Renting vs Buying a Home: The Lie You’ve Been Told

Should you rent or buy your home? I’ll show you how to decide in 4 steps, with real numbers – and I’ll give you a clear rule to follow to make sure you make the right decision.

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Ramit Sethi is the host of Netflix’s “How To Get Rich” and New York Times bestselling author of “I Will Teach You To Be Rich”

[xo]

I have owned a 4-plax to rent out, a condo, a luxury condo, and an acreage. I have also built a log house. Gave up homeownership and started renting in 2014. Less headaches! :) I am a physician and with the healthcare crisis across the country, I can move if I don't enjoy my work anymore or if I have a better offer somewhere. I am in the process of moving for 2x salary increase. Not planning to buy a house anytime soon, but I save and invest my money, so when the market crash, I can buy if I know where I want to be in old age.

[trevortracy]

I love this because it makes sense. I ran the numbers and was surprised that the house I want to buy is $15, 000 cheaper to buy than to rent the equivalent. I messed with all the numbers and it still came out cheaper to buy. Thank you for this resource and explaining. It probably makes the most sense for people who don't have kids and like to live in town.

[eddiemalvin]

When you run the rent vs. buy numbers, make sure you take into account your entire lifetime. Don't stop at 5 or 10 years, include the numbers after the mortgage is paid off but the rent will still be due.

[AveryMtlCa]

It all depends on the person's personality. If they can't save regularly and are always tempted to use up their savings, they should absolutely buy a house within their means. It's the only way to force yourself to build up some capital.

[cyndymm]

Hello Remit. Thank you for all you do. My husband and I found you by watching your Netflix show. I was hooked, discovered your podcast, and rushed to buy your book. I purchased 2 copies. My husband and I had regrets about not purchasing a house. Everyone around us was buying and making us feel like we made a mistake. The numbers needed to make sense when we were looking for a house. You explained how you are not against home ownership. You are saying run the numbers! I'm happy and grateful that we found you because we invested the money we would put down on the house; we are pleased to say we are worth almost a million just by investing and keeping our bills low. We both are in the service industry and live our rich lives by renting a beautiful apartment. There is no way if we were to buy that house, it would be worth a million.

[hypersynesthesia]

My mortgage is dramatically cheaper than any rental situation would be for me, and for the first time I have my own space - a whole flat & garden, not a room. Even once I add in my bills, it’s cheaper than renting was for me, and certainly cheaper than it would be now (London rent is scary). Once I could afford the deposit - which is obviously the biggest barrier for so many people, and that needs addressing - it was an absolute no brainer for me and I feel very fortunate.

[timothybeach]

1. Your example in this video seem restricted to going from renting a condo to perhaps buying condo. Many people in the middle of the country are trying to go from renting a house (a single family dwelling) to buying a house. As a house renter, I don't have to repair the house, but I do have to maintain a rather large yard. 2. Unless the landlord fully owns the rental property outright, he/she has all of the expenses that a home byer would face. So, going on your example of the landlord being limited to charging rent base on market rates, he/she could be in a situation where the rent doesn't meet all of his/her costs, but would offset them - which I hadn't thought about before. Anyway, you've convince me that continuing to rent is the best thing for us.. Thank you

[justlouist]

In Canada what a lot of people don’t often factor in is yearly property taxes. So you have to think about that as well which could be anywhere from $3, 000/$7500+ a yr depending on the size of your home and where you live.

[TheCloveart]

Closing costs, maintenance, transaction costs, and renovations are not monthly costs. These usually happen once or every so often. It depends on the house.

The rest are usually included within your mortage.

[onlinepera]

I have rented large houses for years and sublease a portion of it to my LLC; I use two rooms for my business and have the landlord install a separate meter for water and electricity. I am able to deduct my expenses from my taxes. My business pays for me to live there through my withdrawals and also pays for its own expenses. My LLC also carries the renter's insurance with an umbrella policy. I also rent houses overseas and use the same strategy. The houses I rent are now my assets because they make me money and cover the expenses. I sold both my houses 20 years ago after realizing the cost of owning was very high in Hawaii, about 60% higher than renting, and property tax is constantly increasing.

[omnixoxox]

I bought my house about 10 years ago right out of college, the mortgage is way cheaper than most rentals in my area. Also it’s quadrupled in value since then. You have to be logical in what you can afford. Not every situation is the same and different cities aren’t as affordable but if I could do it over again I would always choose to own where I live homeownership.

[gmkxeqk]

Thank you for sharing your knowledge. May the good Lord bless you more for your generosity. ❤

[drd]

My landlord is providing a service. I am in a small town and pay less the $1K per month in rent. I put my money into R&D instead. While renting I accumulated 40 US patents. Each patent is approximately the value of a house locally. If I put my money into real estate, I would own one house instead. The main downside of renting is social perception: that is women like home owners more. The cost of ownership includes the cost of income taxes having a tie to the local community. In Canada the cost of ownership includes income taxes at 54%. By renting, I can sever the residency tie easily and move to a lower tax jurisdiction. I can save enough in income tax to buy a 8000 sq ft chalet in the Swiss alps free and clear in 4 years by moving to Switzerland. Not coincidentally, Switzerland has 16X more patents per capita than Canada because it is a better place for innovation.

[ween]

I have to disagree. I paid my house off in two years lived super poor and put every penny into paying off. I'd rather pay taxes once a year than rent for life.

[Jgrayfilms]

Something not taken into consideration is that rental prices generally increase year on year when mortgage is likely to decrease overtime.

[bettyngonzalez]

Thank you for this amazing video 🙏🏼 After running the numbers, I realized that it didn’t make sense for me to buy a house, I’m better off renting and investing in the stock market rather than paying a high mortgage.

[happywandering]

Thank you for saving me from doing the would have been the worst financial decisions of my life, buying a house & financing a car. I owe you my life man!!

[gwenaran]

Hands down the best rent vs own video I've seen, was great

[Oscaredi]

That was an entertaining, eye-opening and easy exercise to do! Cheers mate for this! Thumbs up to you.

[abhishekkhanna]

All I know is that my sister rented, while I bought the house. Six years down the line, she recieved an eviction notice, and cannot afford the rent or mortgage of the house she lives in (because the prices have doubled in the last six years, and her rent was considerably lower than the average in the area). Now, she regrets renting more than ever.
I'm not saying you shouldn't rent, I rent my office. But with a house, 8 times out of 10, straightout buying is the way better option. Never have to worry about eviction notices or the rent going up, or running into a douche landlord, who will not maintain the property, or prohibit you from making tiny modifications to your home, which you conveniently skipped over.