What Are the Best Alternatives to Buying a House?
People used to think that the only way to live was to grab the old American dream of buying a house. However, these days people look for viable alternatives because they have learned that investing in real estate has many caveats, not the least of which is cost.
Of course, there are also many benefits to homeownership, too.
For example, owning your own home gives you pride of ownership, a sense of stability, freedom to decorate and garden to your heart’s content and a wonderful place to entertain friends and raise children. Nonetheless, issues such as cost, lack of flexibility, increased responsibility and heavy workloads have made people seek out other options. Some are better than others, and the pros and cons of each are what will be explored in this article.
Location Makes a Difference
It is important to note that location helps to determine whether certain housing alternatives will work better than others.
For example, you wouldn’t want to live off the grid in a recreational vehicle in the northern Alaskan climate. There is nothing you’ll be able to live in there that can substitute for a brick and mortar home that will keep you comfortable and safe from vile weather.
Therefore, when reading about the housing alternatives discussed here, be sure to take geographic location into account!
Renting an Apartment
When people cannot find a house they can afford or don't want to own a house for some other reason, they generally rent an apartment. Although the cost of doing this used to be fairly low, the truth is that at this writing, apartment rents are higher than they have ever been.
This is because a shortage of homes on the market can cause prices to rise and creates a glut of people needing to find alternative housing options.
The Upside of Renting
- Many one bedroom, one bathroom rents are in the $1000 per month range. These costs come in addition to deposits for the first month, last month, security, electricity, and telephone service.
- Despite all of this, people like to rent because it gives them the flexibility to easily move from place to place, eliminates many expenses and requires no labor other than doing some cleaning.
- A renter pays no taxes or homeowners or flood insurance, doesn’t need to mow lawns or paint and if something breaks the owner fixes pays for and makes the repairs.
The Downside of Renting
- In some of the bigger cosmopolitan areas, rents for a one-bedroom are running upwards of $2500 per month!
- In addition, what you pay to rent does not build equity, meaning that you have none of the money you spent once you have paid your rent.
Thus renting can end up costing more than buying a house in some situations.
Buying a Condo
When you buy a condominium, you get some of the benefits of both owning and renting.
This is because you
- only buy the living area from the drywall in,
- do not have to maintain your building or property, and
- can often pay less than when buying a house.
Thus, you don’t pay first, last and security deposits, the cost of exterior maintenance and you build equity.
However, there are many caveats that come with living in a condo because doing so requires you to follow strict rules and limits certain activities that you might otherwise enjoy doing, such as gardening or being able to work on your car.
More importantly, there can be grave financial risks. What You Need to Know Before Buying a Florida Condo goes into more detail about this issue. You should read it if you are considering buying a condo.
Purchasing a Mobile Home
Another alternative to buying a house is to purchase a mobile home. These can be as large as many brick and mortar homes and can be quite comfortable to live in. They used to be inexpensive to buy, and some still are, but much depends on location and circumstances.
In Florida, for example, you can buy an older single wide mobile home on a rented lot for as little as $1,000, but don’t go rushing down there to grab deals like this one because there’s a big reason for the low prices. Florida recently passed a law that allows mobile home park owners to raise their low rates as much as 30% annually!
Thus, lots that used to rent for around $350 per month are now renting for as much as $900! As a result, many people are practically giving their mobile homes away just to escape the high lot rents!
You can avoid them if you buy a place in a resident-owned community. However, you’ll pay upwards of $50,000 for your mobile home and land and will also have to pay a monthly maintenance fee, real estate taxes and insurance. Obviously these costs can vary from one place to another, so it can pay to do your research before buying. You should also check into the costs and availability of homeowner's insurance because these can be expensive or might not even be available in certain areas.
The bottom line here is that while owning a mobile home used to be a good deal, this may or may not be true depending on where you live.
Park Models and Little Houses
There has been a good deal of hype recently about buying or building “little houses” which basically are very small homes that can be built on towable trailers or placed on a property.
Although they are small, they can be expensive to build and provide very limited living areas. Some are as small as 140 square feet! Those on trailers are not legal to tow on US roads, and the ones you can place on property still require all of the expenses and work of homeownership.
A more viable alternative is something called a park model. A new park model can cost upwards of $25,000. A previously owned one can be purchased for somewhat less depending on its condition and amenities.
These units basically are smaller versions of mobile homes that are more easily towed and can be placed either in a mobile home park, RV Park or on your own land. Unlike recreational vehicles, they have standard plumbing in their bathrooms, which means you don’t have to dump tanks as with an RV.
Because some RV parks allow them, owners can pay far less for lot rents and have all of the benefits of RV Park living. For example, owners won’t have to pay for water and sewer, lawn care or taxes. These units are usually 14 feet wide by 35 feet long, so provide much more room than most little houses and are legal to tow on US highways. They are similar to small, one bedroom, one bathroom apartments and can provide a decent, but less spacious, alternative to houses.
In recent years, recreational vehicles such as fifth wheels, travel trailers and motor homes have become very popular housing alternatives.
This is because they can cost less than houses, give many of the benefits of homeownership, can be used for travel as well as year-round living and can eliminate many of the costs involved in owning a house.
In some ways, they are similar to park models in that they are set up like small apartments. Those with slide rooms add considerable amounts of living area but nonetheless have only limited storage space.
These units offer a great deal of flexibility for owners because they are on wheels and can easily be driven from one place to another, can be set up on rental lots, private property, deeded RV lots or simply staying in campsites when going from one place to another.
If you want to know more about them, The Truth About Full Time RV Living would be worth reading.
However, as with all things, owning an RV has its caveats. For example
- some of these units can be extremely expensive to buy,
- they depreciate rapidly,
- they can deteriorate significantly if not well maintained,
- living in one means that you are only one accident away from being homeless,
- they still only offer limited living space and
- they need constant and costly maintenance and repairs,
Despite these issues, many people love living and traveling in recreational vehicles and truly enjoy the freedom they provide.
- Don’t like your neighbor or the park you’re staying in? Drive away!
- Don’t like the high campsite fees? Put your rig on your own land!
- Want to live near the beach? Find a park located on one and rent a spot there!
You cannot do these things with any other type of housing, so you have to decide if the caveats are worth the flexibility.
There Is No Perfect Answer
As you can see, there are many alternatives to buying a house.
It is no longer the case that you are expected to do so, and it’s good to know that you have other options. Every type of housing has it’s pros and cons, but only you can decide which alternative will suit your financial and personal needs.
Think carefully and choose well.
Which housing alternative would you prefer if you couldn't or didn't want to own a home?
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2017 Sondra Rochelle