Rent Cheap to Invest More… or Buy Your Own Home Now?

[Joseph Snyder]

When you’re single, the math is pretty easy. You can live in a duplex or fourplex. Keep your costs low and build equity. Even if you don’t house hack, renting a small one-bedroom or studio can be an obvious win because your living expenses stay low and you can throw more money into investments.

Once you have a family, kids, and a couple of pets, it’s not as simple. Most of the rentals that really save you money aren’t in areas you’d want to live with your family.

Here’s the situation I keep thinking about.

The kind of home most people would want for their family is in a safe neighborhood with good schools and a nice community. That could easily cost over $4,000 a month with a small down payment. Inflation is making it harder for people to save that down payment in the first place. You could rent something smaller or in a less “perfect” spot for around $2,400 and save about $1,600 a month. As a renter, you’re also not paying for big repairs or maintenance, which means even more savings. If it’s a condo or townhouse, you might get a gym or pool included. That could save money there too.

The question is: in today’s economy, is saving $1,600+ each month enough reason to hold off on buying your own place? Or does inflation wipe out the advantage so fast that you’re better off buying now?

And if we do see a market correction, would that change your answer?

[John Clark]

Quote from @Joseph Snyder:

When you’re single, the math is pretty easy. You can live in a duplex or fourplex. Keep your costs low and build equity. Even if you don’t house hack, renting a small one-bedroom or studio can be an obvious win because your living expenses stay low and you can throw more money into investments.

Once you have a family, kids, and a couple of pets, it’s not as simple. Most of the rentals that really save you money aren’t in areas you’d want to live with your family.

Here’s the situation I keep thinking about.

The kind of home most people would want for their family is in a safe neighborhood with good schools and a nice community. That could easily cost over $4,000 a month with a small down payment. Inflation is making it harder for people to save that down payment in the first place. You could rent something smaller or in a less “perfect” spot for around $2,400 and save about $1,600 a month. As a renter, you’re also not paying for big repairs or maintenance, which means even more savings. If it’s a condo or townhouse, you might get a gym or pool included. That could save money there too.

The question is: in today’s economy, is saving $1,600+ each month enough reason to hold off on buying your own place? Or does inflation wipe out the advantage so fast that you’re better off buying now?

And if we do see a market correction, would that change your answer?

 Buy duplex and house hack