Renting Vs Buying A Home (What They Don't Tell You)

Let's be friends:

I answer whether it is cheaper to rent or buy a home. Renting vs buying a home can be controversial. Many people believe that renting a home is throwing away money, whilst others believe that the answer to the rent vs buy question is to rent and invest the money you save. People like Dave Ramey and Graham Stephan have covered this question, but I wanted to do an even more accurate and in-depth analysis on whether it is better to buy or rent a house. I talk about buying vs renting a house over a 13 year period. Renting vs owning a home requires a few assumptions, and I made sure to make them both realistic and accurate. If you've ever wondered Is it cheaper to rent or buy a house, should I rent or buy a house, should I rent or sell my home, should I rent or buy a home in 2023, then this is the video for you!
▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬
▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬
DISCLAIMER: Everything in this video is of my own opinion and could be wrong. I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. I am merely sharing my opinion with no guarantee of gains or losses on investments.

[Foxfire-xqij]

My biggest hangup with renting is that even after renting for X number of years, you end up with nothing to show for it as the house still belongs to the landlord regardless of how much you paid, how much repairs were done, etc.

My biggest hangup with buying is that property taxes are to be paid on the home forever even when it is paid off and if taxes aren’t paid on it after the mortgage is paid you can have your home stolen from you for not paying property taxes. You never really own the home or property if someone can take it from you after you paid for it.

[edwardbatista]

The worst thing about renting is the uncertainty. The landlord can just raise your rent and you have no choice but to pay or leave

[jimmynguyen]

As you said, many factors.
In my area, I am renting right now a 2 storey house, newly constructed 2020, 2000 sq ft of living area, 3 bedrooms, 2 bathrooms, big yard and 2 parking spots for.. 1980$/month.
But the same house, same area and everything else, sells for about 600-700k right now. So for me, renting is a very clear winner here. A 300k house in my area right now is a shack on the verge of crumbling that people would only buy to destroy and build over.

[ryant]

Both have advantages and disadvantages but for me, the biggest advantage of owning is that eventually you will retire and you will no longer have an ongoing income. When that day comes I want to have a fully paid-off house that I can live in.

[winwird]

An important note about the tax savings is they only apply if you have other significant tax deductions to justify itemizing your taxes. In the last 7 years since I've owned my home it was better for me to take the standard deduction every year so I have had no tax deductions at all so far on this house. Also I would say you would need to save more than 200 a month for repairs on an older home. Since I've owned my home I've already incurred over 20, 000$ worth of repairs due to air conditioning, pluming, and the water heater going out.

[BiswaRSingh]

1. No one will rent similar home. They will rent an apartment at a much lower monthly cost and save more money to invest. 2. Maintenance cost will be definitely much more than that. Also the time and energy that you have to invest. 3. Renting has no liability and you will be open to explore better career opportunity.

[zohebc]

I understand you are comparing apples to apples, but when it comes to buying vs renting, most people do apples to oranges to save money for the short term. For example: a person who can afford a 300k home to buy, won’t really rent a 300k home. They would rent a $150k home or go for an apartment, so they can save money over the short term, or keep their monthly housing cost low.

[PARADOXsquared]

So while in this example, the out of pocket expense for the mortgage is lower, it requires someone to already have enough money for the down payment, closing costs etc. So I agree now that buying is better long-term, but since these expenses are not actually spread evenly across the duration of ownership then a lot of people like me are stuck renting when we'd rather own

[davem]

*ONE MAJOR ERROR*
You can’t both take the money saved from the down payment in the renting example AND the money saved in the buying example to invest. In the renting example you truly CAN invest that lump sum of money (assuming you have it lying around which most renters don’t) but in the buying example the money you save monthly on average isn’t available initially to invest…it’s an amount you save ON AVERAGE per month over the entire course of the example here, most of which is not realized until the end of the timeline.

[thats_toyaya]

Unfortunately, I work in the foreclosure industry.... It's all a sham. Most people lose their home, or die before they own it. If they die first, the family typically chooses to let it go through the foreclosure process. The house belongs to the BANK or the city ( taxes). Your home may end up owning YOU. Life is too short to be owned by our financial decisions. This is a great best case scenario video, although a lot of people aren't investing in index funds.... They don't even know about it. Your home can literally make you sick. Just have your financial literacy fine tuned before any decision you make.

[melixx]

I don't think most renters stay in the same place for the same length of time that homeowners do. A lot of rental properties have "new tenant" discounts for the first year, at least in my area they do. This typically leads to people moving around more frequently, chasing a better monthly payment. So adding expenses for moving every 1-3 years would be good.

[Sergio]

We bought a 40 year old home two years ago and since then we’ve had to replace the roof, replace the heating/air conditioning systems, replace the garage door, all it’s mechanicals including automatic door opening system, we’ve completely remodeled one of the bathrooms, added a vinyl 6 ft tall fence around our yard. Had to replace the refrigerator that came with the house and buy a washer and dryer. Now I’m depressed.😂

[toddspangler]

Extremely detailed!!! We did the math on our home we got for 170k 8 years ago now worth 270k. If we just talk ONLY about the mortgage being around $1k a month for 8 years. If we sold, for 270k today, after fees to agents, it would be like we almost lived in the house for free.

Having said that, renting, like she said, makes more sense if you're only staying a few years.

[GeekyBoutiquey]

Thank you! Just from a purely investment based analysis, this is pretty thorough. But when you consider that you need a home regardless if youre renting or buying, having a home and having equity is everything. No one can sell the place out from under you. And if you want to stay in the home for 30 years, you have a home with significantly less expenses and at retirement age, that is everything. My parents never bought and theyre in their 80s and facing some very real hardships with a landlord ready to sell the place and him never doing the repairs needed for the place the 18+ years they've lived there. Now I'm working on a multi-generational home plan for all of us because we live in a very expensive housing market and senior housing is incredibly hard to get into for them.

[TheHomicidalTendency]

These seem like over-estimates, but especially on smaller scale houses/apartments you save a lot of money in yard equipment, mowing, gas, and depending on your available choices distance to work. Just getting a closer apartment to work can save you 30min+ or more each way an hour of your time each day can be worth $20-50 for you. Whats that $400/mo? pay yourself $20/hr not to have to waste time going to and from work. Other cost savings can be had from renting. But houses overall are going to be cheaper long term in most scenarios. (but not all)

[alen]

Buying always wins in a hypothetical scenario because you assume the buyer is a robot. However, in real life you have lifestyle creep. Instead of getting the most bang for your buck buyers upgrade unnecessary things, spend money on luxuries instead of saving 1% a year of the purchase price for future repairs, buy a bigger/more expensive home because its an "investment", and finally if you add in the transactions costs of 3 homes (most people buy 3 in their life time, "starter home", "transition home", and "forever home") you find out renting is cheaper. If you are an employee or have fixed income i would suggest buying but if you are a business owner/investor i would suggest renting because the flexibility and cost of owning a home will drastically hold you back.

[michaeljameson]

The only reason I'm considering buying in 2022 is because people are asking way more for to rent than a mortgage would be. Especially in San Diego.

[jeovanyrodriguez]

Pretty good analysis. The only issue I have with the home purchase analysis is that for most taxpayers, there won't be any tax savings. This is because the mortgage interest deduction is now an itemized deduction and most people will not itemize since itemized deductions need to be greater than the standard deduction to actually use them.

[dillontarr]

Two major problems with the assumptions here:

1.) Mortgage interest rate: 2.88% is not usual, and is like a dream at the time I write this (June 2023). Any increase in this will make a significant difference in the calculations.

2.) Tax savings: Totally irrelevant for most people in the US, who make too little in annual income to justify itemizing federal tax deductions instead of taking the now very high standard deduction.

[nooormann]

Two things:

First time homebuyer tax credit, depends of your location, vet status, it can goes up $3500-$7000 toward your down payment or mortgage rate deduction.

2. HOA fee, renter doesn’t have to worry about it, but this can range from $50/month for houses to $1000/month in apartments (I located in DMV area and it is pretty common to go above $1k/month)