Today I’m happy to host a guest post from Alex and Ellie, two Australian bloggers who are writing over at HisHerMoneyGuide.com. They’re crushing their financial goals and well on their way to financial dependence and early retirement in their mid-40s.
They will talk to you about the (in)convenience of home ownership. I’m as curious about the subject as you are, as I’ve only ever rented apartments in my life. Currently I’m living in a small shared apartment, in order to save half my income, fund my mini-retirement, and work towards early retirement. I hope to buy a house sooner or later, but you will see that having your own house has both pros and cons.
Home Ownership In Perspective
A lot is said about the pluses and minuses of owning your own home versus renting from a financial perspective. It’s a topic we’ve covered before on the blog, and essentially it comes down to what your goals are.
Either option is viable if you’re disciplined and financial independence is the goal. If you want to own a house, that’s fine – but make sure you pay it off. Dawdle and you end up losing money to the bank. If you want to rent for life, that’s also fine – but make sure you save money, and invest it. You’ll need those investments to pay for your housing costs in the future.
However, today we’re focusing on home ownership, but we’re putting the long-term financial aspects to one side, at least mostly. Instead, today we’re going to look at some of the more intangible parts to owning a home.
For us, we’ve bought a home and worked hard to pay it off in three years. That felt amazing, and it’s probably our single biggest financial accomplishment to date.
For Alex, our home was the fifth house he’s owned, but for Ellie, it was her first. So we have different perspectives to home ownership, and the quirks that come with it. After all, despite its positives, there are also a few negatives.
For those who have never owned a home, here’s a taste of what you’re in for.
House Proud, House Cloud
When we bought our primary place of residence, it needed renovations. Nothing significant, but it still cost us around $20,000 – and we largely did it ourselves.
That meant we saved a small fortune. Alex had renovated and flipped a couple of houses before and picked up a few extra valuable skills, and Ellie helped out everywhere possible keep things ticking along. Teamwork!
However, when renovating a house to sell it, you approach it as a job – you’re there to get it done. You do the best you can, but nothing is ever going to be perfect. If it’s wrong, you fix it – but if it’s not ideal, well, you move on to the next task.
When you own your self-renovated house, you pick up on the imperfections. Sometimes, if you own an old house, these imperfections can be seen to be a charm. On newer houses, however, they can rub you the wrong way – especially if you know it’s not possible for them to be fixed.
If you didn’t make/renovate the house, sometimes these imperfections can be hidden from sight – or hidden in plain sight. However, when you worked on something yourself, you know where those imperfections are. Heck, you’re responsible for them. And you see them every single day.
So being a home owner and being intimately close to your house can take away some of the joy from owning it – it can actually cloud your perception of it. With the pluses come the minuses.
However, there is a level of satisfaction involved in something like homeownership (regardless of whether you have a mortgage on it or own it outright).
With Great Power Comes Great Responsibility
You hear about good tenants being those who treat the house like it was their own. On the opposite end are others who don’t care if they knock a hole in the wall. While we’ve both always been the type to treat things with respect, there is an extra level of satisfaction and fulfillment when it is your possession.
Renting comes with a level of disengagement though. Sure, you might change the light bulb – but you’re not living there with the goal of maintaining it – that’s ultimately the owner’s responsibility.
Ahh, responsibility. That’s also shorthand these days for “adulting”. Responsibility means making decisions and taking action. As a tenant that’s not really part of your vocabulary.
If something goes pop! when you’re a tenant, you just shrug your shoulders, contact the rental agent, and call it a day. When you’re the owner (either as the occupier, or a landlord), you have to think about the long term consequences of your decisions.
Say the oven or air conditioner is busted. Okay, is it fixable, or does it need replacing? What’s my budget? How long am I going to own the house, and should I get a better model that might make the house more sellable?
On the plus side, as the owner you’re also in control. You can fix – or not fix things at your leisure.
Tenants don’t have that luxury. Some landlords can be real jerks, and they won’t fix any problems – despite repeated requests. Unless the power goes off, or the hot water system dies, landlords often don’t need to act, and even if they do, some still drag their feet.
So once again, the convenience of home ownership isn’t a one-sided affair.
On a similar note, ownership of a home comes with added worries that a renter doesn’t necessarily share.
We have a pair of investment properties, which are rented. During the Australian summer storm season, thunderstorms pick up over the area where those properties are. If a severe weather warning is issued, thoughts invariably turn towards our houses. After all, we’ve had storm damage before.
With storms comes wind, and in our area of the world the possibility of hail is always present in summer.
In massive storms, roof tiles and windows can be smashed by large hail; metal sheet roofing can be torn off and sheds can fly away in high winds. For a homeowner, this can be a huge and costly issue (even if you have home insurance).
For a renter, this would most likely just be a mild inconvenience (though a roof that’s totally torn off as opposed to just damaged is likely to damage their possessions as well).
We know such damage can occur, because it has happened to us with our current house during a storm.
These concerns extend to things like break-ins.
Alex’s first home was broken into (while he wasn’t home), with people breaking in through a window. In this instance, the threat to your sense of personal security and risk to your possessions is shared by owners and renters alike.
However, owners are the ones who are left with the repair bill for damage to the building – whether they have insurance or not (and you should always have insurance for exactly these cases!).
There Are A Few Benefits
While I’ve been pretty non-committal about the benefits so far (with corresponding negatives often nullifying matters), there are a few firm conveniences that home owners enjoy over renters.
If you’re looking to do any decorating like painting walls (and sometimes even changing the curtains!), you don’t need to ask your landlord for approval. It’s your house – you can just go on right ahead, without needing to wait, raising eyebrows, or risk of your request being rejected, eviction or a hit to your bond.
Want to knock a hole in the wall to put in a new air conditioner? Go for it. Replace the bathroom mirror? No worries.
While some landlords are more than happy to grant such requests, others certainly are not. Depending on the nature of requests, landlords will either ask tenants to pay for it (mostly if the requested change is just a preference), or repair things at their expense if it’s something that’s actually in need of repair/replacing.
Some landlords can be nasty, while others can be accommodating. But in any case, it takes extra time to get things done compared to you being the home owner.
Of course, there are also the financial considerations of renting (and having things repaired for you), but remember that we’re largely ignoring those today.
A Worry-Free Retirement?
If you’re looking for a stress-free retirement, there’s a lot to be said about not owning a home and just renting instead. There are extra worries and responsibilities that come with home ownership that as a renter you can largely avoid.
That said, the inconveniences really aren’t that big. If you conduct proper checks and maintenance on your house, some of those risks can be avoided. It’s no different to being prepared for financial emergencies – identify risks, try to be ready for them, or even better remove the risk entirely.
It’s all about balancing the risks and rewards and deciding for yourself which route is best. We’re massive fans of taking personal responsibility, and arming yourself with knowledge – thinking about your options, making a decision, and not blaming others if it goes wrong (or having the warm, fuzzy feeling of getting it right).
In early retirement we’ll arguably have the best and worst of both worlds.
We’re going to stay being home owners, but we’re planning to travel for up to five months of the year, lodging in Airbnbs and hotels. During that time, we’ll arguably be tenants. If something goes wrong, we’ll contact the host/management. We’ll be at home for the remaining seven months of the year – but we’ll still own it (and other investment properties) for the remaining 12 months of the year irrespective of whether we’re there or not.
For us, we want the stability of having our own house. We don’t want to find out two weeks into a 10 week holiday that we’ve been given notice to move out of our home. That would be a nightmare! So score one for home ownership.
That said, because we’ll be away from home so often, we’ll have a home security system installed. With cameras we can monitor from overseas, and extra security features like security screens and roller shutters, that’ll give us peace of mind. Good luck breaking into that fort!
Once again though, it’s swings and roundabouts; pluses and minuses, conveniences and inconveniences. Life can never truly be easy, can it?
Alex and Ellie, HisHerMoneyGuide.com
PS: Do you see home ownership or renting as being the more convenient option?