get a treasure trove of information from them.

  • Harri @ TotallyMoney March 23, 2012 at 4:00 pm

    I’m 24 and I’d love to buy, but frankly it’s not an option. Saving for a deposit will take me a good six or more years. Even if I did have enough capital at my disposal, convincing a lender to give credit to a first time buyer is a seriously tall order right now.

    In the meantime I have to stand by and watch my hard-earned cash going straight down the drain in rent.