Unconventional Thinking: Renting as an Investment

Most people view home ownership as an investment because one's home will generally appreciate over time, however other contrarian thinkers that your home is a liability because you have to pay all sorts of fees, utilities, taxes, and the like. What if there was a way that you could have the best of both worlds? You wouldn't have to pay all the taxes and fees associated with owning a home, but you would have all of the benefits of being a home owner.

For homeownership, on a year to year basis, you would be earning 5% or 6% on your money, which is about what real estate averages over long periods of time. In the last several years, housing has gone way up and become much more valuable, but the free ride will not last forever, and the housing market will slow down, but over long periods of time, you can reasonably assume you will earn 6% on any money invested in your home. Unfortunately most of that money is eaten up. You'll pay about 2% of the value of your home on maintenance, 1% on property taxes, 1% on insurance, so that brings us all the way down to 2%. In addition you are paying for costly utilities, landscape management, and other fees that you would not have if you lived in an ice apartment. After all of that is said in done, the amount of money in your home is really just sitting there not doing much for you.

Does that mean we should all sell our homes and become renters? There are problems with renting too. In essence, you are not building any sort of equity, or any sort of investment. But what if you could turn you being a renter as an investment?