Renting vs. Buying a Home: Which is Cheaper Over 10 Years?

By Mark Callender

Hello, my name is Mark Callender and I am a licensed real estate agent with RE/MAX Results. Because I have been helping families buy and sell their homes for more than 18 years, I am now helping their children to buy their first homes and their parents to downsize. No matter the direction you’re moving, my goal is to make the process as calm and enjoyable as it can be.

Have you ever stopped to calculate what thirty years of renting will actually cost you? I have received several calls from frustrated people because they feel like properties are just too expensive right now.

Whether you hear it from the media or your own social circle, nobody seems to talk about the true cost of renting for ten or thirty years.

Renting vs. owning: Who are you paying? Your monthly rent is not just a housing cost. It is a wealth transfer. Every time you write a check, you are paying your landlord’s mortgage.

You have to ask yourself: would you rather pay your own mortgage or someone else’s?

Every check you sign makes your landlord richer while your own net worth stays exactly the same. When you rent, there is no equity and no appreciation. You don’t have an asset to pass down to your children. All you have at the end of the day is a pile of rental receipts.

The power of “forced savings.” Currently, the median homeowner has forty times the net worth of the median renter. This gap does not exist because homeowners are naturally smarter or better with money. It happens because a mortgage acts as a forced savings account.

When you pay a mortgage, you are slowly owning more of an asset. When you pay rent, that money is gone forever. Rent, on the other hand, is a forced cost.

You might not feel the impact of this today or even in five years. But imagine when you reach retirement age. If you have spent your life renting, you basically have a storage unit full of furniture.

The reality of the market. It is ironic that the people telling you homeownership is dying are often the same people who own multiple rental properties. Don’t get me wrong, there is a place for renting in the market. I own rental properties myself. However, I always try to help my renters reach that next step of buying a home because I know what the long-term math looks like.

Let’s look at a real example. Back in 2012, right as we were coming out of the Great Recession, I had some clients looking at houses. There were great deals to be found, but they decided to keep renting. Fourteen years later, they still haven’t bought a home.

In those 168 months, assuming a very modest rent of $1,500 per month, they have paid out $252,000. They are still in that same house, and their landlord is still collecting their checks. They essentially paid off the landlord’s mortgage. Now, the landlord likely owns that property free and clear, while they have nothing to show for a quarter of a million dollars.

Whether you are currently renting or looking to buy, we need to have a serious conversation about your wealth strategy. There are ways to make homeownership happen, even when the market feels tough.

Feel free to reach out to me with any questions at (612) 961-9448 or Mark@MarkCallenderHomes.com. Let’s make sure you start building your own wealth instead of someone else’s.