Home owners association for houses, pro/cons
Some examples where an HOA is a positive thing: 1) Amenities: Maybe it is professionally maintained landscaping at the front of the subdivision, or a playground, or community pool. An HOA provides a convenient way to have things like that and share the costs among all the people who benefit. 2) Legal Advocacy: I live in a neighborhood (rural) without an HOA. My neighbor decided to start an auto-repair shop on his property which was CLEARLY a violation of the covenants. There isn't really a Government body you can report them to that will swoop in and make them stop a neighbor from destroying your property values even if they signed an agreement when they bought it to the contrary. You need to hire a lawyer and sue them and that costs money and time. Also, in many cases if you wait too long they can get an exception grandfathered in because no one raised an issue about it. An HOA exists to watch for this kind of thing and nip it in the bud rather than making homeowners have to hassle with the time/expense. 3) Independence: Assuming no HOA, and assuming you are okay with suing your neighbor over violating a covenant. That makes for a very uncomfortable situation between you and that neighbor. Having a neutral 3rd party take action on your behalf anonymously can greatly help that situation. It's not all about making people ditch their basketball goals, or garden gnomes. They also protect you from other obnoxious stuff like junky mobile homes in high-end neighborhoods, the guy who blocks half the street permanently with his RV/Boat parked on the curb, three foot tall grass that is an eyesore and a fire hazard, a taco stand opening in your neighbors garage,  etc. At its best, a HOA provides the same benefits as a condo association -- shared investment in the shared neighborhood resources/environment.  At its worst, a HOA has the same problems as a condo association, potentially creating unreasonable constraints on what you can or can't do with your own property because your decisions might affect the value of someone else's property or demanding shared investment in something you don't consider worthwhile. Basically, if an HOA is active in your neighborhood, (A) make sure you know its history and biases before you buy, and (B) make sure you're active in it, or you may be unpleasantly surprised by its decisions. "As I understand it the basic premiss of a HOA is to ease communication between neighbors and help work towards common community goals.  As I understand it the reality is that the HOA works to keep the community homogenous so there are no ""sore thumb"" neighbors.   As to why look for one or avoid one.  If you would want a uniform image out of your neighbors and don't mind towing the party line, then they are for you.  If you don't care about what your neighbors do with their property (within civic ordinance) and would like freedom to do things different from your neighbors (paint your house blue, hang a clothes line, increase the size of your flower beds), then they are to be avoided." I think it depends a lot on your idea of how you should relate to your neighbors. Personally, I think that I should be allowed to do just about whatever I want with my property, and I grant my neighbor the same right. If my neighbor wants to paint his house purple with orange stripes and fill his front lawn with pink flamingos, I think that's his right. If I don't like it, I don't have to look at his house. (I would draw the line at things that I cannot avoid by simply looking the other way, like running jet engines in his back yard at 2 in the morning, as I could not avoid the noise. Or dumping toxic waste on the street, as it will cause health problems. Etc.) Others think it IS their business what their neighbor does with his property and want to be able to control it. They want someone who has the authority to force everyone in the neighborhood to paint their house in colors deemed acceptable, to meet certain requirements for yard work. And that's what Home Owners Associations are for: to require that everyone in the neighborhood maintain their property according to a standard set by the HOA, which should theoretically represent the wishes of the majority. Of course the price you pay for giving you the right to tell your neighbor what kind of fence he is allowed to have is that now your neighbors can tell you what kind of fence you can have. Advocates of HOAs often say that they are necessary to protect property values. Personally I think this is something of a circular argument: I must have the right to prevent my neighbor from doing something that, in my opinion, makes his house ugly, not because I necessarily have no choice but to stare out my window at his house all day and be repulsed by it, but because someday I may want to sell my house to someone who will have no choice but to stare out the window at his house all day and be repulsed by it and so will not want to buy my house. Of course if we all just minded our own business, this wouldn't be an issue. Okay, this was pretty much an anti-HOA post, but I did TRY to state the other side of it. "I agree with the basic purpose of an HOA. Unlike the poster above Jay, I do believe that people painting their houses purple will definitely affect the value of my house or property. I for one would not want to live next to someone who has a wild purple house, even though it is his right to do so. In saying that I know that there are very few people who would want to buy my house were it situated next to the ""purple house"". So in the sense of limiting known eyesores I agree with the purpose of HOA's. That being said, I do not agree with the fact that HOA's are not regulated and that its rules are formed by community members who may be very strict on what or what isn't allowed. If it were simple rules like not painting the house disturbing colors (we all know what they are) or not having junk cars  or loud music after a certain time (except on holidays or special calendar days like New Years etc."
Getting the first year right for any rental property is key. It is even more complex when you rent a room, or rent via a service like AirBnB. Get professional tax advice. For you the IRS rules are covered in Tax Topic 415 Renting Residential and Vacation Property and IRS pub 527 Residential Rental Property There is a special rule if you use a dwelling unit as a personal   residence and rent it for fewer than 15 days. In this case, do not   report any of the rental income and do not deduct any expenses as   rental expenses. If you reach that reporting threshold the IRS will now expect you to to have to report the income, and address the items such as depreciation. When you go to sell the house you will again have to address depreciation. All of this adds complexity to your tax situation. The best advice is to make sure that in a tax year you don't cross that threshold. When you have a house that is part personal residence, and part rental property some parts of the tax code become complex. You will have to divide all the expenses (mortgage, property tax, insurance) and split it between the two uses. You will also have to take that rental portion of the property and depreciation it. You will need to determine the value of the property before the split and then determine the value of the rental portion at the time of the split. From then on, you will follow the IRS regulations for depreciation of the rental portion until you either convert it back to non-rental or sell the property.  When the property is sold the portion of the sales price will be associated with the rental property, and you will need to determine if the rental property is sold for a profit or a loss. You will also have to recapture the depreciation. It is possible that one portion of the property could show a loss, and the other part of the property a gain depending on house prices over the decades. You can expect that AirBnB will collect tax info and send it to the IRS As a US company, we’re required by US law to collect taxpayer   information from hosts who appear to have US-sourced income. Virginia will piggyback onto the IRS rules. Local law must be researched because they may limit what type of rentals are allowed. Local law could be state, or county/city/town. Even zoning regulations could apply. Also check any documents from your Home Owners Association, they may address running a business or renting a property.  You may need to adjust your insurance policy regarding having tenants. You may also want to look at insurance to protect you if a renter is injured. Here are the pros and cons and an analytical framework for making a decision. Pros of walking away: Cons: Here's the framework: compare the value of first and second sections for you [1] http://www.nytimes.com/2009/07/30/business/30serviceside.html?_r=0 [2] http://www.mortgagecalculator.org/ Check with local mechanics which cars they drive and dealers the buy from. Tell them your budget and needs and you'll find they're pretty consistent in their recommendations. Also, don't overlook dealers in favour of buying direct from owners, both have pros and cons.  Dealers have to allow you to return the vehicle within a certain time frame, their name is also on the line. Some offer warranties to fix anything that goes wrong in the first x years. Do your research, but for old cars this can be a valuable saving. Also, some dealers offer to provide you with parts at cost for the life of the vehicle, also potential savings. Don't go in on a Saturday, do go in near the end of the month. Go back several times, compare, negotiate. Your calculations are good as far as they go, but there are lots of other factors and pros and cons to each decision. Yes, you should certainly compare the monthly rent to what your mortgage payments would be, as you have done. Yes, you should consider how long you might live there. If you do move out, how difficult will it be to sell the house, given market conditions in your area? If you try to rent it, how difficult is it to find a tenant, and what rent could you expect to receive? Speaking of moving out and renting the place: Who will manage the property and do maintenance? Would you still be close enough to do this yourself? Would you be willing and able to spend the time? Or would you have to hire someone? Also, what if the tenant does not pay the rent? How difficult is it to evict someone in your area? Speaking from personal experience, I own a rental property in Ohio, and the law says you can evict someone with 3 days notice. But in practice they don't just leave, so then you have to take them to court. It takes months to get a court date and months longer before the police actually show up to order them out of the house. And you have to pay the lawyer and court fees. In that time they're living in your property rent free. In my case one tenant also totally trashed the place and stole everything that wasn't nailed down -- I had to spend $13,000 on repairs to a house worth a fraction of what you're talking about. Being a landlord is NOT just a matter of sitting back and collecting rent checks: there's a fair amount of work and a lot of risk. What do you have to pay the realtor, and what other closing costs would you have to pay? Where I live, realtors typically charge 6 to 7%. You may also have to pay for an appraisal, title search, and bunch of other little fees. Mortgage interest is deductible on your federal income taxes. Rent is not. If you own and something needs to be repaired, you have to pay for it. If you rent, the landlord has to pay for it.  If you own, you can do pretty much what you like with the property -- subject to zoning ordinances and building codes and maybe homeowners association rules, but you should have a pretty good amount of leeway. If you want to install ceiling fans or remodel the kitchen or add a deck, it's up to you. If you're renting, it's up to the landlord to decide what you can do to the property. And if he agrees to let you do some upgrade, when you're done, it belongs to him. With a condo, you are not usually responsible for exterior maintenance, like mowing the lawn and trimming the bushes and washing the outer walls. With a house, you are. You might pay someone to do this, which adds to the cost, or you might do it yourself, which takes time. Insurance on a condo or aparment is much less than insurance on a house. In my area, anyway. You should investigate those costs. If you buy, eventually you own the place and don't have to pay a mortgage any more. If you rent, you continue to pay forever. (Even if you don't live in the same house forever, as long as you don't take a terrible loss when you sell you should then have some money left over to apply to the next house, so you are still building equity.) Some of these pros and cons are easily quantifiable. Others are probabilities, like how likely is it that your water heater will fail?, and how long is it likely to take to find a buyer if you want to sell? And others are pretty subjective. Let me add a few thoughts that have not been mentioned so far in the other answers.  Note that for the decision of buying vs. renting a home i.e. for personal use, not for renting out there's a rule of thumb that if the price for buying is more than 20 year's (cold) rents it is considered rather expensive. I don't know how localized this rule of thumb is, but I know it for Germany which is apparently the OP's country, too. There are obviously differences between buying a house/flat for yourself and in order to rent it out. As others have said, maintenance is a major factor for house owners - and here a lot depends on how much of that you do yourself (i.e. do you have the possibility to trade working hours for costs - which is closely related to financial risk exposure, e.g. increasing income by cutting costs as you do maintenance work yourself if you loose your day-time job?).  This plays a crucial role for landlords I know (they're all small-scale landlords, and most of them do put in substantial work themselves): I know quite a number of people who rent out flats in the house where they actually live. Some of the houses were built with flats and the owner lives in one of the flats, another rather typical setup is that people built their house in the way that a smaller flat can easily be separated and let once the kids moved out (note also that the legal situation for the landlord is easier in that special case). I also know someone who owns a house several 100 km away from where they live and they say they intentionally ask a rent somewhat below the market price for that (nice) kind of flat so that they have lots of applicants at the same time and tenants don't move out as finding a new tenant is lots of work and costly because of the distance.   My personal conclusion from those points is that as an investment (i.e. not for immediate or future personal use) I'd say that the exact circumstances are very important: if you are (stably) based in a region where the buying-to-rental-price ratio is favorable, you have the necessary time and are able to do maintenance work yourself and there is a chance to buy a suitable house closeby then why not. If this is not the case, some other form of investing in real estate may be better. On the other hand, investing in further real estate closeby where you live in your own house means increased lump risk - you miss diversification into regions where the value of real estate may develop very differently.  There is one important psychological point that may play a role with the observed relation between being rich and being landlord. First of all, remember that the median wealth (without pensions) for Germany is about 51 k€, and someone owning a morgage-free 150 k€ flat and nothing else is somewhere in the 7th decile of wealth. To put it the other way round: the question whether to invest 150 k€ into becoming a landlord is of practical relevance only for rich (in terms of wealth) people. Also, asking this question is typically only relevant for people who already own the home they live in as buying for personal use will typically have a better return than buying in order to rent. But already people who buy for personal use are on average wealthier (or at least on the track to become more wealthy in case of fresh home owners) than people who rent. This is attributed to personal characteristics and the fact that the downpayment of the mortgage enforces saving behaviour (which is typically kept up once the house is paid, and is anyways found to be more pronounced than for non-house-owners). In contrast, many people who decide never to buy a home fall short of their initial savings/investment plans (e.g. putting the 150 k€ into an ETF for the next 21 years) and in the end spend considerably more money - and this group of people rarely invests into directly becoming a landlord.  Assuming that you can read German, here's a relevant newspaper article and a related press release. In most cases there is no debt attached to those properties, so there is no risk to financial institutions.   So that leaves us with an increase in supply of houses most people can't afford at current prices, expect a short-term boost to construction while many are converted to duplex/apartment type properties and slight downward pressure on prices. Obviously these are wild generalisations and the effect will be massively different in most cities compared to rural or small-town areas. I just read through all of the answers to this question and there is an important point that no one has mentioned yet: Oftentimes, buying a house is actually cheaper than renting the identical house. I'm looking around my area (suburbs of Chicago, IL) in 2017 and seeing some houses that are both for sale and for rent, which makes for an easy comparison. If I buy the house with $0 down (you can't actually put $0 down but it makes the numerical comparison more accurate if you do), my monthly payment including mortgage (P+I), taxes, insurance, and HOA, is still $400 less than the monthly rent payment. (If I put 20% down it's an even bigger savings.) So, in addition to the the tax advantages of owning a home, the locked in price that helps you in an economy that experiences inflation, and the accumulated equity, you may even have extra cash flow too. If you were on the fence when you would have had to pay more per month in order to purchase, it should be a no-brainer to buy if your monthly cost is lower. From the original question: Get a loan and buy a house, or I can live for the rest of my life in rent and save the extra money (investing and stuff). Well, you may be able to buy a house and save even more money than if you rent. Of course, this is highly dependent on your location. "It doesn't make a lot of sense to buy a house/condo and rent it out now. On the other hand, I think finishing your basement and then renting it out is an excellent idea.  The ROR is excellent as long as you can deal with the ""strangers"" in the basement, have the extra driveway space and negative association with renting out your basement. HTH"