Why and When Living in Rented Accommodation Can Make a Lot of Sense
Owning your house does give one a sense of achievement, it is true. There is also something to be said about the emotions of pride and joy of living in a home that one owns. However, when one thinks logically, this doesn’t have to be the only outcome of owning a home. In a lot of cases, it can actually make much more sense to live in rented accommodation while renting out one's own property to someone else. The correct choice ideally should depend upon where you live vis-à-vis where you own property.
When it makes sense to live in a rented home.
For people who live in San Francisco, Los Angeles, San Diego, New York and so on, where property prices are really high, renting can make a lot of sense. While property prices in these areas are very high, rents are low relative to these valuations. So it may not be affordable or even advisable to buy property here, but it could make a lot of sense to rent property in these areas.
You could say that rent of around $5000 a month is high, and you would be right. However, it is high only in absolute terms. That amount is actually really low when you factor in the fact that it’s what you're paying to live in a $2.7 million home! So if you're living in these areas with high property prices and low rents, it simply makes sense to live in rented accommodation.
You can still be a property owner.
In places like Atlanta you could still buy and live in your own home, but this could make a lot less financial sense in other places. It can make sense to own property in one place while living in rented accommodation in another place. You can still have the joy and the sense of achievement and ownership that comes from buying a house. You can own it, but not necessarily live in it.
There was a time when I was living abroad and the parents of my new wife came to visit us. We were living in a rented home – it was a beautiful home but it was rented. My mother-in-law’s first reaction was to say – oh if only you owned it! She knew that I owned dozens of homes in the US, but she still said this. It merely echoes the mindset that living in the property you own is somehow better than living in rental accommodation. If you can get past the mindset that wants you to live in the home that you own, you could find that you're actually making a wise financial decision. If you can overcome emotion and think logically, you would find that my point of view makes a lot of sense. Check out this video for more details.
I'm going to be speaking more about this in my next quarterly event – about the possibility of living in a rented property while still being a property owner yourself. I will be touching on the best places to rent and the best places to buy property right now.