How to be Financially-Free by Renting Instead of Buying

Image credit: Oliver Sjöström

How to be financially-free is something that almost everyone wishes for. For the vast majority though, financial freedom remains a misty, far away fairy tale that never comes true. Somehow we get caught up in the American dream of owning our own home, putting other financial plans on the back burner. We chase the dream of home ownership, never realizing the true price we’ll pay down the road.

Contrary to popular belief, the path to being financially-free isn’t buying a home to live in. Home ownership isn’t the asset that many people think it is. Your financial liabilities increase exponentially the moment you buy a home to live in.

Why You Shouldn’t Buy a House to Live In

It sounds crazy to say that people shouldn’t buy a house to live in; that is, until you start thinking for yourself instead of following what you’ve been told all your life. Here’s what you get when you don’t own your home:

◦Financially-free from repairs and maintenance

◦Freedom from spending your weekends mowing the lawn and raking leaves

◦Freedom to move to a more prosperous area should you lose your job

◦Financial freedom from emergency replacements

◦Freedom to invest cash and become wealthy

◦Freedom to travel when the mood strikes you

◦Freedom from useless “décor” that clutters your life and your thinking

Do any of these things sound like negatives? No, they aren’t. They’re all very good reasons to not buy a home.

Of course, I’m not saying that home ownership is all negative. There are many reasons when it makes smart sense to own a home to live in later in life. What I’m saying is that, if you aren’t already wealthy—if you want to be financially-free someday—homeownership should not be your first priority right now.

Why I Recommend Renting Instead of Buying to be Financially-Free Someday

Your first priority right now should be to focus on acquiring real estate investment properties, which can ultimately bring you wealth. Renting is the better option for wealth building than buying a home. Instead of tying up your savings in a down payment that’s going to give you no return on your investment, use that money to earn more money. Make your money work for you.

Take your down payment money and buy yourself investment properties instead. Investment properties that will help you build wealth include turnkey rentals.

I suggest buying turnkey rentals instead of investing in fix and flips because you can start cash flowing from day one, have less market vulnerability and don’t need to carve out any extra personal time to make it work.

I also recommend staying employed full-time as long as you can while you pursue being financially-free. Keep your day job and use your money to continue buying turnkey rental properties that you can buy and hold. Having that full-time job will make it easier to obtain financing, as well as give you an important feeling of security and confidence. It’s hard to take even small risks in life when you’re worried about how you’re going to pay the bills.

Buying turnkey rentals will give you continual monthly income that you can put together with whatever money you can save up to buy more properties. One turnkey rental could conservatively bring in $200 a month. If you take advantage of your ten allowable Fannie Mae loans, you could have $2,000 of passive income every month, and that’s after paying all your expenses, including property managers to take care of all your buy and hold properties.

The other huge benefit to owning turnkey rentals is the effect on your taxes. As a turnkey rental owner, all your related expenses are tax deductible, including your loan interest. Now you can use those deductions to offset your taxes owed on income from your day job. Turnkey rental ownership allows you to build wealth, lower or eliminate tax liabilities and gives you passive income for a lifetime. That’s the true way to become financially-free.