Why Rich People Rent
If you've been rocking with me financially for a while, you know that I LOVE the rent vs. buy debate. I am famously a MILLIONAIRE who RENTS! And some of my new readers might be thinking: A financial pop star? Throwing money to a landlord every month?
I know, I know, but I really am a firm believer that buying is not for everyone. Even Warren Buffett, my boyfriend, said…
But enough about me, what’s best for you? Let’s weigh the pros & cons and scroll to the bottom to use my new rent vs. buy calculator:
Renting allows you FREEDOM. And when you're young… like me (is 32 young? Don't answer that…) Freedom is EVERYTHING! I don't know where I will be in 3-5 years, so I wouldn't buy property! What if I am in Nicaragua with a hot chef raising poodles? Anything could happen! Another reason to rent is that you don't have to deal with homeowner stuff like leaky pipes & can just call your super to handle it. And, my favorite reason of all, is that the stock market has historically out-performed the real estate market. So if you're looking at real estate as an investment — think again. Renting & investing your “down payment money” instead is actually a wiser choice from a financial perspective.
"Stocks have returned, on average, about 8% to 12% per year while real estate has generated returns of 2% to 4% per year," says Peter Earle, an economist at the American Institute for Economic Research.
Buying a home is great if you're looking to put down roots. It's cute to raise a family in a home you own, people love that shit. Plus — depending on where you buy (Austin?) you could make money when you sell your house eventually. Yep, when you buy property you are famously building equity in a property that you can resell (hopefully) at a later date for a profit.
Your monthly mortgage payments and renovations are going towards an overall investment at the other end of the tunnel.
Need to figure out if renting or buying is right for you right now?
Use my rent-to-buy ratio calculator!
Need to figure out what rent you can actually afford?
Use my rent affordability calculator!