Kim and I have always been homeowners. We’ve owned three homes in our time together. Now we live in Airbnbs. The switch from owning a home to renting Aribnbs is one of the best decisions we’ve made.
The “Starter Home”
We started with the uniquely American concept of the “starter home.” This term is totally alien in other countries. In other countries, people buy a home in which to live. A home for them is not an investment it’s a home. It is not purchased with the intent of leaving as soon as they can afford a bigger house.
Kim and I sadly left the last house we owned in 2013. We sold our house and belongings when I accepted a lecture position at Bangkok University in Thailand. We quickly became happy with Airbnb living. The freedom of not being anchored to a home was liberating.
Two years later we returned from Thailand and debated whether to buy a house or rent. Since we planned on leaving the U.S. again we decided to rent. I was nervous. I had not rented an apartment in the United States in many decades. It turned out to be not just the right decision but a great decision.
Airbnb Living Saves Money And Life Is Better
The decision to NOT buy a house not only saves money but contributes to a higher quality of life.
Buying a home is a lengthy process:
- Saving for a down payment
- Qualifying for a loan
- Finding a realtor
- Searching for a house
- The application
- Whatever other processes
Once you’ve saved tens of thousands of dollars as a down payment you still need to come up with the mortgage payment.
- Searching for an apartment
- Saving for first and last month’s rent
- A deposit
Airbnb living involves:
- An online search
- Paying for the stay
Renting And Living In Airbnbs: A Hassle-Free Life
Renting and Airbnb living has the compelling advantage of increasing life satisfaction by eliminating many of life’s stresses.
For example, in my lifetime I’ve had two refrigerators that needed to be replaced. One in a home I owned. One in an apartment I rented.
Replacing the refrigerator in the home I owned turned into a week-long hassle:
- Distributing Food to friends
- Researching the best replacement
- Finding the best price
- Shopping for the refrigerator
- Arranging delivery
- Purchasing new food
- Arranging disposal of the old refrigerator
This ordeal was a time consuming, costly, week-long process.
We had a VERY different experience when the refrigerator at the apartment stopped working:
- I called the office
- A new refrigerator was installed the next day
No hassle. No cost.
This made me think of when we were homeowners and of the time, effort, energy, and the significant cost of the plumbing, electrical, roof, yard, appliance, carpet, etc. issues Kim and I suffered through and paid for as homeowners. I wonder if I would have fewer grey hairs and more money in the bank if we hadn’t owned those three homes.
Airbnb Living Is Better
Airbnb living offers even more life satisfaction and money savings. Weekly cleaning is the best perk. House cleaning is low on our list of happy activities. Life is better when we go out for a morning coffee and return to a clean house. Cleaning includes new sheets, beds made, new towels, and usually a chocolate on the pillow. Airbnb hosts also provide consumables like soap, toilet paper, paper towels, dish soap, etc. Small savings that add up over time.
Owning A House Is An Investment?
I can hear the argument, “But owning a home is an investment.” That is correct, homeownership is an investment for the lender. Interest is paid to the lender who collects the money without the hassle, expense, or risk of owning a house.
But isn’t it an investment for you, the homeowner? Probably not.
A Real-life Example
A long-term friend is considering selling his parent’s home. We had a long discussion about it. The house was purchased in the 1960s for about $38,000. This year, 2020, it was appraised at $800,000. On the surface that is a huge gain, a solid investment.
A different picture emerges when some of the details like inflation and expenses are considered. The biggest shock to my friend was realizing that $38,000 in the 1960s is equivalent to about $300,000 in 2020 when adjusted for inflation.
Certainly, a $500,000 increase from $300,000 to $800,000 is nice, but not nearly as dramatic as $38,000 to $800,000. In fact, that $500,000 increase in price is an average of only $9,600 per year. That’s not a great financial return.
Part of the reason for the $500,000 increase is due to two additions and refacing the exterior of the house.
Once these expenses along with a new roof, landscaping, and decades of repairs and maintenance are taken into consideration my friend’s parent’s house has only appreciated $100,000 in those 50 years. Tack on property tax and other expenses he does not recall or know about and you can imagine that $100,000 rapidly evaporating.
|Year||Cost||2020 dollar equivalent|
|Home repairs, maintenance, etc.||$88,000|
If these above numbers are correct, and they are probably on the low end, and we ignore property tax then the house as an investment has realized $100,000 over 50 years. That’s a poor performing investment.
A Better Investment
Had his parents invested the 20% down payment ($7,600) for the house in the 1960s in the stock market that account would be worth close to $700,000 in 2020. That profit comes without the hassle, stress, and extra expenses of homeownership.
If his parents had rented a home rather than purchased one, what would have been paid in mortgage payments, repairs, maintenance, new appliances, carpet, etc. would have been paid in rent with money left over.
More Savings Living in Airbnb
Living in an Airbnb has additional significant savings. The Airbnb rent includes all the utilities:
A Home Of Your Own
I often hear another reason not to rent or Airbnb: you miss the security and pride of homeownership.
However, in the United States, you never own your home. A home ‘owner’ must always pay a fee to an institution. If that fee is not paid that institution has the legal right to take the house.
You pay a mortgage payment to the bank. If you miss a payment the bank has the legal right to evict you and repossess the house. After the bank is paid in full, you continue to pay property tax to the state. If you miss a payment the state has the legal right to evict you and repossess the house.
A home of our own whether rented or owned. Our sons and friends performing
The American Dream
The American culture emphasizes homeownership and pressures people to own their house. It’s part of the “American Dream”:
- A sign of stability and accomplishment
- A goal one works for for decades
- An expectation one is expected to live up to
- A badge of one’s social status
But the American Dream is just a cultural construct. In other countries people rent the same home for decades, homeownership is not important.
So, try to step back from your cultural perspective and look objectively at your situation. Understand there are more options than you realize. For Kim and me stepping away from homeownership gave us the ability to live the mobile, flexible, free life that we love.
We love living in Airbnbs in different cities and countries every few weeks or months. That’s not the life for everyone but whatever your desires are don’t get bogged down in cultural constructs and the expectations of others. Find a way to make your life what you want it to be – you have options.