#AskBP 069: Should I Buy or Rent?

by | BiggerPockets.com

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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About Author

Brandon Turner

Brandon Turner is an active real estate investor, entrepreneur, writer, and co-host of the BiggerPockets Podcast. He began buying rental properties and flipping houses at age 21, discovering he didn’t need to work 40 years at a corporate job to have “the good life.” Today, with nearly 100 rental units and dozens of rehabs under his belt, he continues to invest in real estate while also showing others the power, and impact, of financial freedom. His writings have been featured on Forbes.com, Entrepreneur.com, FoxNews.com, Money Magazine, and numerous other publications across the web and in print media. He is the author of The Book on Investing in Real Estate with No (and Low) Money Down, The Book on Rental Property Investing, and co-author of The Book on Managing Rental Properties, which he wrote alongside his wife, Heather, and How to Invest in Real Estate, which he wrote alongside Joshua Dorkin. A life-long adventurer, Brandon (along with Heather and daughter Rosie) splits his time between his home in Washington State and various destinations around the globe.

2 Comments

  1. Andy Gross

    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

      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!

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