Renting is Throwing Money Away, Right? (2015)
The answer in most cases is &quot;yes&quot;.<p>This post is full of the kinds of flawed arguments that usually accompany pro-rent arguments -- which do a real disservice in identifying those cases where the answer is &quot;No&quot;.<p>Breaking down the problems by section:<p><i>Equity</i><p>&quot;Here’s the rub: Only a small slice of <i>your mortgage payment builds equity.</i>&quot;<p>There you go, the article defeats itself not even a full screen below the correct answer.<p><pre><code>   If you rent, 0% of your monthly payments build equity.
   If you own, X% of your monthly payments build equity.
   X &gt; 0
</code></pre>
It attempts to list all the parts of a mortgage payment as if itemizing it makes the equity earned meaningless.<p><pre><code>   Your mortgage consists of four parts:

   Principal (the equity-building piece)
   Interest
   Taxes
   Insurance
</code></pre>
This is basically correct, but the case for &quot;Your rent consists of the same four parts + two additional parts where the property owner may make a profit off of you as well as some additional money to cover various expenses that they&#x27;d rather not pay for out of pocket.&quot;<p>Again, nothing in this section invalidates that building equity is better than not.<p>One way of thinking about renting is that you pay all of this, plus the extra stuff and in the end you&#x27;ve built equity for somebody else and none for you.<p><i>Opportunity cost</i><p>I didn&#x27;t bother to read this to be honest, these sections are almost entirely filled with notions that &quot;if I just invested my money in horse farms or leverage backed security instruments I&#x27;d make more money in the long run&quot; blah blah blah. The logical flaw in these are usually pretty easy to spot as they involve a scenario setup that&#x27;s not like-for-like (meaning the same house as a renter vs. as a buyer) and focus on weird time frames like the lifetime of the loan not the life of the person.<p>In other words, at the end of 30 years, the rent may have made more money in some scenario of a perfect investor, but then they still have to rent to have a place to live. The homeowner now owns their property free and clear and can do all kinds of things with it, and their now future income is entirely liquid.<p><i>Should I rent of buy</i><p>Do what you want! But don&#x27;t follow the flawed arguments in this blog. Here&#x27;s what it really comes down to, do you want your money to be more liquid and your location to be more mobile? Then rent.<p>Do you want to own large amounts of assets that can be liquidated in a few months (in most places) or that you can live in virtually free in the future? Then buy.<p>Bonus: if you buy, you can end up in a situation where you just have other people literally giving you money to pay your mortgage away...it&#x27;s called being a landlord. You can even do it with parts of your property, like a bedroom or a basement. Over time you can own a property outright, rent it out, and use that rent to service another mortgage in a property where you live meaning you live virtually free and accrue assets at a frightening rate.<p><i>edit</i> once again, here&#x27;s probably the best post written on the subject.<p><a href="http:&#x2F;&#x2F;assayviaessay.blogspot.com&#x2F;2014&#x2F;04&#x2F;rent-or-buy.html" rel="nofollow">http:&#x2F;&#x2F;assayviaessay.blogspot.com&#x2F;2014&#x2F;04&#x2F;rent-or-buy.html</a>