#40: Rent vs. Buy

Season #1

Episode 40: Rent Vs. Buy

One common mantra is that renting is throwing money away. Is that true? What are other things to consider?

Top 5 takeaways:

  1. It’s easy to understand where the “Homeownership is the best answer” comes from: If you rent for 30 years, you have “nothing” to show for it. If you pay a mortgage for 30 years, you have a house.
  2. If you buy a $400k home, you can figure roughly $3k a month in the mortgage payment (including taxes and insurance) plus average maintenance costs. Rent for a similar property would be roughly $2k/month. In 30 years, if that $400k house appreciated 4% (which is high!), it would be worth $1.3 million. If, over that 30 years, that renter invested the $1k/month, 8% returns would be $1.36 mil.
  3. People who believe that buying a house is stupid often have a history of being burned (the number of people who believe that spiked in 2008-2009).
  4. When renting, you don’t have to pay an unexpected $40k because your roof is leaking.
  5. Renting affords you a LOT more flexibility than owning a house.

Resources mentioned in this episode:

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