Google “renting vs. buying”, and you’ll see countless results (well, about 95,000,000 according to Google if you did it when I did). The top results contain various articles on the advantages and disadvantages of renting vs. buying a home (your primary residence), calculators, and listings for major real estate sites. Whether you rent or buy, there are numerous variables to consider when collating the advantages and disadvantages of either option. No one size fits all.
There are lots of things to consider. Countless books, articles, websites and other sources exist to help one make an informed decision to questions like:
- Should we rent or buy?
- Are we wasting money on rent?
- Should we buy a place to build-up equity?
- When is the right time to buy a house?
- How much should we save for a down payment?
Admittedly, I ask myself these questions every so often. But I often come to the realization that it can change frequently for each respective individual due to a number of variables. There isn’t always a clear or right answer.
Regardless, I still wonder: “what should we do next or perhaps differently?” Topics such as how much to spend on health & fitness or how to decide how long and for what price to vacation are similar questions. Perhaps less meaningful in terms of financial impact, but arguably as significant in other ways, these are valuable questions to consider.
As with a recent exercise, I decided to reflect on our past living arrangements to offer some context for us to consider going forward. Here is some background and an overview of our last 10 years as renters since leaving college.
I moved to New York City after college for my first “real” job in 2007. New York housing was (and still is ) ridiculously expensive compared to the “luxury” (i.e., capable of holding a keg on a balcony) apartments I lived in during college for 2 years after the dorms. Today, New York and San Francisco remain two of the most expensive cities in the US – although perhaps not as expensive when viewed globally:
Regardless of prior and current New York housing costs, they seemed high to me at the time. Chicago is still not cheap – but apparently Bloomberg thinks so! (At least on a global scale):
Balanced Dividends Rental Summary
Summer 2007 to Summer 2008
My first year in NYC, I lived in the Financial District at the corner of Maiden Lane and Gold Street. Ah, good times at Ulysses, other local watering holes, and Giardino D’Oro (at least on very rare occasions). I don’t recall the exact details, but here is what I can remember on our place:
I met my roommate through my work’s entry-level training program; we connected on Facebook and made arrangements to meet when I flew out to New York for a weekend. I stayed with some family (he was local), and we ended up signing the lease a few hours after looking around the area.
Summer 2008 to Summer 2010
Mrs. BD moved to New York in early 2008. After spending 4-5 months effectively living together (plus with my actual roommate), Mrs. BD and I got our own apartment. Our first official place together was in downtown Brooklyn in Brooklyn Heights. We paid a premium to live on a crowded tourist street above a high-end grocery store with late night garbage/recycling picks-ups and store deliveries 4-5 times a week. We slept like crap.
Additionally, our doors had a 1.5 inch gap on the bottom to help accentuate airflow. It also did the same for sounds; we could hear normal-level conversations through 2 doors while sitting in our apartment. We really enjoyed the location of the building (if not the apartment itself).
Despite the noise, I walked less than 5 minutes to work. As my office was so close, I NEVER got to work-from-home though (even on crazy snow days). Mrs. BD also had a place to park her car, which she needed for work at the time. Mrs BD’s car cost $400 a month to park in a garage serviced by a single elevator for cars coming in and out (you could sometimes wait +30 minutes just to get your car in or out – it was crazy!).
Summer 2010 to Summer 2013
We moved half a mile down the street. Our second place together was our biggest in New York and also our longest place. We originally signed a 1 year lease. In 2011, when our lease came up for renewal, we locked in a 2 year lease with no increase. This enabled us to experience a 0% increase for 3 years. However, when the next renewal letter came with about 3 months left on our term…SMACK! The management company was going to raise our rent over $600 a month – time to go! We did have a good deal though for 3 years.
Summer 2013 to Summer 2015
We moved about a mile further into Brooklyn in Fort Greene. Oddly, our zip code remained the same as it had for the prior few years while we lived in downtown Brooklyn. Our apartment was across the street from Long Island University and near a hospital next to Fort Greene Park.
We opted for a 2 year lease, as we received a “free” 25th month. It was nice though; we negotiated to apply the free month toward our first month instead of the last. When we moved from New York to Chicago, we also managed to get out of the last month of our lease for no extra cost. Our unit was also located across the hall from the leasing office and near the maintenance office, so we became very friendly with most of the staff. It helped!
Summer 2015 to Present Day
As shared previously, we moved to from Chicago to New York in 2015. We’ll perhaps cover in detail in a future post, but we found our current apartment at the end of our first day of touring. Mrs. BD and I both thought it felt like home. The neighborhood also reminded us of Brooklyn a little bit. We did an initial 1 year lease, renewed for another year, and just extended for another 15 months after negotiating a 0% increase!
Overall, we pay effectively the same for 2/2 in Chicago as a 1/1 in New York. And the NY prices are 8-10 years old…I checked some of our old buildings recently, and rent is going anywhere from $400-$800 a month more from what we paid. Clearly, being an owner does have its advantages (as does a renter). And for that reason, real estate plays a big part of our financial plan.
Looking Back – and More Importantly – Ahead
After 10 years since college, we still rent. We’re still going to be renting for next 14-15 months. Will we rent after that? Probably. Will we rent forever? Most likely not.
We’ve spent A LOT on rent in 10 years (over $337,600). One could argue we could have been building up equity for 10 years (although don’t forget taxes, insurance, maintenance, etc.). But, in our early/mid-twenties, we had no clue how long we’d be in a certain city, job, or place.
We have no regrets, and we’re still finding where we’d like to be long-term. Overall, we’re quite content renting for the time being. We continue to find our balance.