Real Estate: to Own or Rent?

Owning one's own home is a dream shared by countless millions of Americans, and individuals world wide. Many consider owning real estate to be a major step toward solvency, status, and a sense of socioeconomic security. Home ownership is synonymous with freedom, apple pie, and the "American way" in today's culture. Surely this is what the real estate brokers and mortgage lenders would like to see. A good marketing scheme to be sure, but how well does the whole thing stand up after we peel away the layers of ego and sales hype? Beyond the emotional attachment, what are the real costs and benefits?

PWNED! (Owned!)... Not Rented.

Owning real estate entails a number of important costs and benefits, just as any other human activity. Here are a few of the most important ones:

Benefits

1. (Near) full control over your house and land, assuming that you don't live in somewhere like New London, CT where eminent domain is a problem.
2. You can improve your property, then resell it, donate it, or will it to your children at a later date.
3. No monthly rent payments to deal with after the mortgage (if any) is paid off.
4. No annoying landlords or loud, dirty, dysfunctional corenters or room mates to deal with.
5. You can keep up with the Joneses, all while propping up the house-of-cards controlled economy!

Costs:

1. Eminent domain (see above).
2. The housing market bubble is deflating (sell now, buy later).
3. If you have a mortgage, you'll be in debt for years.
4. You have a liability as well as an asset if someone decides to sue you in court.
5. It is generally less private than renting, as your name will be on more public records.

Why Rent?

Renting gives you many tangible and intangible benefits that owning a house does not typically provide.* Most obviously, a renter has the flexibility to move to a new location quickly, often within thirty days. Mobility is hard to put a price on when rushing off to take advantage of a new economic opportunity or to escape stalkers or other abusive people. An associate of mine is moving very soon for just this reason. The restless usually rent rather than own because they can change locations every few years when they get bored. Not only is moving at short notice possible, but you are also not tied to a massive, multi decade debt (a 30 year mortgage for example), but rather a smaller, more manageable month-to-month debt that can easily be saved up for and paid off each time.

The smart privacy seeker also rents because it helps him keep a low profile. When you own a home in your own name (rather than with a LLC for example), you can easily be found by deed records or inquiries at local utilities using a subpoena or social engineering (con artistry). When you rent, the deed and hopefully the utilities will be dealt with directly by your landlord, keeping you free to pay-and-forget for the most part. Please see J.J. Luna's How To Be Invisible for more information on this and other privacy topics. Another benefit is that if you don't own something, no one can take that something away from you.

*To own real estate -or even automobiles- in a more private and secure way, consider controlling them indirectly through the use of an invisible LLC or offshore trust.