[USER]

The owning versus renting housing debate is always full of interesting perspectives. Sharing an AI financial analysis of the two options.

Might be interesting to some. If so, feel free to share your thoughts!

Let’s do a detailed calculation comparing buying and renting the same property over 30 years. We’ll assume the following example scenario:

Property Details
• Purchase Price: $300,000
• Mortgage: 30-year fixed at 6% interest with 20% down ($60,000 down payment)
• Rent: Starts at $1,800/month, increases 3% annually

1. Buying Scenario

Upfront Costs:
• Down Payment: $60,000
• Closing Costs (estimated at 3% of purchase price): $9,000
• Total Upfront: $69,000

Monthly Costs:
• Mortgage (Principal + Interest): $1,440/month
• Property Taxes (1.25% of purchase price): $3,750/year or $312/month

• Homeowner’s Insurance: $1,200/year or $100/month
• Maintenance (estimated at 1% annually): $3,000/year or $250/month

• Total Monthly Costs: $2,102/month

Long-Term Costs:
• Total Paid Over 30 Years:
• Mortgage Payments: $518,000
• Property Taxes: $112,500
• Insurance: $36,000
• Maintenance: $90,000
• Total: $756,500

After 30 Years:
• Mortgage Paid Off: No more monthly payments except taxes, insurance, and maintenance (~$662/month).

• Home Value: Assuming 3% annual appreciation, the home would be worth $728,000.

2. Renting Scenario

Initial Monthly Rent:
$1,800/month

Rent Increases:
• 3% annual increase: Rent increases each year.
Long-Term Costs:
• Total Rent Paid Over 30 Years:
Using compound interest to calculate annual increases:
• Year 1 Rent: $21,600 ($1,800 x 12)
• Year 30 Rent: ~$4,367/month or $52,400/year
• Total Rent Over 30 Years: ~$974,000

Comparison
Total Costs After 30 Years:
• Buying: $756,500 total spent, but you own a home worth $728,000. Net cost: $28,500.

• Renting: $974,000 total spent, no equity or ownership.
Key Takeaways:
• Buying is significantly cheaper over 30 years due to equity and appreciation.

• Renting costs more because payments rise over time, and you don’t build equity.

[Sarah]

Only issue is housing costs in my state start at 400k and are normally needing quite a bit of money to make them livable. So, if you put a downpayment it’s closer to 70k which is over a yearly salary for most people.

And therefore with rent increases, food increases and other monthly bills one will never be able to pay a down-payment to cover.

Or will have to do 0 down which makes the mtg monthly way over a renting monthly cost

[Francess]

you re missing a few things. 1. it costs far more to maintain a house verses someone else paying for those repairs/upkeep.

2. owning will have your costs rise faster than renting. BUT id rather own than be dictated to by owners. ive already had parents…and I like the peace.

[Joyce]

I’ll tell you what is frugal, sold our family house when the youngest was starting college, we wanted a small house in the country for our retirement.

Found a house that didn’t sell at sheriff auction, made a deal with the bank and paid cash. 17000. yes, that’s right, there was nothing wrong with the house.

There are so many banks that are stuck with houses that they don’t want. So, check with the banks and pay alot less.

[Elaine]

Here’s my opinion. If I rented a house around me that was valued at $300k, the rent would be closer to 1200 per month. So, these numbers are not based in reality, or are for a specific location.

The closing costs supplied are the low end of Alexa’s search of closing costs for a 300k home.

A search supplies a range of 9k to 18k in closing costs. So, this scenario is incorrect in it’s assumptions and it’s conclusion.

[Jeri]

I bought a house 30 years ago and though the numbers aren’t the same, the outcome is.

House is paid off. Now taxes and insurance are about $6k per year. If we were renting the same house all this time the rent would have started about $600 per month and would now be at least $2,000 per month.

That’s $24,000 per year wasted. I would never want to be a lifetime renter.

[Lisa]

Rent has increased significantly more than 3% per year where I live. As well, home values have gone up 25-50% in 6 years.

We looked at a house that was $570 in 2017, it sold 4 years later for $830. Pretty good investment.

[Angelica]

There is a lot missing from this. The biggest being that your taxes and your insurance go up every year. This year alone, I had about a $1200 escrow shortage.

Then let’s look at maintenance. 1% per year?

Replacing a shut off valve and installing a new water heater was over $3k. Having my oak tree trimmed was $1400.

My oven needed to have a part replaced. That was nearly $400.

A new roof if going to cost me $30k. That alone averages out to $1500 a year by itself.

I’ve barely owned the house a year.

[Pickles]

I think the perspective is different if you’re middle class and up vs poor poor. My extended family owns quite a bit of land in the country, been in the family for generations and it really is a huge safety net.

If you can’t afford rent and miss payments, you’re homeless, out on the street.

In the case of my family if they can’t afford maintenance, then there’s no hot water, or the roof can’t get repaired for awhile. Just have to get by until it can get fixed.

It’s much better to sleep in a tent on land that you own than trying to survive on the streets

[Chris]

Just my opinion but owning and building equity is always better. I’m not sure in this market, with home prices being so high, but you almost never lose buying real estate.

[Annette]

I didn’t need AI to tell me the better investment. It is all about what one can afford.

I recently sold a house for 600k that I bought for 118k.

[Rina]

It also doesn’t take account that many people don’t live in one place for 30 years anymore.

[Angel]

Keep in mind not all countries have fixed term lease that long. Not everyone can take on a fixer upper. Which is what $300,000 would buy in lots of rural areas in British Columbia.

Not everyone has the skills, money to keep up with Maintenance & repairs.

Or have the extra to save for 20% down-payment. It’s not so black & white. Lots of variables to factor in. In British Columbia Canada there are caps on how often & how much rent can be increased.

Rents can only be increased once every 12 months, by the % the government sets out. For 2025 rents can only be increased by 3%.

Also when a lease end, it automatically switches to a month to month lease.

With the same terms, conditions, amounts. So even on a month to month lease rents can still only be raise once every 12 months & by the set %.

So lots of things to factor.

[Brian]

I think this is a good analysis. The only thing I would say is the among the rent would be. If buying the house with 20%, taxes insurance and maintenance is $2,100 a month, I would put rent of that house to be closer to $2,500-3,000 a month.

No one is buying an investment property and renting it for less than their costs (or very few would unless there is a tax benefit or something).

So, I would put the cost to rent much higher and therefore financially not as good of a decision as buying.

[Vina]

Real estate is an excellent investment and asset. It exceeds renting by far. *as long as you pay what the true value of the house is, and I am not talking about the assessment or appraised value.

You need to know the numbers of the house and those numbers need to work for it to be a positive.

Research, educate yourself, and be ready (have a good down payment) for when the time is right.

[Author]

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