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Why Falling Home Ownership Is a Good Thing

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Ever since the end of the boom years of the early 2000s, the housing market has struggled to hit bottom, seemingly plowing ever lower even after years of declines. As a result, millions of former homeowners have lost their homes, while millions more owe more on their mortgages than their current homes are worth. Many have bemoaned this trend as meaning the end of the American Dream of home ownership.

But when you take away the emotional response to the housing bust, the question remains: Are falling levels of home ownership really such a bad thing? For many, owning a home never made financial sense -- and avoiding the burden of having so much debt on your biggest asset can make your financial life a lot easier.

Falling from record highs
When the Census Bureau released its 2010 housing data last year, it revealed an astonishing fact: The percentage of Americans who owned their own homes fell by the largest proportion since the Great Depression. That made for good headlines at the time, as media sources proclaimed the death of the American Dream.

But a closer look at the numbers reveals a much different picture. During the Great Depression, many fewer people owned their homes -- around 45%, according to Census data. But by 2010, that rate was up to 65% -- meaning that tens of millions more American families became homeowners during that period. The rate even got closer to 70% before the housing crash happened.

The more important statistic
By themselves, these figures don't mean much. Whether someone owns a home or rents one from someone else doesn't matter in terms of overall demand -- as long as either a homeowner or an investor/landlord wants a property, the effect should be the same. What has really caused a problem, though, is the number of empty homes.

Again looking at Census data, the number of empty homes jumped by about 4.6 million over the past decade. When you consider that the total housing stock jumped by only 16 million homes, you can see that new supply far exceeded actual demand for real estate. Overbuilding was especially rampant in hot areas of the country, including the Desert Southwest and the Deep South.

Overbuilding worked out great for homebuilders at first, as it didn't cause any problem as long as there was enough demand for the homes. Between 2000 and 2006, Hovnanian (NYSE: HOV  ) saw sales jump more than fivefold -- only to give back every bit of those gains by last year. KB Home (NYSE: KBH  ) , which got in on the boom earlier, saw the same trend -- and its recent sales are only a third of its 2000 revenue. Standard Pacific (NYSE: SPF  ) and other builders in particularly hard-hit regions were especially prone to big leaps followed by inevitable declines.

The new normal
Meanwhile, the aftermath has driven many speculators out of the market -- at least those who are seeking short-term rather than long-term profits. Even though that hurts demand in the short run, it arguably makes the market healthier in that it more accurately reflects the intrinsic demand for housing as a necessity rather than simply as an investment asset.

Of course, not everyone wins in that scenario. Hamstrung mortgage banks Citigroup (NYSE: C  ) and Bank of America (NYSE: BAC  ) would likely prefer more speculation in the market, since it would help those institutions get bank-owned assets and bad loans off their books more quickly.

But for people trying to decide whether to buy, the combination of low interest rates and cheap housing makes buying as attractive as it's likely ever going to be. So if your finances don't work out to allow you to buy now, they likely never will. That may sound brutal, but that knowledge should help those who can't afford a home to make arrangements that will work -- and hopefully benefit from the freedom that not being tied down to a house provides.

The dream that became a nightmare
So rather than a regretful loss of the American Dream, falling home ownership could actually be good both for individuals and for the economy as a whole. Instead of betting your entire financial life on a place to live, you can look at the housing bust as your wake-up call to consider other priorities first.

Even if you have a big mortgage weighing you down, you still need to save for long-term goals like retirement. You'll find several stocks that can help get you there in The Motley Fool's latest special report. It won't cost you a thing, but jump on your chance now before it's gone.

Tune in every Monday and Wednesday for Dan's columns on retirement, investing, and personal finance. You can follow him on Twitter here.

Fool contributor Dan Caplinger was early buying his house, but he doesn't regret his decision. He doesn't own shares of the companies mentioned in this article. The Motley Fool owns shares of Citigroup and Bank of America. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy puts a roof over your head.


Read/Post Comments (28) | Recommend This Article (21)

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  • Report this Comment On January 19, 2012, at 10:49 AM, MKArch wrote:

    <<<Instead of betting your entire financial life on a place to live,>>>

    -----------------------------------------

    I went through this on the recent Shiller article but lets try this again. Assuming you can rent for about 2/3 of a mortgage at current rates and rent increases at about the rate of inflation or about 3.5%/ year, rent will exceed the mortgage in about 12 years. Again assuming you take out a mortgage that your income can support show me how a lifetime of renting would beat a lifetime of owning. This isn't even getting into the real world reality of whether a renter is going to actually save the difference and invest it intelligently or spend it on something made in China.

  • Report this Comment On January 19, 2012, at 12:34 PM, yhtbaotbai wrote:

    To own a house could be considered if the owner(s) plan(s) to live there forever. Otherwise, to rent is a far better option.

  • Report this Comment On January 19, 2012, at 12:56 PM, wolfman225 wrote:

    ^To reference the above, and to quote from the article :"...... benefit from the freedom that not being tied down to a house provides."

    During the recent downturn in the economy, reports of people being "trapped" by their underwater home, unable to move to areas of better employment opportunity abounded. It is much, much easier to pull up stakes and relocate to a (potentially) better job marked if you are renting, as opposed to being obligated to a mortgage. It's not just the smaller financial stakes involved, but also the fact that people have less of an emotional attachment to a rented apartment than a property they own.

  • Report this Comment On January 19, 2012, at 1:21 PM, MKArch wrote:

    So you think ever increasing rental payments until the day your drop outweigh the inconvenience of potentially having to sell a house at some point? To be clear if you know you will be moving in the not too distant future certainly renting is the way to go but committing to renting long term to avoid a hypothetical need to move?

  • Report this Comment On January 19, 2012, at 1:26 PM, DJDynamicNC wrote:

    Try inverting the headlines and see what the emotional response is:

    "Cost of living continues to fall"

    "Housing becomes even more affordable"

    "Housing expenses continue to decrease for middle class families"

    "Housing becomes more accessible for students and lower income workers"

    These all describe the exact same phenomenon as "Housing market crash."

    If you are going to own a house to live in for 40 years, then MKarch is absolutely right - it blows away renting. And if you have the tenacity and dedication to be a landlord, then housing can be a good investment. A lifetime of owning versus a lifetime of renting is no contest.

    But for many people - I'd argue most people - housing is a poor investment and owning a house is a poor decision. It locks you in to the nearby labour market as Wolfman mentioned, it locks up a significant portion of your income for the foreseeable future on interest payments (you don't really start building equity for years), and it literally hands control of your shelter over to a bank.

    Also, there's a language gap here. You don't buy a home. A home is something you make with your family. You buy a house, which is just a wooden box that sits in the rain and rots around you. The housing industry would prefer to say "buying a home" because that activates emotional circuits instead of rational circuits.

    And our policy of providing mortgage deductions to encourage housing ownership is misguided and short sighted and needs to be changed.

  • Report this Comment On January 19, 2012, at 1:27 PM, DJDynamicNC wrote:

    Remember, on average people move after 7 years.

    If you have the kind of job security and foresight to know that you'll be in the same location in 30 years, buying a house is far and away the better choice. If you're at all uncertain, you should at least think it over thoroughly before taking the plunge.

    I'd like to see some sort of "rent to own" arrangement available to provide the best of both worlds. Does anyone know if such a thing exists?

  • Report this Comment On January 19, 2012, at 1:28 PM, DJDynamicNC wrote:

    Disclosure - the figure cited above, average people move every 7 years, is pulled from a half-remembered website from a year ago and may not be particularly accurate.

    Figured I should be up front about that, if I could go back and edit that post I'd delete the reference.

  • Report this Comment On January 19, 2012, at 1:36 PM, wolfman225 wrote:

    ^Two things: 1)Having to sell a house "at some point" is more than an inconvenience if you aren't able to, and 2)many people who got into home ownership were obviously unsuited to the obligation, either underestimating how much work and expense is involved in maintaining a home or by over-estimating the appreciating value of the home as an "investment".

    For many people, renting is the better option as it frees them up from the concerns of maintenance, taxes, and repairs. Also, there is the possibility of renters' investing the difference between what they need to spend on rent and what they would've had to spend on expenses associated with ownership.

    It's rarely as cut-and-dried as a comparison between rising rents and a supposedly fixed cost of a mortgage. The total cost of ownership is more than just the mortgage payment. You need to include insurance & rising property taxes along with the usual maintenance expenses.

    So, yeah. For some, the rising rents could easily outweigh the possible "inconvenience" of owning.

  • Report this Comment On January 19, 2012, at 1:41 PM, wolfman225 wrote:

    Damn, DJ. Looks like we agree on something else. Must be something in the water...... :)

    <<I'd like to see some sort of "rent to own" arrangement available to provide the best of both worlds. Does anyone know if such a thing exists?>>

    Actually, they do. Usually in a private sale by the owner directly to the buyer. That's how I was able to sell my home in this market. I rented to a friend and his wife who were enterpreneurs just starting a bagel/breakfast shop. They paid slightly less than market, with an agreement to purchase at the end of 2 years as an agreed-on price. A win-win for both of us.

  • Report this Comment On January 19, 2012, at 1:58 PM, DJDynamicNC wrote:

    @Wolfman - Yeah, it's becoming a trend it seems. With our powers combined... :lol:

    That's a good arrangement, I'd be much more interested in someting like that rather than a straight-out purchase. Not yet, of course, I'm about to move for the fourth time in seven years so I'm staying as liberated as possible in terms of housing.

  • Report this Comment On January 19, 2012, at 3:02 PM, Hawmps wrote:

    2 tumbs up for above comments. Nice to find some common perspectives.

    Not everyone is cut out to be a home owner (or house owner). As mentioned, the maintenance, etc. a successful home owner has the aptitude to have at least some reserves for when things go wrong... and when you own a home, something will go wrong, wear out, get flooded, whatever. Many people that have gotten into home ownership over the past ten or so years, because it was so easy to get a mortgage, had no business owning a home in the first place because they had a hard enough time trying to see past next month much less try to sock away a few grand to inevitably replace an aging furnace or water heater. In many areas of the country, market rents for a single family home still wouldn't pay the PITI at today's interest rates with 20% down.

  • Report this Comment On January 19, 2012, at 3:59 PM, TMFGalagan wrote:

    @MKArch -

    I didn't see your comments on the Shiller article, but does your math include:

    -- Maintenance costs?

    -- Taxes and other costs beyond mortgage interest?

    -- 6% commissions on several home sales over one's lifetime, as I believe the average stay in a home is around 5-7 years?

    -- The value of the time you spend dealing with all this stuff, versus simply being able to call up your landlords and have them deal with it?

    If every house on the market were available both to rent or to own, I think you'd see a lot more renting.

    best,

    dan (TMF Galagan)

  • Report this Comment On January 19, 2012, at 5:25 PM, DiggerSLC wrote:

    I can't figure out why every article speaks of "homeowners" so highly. I OWN a home...I PAID off my mortgage! Paying a mortgage is NOT owning a home. You say home "ownership" reached 70%...that is why the housing market fell! Too many home "owners" that couldn't afford them.

    Be more correct! A home OWNER is different from a home BUYER!

  • Report this Comment On January 19, 2012, at 5:52 PM, DJDynamicNC wrote:

    ^^^ That's a solid point.

  • Report this Comment On January 19, 2012, at 6:00 PM, PlanB101 wrote:

    Well, I tend to agree with the article in some respecrts. Several of my friends were pushing me to buy in 2005 and -06 but I could see that there was no way that the market could sustain the rising costs. I wondered how many Vons clerks could afford a home at these prices? Also, I had worked in a property tax collector's office during the down turn of the 90s and had seen people being pushed out of their homes as the interest rates adjusted back then.

    As it happens, I could afford to buy but waited anyway. What I ended up with was a house on a golf course in place of the track home selling for the same price two years earlier.

    What I wonder is, why are people always acting surprised when these downturns happen? It's not like it's new...

  • Report this Comment On January 19, 2012, at 6:30 PM, MKArch wrote:

    Dan,

    I'm going ot guess that the average age of a first time home buyer is ~30. I think average life expectency now is ~mid 70's. So you are saying the average person will own 7-8 homes in their lifetime? Or is it more likely your stat is flawed and it's being skewed by things like small developers and flippers?

    In the real world that I live in people may move once or twice before settling on a final home but not 7-8 times. I've already conceded if you know you're likely to move in a few years rent is the way to go. My argument is about getting to the point of a long term decision about your living arangments. In that case I don't think it's close owning trounces renting. Do you want to be making rent payments at current market rates when you are retired? Probably a better question is could you retire with that burden.

  • Report this Comment On January 19, 2012, at 6:40 PM, Chontichajim wrote:

    I think there is more a problem of home selling than home buying. We will never leave the area we live in and we have never sold a property.

    The three places we bought were priced well below what our income would support and we paid each mortgage off before moving to a second and then third home. Being a landloard is a pain, but just get a manager and expect about 1/3 of rent to go toward fixes and managers. If it has no mortgage it is still worth it.

    I did rent for about 10 years before rent increases forced me first into moving out of the city and then into buying when I just couldn't afford the rent increases. If you like living in areas that have affordable rents and desire mobility then rent is the best option. The worst option is to "buy to sell later". Buy for security not profit and it kind of works.

  • Report this Comment On January 19, 2012, at 8:32 PM, Hawmps wrote:

    @ DiggerSLC-

    Solid points, yes; and I agree that too many people became home owners that shouldn't have been. I also agree that 70% homeownership is too high... it is unsustainable and that number got up there artificially.

    However, I disagree with the statement that you are not a homeowner if you have a mortgage. When I look up the title for my property, it has my name on it regardless if there is a mortgage or not. In the case of a mortgage, it is an encumbrance to the property and nothing more than a business relationship with a 3rd party, in this case a lender or financier. The bank doesn't own it unless I don't hold up my end of the deal and they go through the legal process to take it from me. The bank doesn't even want the property, that's not thier business. They are in the business of renting money. Saying that one does not own the home because there is a mortgage is akin to saying I don't own my business because I am using debt as a part of the growth component of my business model.

    Congrats on paying off the mortgage and being free of the encumbrance on your property. Most cannot say the same.

    P.S. - you are correct... a home owner is different from a home buyer. A home buyer is "in the market" and shopping; while a home owner has already completed that process.

  • Report this Comment On January 19, 2012, at 8:42 PM, EloquenceInc wrote:

    You people are not smart.

    A person renting for the next 10 years will MOVE if their rent gets out of control to a competing property that offers rent within their budget, or get a ROOMMATE and immediately cut current housing and utility costs in half with someone who is LEGALLY AS OBLIGATED AS YOU ARE to pay that rent.

    Versus the house where you are locked into the one price for 30 years, and even if you get a "roommate" the highest they get on the legal ladder is TENANT...and they can move out on you and still leave you stuck with the bill.

    It is very hard to find mortgages for the AVERAGE Joe with AVERAGE credit in a neighborhood anyone would want to lock themselves into for 30 years AND a school zone worth being tied down to for 30 years, that costs only $600 or $700 per month! You can find PLENTY places to rent in the south for that and less.

    And yes in a volatile job economy where your next meal 5 years from now could be a job that involves an out of state move, the house as a purchase to LIVE in is very risky exactly because of employers' lack of commitment to today's worker. They treat us like disposable diapers, not like before where once you got in and proved you could do the work, you were set for life and could plan out a house/home purchase and the other finer things in life.

    That is why my plan is to buy a house back home, because that is the only place on planet earth I know I will always return to, especially when I am old and no longer of use to anyone for work purposes. It is also more affordable than anything up here. Or better still people can get back to the days where you went to live with your CHILDREN when you got old, helped out with the grandkids so a stranger in a daycare doesn't have to watch them...old people who are not working are not suppose to be isolated and paying mortgages still!

  • Report this Comment On January 19, 2012, at 10:57 PM, devoish wrote:

    Dan,

    What happened to those people during the great depression? The ones that did not own homes, lost their jobs and could not pay rent? And is there a connection between that reality and Fannie Mae and SSI?

    Just saying, it was not better for renters to be renters.

    As an investment, a median home purchased in sept 2000 was priced at $170k in sept of 2011 it was $213k and it might still get worse, but the bottom is not zero. Thats about a 22% gain?

    Today's median stock price (ok the S&P500) is 1314. 20% less than that was first achieved in 1998.

    As an investment during that time frame, neither is better unless you timed the sale.

    The risk is different however. The risk that a house will not provide a place to live in retirement is less than the risk that equity investments will not provide a place to live in retirement. At least that is what I think the investors in GM, F, Bear Stearns, Lehman, C, BAC or any homebuilder, will tell you.

    Obviously, losing your job impacts both investments adversely. Homeowners cannot pay their mortgage and lose the home and get dumped into tent cities. Renters can hold out as long as their investments let them and then they go live in tent cities. Of course everyone who is retired and counting on investments to pay their property taxes or rent loses in 2008.

    You also said "But for people trying to decide whether to buy, the combination of low interest rates and cheap housing makes buying as attractive as it's likely ever going to be" and that is not true on its own.

    Low interest rates are not a good time to buy. Low interest rates allow home prices to be higher. High interest rates force home prices lower. Either way you spend based upon what you can afford to pay each month. But you never get to refinance a low interest rate and cut your monthly payment. But you can if you start with a high rate and lower principle. At least that was true for the last thirty five years.

    The first reason this is a bad time to buy a house is because rates are low. Imagine you had an imaginary median income and 1600/month to spend on a house. At 5% you can buy a $300,000 house.

    At 15% you can only buy a $115,000 house, and that is what the median house will cost.

    The second reason this is a bad time to buy a house, is that work does not pay for most Americans. The $25,000 median income does not pay the bills. It does not pay rent, plus healthcare, plus food, plus car, plus insurance much less investments.

    Unfortunately the rules have been changed enough from the 50's to so favor investors and owners over the work that helped you become an investor and an owner, that the best most young people can hope for is to rationalize their inability to own homes as a smart choice, while they live with their parents in a home they will never be able to afford.

    It sucks, but its true.

    Best wishes,

    Steven

  • Report this Comment On January 20, 2012, at 11:07 AM, 48ozhalfgallons wrote:

    30 year careers gone = 30 year mortgages gone

  • Report this Comment On January 20, 2012, at 11:57 AM, ETFsRule wrote:

    "TMFGalagan wrote:

    @MKArch -

    I didn't see your comments on the Shiller article, but does your math include:

    -- Maintenance costs?

    -- Taxes and other costs beyond mortgage interest?

    -- 6% commissions on several home sales over one's lifetime, as I believe the average stay in a home is around 5-7 years?

    -- The value of the time you spend dealing with all this stuff, versus simply being able to call up your landlords and have them deal with it?

    If every house on the market were available both to rent or to own, I think you'd see a lot more renting.

    best,

    dan (TMF Galagan)"

    I don't want to speak for MKArch, but here are my thoughts:

    "-- Maintenance costs?"

    No, his math did not include this. But, maintenance costs are a worthwhile price to pay for the benefits of a house over renting. For instance, having a backyard.

    "-- Taxes and other costs beyond mortgage interest?"

    Yes, these are included in his calc's. He assumed rent is 2/3 the size of a mortgage, which sounds accurate to me. Those mortgage payments include property taxes as part of the escrow payments.

    "-- 6% commissions on several home sales over one's lifetime, as I believe the average stay in a home is around 5-7 years?"

    His calc's did not include this, but they also did not include house price appreciation. If your house goes up, even by as little as 1% per year, then over your lifetime this would more than compensate for the 6% fee, even if you had to pay it several times.

    And, when you say "the average stay in a home is around 5-7 years", does that apply to people who own a house? Or is this the average, between owners and renters? I am sure that if you only looked at the statistics for people who own a house, you will find that they move much less often than every 5-7 years.

    "-- The value of the time you spend dealing with all this stuff, versus simply being able to call up your landlords and have them deal with it?"

    This is subjective. See my response to your question about maintenance costs.

    Also, what is the value of having a working fireplace in your house, an attic for storage, a full basement, the option to paint your house whatever color you want, the ability to have whatever pets you want, the additional privacy you gain by owning your own home, the freedom to get whichever home appliances you prefer to use, etc, etc?

  • Report this Comment On January 20, 2012, at 1:18 PM, Hawmps wrote:

    The title reads "Why Falling Home Ownership Is a Good Thing".... well, I have a small apartment building that is 100% occupied and rents are stable to increasing. :)

  • Report this Comment On January 20, 2012, at 2:12 PM, Rowants wrote:

    Skip a couple of property tax payments, and you will find out who really owns the property.......

  • Report this Comment On January 20, 2012, at 4:35 PM, Hawmps wrote:

    ^^ All Real Property comes with a "bundle of rights". Government always has and always will have 4 rights to all Real Property (in the US):

    Police Power

    Taxation

    Eminent Domain

    Escheat

    When you agree to take title to any real property, you also acknowledge that the Government has these rights to that property. If you want to play the game, these are the rules. If you don't want to play, pay rent.

  • Report this Comment On January 20, 2012, at 10:30 PM, MKArch wrote:

    I only hit Dan's assertion that the average person owns something like 7-8 homes in their lifetime but I hope he doesn't really believe that landlords are generous enough to swallow the costs of taxes, maintenance and insurance. BTW renters don't get to write off the cost of footing their landlords interest expense but the interest deduction is pretty big for an owner. I

    'm no financial analyst and while I feel strongly about my position I keep bracing myself for one of these CPA's to finally point out something I hadn't thought of. So far the arguments are pretty weak. As best I can tell they are only looking at the early years of a mortgage when there are significant savings and comparing potential gains investing this to the price appreciation of the house.

    They seem to completely ignore the fact this only last about a dozen years and the amount of saving drops off fast and reverses after a dozen years in addition to eventually getting to the point of no mortgage payments. When you add up the savings and investment potential after rent exceeds the mortgage and extrapolate it out to a life time and include the mortgage interest deduction it's not even close.

  • Report this Comment On January 23, 2012, at 1:45 PM, DJDynamicNC wrote:

    @EloquenceInc - I agree with several of your points, but let me tell you, starting out by saying "you people are not smart" is not only not particularly helpful for your case, it's demonstrably untrue.

    I disagree with a number of posters on this site regularly, but every single one of them has earned my respect for their intelligence. That holds true for the people I agree with, too!

    This site may be full of Fools, but not one of them is an idiot.

  • Report this Comment On February 10, 2012, at 11:51 AM, Ptrenter wrote:

    Renting is hardly the utopian paradise it's being made out to be in many articles and comments I've recently read.

    After 15 years as homeowners, my husband accepted a management job that requires us to move from time to time. We sold our home, and hit the road. As a consequence, we have rented from 8 landlords in 4 states over the past 12 years. We have top notch references, but they've come at a high cost:

    1.) Pets -- If you have a pet, it often costs $500 (NONrefundable pet "deposit") extra to move in (and/or pet rent). So if Fido does no damage, you still lose your $. 2.) Nothing is "normal wear and tear". Buy the paint, buy the paintbrushes, and repaint even if the place needed repainting when you moved in...even if you have documenting photos to prove it. Oh, and don't forget that if you hung any pictures, to fill ALL the nail holes first (even if the walls were riddled with former tenants nailholes), then sand and paint. 3.) Have any carpets professionally cleaned unless you own a whiz bang pro style steam cleaner yourself (we do, so add the cost of the cleaners, but it's still cheaper) 3a.) despite this, even if you have documented it, you may wind up paying for carpets that were stained when you moved in. 4.) I call it, "Remember the $100 door" & inspect everything minutely before your exit inspection. I missed a small black mark on a white door...the landlord came to inspect & I said, "oh, let me get that, I missed it." I was told not to worry about it because everything else looked so good. When the deposit check came, it had $100 deducted from it for the cost of "painting the door" (with my paint that I bought for touchups and left in the garage). 5.) Researching your landlord with online services (fee paid). I learned this the hard way. A small investment company rented us a house, then "lost it". We had to incur all the costs of moving again. 6.) Unless specifically enumerated in your lease or state laws, the only thing your landlord is actually responsible for is working plumbing (we once had a landlord "plant" a dirty disposable diaper to say that caused the backup...it didn't work because we had no babies around at all), ridding your place of an infestation of bugs or rodents (and you may have to fight about it), and a source of heat (maybe).

    7.) Renters Insurance is another cost that varies widely depending on what you own ($) and where you live...and is often required. 8.) Your landlord, & any designated agent/employee, no matter how unscrupulous, has a key to your residence. We rent houses, so as a matter of course we always buy new locks and supply the landlord or property management company with the keys. 9.) You must learn how to, or hire someone to make any minor repairs to your residence, appliances, etc. Example: If the over heating unit burns out, go buy one and replace it. Then you can always call or send your receipt to your landlord and ask for some sort of compensation...but don't expect it. Many leases specify that you are responsible to maintain the rental residence as if it were your home. It's a sweet deal for the owners most of the time. No maintenance, no turnkey, no nothing but collecting your money. There are certainly bad tenants, no doubt about that. But most of us more than make up for the occasional exception. This, of course, excludes slum lords, who deserve what they get, anyway, IMO.

    If we are going to move (so to speak), as a country, to accepting renting as a norm, then renters should be treated like regular folks, not second class citizens. The notion that a bunch of absentee investment landlords are about to own a big chunk of rental housing is scary to me. I can only imagine what the lease will look like, and the legalese that will have to be pondered (already so long! Our current lease is 17 pages)

    We will have enough saved soon to purchase a modest "forever" home outright. I can't wait. At least then the repairs and improvements we make will be to our benefit, and I won't have to worry about who has keys to our home.

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Dan Caplinger
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Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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