Is Renting Better Than Owning A House? (I Sold My House to Buy Crypto)

This is a rather controversial statement, right? And I’m referring here just to the first part of the title, we will talk about crypto later. Since the earliest days of my adulthood, I remember that owning a house (or a flat) was very high on the list of ‘must do's’ of every responsible and successful person. Renting was always seen as a necessary-evil-stepping-stone on the way to property ownership. As a result, I couldn’t wait to buy my first house, and I eventually did buy one in my late 20's.

Almost 10 years and a couple of properties later, I’ve just finalised the sale of my most recent house and a few weeks ago I moved to a rented apartment. And frankly… I couldn’t be happier. I think that in many cases, owning a property is massively overhyped, and renting might actually be a much better option.

Of course, this article is just simply my opinion. I’m not claiming that this is the best or the only right approach, as everyone’s situation is different but these are just my thoughts based on my own experiences.

Here are the reasons that explain my point of view.

1. Costs

Buying a property usually means putting down a very sizeable chunk of money as a deposit and committing yourself to 20-30 years of repayments. It’s a big decision, and especially these days, not necessarily the best one for many people. Sure, your own house can be a source of stability and it can be a good long-term investment but at the same time, it’s also a big responsibility, often means a lot of expenses and in some circumstances, it can cause a lot of stress.

Being a property owner will always mean incurring expenses that go beyond just getting some new furniture and redecorating the place. While a brand new place will likely come with a guarantee, getting the work done under that guarantee can be a quite difficult and frustrating experience. Also, if you’re going to keep the place only for a couple of years, you may struggle to sell it at the same or higher price due to the premium price you usually have to pay for buying new. And if you’re buying an older property, well…

Older properties always require work and some of them can be real money pits. The last house I owned, needed so much work that I ended up putting another 15% of its purchase price in all the necessary upgrades and fixes… and it was still far from being complete. Granted, it was 250 years old but it was modernised a lot by its previous owners and it certainly wasn’t in a project-type condition. It’s great if you can make that money back when you sell it, but it is not always guaranteed.

Plus, it’s not just about the money. After a number of ‘small’ leaks and other similar issues end up turning into $1,000 jobs, I actually developed a bit of anxiety and obsession checking constantly for any new problems.

2. Flexibility/mobility

If you own a property and you want to move, it means anything from around 2 to over 6 months and a good $5-10k (or more) out of pocket to finalize the process. Of course, that’s after you found a buyer and assuming that there’s no chain. I can quote plenty of examples just amongst my friends where it took well over a year to sell a house. On the other hand, if you’re renting, you can always be where the action is, regardless if that means moving to a different part of the city, country, or the world. Sure, there are still some time restrictions and costs involved but it’s much easier to be more mobile.

This leads me to another important aspect – location. While you may be able to afford the rent in the location you like, you may not necessarily be able to buy there (the mortgage repayments will likely be cheaper than rent but saving up enough for the deposit is likely to be an issue), so you have to either compromise and buy somewhere else or rent where you really want to live.

There’s of course another option – buy a place where you can afford it and rent it out so it’s paying for itself and increasing your net value, while you’re renting in a location where you can’t afford to buy but you really want to live there.

3. Property as an investment

A house can mean a lot of things to a person – it can be a home, a source of stability and security, or simply an investment that’s supposed to bring as much profit as possible. Or it can be a combination of all of the above.

All my property purchases and sales to date were always well-timed in terms of market activity. Sometimes it was just pure luck, but in other cases, I was taking advantage of the situation. I sold my last house much quicker and for much more money than I expected because detached properties in villages suddenly became really sought after due to Covid. Regardless of all my other reasons to sell, it was simply a really good moment when it came purely down to figures.

4. Selling a house to buy crypto

If I would mention this to my parents, it would certainly sound like pure madness to them. To me, this makes perfect sense.

Depending on the state of the property market and your individual investment plans and risk tolerance, pulling equity out of the property (or money you would otherwise need as a deposit) can give you more flexibility and power to invest. Sure, the risk will probably be higher (although when considered in a long-term time frame, a lot of investments are actually pretty solid) but the profits can also be much higher if you play your cards rights.

If we look at Bitcoin as a long-term investment, it is actually a far better option than investing in property. Bitcoin has returned 196.7% 10-year compounded annual growth rate (CAGR) or in other words, Bitcoin returns nearly 200% every single year, for 10 years, compounded! In ROI terms, that's 5.2 MILLION % return in a decade. No other investment comes even close to this figure.

In my case, it was a no-brainer. I knew I wanted to sell the house and rent for a few years before I decide where I want to settle. I’m very bullish on long-term crypto investments so it was an obvious choice to put around 30% of the proceedings from the sale into BTC, ETH, and ADA. I would invest even more but I need quite a bit of cash for my other plans. My goal for the next 12-24 months is to generate more money to keep reinvesting it until I’m ready to buy a property again. In the meantime, I’ve earned more interest from staking ADA for a month, than I would earn in a savings account or bonds in a year ;-)

And finally, and most importantly – just do what feels right. I was happy as a homeowner but there came the time when I was more than happy with the idea of selling my house and renting. I’m sure there will come a time when I will buy another property but I’m certainly in no rush to do it, nor do I feel any less successful than any of my homeowner friends.

What are your thoughts on this?

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Disclaimer

The content covered in this article is NOT to be considered as investment advice.

I’m NOT a financial adviser. These are only my own speculative opinions, ideas and theories.

Do NOT trade or invest based purely upon the information presented in this article.

Always do your own research and due diligence before investing or trading. I’ll never tell you what to do with your capital, trades or investments. I’ll also never recommend for you to buy, sell, long or short any asset, commodity, security, derivative or cryptocurrency related instrument as it's extremely HIGH RISK!

You should always consult with a professional/licensed financial adviser before trading or investing in any cryptocurrency related product.