Walden Pond Apartment Homes Blog

That is what smart money columnist advises. Forget the conventional wisdom about renting. It turns out that renting is one of the smartest investments you can make.

In fact when economists run the numbers they find that renters save an average of $560 every month just by choosing to rent over buying a house.

And don't worry about losing out on the investment potential of a house. Renting allows you to use your "down payment money" for other investments, which provide a higher return than real estate, even in a booming housing market.

As a case in point, a $100 investment in housing in 1985 would be worth $293 today, while that same $100 placed in stocks would be worth $1146 - nearly four times as much.

When you add up all of the potential liabilities of home ownership - hidden maintenance and insurance costs, rising property taxes and potential price drops - renting is a smarter choice from the start.

Live smart; rent from the leading apartment home community in the Lynchburg area: HHHunt. For more information on apartments in Lynchburg, VA contact Walden Pond Apartment Homes.

National Multi Housing Council

Many people are told when they are younger that renting is only for college graduates or people who cannot afford to buy.  Many parents hammer these ideas into their children and tell them that renting is equivalent to throwing money away every month.  Fortunately, today people are beginning to finally think for themselves and challenge these ideas.  Here are 4 reasons to pat yourself on the back for deciding to rent an apartment in Lynchburg, VA at an HHHunt Community!  

1.  Renting can save money

At the very minimum you’ll be shelling out PITI for your home. That is:

• Principal
• Interest
• Tax
• Insurance

The PITI doesn’t include property maintenance like maintaining the yard, paint, plumbing, repairs, decorating, etc… When you rent an apartment in Lynchburg at an HHHunt community, the monthly payment is almost always quite a bit less than the PITI in your area and there are no maintenance expenses!

2. Homeowners’ tax deductions are overstated

According to research quoted by MSN, “… half of homeowners don’t get a break, because even with mortgage interest and property taxes, their total deductions do not exceed the standard federal tax deduction ($11,900 for couples and $5,450 for singles)”.

For these folks, it’s like spending $100 to save $20. They’re better off saving the difference and investing it.   Even if there is a “break” on your taxes, you typically had to spend more than you would have spent to rent to get back that $20 for every $100 spent in interest payments.

3. Renting gives you flexibility

For the up and coming young professional, you’re better off renting and saving for a few years than to buy a small condo. Who knows how fast you will outgrow it?  When you own a home, you can’t always sell it when you need to sell it at the price you want to sell it in order to accept a new employment opportunity.  If you have owned a home and don’t want the constant maintenance responsibility, renting gives you the opportunity to enjoy your weekends instead of completing that “to do” list.

4.  Our superb service teams!

Most apartment communities offer 24 hour emergency maintenance and technicians who are skilled in HVAC, plumbing, and electrical.  At an HHHunt Community, our service teams take great pride in offering prompt and professional service to you.  Whether you need a light bulb changed or a new compressor for your AC unit, we are there to take care of you as fast and efficient as possible.  We are always a phone call or email away and most service requests are performed on the same day or within 24 hours!

One of the most popular home ownership myths in Lynchburg, VA is that owning a house is a huge tax break as compared to renting.  I don’t know how many times people have personally told me that they want to buy a home because they NEED a tax deduction!  I just shake my head in disbelief because I have done the math.  

If your mortgage interest and other qualifying expenses such as charity contributions aren’t more than the standard deduction, ($11,600 for joint filers in 2011), there is no tax advantage to owning a home as opposed to renting an apartment in Lynchburg, VA.  Assume that you buy a $200,000 house with a 5% downpayment at a 6% interest rate.  Your mortgage interest for the year would be $11,336.  The Standard Deduction for joint filers is $11,600.  

In this example, there is NO TAX BENEFIT.  Even when there is a tax benefit, you most likely paid much more money to maintain the house than you are saving in taxes.  If your mortgage interest is more than the standard deduction and you choose to itemize, there is little to no advantage.  

For example, assume that your mortgage interest in 2011 is $15,000.  You would get to deduct an additional $3400 if you itemize BUT you spent $15,000 in mortgage interest to save $850 on your taxes (assuming 25% tax bracket).    

Don’t forget that you would also have all of the other expenses of home ownership that you would not have incurred when renting an apartment in Lynchburg, VA in an HHHunt community.

National house prices have dipped in many of the largest metro regions, and declines in house prices are expected to continue given the million plus backlogged foreclosures. As the American economy shifts from buying to renting, with the number of renting households rising by 700,000 annually -- according to a USA Today analysis of Census data -- the number of homeowners fell by nearly 200,000 per year. Unemployment rates remain high and wages are down, which makes it more difficult for people to buy a house and prompts them to rent.

A number of studies continue to show that renting is better than owning for many Americans, with a house being a poor investment compared to renting and investing in inflation-adjusted Treasury bonds. In the paper "American Dream or American Obsession?," Wenli Li and Fang Yang from the Philadelphia Federal Reserve Bank concluded that the "adjusted real rate of return on housing actually falls below zero," and the national rate of return for homeownership between 1975 and 2009 was 1.35, below the 3.375% return for stocks.

Homeownership translates into less money available for investment and owning a house limits mobility should a new job opportunity arise elsewhere. Some economists have even suggested that high homeownership rates correlate to high unemployment rates. Declines in house prices could make it difficult to sell if the house is worth less than its mortgage. Not everyone should own a house, and the recession has helped eliminate some of the stigma once associated with renting, now that 70 percent of Americans now agree that renting has its advantages over owning.

Looking for a home in Virginia? Contact Walden Pond Apartments in Lynchburg, VA for more information.

Article from National Multi Housing recent release

So many Americans are wondering if they should buy a home now or rent. Today people think they should own a home. But there is that argument that thinks that for many, renting is better.  While home ownership provides security, it doesn't necessarily give you the returns of equities. Using history as a guide, you can reasonably expect roughly 8% annual gains on your stock portfolio over the long term. House prices, on the other hand, tend to follow the rate of inflation.

Finally, don't forget that even with the tax-breaks of home ownership, you will still be incurring out-of-pocket costs that you wouldn't encounter renting from the cost of ripping down wallpaper to repairing a leaky roof, even gas for the lawn mower. Before you think about buying, estimate how much the costs will be. Don’t put yourself in the position that you are living hand-to-mouth even if it is in your own home.

Draining Your 401(k) for a down payment

Even though it is an option, withdrawing money from your 401(k) to buy a house is a bad idea. Assuming you're not at least 59 1/2 years old, you'll owe taxes plus a 10% penalty. You will also cripple your retirement savings, since most plans won't allow you to contribute to your plan for at least a year following a withdrawal. This means you're going to lose out on your company match as well as future tax-deferred contributions, not to mention the earnings on the money you've withdrawn.

Borrowing from a 401(k) isn't much better. If you leave the company for any reason, you run the risk that your loan will be called immediately. While out of your account, those dollars will also miss out on any market gains, and that tax-deferred growth.

Moving to or within Virginia? Contemplate renting an apartment in Lynchburg, VA. We invite you to contact Walden Pond Apartment Homes for more information.

Excerpts from Smart Money