Jan 13, 2018
We hear the same thing repeatedly. If you rent, you’re throwing away your money. Why? Because you have nothing to show for it at the end of the month. On the other hand, if you own your home, you’re paying down your mortgage and building equity. But is this true? Why can't you build wealth by renting? Today's guest thinks you can.
Some points to consider, according to Alex Avery:
- It’s not one-size-fits-all. Buying isn’t for everyone. Neither is renting. Consider how long you expect to be in a particular location. If you have precarious employment, or know that a job will be moving you to another location, renting is a more suitable choice. On the other hand, if you know exactly where your life will be in the next 10 years and you’ll have children, who will go to school, then it’s probably better to invest in a home.
- When making the decision to rent or buy, don't forget all the negative carrying costs of owning and selling a home. Count that against your 'investment' decision. Be aware of you biases that might make you want to scale up, buy more, renovate more. Alex uses the term investment creep to explain this bias.
- Understand how the pro ownership lobby can influence your decision - from the government, to real estate agents, even your friends talking around the dinner table. Don’t be persuaded by someone else giving you advice that reflects their objectives, not yours.