I posted last week about how we were replacing the windows in our house ready to rent it out in 2012. This post lead to a very interesting discussion between Tony and Anna {regular readers} about the good and bad of renting versus owning your own home.
There was something that Tony said that has stuck with me,
I still think renting out is the right decision financially, but there is something remarkably liberating about the idea of selling up completely.
There have been countless debates about the financial ramifications of renting or owning your home, but to me this decision is becoming more about being free; free from the 9-5 and free from any debt, including mortgage debt.
Are we too conditioned in the UK to thinking that owning a home is what we must do, is renting a better option? – I say this as someone who has a had a mortgage for 24 of her 26 adult years!
{There are options of course to use the small amount of equity from our house sale, buy small in Portugal and still be mortgage free. But is this what we want? It would almost certainly be inland and further from the sea}
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{photo credit: Stewart}
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I’m a big fan of renting.
I’m sure customs and practices vary a lot depending on where you live, but where I live rent usually includes a lot of expenses that homeowners have to pay for separately—water, sewer, and garbage, for example. Renters also don’t have to insure the structure or pay property taxes. And some rental units include even more. (In the complex where I live, for example, the rent includes heat, hot water, and basic cable.)
In fact, when I cranked the numbers a couple of years ago, it turned out that you could give me a house for free and I still couldn’t live in it as cheaply as what I was paying for rent, once you included all that plus each year’s share of maintenance costs (new roof, new furnace, new windows and doors).
Rental property is a nice diversification from having all your money in stocks and bonds. But it’s only going to pay a higher return if you do most of the work of being a landlord yourself. If you hire an agent to do the work of interfacing with tenants, I think that will drag the actual return down to about what you can get from other passive investments.
.-= Philip Brewer´s last blog ..Can a Little Inflation Be Good? =-.
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Hey
I found your site by accident and ended up spending the last 45 minutes or so reading through various posts.
I hope you realise your dream. I live in Lisbon – and can appreciate why you’d want to move, albeit you seem to want to live outside the city.
For my part, re your post – renting is a viable option. I know in the UK the view is ‘rent?? but that’s money down the drain!’ – but I’m not so sure. More so if you’re intending to do it as a means to an end.
Like you, I was mortgaged for years. Following my marriage breakdown, I walked away from the house and I feel the better for it. I guess it’s the ‘bricks and mortar’ side of things, money in the bank and all that.
But if you fully intend to move over here within a relatively short space of time, why not rent? You could probably rent cheaper, I’m assuming you’ll remain working until moving. Leave on the on-costs to your landlord – save money that way.
Unless you’re sure that there’s going to be a nice jump in house prices of course.
I reckon with careful planning you could buy something pretty cheap over here. I know many say different but having been through the buying process – it can be done, providing you’re willing to cut the cloth.
Whatever you decide, good luck. And if ever you want some advice, let me know. And I’ll call back and keep an eye out for further posts
.-= Andria´s last blog ..10 Things You can’t Do in Lisbon =-.
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I’ve just sold up and it is hugely liberting as Tony says. I’ve come to terms that in order to live the way I want to live that this will involve renting long term, both to tie up loose ends in the UK and also for extended periods abroad. I have made peace wtih the fact that this will be seen as unconventional but I dont care. I tried the conventional life, working in the system and it didnt work for me and made me deeply unhappy. The trouble with owing a house is that I have found that the things I want out of life change as I get older and this involves (for me) living in different places, but of course a house is stationary in one place so its a problem.
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@philip. Great points Philip. Managing your own rental property when living in a different country sounds far too stressful so your returns would automatically be lower after agency fees. For a truly simple {easy} life, complex living sounds a great idea
Hi Andria; thanks for visiting and your insight – life in Lisbon sounds great!
@dreamer you’re very right about how your life changes as you get older; I’ve changed so much over the last few years and like you working in the ‘system’ made me deeply unhappy. Leaving the system was the first step, the next two years will bring on steps 2 and 3.
Ps, I’m so pleased that you sold you house
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Tricky one. We’ve been contemplating renting our place out and then renting somewhere ourselves if we can’t sell. I love owning my own home but I do hate how it ties you down. We were on the market for 18 months and I found it really stressful – particularly as it didn’t sell! It is really frustrating when you are ready to move on but can’t. I’ll be interested to hear what you end up doing!
.-= Shoestring´s last blog ..Financial plan for the month =-.
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Hi Laura,
Thanks for visiting my blog- I’m glad I’m not the only West Wing fanatic out there!
Good luck with figuring out the rent/ sell dilemma!
I’m also impressed with your spending hiatus- I’m not buying clothes between Jan 1st and April 1st or craft supplies between Feb 1st and May 1st, so I know how challenging it can get!
Looby
.-= Looby´s last blog ..When the circus comes to town… =-.
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I know a lot of people who’ve sold up to rent and have said they would never go back, they say having those savings in the bank and being able to go anywhere with no distractions or demands etc. Love the picture!
.-= Frugal Trenches´s last blog ..Reclaiming Simple Sundays =-.
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I rent… well, I married and my husband has a house. We decided to not to put it in my name. Yet, when we do buy a new house it will be titled to both.
I think renting in California… well, if you bought a house when the market was low then it is the way to go. If not, most rentals have atrocious prices stuck to them.
When I was younger, I would agree renting was the way to go as it works with my free spirit. But now, that I am more settled, I would love to own a home.
BTW, love your inspiration board.
Can’t wait to see your new one.
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Hi Laura! I’ve been away (looking at a potential city to live in
) Interesting to get others’ perspectives on the renting out your own house and or buying a new house abroad.
When we sold our house in the UK (in the worst week of the financial crisis in 2007) it WAS hugely liberating. We walked away with money in the bank and it felt *so* good and freeing – we felt unburdened and light on our feet. We’d also de-cluttered almost all our furniture! We have had two rentals in the UK since but I’ve not been happy in either – as I’ve got older I’ve realised that I want to be in charge of my habitat (I want/need green, organic, and simple) and this hasn’t been possible in the two rentals. I began to wonder if we should buy (France probably). But we don’t have a lot of released equity and as you said – we would have to buy a shack inland – do we want this??? As I said to Tony, if I could get a rental such as he found, by the sea I’d probably be happy to carry on renting.
I’d like to be nomadic as Dreamer commented, I want to do a lot of stuff in many places and just love the thought of packing and leaving – it thrills me! To own a house – any where, seems too much of a drag to me. I think we have fallen for the bricks and mortar dream: and even now, ‘they’ are telling us that house prices are going up – better get in quick and buy now before it’s too late. From what I read, I think there’s still a long way to go before financial health re-appears in the housing sector or the economy. I am almost certain of not buying another place but using our resources to LIVE our lives and not to maintain a money-hungry pile of bricks.
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