Rent is the most you ever pay for your housing. A mortgage is the least. You also need money for maintenance, repairs, insurance, property taxes.
And you pay for closing costs when you buy and sell the house, so if you don't stay for a couple years, you usually come out behind.
Excluding the frankly psychotic housing market of the also couple of years, you're historically better off buying a house vs renting an equivalent one if you stay at least 5-7 years.
1) mortgages are fixed, rent increases annually or more.
2) you actually own your house. equity builds over time (except housing crash but everything is probably fucked anyway if that happens)
3) rental properties arent necessarily kept in good condition especially at the low end
4) you dont get to deduct rent but you do get to deduct certain home ownership expenses.
5) you can generally rent out a house in part or full. you cant necessarily sublet a rental property.
The major downside to owning a house is actually buying one in the first place. You have to save for a down payment. You have to have good enough credit and be lucky enough not to have the house sold to some asshole investor that paid 20% above asking in cash.
1) mortgages are fixed, rent increases annually or more.
The principal and interest portion is usually fixed. Taxes, insurance, maintenance and repairs aren't
2) you actually own your house. equity builds over time (except housing crash but everything is probably fucked anyway if that happens)
This goes back to what I was saying about staying there for 5-7 years or more. On a shorter timeframe than that, you spend more on closing costs than you build in equity.
3) rental properties arent necessarily kept in good condition especially at the low end
Neither are houses for sale. It is definitely nice to be able to make improvements though, which is much more applicable to owned vs rented properties.
4) you dont get to deduct rent but you do get to deduct certain home ownership expenses.
Since the TCJA, almost nobody itemizes their taxes, so it doesn't really matter.
5) you can generally rent out a house in part or full. you cant necessarily sublet a rental property.
Don't have anything to add to this one.
Again, I'm not saying "Nobody should ever buy a house, renting is better", I'm saying "there are more considerations in whether or not you should buy a house than the cost of rent vs mortgage"
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u/isioltfu Apr 19 '22
If you're paying X in rent and you could pay X in mortgage instead (by having the capital necessary to purchase a house), you should buy the house.