Is it better to rent or to buy? How can you get data with a little more confidence to see whether renting or buying is better? Well I have something neat to show you that will help you decide if renting or buying is going to be cheaper. Please keep in mind that these numbers are just guesstimates and you need to speak with a lender for your very individual and special situation. This is generally and hypothetically speaking. This is an interactive blog, so you'll want to watch along with the video to see what I'm talking about.
Rent vs Buy Calculator
Today I want to share with you something much more practical and a little bit more specific and calculated online with this handy “better to rent or buy” tool by the New York Times. It's pretty neat because you can see if it’s worth renting over buying in just a few clicks of a button.
So the median home price in Colorado Springs is around $450,000, but I'm just going to settle right here on $464,000 so you don't have to watch me struggle to get the dial in the right place.
In this example here we're going to look at some rentals in Colorado Springs that are single family homes with 3 bedrooms and at least 2 bathrooms. You can look down here and see what the rents are going for so you've got prices ranging from $1800 per month to $2800, maybe $2300 could be our middle or median rent price for this live example. Well live when I recorded it.
Renting vs Buying a house pros and cons
Now if you’re going to rent you have a lot of pros. Let’s start with the first pro, which is the commitment. You only have to commit to your lease length. You only have to commit to keeping general maintenance on the home. Roof gets damaged or comes off the house? Don’t worry your landlord will take care of it. Tree roots growing into your pipes? If you have a good landlord, he or she is likely to take care of it. Fence fall over in the wind? Again landlord problems. These are great problems to pass off to someone else. If you’re a homeowner you are responsible for these repairs. You’re responsible as a homeowner to maintain every part of the home from pipes bursting to other potential surprise repairs.
The cons are that you are not building wealth and equity for yourself. You’re building it for your landlord. You are paying a mortgage, just not your own. So any rent payments that you put towards your house just disappear as a monthly expense, like gas and groceries. When you’re paying a mortgage for your own house, each payment brings you closer to that heavenly day where it’s paid off and you don’t have to make such high payments anymore to have a roof over your head. It also continues to grow equity and you can either rent it out, or pass it along to your children and their children’s children. What do you think the average home price will be in 30 years? I’ll tell you this. 30 years ago, the average home price in Colorado Springs was $96,643. That’s all I’m saying. That’s the gift and the curse of inflation. That’s why homeownership can be a great investment. Furthermore, you aren’t able to write anything off at tax time for your house. This is an added bonus of buying vs renting. I’ll be doing a more in depth video on the pros and cons of buying vs renting so make sure you are subscribed for that to be published.
Is it better to rent or buy in 2022?
Take a good look at your finances for 2022. If you have consistent income and a reliable job with a good chunk of savings in your bank account, it might be better to buy a house. If you don’t plan on being in your house very long, or you don’t like the responsibility of taking care of the house repairs on your own, it might be better to rent a house instead. I mean we can be honest with ourselves. Like, for me personally, I want a dog. The kids want a dog. But, then I think about the responsibility and it brings me right back and centers me. That feeling right there trumps any amount of love and companionship a dog brings. I know that’s way different than buying a house, but I know where I stand and I’m committed to that decision. It doesn’t make sense for someone who is not planning on staying in the house very long to buy a home unless they are going to rent it out. I have had sellers make really good money on a home in less than a year, but that is not the norm. Check out the link in the description box for the rent vs buy calculator and let me know in the comments how this changes your perception or if it helped you make your decision on buying a house. Now, just because your bank account isn’t stacked doesn’t mean you can’t still buy a house. Check out this video next on down payment assistance or watch this other video about the average home price in Colorado Springs.