Why You Should Rent vs Buy A Home

so is it possible that renting home could be a better option than buying a home that's what we're gonna dig into in this video I think there's a lot of misconceptions about this topic so hopefully we can clear those up for you in this video and provide you with some reasons as to why in some cases not all but some cases renting a home can actually be a better financial decision than buying a home now this is not all cases so we just have to make that very clear but I want you to take these different key topics here that I want to talk about today in this video and at least think about them and process them for making that decision as to whether you should buy or rent a home so without any further ado let's get into this video if you're new here to the channel and make sure you drop a like subscribe to the channel for more videos like this one we're helping people make more money save more money and build a better financial future for themselves so let's get started with this now one of the biggest misconceptions or at least one of the biggest things that people think from a very early age from a very young age people tell us they say renting is a waste of money and buying a home is always better and it's 100 of the time renting is not good and 107 the time buying is the better option but I want to kind of break that that knowledge today or at least debunk some of those ideas because the problem is look when you are thinking about the cost of renting versus buying the problem is people don't factor in the cost of ownership see what it comes down to is that no matter what there's going to be a cost of putting a roof over your head now maybe you're paying that through rent or maybe you're paying that through property taxes and paying for an actual physical roof over your head by getting a new roof on the home that you might own but regardless there's going to be expenses on both sides of the spectrum and you need to consider that so so many people leave that out when they're thinking about whether or not they should buy or rent and they say well if I owned the home after 30 years of paying off this mortgage I'm gonna have zero dollars a month for my home expenses but that's not the case there's so many expenses my parents own the home and they pay hundreds probably well over $1,000 per month in total expenses for maintaining their property if you want to get landscaping done if you want a new roof a new water heater there's a lot of expenses that are involved now in some cases homeowners insurance could cover some of those different things but at the same time there's going to be expenses that could be incurred when you own a home so you need to consider that before actually making that decision now another thing that people don't take into consideration is something called opportunity cost so what would be the opportunity cost if if you are living in your home how much could you be renting that home out for to somebody else see that's a cost there that you could be making money on that home that you're living in now you need a place to live everybody needs a place to live but you need to factor in that cost as well going forward with your financial decision on this so if you're little bit confused on the opportunity cost you can dig into a little bit deeper maybe just do a simple google search on opportunity cost but it's something that I use through every financial decision making that decision with just using this basic concept of opportunity cost it's really basic but it's so incredibly important to understand and that's something that people don't consider when they think about renting versus buying now there's a couple more reasons why I personally choose to rent over buying a home this is my personal decision it's not always the better option to rent in a lot of cases I'll be honest with you a lot of cases buying home for the long run can be a better financial decision than renting it's it's been proven in a lot of cases that it is better but there's still some reasons as to why renting could be a better option for you right now at this moment and one of those reasons is is because renting allows you to have much more mobility and this can end up saving you a lot more money as well so a lot of people today will move from one job to the other every few years and if that's the case buying a home in say Philadelphia and then moving to Colorado Boulder three years later and then moving to Los Angeles three years after that and then moving to somewhere in Tennessee four years after that and if you're buying home every single time when you're moving that could work out for you but in a lot of cases it doesn't work out for people so I want explain this to you now when you're buying and selling homes quite often every few years because you might be moving from one job to the other or one state to the other this could really incur loss first of all there's there's closing fees their selling costs may be thousands of dollars for that but something that people don't think about is that say you buy a home for $400,000 in Philadelphia and two and a half years later you decide you're gonna move to the Colorado Boulder because you want to move jobs or your employer says you're moving from this place to the other we're making you do this or else you're losing your job it happens to people right and and if that's the case that you bought your house for $400,000 three years later or two and a half years later when you're thinking about moving to a new place the house maybe it's worth $300,000 now in a lot of cases that's that's not what happens most homes go up in value over time but if you find yourself at the wrong time period that home could lose value especially if it's right during the financial housing crisis right so say that house goes from $400,000 to three and a thousand dollars well maybe you just took a mortgage out on that home for $400,000 to get that home and now the house is worth $300,000 so if you want to sell that you're essentially out a hundred thousand dollars it's called being underwater or upside down on a loan and this can cause a lot of stress to families or people who are buying homes and then if they want to move to a new place they're faced with a serious financial issue so this is just something that you need to consider it's it's not something that should necessarily hold you back from owning a home but the whole purpose of creating this video is to at least hopefully kind of make people think a little bit further outside the box and think about the potential risks that could be involved with buying and and and selling homes quite frequently moving from one place to the other so that's something that you do need to think about now one of the other reasons as to why renting could be better is because there's a much lower down payment so you're probably paying your first month's rent maybe your last month's rent to move into the place versus paying maybe 10 20 30 thousand dollars or more to buy a home you need a down payment to buy a home at least 3% maybe 5 10 percent 20 percent down to buy a home and you want to think about the opportunity cost behind that as to what you could be doing with that money that that down payment instead of using it going towards your home so a great example let's say you have $50,000 that you're gonna use for a down payment on a home well what if you took that $50,000 and instead rented and and use that $50,000 to get a positive return on investment of say 10% or 20% per year if you could pull something off then you could see how much money you can make off of that and run the numbers and in some cases that shows that renting could be a better option than buying that's why I personally choose to rent at the moment because I want to take all the capital that I'm making now and putting it back into my business putting it back into investments and netting a higher return on investment and then it would be for myself to lock up a lot of cash just for a place for myself to live now we're not talking about real estate investments is talking about a place for you personally to live real-estate investments that's a totally different ballgame and in just about every case it's going to be a better option buying a real estate investment out I don't think you can rent a real estate investment now another bonus to renting is is predictability see this actually has a lot of weight at least for myself knowing that if my rent is say nine hundred dollars per month I know how much is going to be every single month whereas if you own a home there's a lot more variable costs involved that could mess up your budget or at least kind of hinder some different things for your financial future budgeting especially which I think it's really important you know whenever you look at investments if you know how much a company's gonna be bringing in every year it's going to allow you to have much less risk involved because you know the future outcome of that so personally when I know that if I'm paying nine hundred dollars a month per month every single month it allows me to budget better and allocate my my assets in a much smarter way versus if I don't know how much I'm gonna have to have because maybe some type of expense pops up when I'm owning a home that I'm gonna have to cover in the future so having that predictability of renting is a bonus for myself and that's why I choose to personally rent now there's a couple more reasons as to why renting could be better than buying one that I would want to just touch on ever so briefly and and this isn't one to necessarily go off of too much but I wanted to bring it up regardless and that is renting could be a better option than buying if it's 2007 so it you know it's not always a good option to try to predict the housing market or any market I choose to not really try to predict the stock market or various other markets because there's so many different factors that go into play here and that it's almost impossible to truly predict the outcome or of the housing market but if it's 2007 and you're looking around and you're seeing that some of the homes in your particular area are going up double-digit percentages every single year in a home that was worth $100,000 three years ago is worth $200,000 today you might want to think about maybe renting over buying thinking about you know whether or not there might be a bubble in the housing market so if you see prices rising drastically that could be a reason as to why you might want to hold back a little bit like I said timing the market it's not always the best often but if you see markets going up very very very quickly very rapidly then maybe you do want to take a step back and say that you're gonna choose to rent for a little bit longer instead of getting in at a time that could be very high but that's that's something that's a little bit risky and to be honest sometimes you'll see markets going up and do not go down for 30 years they could just continue to go up and those slow times might just kind of stagnate for a little while the home prices but they don't go down so if you're waiting for a great deal don't wait for another housing crisis to buy a home but at the same time think about kind of being able to time and ever so slightly at least in a sense where if you're seeing those prices going up tremendous amounts and you might want to hold back for a little while so those are the different reasons why renting could be a better option than buying like I said this is kind of rare this isn't always the case and for a lot of people buying is still the better financial decision for the long term especially if you know where you're gonna live you have your place lock down you have your family in one area and you want to live in that specific area then buying home from the long-term is almost always a better option so thanks for watching the video any questions comments leave them down below and I'll save way next time

Channel: Nate O'Brien

Views: 109,814

Rating: 4.8799424 out of 5

Keywords: buy or rent, buy versus rent, buying a house, buying property, home ownership, how to invest, how to invest in real estate, investing 101, investing quick start guide, learn to invest, phil town, real estate, real estate investing, real estate investments, rent or buy, rent or buy a house, rent or own, rent to own, rent vs buy, rent vs buy home, renting vs buying, renting vs buying a home, why you should rent vs own, nate o'brien

Id: 3xf0kilLGxc

Length: 10min 4sec (604 seconds)

Published: Thu May 09 2019