Should You Rent or Buy

Should you rent or buy? The two different choices are very different in living situations. One allows you freedom one is more unmovable. Renting pays the full amount out without increasing Net Worth but buying is highly leveraged and can be a great risk short term. There are many thing to consider but one thing is for sure, if you buy long term, you are highly likely going to be better off just like many of those who choose to own a home. Short terms though, the price might fluctuate so much that you might completely lose your down payment in equity in a blink of an eye.

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[TimelordUK]

I'm happy renting. My rent is £385 a month, about $507 for a one bedroom apartment. I live alone which I love. I'm self employed so my earnings differ dramatically each year, this year has been very bad for me. I have no dependants, so even if I struggled with a mortgage I'd have no one to leave the property to anyway after I'm gone. I'd need to get a lodger to help pay the mortgage and I don't want to share with anyone, so my situation suits me. I'm nearly 50 and have rented all my life

[NDX]

Average monthly cost of home maintenance in America, is $1, 200. That’s not including any mortgage payments. You can find apartments cheaper than that. Add in a 30 year mortgage on a half a million dollar home, plus 30 years of maintenance costs, and that’s well over a million! You could rent for far much less than that, save the difference that you would’ve paid on a mortgage+maintenance, and invest the rest into the market, or just rent until you can buy a home in cash. Don’t buy in a high housing market (like now). Rent low, make, and save, as much as you can. Only buy homes at low prices, in cash! DO NOT take the mortgage death pledge.

[Gary]

Since I quit work back in 2000. I wanted to move around and see the country. My main income plan was the stock market. Mostly to buy low after market meltdowns like in 2003 and 2008 and am getting very annoyed with the no recent meltdown in 8 yrs..grr I would sell my house now if the market was down 30 or 40% like before and pour all the money in the market.

Of course you gotta have money to make money in the market so I moved around to places that were cheap to check them out for a while. An area not too cold and not too hot without dangerous weather.
Had a house in Big Spring TX for $14K.
Rented an apt in Roswell New Mexico for $300 per mo.
Over the past 13 yrs had 3 houses in W Virginia. One for $19K, #2 for $39K and #3 for $52K. All done with cash.
The house I bought for $19K was in a flood zone and the state bought me out for $82K. Talk about hitting the RE jackpot with that house....that was sweet going to the bank with that check.
And haven't bothered to work in a "job" in 17 yrs. This yr I retired at 62...hehe
And so far I have refused to live in a motor home, van or car to save even more money like so many people are doing now days with the high cost of housing.

[ominous]

Gentrification is why I moved out my last place. I was paying $1100 a month. Landlord wanted to increase it to $1200/month on the new lease due to new development in the area. I dipped. Found a $800/month place just 7 miles away. There are loopholes in the renting game.

[johnroberts]

What most people forget, and what he failed to mention is, if your single, and you own your own home, and you lose your job, it's harder to sell your house than to move to another apartment down the street. That's why I prefer to rent rather than own, because it's so much easier to get up and move, than sell your home. I mean, it could take months or years!! It's like having your Emergency Fund in the stock market.

[CeeCee-jw]

"You do need somewhere to live sometimes" 😂😂😂

[PlacesGoTravel]

When you buy with a mortgage you are effectively renting house from the bank, but you have to pay for upkeep and repair of property PLUS you’re stuck with hassle and cost of selling if you need to move AND the risk of property prices fluctuations. My recommendation is to rent until you can afford to buy a property mortgage free, unless this is unviable for you (accepting that it is in some countries) or you have very strong motivation to “own” with mortgage.

[GStar]

Super informative - I personally prefer to rent as it gives me location flexibility but I agree with your point on buying as a better long-term option.

[kingofhill]

I'm taking a personal finance elective and we were working on rent vs buy scenarios. Exactly like what you said it's always cheaper to buy and then rent in the end. A lot of the stuff in the class is familiar to me because I watched your videos! They're very informative and interesting. Thanks for making these great videos!

[markm]

The housing market is a big game and it's so predictable. We are in a bubble now and the prices are getting scary high. If you have a house I would sell now and go live in a rental for a few years while you wait for the crash. When the housing market crashes hard it's time to buy a house at auction. At the last market crash I've seen really nice homes that were around $150k in value sell for $30k at auction. You can get insane deals and really grow your net worth 3x-5x over ~10 years without actually having to work. I hope to have $100k in cash the next round of the housing market so I can grab a few homes. Put them in rentals. And wait patiently for the bubble. If you miss the bubble it's no big problem, just wait another 10 years and those houses will be in the bubble again.

[silverplug]

Unfortunately, I'd have to disagree with some of the info presented here. The value of the house is only relevant to you when you buy it or sell it (or pay taxes). Just because the house prices appreciated 20% percent, it does not mean that you suddenly acquired 20% more wealth--it only means that IF you were to sell it RIGHT NOW you'd probably get 20% more cash than a few years ago. Since you live in your house, you can't call it an "investment, " as in "thing that produces you money" unless you rent out rooms, or something. A rental property would be an investment.
Of course, owning a house is a great vehicle to save money, budget, and overall improve your financial situation. But the existence of a house does not always equal "investment." Not by the very definition of the word.

[GilBatesLovesyou]

I think renting is better if you're not a generally handy sort of person. A lot of people really overlook the service aspect of renting. With a house there is upkeep, and when you live in an apartment or rented house, you don't notice all the time maintenance comes down, the landlord does something, etc. Your fridge breaks, apartment, get a new one in a week, included in the bill. Owning a house, need to figure out $400 for a new fridge somehow. Going even further, even aside from basic plumbing like sink traps/etc ($50-100 for a plumber to come out) there's things that aren't very reasonably DIY like roofs that need to be replaced. Our house needed a new roof and it's a small house and cost about $10K. $10K over a few years pretty much makes the difference in renting nothing. And of course as well, just wear and tear stuff from living in one spot for so long, like painting, carpets/flooring etc, add up (especially again, if you're not doing them yourself) whereas renting you might stay for 3-4 years, go to another place, and get those "new" again. Renting is a good service, and I think it's better for someone that doesn't want to be handy/can't be handy (my mom is disabled and elderly and can do basically no home repair stuff...) to just rent, as houses like cars, inevitably have problems, and this is one reason I don't believe houses are just an automatic investment.

[incharini]

Here's what a lot of people don't understand (and gets lost with everyone patting themselves on the back).

A mortgage is an obligation. Not only that, it's a 30 year obligation. It limits your job and living options.

You also have to buy surplus room in case you get married or have kids. The extra room is not free, there's a cost associated with that. When you rent, you only rent the EXACT space that you need. Sure you can rent a room out, but now you're not living alone. The opportunity costs for not being able to put extra money in a retirement fund because you have to pay for the extra space you're not using but might somewhere down the road is enormous.

On top of that there's property taxes. Sure they are deductible, but it's not a credit. Huge difference.

The truth of the matter is that buying a home is a FANTASTIC investment... for the bank.

[hotfoodonaplate]

So currently, we sold out moved across the country, income has went up, now we currently rent at a rate that is less then the property tax and utilities costs. So we are only staying here long enough to get the last of the kids through college. And then we are hitting the road . Our current projection is 33k, in liquid assets per year I to savings, .. The housing market has peaked here so it is better to rent especially for where we are at and the low cost.

[erakkovaatainen]

I rent in slums, cheap rent, I pay for service. Cost of living is for everyone, okay, you can't escape it. You either wasting your money on some interest and bills related to own house or on rent and landlord who pays all these important bills. I rent studio apartment for 417 € a month w/ bedroom. My yard is mowed, free snow removal, my water is paid... also cable and garbage fees included to the rent. And I am not even talking about not paying any other bills. If something is broken, I just call someone, and it gets fixed as soon as possible. Just one call.

This may not be for everyone, but all house owners in Finland seem to be more of the same: I have too much bills. Then when someone is buying house and you walk there, they say let me give you a tour. I always ask are you selling it to me or what? Minimalism is the cure, you rent in slums, and you save money for something more important. Your money are not inside a thing. Because let's face it, homes are in dreams, they are just houses supposed to rust with you. Why to invest in something that could be gone tomorrow? I don't know.

Now if you have a house in slums, these are not like your suburbian houses, but you can live. You can live just fine.

Cost of living is for everyone, you can't escape food, housing, electricity and other bills. But you can save on that.

[ianfraser]

in Australia Sydney home price increasing at 10-20% per year and rent costs are always rising so buying is a much better option

[Nuganics]

Because in Soviet Australia real estate sale tax and agency fees are high normally you have to stay in a place for 5-10 years to make purchasing worth it.

[kinglucas]

Why do these days people keep talking negative about buying and renting is way better? You're one of the only few videos that gives really good information...Thx!

[MRC]

I'm a renter because house prices are insanely high in Australia. 500k or more for a house that would sell for 100k. Our people are debt saturated as well but we all carry on as if we're okay. I want to own but not without a major downtirn in prices.

[Sonny]

Great Video. I am going to add that You should buy a home, ONLY after you have done below things:

1) Have 6-9 months of solid Emergency funds (liquid cash).
2) Have paid all Bad Debts (credit cards, loans). NO Bad Debts.
3) Have saved at 20% down payment.
4) Have invested in 401K to company match, and/or IRA.
5) Plan to live in same house for next 10 years. 5 years in too uncertain.
6) Fee that job and/or business income is reliable or safe.
7) Have general knowledge about house maintenance, upkeep, fixes, taxes, refinance process, and in general real estate market.

There is nothing worse than buying a house in hurry and going through foreclosure. Rent until you have above list completed. Only then you are ready to Buy a house. Also, have a plan to pay off mortgage early.