Renting vs Owning

The table below illustrates how much money you spend over a period of time when renting your home. If you pay $1,500 a month in rent, in three years you’ve paid the Landlord $54,000 and in 5 years, 90,000, with no equity to show for it.


The Downside of Renting a home …

  1. Your rent can be raised at the end of each lease period
  2. The owner can make you move through possible eviction or if they decide to sell the home
  3. No equity build up over the course of time
  4. No potential tax write-off for the cost to live there
  5. Any improvements on the property need to be cleared by the Landlord and you’re improving THEIR property, not yours
  6. Increased deposit costs if you want a pet (if they will let you have one)


The Benefits of Renting a home …

  1. Shorter commitment, you can move after your lease is up, usually after 6-12 months
  2. Lower maintenance costs
  3. No risk of losing an investment


The Benefits of Owning Your Home …

  1. Stability in your monthly mortgage payment if you have a fixed interest rate loan
  2. You build equity over time as you pay down your loan
  3. Potential yearly interest tax write-offs (consult your tax advisor)
  4. More freedom when you want to have a pet
  5. More liberty in decorating your home inside and out (though HOAs can sometimes limit this)
  6. Improvements to the property can increase the long-term value
  7. You can build an investment portfolio. After you buy your first home you can save up another down payment, buy a second home and rent out the first one

The Downside of Owning a Home …

  1. It’s a long term commitment and you risk the market going down after you buy (but if you plan on keeping your home 7-10 years often you can weather the storm and historically real estate appreciates over time)
  2. You pay for the maintenance (i.e. replacing water heaters, roofs, etc., when they wear out)

Sometimes your monthly payments can go DOWN when you buy a home compared to renting. It might mean moving a little further away, but sometimes it’s worth it. These two homes were within 5 miles of each other.