Buying vs. Renting When Young and Just Starting REI Business

[Brandon Reed]

Hey BP,

Can you guys help me understand  the true value of buying over renting a primary residence? I hear so many different opinions on the positives of purchasing a home to live in. All my life I've heard "don't throw your money away to a landlord when you could be putting that away towards building equity in a home"...but as I've been learning more about REI I've heard a lot of the other side of that argument as well and have read a lot about how owning a home can be largely overrated and should be avoided.

My wife and I are in our late 20's and are currently renting and love the neighborhood we are in. We love our home and are in no hurry to move. We are at the very front-end of starting our REI business and are currently looking for our first deal. We know that right now we definitely shouldn't be buying a home since our cash on hand is low and we want to spend that money on a down payment for an investment property instead of a primary residence. We feel really solid about that decision. But my question refers more to the future. Should we be in a hurry to save back up in the next few years for a primary residence? Or should we not be in any hurry on that at all and just use all of our cash to go right back into obtaining more investment properties?

Any insights you could offer would be helpful. Thanks so much!

[Nicholas Sheridan, Jr.]

You should make a big Pro/Con chart for renting an apartment vs buying a house.

Renting an apartment:

Pros: Little to no maintenance on your end, save a bunch on not paying property taxes

Cons: Not building equity (aka you don't own anything), proximity to neighbors

Buying a house

Pros: mortgage interest deduction, after X years you own something that you can sell

Cons: Maintenance, taxes, insurance

Buying a property like a duplex and living in one side and renting out the other:

Pros: Your tenants help pay for your mortgage and other expenses, you get to learn how to be a good landlord

Cons: You live close to your roomates albeit seperate units (this could be a pain in the butt if you have crappy tenants)

Hope this helps!