Buy vs Rent – Is Renting a Home Killing Your Net Worth?

Renting a home – is it killing your net worth? The answer is YES. I could not be more emphatic about this.  In this video, I’m going to try and convince you that owning a home has significant advantages in you long-term net worth.

I’m going to give 3 reasons why I believe that renting is the worst long-term financial decision you can make. And I’m not even gonna bring up things like tax deductions, family stability or the awesomeness of having your own back yard. I’ll talk about those in a different video. This is all about net worth.

OK, number one.

Take a look at this chart.

This is how much money you’re giving to your landlord when renting. Find the amount of your monthly rent.

Let’s say your rent is $2,000 a month. Now find two thousand on the chart (highlighted in Yellow). Now look at the next column. That’s how much you will give to your landlord in 5 years.

Did you find it. 120 thousand dollars. 120 freakin’ thousand dollars in 5 years. Now if this is the case. Your landlord LOVES you.

Now remember, whether you rent or own, you are increasing net worth. In this case, you are increasing your landlord’s net worth, not yours. Why are you doing that again?

Look at the chart again. At 10 years, you gave away 240 thousand dollars. Is this starting to sink in? I hope so. I hope you are starting to realize that your monthly housing payment can be going to your financial well being instead of someone else’s.

Now of course, much of that money will be going to interest in the beginning, but when you combine appreciation and tax deductions, owning a home can significantly help your net worth.

Reason#2 -Renting is killing Your Net Worth

Ok, so you’re not convinced yet. According to the FEDERAL RESERVE’s  Survey of Consumer Finances in 2016, the median net worth of homeowners is 44  times the net worth of a renter. 44 times!! That’s crazy.

And it gets worse, from 2013 to 2016, the median net worth of homeowners went up 15%, and the net worth of renters went down 5%. The gap is getting bigger, and renters are worse for wear.

Your’e still not convinced?

Reason#3 -Renting is killing Your Net Worth

Ok. No more numbers. Let’s look a little closer to home.

My parents did not make a lot of money. But somehow, they were able to buy a home. And we lived in that home until I was 15, then we sold it and bought a bigger one.

After my father passed and we were all out of the house, and it was time for my mother to retire, she sold the house and made a significant profit.

She was able to use that money, along with her social security, to live a comfortable life style, which including visiting relatives and doing some travelling.

Without the money from the sale of the home, her retirement would have been tough. We would have had to help her out. But we didn’t, for the sole reason that they owned instead of rented.

Now im telling you this story, because you may be able to identify with it. Maybe with your own parents, or people you know that are retired. Many, many people live comfortably in their retirement, mainly because they bought a home and lived in it for 30 plus years.

Is this starting to sink in?

I hope so. I hope some of this is starting to make sense. Now buying a home to live in may not be the right choice for you right now. I don’t know. Maybe buying an investment property may be a better option. All I know is that real estate creates net worth over time, and that you should start thinking about it.

If you have any questions, or don’t agree, please leave a comment below. And don’t forget to subscribe and hit the bell so you can get notified when a new video hits the channel.

I’m Your first Call.

Your first step should always be to talk to a mortgage professional. Schedule a time speak with me today, it doesn’t matter if your’e already under contract, or if you are buying until next year. I need to make sure we get you ready, and that you’re doing the right things today, so when you do make an offer, you are all set. I see too many people that take advice from the internet or non-professionals and mess up their chances to buy.