#AskBP 069: Should I Buy or Rent?

Expertise: Landlording & Rental Properties, Personal Development, Real Estate News & Commentary, Business Management, Flipping Houses, Mortgages & Creative Financing, Real Estate Deal Analysis & Advice, Real Estate Wholesaling, Personal Finance, Real Estate Marketing, AskBP, Real Estate Investing Basics
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Should I Buy or Rent?

It seems like such conventional knowledge that its better to own a property than to remain a tenant. While that’s true for many, some people don’t fully understand all the factors that come into play for homeowners to their advantage over the long term. On this episode of the #AskBP Podcast, Scott Trench discusses the financial components that come into play for the owners of property, and the scenarios in which it might be better to just remain a renter.

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Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He is a nationally recognized leader in the real estate education space and has tau...
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    Andy Gross from Baltimore, Maryland
    Replied about 5 years ago
    Great episode. If you want to put numbers into this concept, you can see how much you’d be paying down over the course of ownership by looking at an amortization chart. Let’s say I intend on living in a place for four years. At 5% interest, I will pay down my mortgage by about 6%. Assuming that there is zero appreciation, I would need to live in that house for 4 years to break even if my broker charges me 6% (split between buying/selling agents) to exit the property. That money would have otherwise been “thrown away” on rent. The other issue is whether or not the mortgage interest deduction is actually going to help you. Depending on the cost of your property, your standard deduction may actually exceed the itemized deduction. This is something you should ping your accountant on before buying.
    Scott Trench President of BiggerPockets from Denver, CO
    Replied about 5 years ago
    Andy – great additional points here. I really should have included that last bit about the standard deduction often being higher than the itemized deduction. In my case, as a single man with no dependents, my standard deduction is going to be very easily outstripped by my interest payments and tax deductible mortgage insurance – but I also live in a more expensive place than a lot of folks. Thank you for these points!