“Don’t wait to buy real estate, buy real estate and wait.”
– Will Rogers
A lot of people are surprised when I tell them we own over 2,000 multifamily units.
I even choose to rent my house, which always sparks a lot of questions.
Bronson, why in the world would you want to rent a house?
Isn’t owning a better investment?
Aren’t you throwing that money away each month?
To those questions, I say, unequivocally, no.
Let me tell you why.
A basic three-bedroom house in Pasadena, California, where I live, is around $1.27 million right now.
That’s for a 1,300 square foot home.
When you rent, that usually comes to $3,550 a month.
If I wanted to buy that home, I would need to come up with around 20% to put down.
That would be around $250,000.
After that, the mortgage would equal out to about $9,500 a month.
I’d be paying almost triple what I’m paying now, plus the down payment.
Today, we’re gonna get into why I think it is a better investment to rent rather than to own.
Let’s jump into it!
1. Opportunity Cost
That $250,000 down payment is money I could invest.
I could invest in oil and gas or a property.
Those investments would not only get great cashflow, but also a lot of depreciation as well.
If I put equity into something, it limits what I can do elsewhere with that money.
Robert Kiyosaki would say that single-family house you live in is not an investment.
It’s not an asset.
It’s simply somewhere that you live.
You could, and maybe should, take that money and put it somewhere else.
2. Hidden Costs
There are hidden costs involved when you own a home.
Property taxes are a big one.
The Wall Street Journal published this article that claims over 50% of people’s monthly paychecks in the U.S. is for taxes and for insurance.1
That’s crazy!
Maintenance costs can also add up.
These hidden costs can make it not only hard to invest but also difficult to have other forms of financial freedom.
If you’re looking at buying a house, look for these hidden costs because they are everywhere.
3. Flexibility and Growth
There are a lot of opportunities for flexibility and growth when you rent a home.
You can move whenever you want.
When you want to move out of an owned home, that isn’t the case.
You have to go through the entire selling process.
It frees up capital to grow investments.
I can take that $250,000 down payment and grow it at 15% per year.
That investment should double about every five years.
Plus, I get whatever sort of tax benefits go along with that.
I would also be taking home $6,500 per month and putting that into other investments.
That’s over $80,000 per year.
Over the next 5 years, that would turn into $400,000.
If I add in the $250,000 down payment I would be saving, that’s $650,000.
That’s $650,000 in investment potential or $650,000 lost if I owned the property.
Am I totally against single-family ownership?
Not entirely!
There are positives to owning a house, especially if it appreciates.
Homeowners are also proven to be happier in terms of general quality of life.2
I will probably own a single-family house one day.
But as far as investments go, it’s not always the best decision, especially right now.
If rents are 1/3 or 1/2 of what it would take to buy, renting would be a better investment.
Do you agree that renting is better than buying right now?
Feel free to prove me wrong in the comments!
I’d love to have a chat about it.
Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.
If you are interested in investing with us, we are happy to answer any questions that you may have. Join our investment club today and we will be in touch.
Check out my bestselling book on Amazon!
Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.
Works Cited
1. Friedman, Nicole. “Insurance and Taxes Now Cost More Than Mortgages for Many Homeowners.” Wall Street Journal. December 23, 2024. https://www.wsj.com/economy/housing/home-insurance-property-tax-vs-mortgage-cost-43ab76ed.
2. M. Dockery and S. Bawa. “Why do home-owners do better?” (2019).
