Should I rent forever?

[creeker]

I'm almost three years from graduating residency. I paid my student loans off a few months ago while also putting 27% of my gross income into tax-advantaged accounts. I expect my savings rate to increase now that I've paid off student loans. The next thing it feels I should be saving for is a down payment on a house. I live in a HCOL location. I've been fortunate enough to be living in a sweet rental situation. I live in a friend's house for a very good price in exchange for a few things that I think make it worth his while as well. The house is beautiful and in our favorite part of town. Short bike ride to a job I'm jazzed about. Lots of fun things to do nearby. Great restaurants. The mortgage of a similar house would significantly more than our current rent although we would probably buy something smaller than what we are currently renting.

-Should I rent forever given this situation? Is it still worth owning at some point regardless?
-If I end up renting for the long term, should I save a significant chunk of cash for if/when my landlord doesn't want to rent to us or increases the rent to the point that buying makes more sense? Or should I invest the all my spare cash all in a taxable account with the risk that the time to buy a house could occur in a bear market?

Anything else I should be considering?

[ENT Doc]

I'm almost three years from graduating residency. I paid my student loans off a few months ago while also putting 27% of my gross income into tax-advantaged accounts. I expect my savings rate to increase now that I've paid off student loans. The next thing it feels I should be saving for is a down payment on a house. I live in a HCOL location. I've been fortunate enough to be living in a sweet rental situation. I live in a friend's house for a very good price in exchange for a few things that I think make it worth his while as well. The house is beautiful and in our favorite part of town. Short bike ride to a job I'm jazzed about. Lots of fun things to do nearby. Great restaurants. The mortgage of a similar house would significantly more than our current rent although we would probably buy something smaller than what we are currently renting.

-Should I rent forever given this situation? Is it still worth owning at some point regardless?
-If I end up renting for the long term, should I save a significant chunk of cash for if/when my landlord doesn't want to rent to us or increases the rent to the point that buying makes more sense? Or should I invest the all my spare cash all in a taxable account with the risk that the time to buy a house could occur in a bear market?

Anything else I should be considering?

Ooooh, do tell!

Hard to say without looking at hard numbers but there’s always a reasonable case to be made for renting in some situations.

[CordMcNally]

Ooooh, do tell!

Or don't...depending on what it is...

[G]

if your personality suits, rent forever!

about mid-30s--although I already had a mortgage on a placeholder house--I started looking for a forever house because I wanted to nest. (actually, I mostly wanted a gym.) Rona made me thankful beyond measure to have a place decked out to my specifications without getting permission from a landlord.

but let's be real: the Gov is still the landlord.

I'd probably keep an e-fund a little fat so that I could drop a deposit on a house, particularly towards the end of the rental period (in the slim chance that a house you wanted was immediately available). I'd probably also see if the landlord would be interested in a longer term lease for extra protection.

[Gamma Knives]

Sounds like you have a great setup and you're happy. As long as it stays that way, I don't think you are missing out by renting. I agree that you might want to have a bit more set aside in e-fund or stable bonds in case the situation changes.

[artemis]

Your current life is good. Why rock the boat?

What I would do, though, is to calculate the difference in monthly cost between your current rental and a mortgage payment on a suitable house in your area, and be sure to invest that difference every month. In the long run, this may well have you coming out ahead over what you'd gain as a homeowner (given that over long periods of time, the stock market typically beats residential real estate returns in most housing markets).

[VagabondMD]

Forever is a long time, and, likely, your circumstances will change and or the landlord's will change, such that the current arrangement will be terminated. That said, as long as it is working for everyone, I would keep it going. You could do a lot worse.

In the USA in the 21st century, we are driven to own our homes, but there are times and places where this was not universally the case.

[Jaqen Haghar MD]

Ride that wave as long as it lasts, but save for the inevitable changes, so you are ready.

[MPMD]

another vote for not rocking the boat.

make sure you are using this time/freedom to crush other financial goals.

might be a good time for a real turkey talk w/ your friend about what their time horizon is for you as well.

[xraygoggles]

You've heard the phrase before: "Guests are like fish - they go bad after 3 days"?

It sounds like you have been staying there for a while now, but things can turn on a dime. I would at least look at other potential rentals in the area you like as backup...

[Jaqen Haghar MD]

....a very good price in exchange for a few things that I think make it worth his while as well.

Anything else I should be considering?

Oh, BTW...
I think I get what you’re saying here.... Consider doubling down.

[Tangler]

another vote for not rocking the boat.

make sure you are using this time/freedom to crush other financial goals.

might be a good time for a real turkey talk w/ your friend about what their time horizon is for you as well.

Yes, agree. No need to buy now. Save like crazy in taxable so that when things change you have options. Buying is not always financially better.
Buying costs time/energy/effort/$
Renting gives you flexibility and agility.
The common folly is to look at rent payments vs mortgage payments.
Rent = max paid each month, mortgage = not max paid each month.
I own a home (paid off) but before i paid it off the mortgage was not my max monthly payment. Mortgage is not the max i paid each month but just the beginning (taxes, repairs, hvac, leak, window, sink, yard stuff blah blah) and the other costs are insidious.
I love my place but I could likely rent for less.

Vacation homes are even worse. I got a great deal. I am renting a house on the water for $73.89/night next fall. House is worth $500,000. I could rent the place for several years for less than a down payment!

[creeker]

Thanks everyone. Sounds like I'm thinking about it right.

[molar roller]

We bought our house $1.2M house in 2006 with a 20% down payment. I ran the numbers recently, and we had continued renting, even moving to the same size house we have now, and investing the difference (actual numbers used in portfolio visualizer), we'd be up ~$1.5M.

There are many reasons to own a house, but if you're a diligent and disciplined investor, "building wealth" is not one of them.

[Flapjacks]

We bought our house $1.2M house in 2006 with a 20% down payment. I ran the numbers recently, and we had continued renting, even moving to the same size house we have now, and investing the difference (actual numbers used in portfolio visualizer), we'd be up ~$1.5M.

There are many reasons to own a house, but if you're a diligent and disciplined investor, "building wealth" is not one of them.

I think its because you bought a 1.2 M dollar house is why you didnt gain much appreciation, those types of houses don't appreciate well.