Is Renting a House Really Cheaper than Buying a House?

For many people, mortgage prices and rates are higher than they have ever been. It is becoming much more difficult to envision holding the keys to one’s own home. Monthly costs of buying and owning homes are up by double digits, shutting down the dreams of several generations.

Rising House Costs Prevent Home Ownership

In contrast to the rapid rates of home prices and costs, rental costs are considered to be much more affordable. A lot of local housing markets in America allow for lower rental costs.

Prolific personal finance writer and businessman, Robert Kiyosaki suggests that owning a house can be considered as a liability not an asset. He states that it is not a given that a home will appreciate in value.

“I am not saying don’t buy a house. What I am saying is that you should understand the difference between an asset and a liability,”

“When I want a bigger house, I first buy assets that will generate the cash flow to pay for the house.”

In a show with Valuetainment, Mr. Kiyosaki points out the importance of being antifragile in the face of economic uncertainty. As worries deepen over the potential incoming financial crisis, the antifragile will grow stronger while the weak could fold. As risk expert and critically acclaimed author Nassim Nicholas Taleb points out in his written work, those who survive tumultuous times in markets are more likely to survive, not because of dependance on infrastructures that are “too big to fail” but rather because of sufficient exposure to the forces of the markets which prepare them for the unexpected blows that ultimately come.

Real Estate Still a Great Source of Wealth

While real estate markets have been a great burden to many, they are also a source of great wealth, creating many of the world’s millionaires and billionaires. In economic downturn, many may gain from purchasing homes that are sold at a lower price. If the incoming recession deals a big blow to the nation, jobs will inevitably be lost and income reduced but potential homeowners and aspiring real estate moguls could gain from preparing now, saving and investing much as they can in order to capitalize on an unavoidable downturn in economic activities.

Robert goes as far as stating on the show with Valuetainment that he made the most money in his life after the 2008 financial crisis. Homes could be purchased at a lower price. No one ever felt regrets for saving for a rainy day. If one’s cards are played right, a rainy day could lead to a sunny day on a new yard.

Self-made millionaire and real estate tycoon, Grant Cardone asserts that if he could give his younger self advice, he would tell himself to not buy a home. He purchased a home when he was 30 years old. He believes that buying a home can prevent one from ever having enough. People cannot move and rarely ever truly own the home. They usually have to keep spending money on the house in order to keep it.

Hidden Costs of Home Ownership

If an emergency arises that costs more money than anticipated, one could easily fail to make mortgage payments. Studies show that fifty-seven percent of American adults have been faced with medical bills that they did not expect. Often times, they thought the bills would have been covered by insurance.

One has to take different costs into account as a homeowner. Such costs include mortgage payments, property taxes, and repairs. These costs have to be paid even if the house is not occupied.

As a landlord, these could be considered as costs of doing business. Many landlords make significant amounts of passive income which they are able to use to easily pay for rent or home ownership in highly demanded locations. However, even as a landlord, one must remain aware of the different laws that could prove to be unfavourable for landlords.

The Solution

For now, it does not look like housing prices are about to fall anytime soon. Interest rates are relatively low while employment, income, and borrower credit ratings are up. These are all ingredients for sustained growth in the value of homes. For those who earn lower income than average, this could be a bad sign. While home ownership can be costly, the fact remains that rent is essentially “forever”.

There are rent to own deals that many people find more attractive than conventional mortgages and rent. Rent to own deals allow people to buy or sell a home , with the option for a buyer to purchase the house at some point in the future. Many people find rent to own to be more flexible than a mortgage. However, it is not a full-proof method of acquiring a home. During times of economic downturn, it could be harder to buy the home which may mean that you lose all the extra money that you paid for the home.

Originally published at https://morethanfinances.com.