Ah yes, the rent vs buy decision I’ve been trying to figure out for years. The rental income vs mortgage payment calculation never made sense to me. But this is much more logical and makes far more sense. Thank you for simplifying this!
Most people are unable to handle a fall since they are accustomed to bull markets, but if you know where to look and how to get around, you can profit handsomely. It depends on your entry and exit strategy.
A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850K
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Sophia Maurine Lanting” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
Thank you for this tip. It was easy to find your coach on web. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
I've been renting since I divorced and sold our family home 12 years ago. What single person can spend ONLY 25% of their income on housing!? Most management companies even require 3x the rent as income. Nearly impossible for a single income household.
It’s difficult to save money for a home while renting when rents are just about the same cost as a mortgage these days. Just that owning a home can come with its hidden costs like maintenance. Would still rather own and build equity than fork over my hard earned cash to another power.
That's what the calculation is for. A quick evaluation I follow is that unless rent is less than 60% of 2x the monthly mortgage payment of a 30 year loan, I should probably consider buying a home instead. Any calculation of this level should always include opportunity costs though, not that it will matter because most people don't save the difference between the two.
Rent by me is MORE expensive than a mortgage 😮 Our purchased home is almost twice as large as our previous rental, and is $200 LESS per month, including P, I, and property taxes 😅
This sounds great and makes sense. Nowadays though, it feels a little hopeless to buy a home with the cost of homes, insurance, and interest rates in California. I only make $40k a year working 2 jobs 50 hours per week. Trying to also do a business on the side, while raising a family. I feel burnt out. Some hope would be nice. 😊. I appreciate your content and channel.
Great list Rachel. Homeownership should always be the goal, but you should never skip steps to get there. There is no shame in renting, it's actually a luxury because it grants you flexibility and time - the latter of which money can never buy
I do agree with some of this. Both our houses we bought with no down payment (VA), mortgage less than 25% of net income, we still have student loan debt but are able to invest 15% each month still. Our investment ROI is higher than our student loan interest rate. I do agree with the emergency fund. Our basement flooded, but we saved the $5k it cost to remodel before we did it. We know we have a tree that needs to come down, so we’re saving the money to take it down. Nothing goes on debt.
Where we are, rentals were about $500-$1000 more per month than a mortgage, even including property taxes 😮 We got more space for less money 🤷♀️ Edit - that said, I agree with most of these
Rent vs buy is a really simple calculation, but you need to consider 3 big questions first. 1. Why do you want a house? 2. Do you plan to stay there longer than 15 years? 3. Can you afford a 20% down payment? If you can answer the first 2, then you can do the Rent vs Buy. The 3rd one would change the consideration though. Can you pay 20% down? Yes: Is your current rent lower than 2x the mortgage payment for the home size (include real estate fees into mortgage payment after the 20% down). No: Is your current rent lower than 1.5x the mortgage payment? Why those numbers? Because, in general, the total cost of owning a home is generally around 1.5x of the mortgage payment (this includes insurance, maintenance, property taxes, etc.). As for the 2x, this one includes the opportunity cost of investing that 20% down payment amount in anything else. If your rent isn't significantly lower than any of the above values, then you should realistically consider buying the house. The more closer the rent is to those values, the more you should consider buying the home. Whether you have a 15 year or 30 year loan will change it a bit, but you get the gist of the it.
Times changed, as the equity is building faster just in days and months, people are running after buying which is making it far more worse for future buyers, It will crash someday and who purchased on high have to cry
Rent is paying sb elses Mortgage or building CEO of a corporate landlord's wealth. Ok, I am not living in the US, but I can't believe there are no apartments or small houses to buy.
I'm near Louisville KY. I can rent a one bedroom for $800. It's 160k+ to buy a non fixer upper. Definitely cheaper to rent. Was considering a new construction Two bedroom, one bath for 195k.... More than double the cost of renting.
@@sarahmartin8420 Thank you for the reply. Doing a math is crucial. But are you comparing the same? I mean, are you renting currently an apartment or a house? Have you looked at apartment or a house to buy? Obviously buying is not always the best option, however I wonder if threre is a comparison between apples and apples not apples and oranges. I remember from my life in Toronto, that there were only condos with ammenieties and houses available. There were not so many basic apartments without the gym and etc.
As a renter I feel like I am paying for convenience. I tend to move every few years and am currently looking for a job in another state. Like Rachel said why buy something in a place you don’t intend to put down roots? As a renter it’s easier to decide to move and move. Rent prices can vary. I pay $1,200 for a two bedroom two bath apartment. In the state I was living 3 years ago was also 2 bedroom 2 bath and included water and basic cable. Both in nice areas. I actually live alone but live having extra bedrooms for my office/guestroom. I don’t want to shovel snow, rake leaves, pay thousands for a leaky roof or faulty AC. My garbage disposal stopped working last month, I called maintenance. Bada bing baba boom. TBH I could rent something cheaper but I don’t want to do an in town move ahead of my out of town move.
I reckon the paying of rent could be abolished and here's why Al has and will make so many people unemployed and with the tech giants making robots faster than ever fewer people will have jobs to be able to pay rent so AI will effectively cause a global property crash as the whole rental sector needs tenants and without tenants the property sector crashes because landlords would then have to pay their own mortgages eg something they refuse to do
Finally, someone who gets it! We own three homes, two are occupied with family at not cost to them. We live in the third and love it. I would however not turn down a rent home. In fact, it makes economic sense to buy your rental home for someone else and rent the home you reside in. I am talking about investment and tax implications. It would take me a long time to explain but the concept is clear to me. So do a study yourself. With a stack of blank paper, several sharp number 2 pencils, and a calculator. Rachel touched on some of the rationale but she may need to look a the numbers.
Yeah, just keep contributing to the landlord’s equity and he’ll keep raising your rent until you go broke and end up in the street. Then he’ll just rent the unit to some other schmuck, rinse and repeat.
OF COURSE she’s going to tell you it’s better to rent! How else is her father going to fill all those units he bought up during COVID? Funny how they portray credit card and life insurance companies as the enemy when they’re taking homes away from families just to enrich themselves. Not very Christian of them.
I’ll tell you right now that I am gen z and my wife is a millennial. Our total income from both our jobs is under 90k per year. With saving a lot off of that and side hustles, we save about 3k a month. Doing that for just 3 years will get us to 100k. It is within reach if you live below your means and do what you can to make extra money and make good decisions
@ not saying it’s not possible. I just don’t think the average house is worth the price today. I personally don’t plan on buying a house until my net worth hits at least 1 million. In the meantime I can make way more money trading stocks and options.
@ yeah. I mean we rushed into home ownership for sure and are now selling our house and will be out of right away after that with the profit. Home ownership definitely comes with a lot of stuff that isn’t always talked about
![I.N "HALLUCINATION" | [Stray Kids : SKZ-PLAYER]](http://i.ytimg.com/vi/n5B5q1Hwt_U/mqdefault.jpg)
Ah yes, the rent vs buy decision I’ve been trying to figure out for years. The rental income vs mortgage payment calculation never made sense to me. But this is much more logical and makes far more sense. Thank you for simplifying this!
Most people are unable to handle a fall since they are accustomed to bull markets, but if you know where to look and how to get around, you can profit handsomely. It depends on your entry and exit strategy.
A lot of folks downplay the role of advisors until being burnt by their own emotions. I remember couple summers back, after my lengthy divorce, I needed a good boost to help my business stay afloat, hence I researched for licensed advisors and came across someone of utmost qualifications. She's helped grow my reserve notwithstanding inflation, from $275k to $850K
This is definitely considerable! think you could suggest any professional/advisors i can get on the phone with? i'm in dire need of proper portfolio allocation
Certainly, there are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ‘’Sophia Maurine Lanting” for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look-her up.
Thank you for this tip. It was easy to find your coach on web. Did my due diligence on her before scheduling a phone call with her. She seems proficient considering her resume.
I've been renting since I divorced and sold our family home 12 years ago. What single person can spend ONLY 25% of their income on housing!? Most management companies even require 3x the rent as income. Nearly impossible for a single income household.
It’s difficult to save money for a home while renting when rents are just about the same cost as a mortgage these days. Just that owning a home can come with its hidden costs like maintenance. Would still rather own and build equity than fork over my hard earned cash to another power.
That's what the calculation is for. A quick evaluation I follow is that unless rent is less than 60% of 2x the monthly mortgage payment of a 30 year loan, I should probably consider buying a home instead.
Any calculation of this level should always include opportunity costs though, not that it will matter because most people don't save the difference between the two.
I agree. Neither do I desire to live in the neighborhood or property that rent for 25% of my salary
Rent by me is MORE expensive than a mortgage 😮 Our purchased home is almost twice as large as our previous rental, and is $200 LESS per month, including P, I, and property taxes 😅
Believed all the stuff. Bought a house while still in debt. Selling the house only 11 months later
This sounds great and makes sense. Nowadays though, it feels a little hopeless to buy a home with the cost of homes, insurance, and interest rates in California. I only make $40k a year working 2 jobs 50 hours per week. Trying to also do a business on the side, while raising a family. I feel burnt out. Some hope would be nice. 😊. I appreciate your content and channel.
Change states, we need you in indiana
Great list Rachel. Homeownership should always be the goal, but you should never skip steps to get there. There is no shame in renting, it's actually a luxury because it grants you flexibility and time - the latter of which money can never buy
I do agree with some of this. Both our houses we bought with no down payment (VA), mortgage less than 25% of net income, we still have student loan debt but are able to invest 15% each month still. Our investment ROI is higher than our student loan interest rate. I do agree with the emergency fund. Our basement flooded, but we saved the $5k it cost to remodel before we did it. We know we have a tree that needs to come down, so we’re saving the money to take it down. Nothing goes on debt.
Where we are, rentals were about $500-$1000 more per month than a mortgage, even including property taxes 😮 We got more space for less money 🤷♀️
Edit - that said, I agree with most of these
Rent vs buy is a really simple calculation, but you need to consider 3 big questions first.
1. Why do you want a house?
2. Do you plan to stay there longer than 15 years?
3. Can you afford a 20% down payment?
If you can answer the first 2, then you can do the Rent vs Buy. The 3rd one would change the consideration though.
Can you pay 20% down?
Yes: Is your current rent lower than 2x the mortgage payment for the home size (include real estate fees into mortgage payment after the 20% down).
No: Is your current rent lower than 1.5x the mortgage payment?
Why those numbers? Because, in general, the total cost of owning a home is generally around 1.5x of the mortgage payment (this includes insurance, maintenance, property taxes, etc.).
As for the 2x, this one includes the opportunity cost of investing that 20% down payment amount in anything else.
If your rent isn't significantly lower than any of the above values, then you should realistically consider buying the house. The more closer the rent is to those values, the more you should consider buying the home.
Whether you have a 15 year or 30 year loan will change it a bit, but you get the gist of the it.
Dave Ramsey said renting is like setting a fire on money in a living room, something along those lines.
Rachel is the only Ramsey personality that can disagree with Dave openly without repercussions.
Rachel what happened to your 👖👖 jeans. 😅😅
nice advice
Times changed, as the equity is building faster just in days and months, people are running after buying which is making it far more worse for future buyers,
It will crash someday and who purchased on high have to cry
I wish I could only spend 25% of my salary on housing…
America is a rent country now that houses are not affordable period.
Rent is paying sb elses Mortgage or building CEO of a corporate landlord's wealth. Ok, I am not living in the US, but I can't believe there are no apartments or small houses to buy.
I'm near Louisville KY. I can rent a one bedroom for $800. It's 160k+ to buy a non fixer upper. Definitely cheaper to rent. Was considering a new construction Two bedroom, one bath for 195k.... More than double the cost of renting.
@@sarahmartin8420 Thank you for the reply. Doing a math is crucial. But are you comparing the same? I mean, are you renting currently an apartment or a house? Have you looked at apartment or a house to buy? Obviously buying is not always the best option, however I wonder if threre is a comparison between apples and apples not apples and oranges.
I remember from my life in Toronto, that there were only condos with ammenieties and houses available. There were not so many basic apartments without the gym and etc.
As a renter I feel like I am paying for convenience. I tend to move every few years and am currently looking for a job in another state. Like Rachel said why buy something in a place you don’t intend to put down roots? As a renter it’s easier to decide to move and move. Rent prices can vary. I pay $1,200 for a two bedroom two bath apartment. In the state I was living 3 years ago was also 2 bedroom 2 bath and included water and basic cable. Both in nice areas. I actually live alone but live having extra bedrooms for my office/guestroom. I don’t want to shovel snow, rake leaves, pay thousands for a leaky roof or faulty AC. My garbage disposal stopped working last month, I called maintenance. Bada bing baba boom.
TBH I could rent something cheaper but I don’t want to do an in town move ahead of my out of town move.
I reckon the paying of rent could be abolished and here's why
Al has and will make so many people unemployed and with the tech giants making robots faster than ever fewer people will have jobs to be able to pay rent so AI will effectively cause a global property crash as the whole rental sector needs tenants and without tenants the property sector crashes because landlords would then have to pay their own mortgages eg something they refuse to do
Finally, someone who gets it! We own three homes, two are occupied with family at not cost to them. We live in the third and love it. I would however not turn down a rent home. In fact, it makes economic sense to buy your rental home for someone else and rent the home you reside in. I am talking about investment and tax implications. It would take me a long time to explain but the concept is clear to me. So do a study yourself. With a stack of blank paper, several sharp number 2 pencils, and a calculator. Rachel touched on some of the rationale but she may need to look a the numbers.
Instead of buying a home, rent and invest with the money you save!
Yeah, just keep contributing to the landlord’s equity and he’ll keep raising your rent until you go broke and end up in the street.
Then he’ll just rent the unit to some other schmuck, rinse and repeat.
OF COURSE she’s going to tell you it’s better to rent!
How else is her father going to fill all those units he bought up during COVID?
Funny how they portray credit card and life insurance companies as the enemy when they’re taking homes away from families just to enrich themselves.
Not very Christian of them.
You just bitter
Who the heck can afford a 100k down payment on an average house these days? Gen z and millennials have been completely priced out of real estate.
I’ll tell you right now that I am gen z and my wife is a millennial. Our total income from both our jobs is under 90k per year. With saving a lot off of that and side hustles, we save about 3k a month. Doing that for just 3 years will get us to 100k. It is within reach if you live below your means and do what you can to make extra money and make good decisions
@ well good for u guys 👍
@@Bill-qz8jv not trying to brag at all but don’t tell me it’s not possible
@ not saying it’s not possible. I just don’t think the average house is worth the price today. I personally don’t plan on buying a house until my net worth hits at least 1 million. In the meantime I can make way more money trading stocks and options.
@ yeah. I mean we rushed into home ownership for sure and are now selling our house and will be out of right away after that with the profit. Home ownership definitely comes with a lot of stuff that isn’t always talked about
@rachelcruz, your thoughts on NACA program?
Also, I can purchase income property through NACA