"Buy a house at all cost because renting is wasting money” - Says Who?

As a kid, I was always told that I should own a house instead of renting because renting is a waste of money. What are what my thoughts now after all my experiences in life?

I think it depends. Let's say your buying power, which is how much money you got + how much the bank would lend you, is $500k(e.g. $50k + $450k). Here's what I would not do:

Spend the $500k on my own house and just live in it. Now you got $450k of debt you need to pay every month. That's about $2000 a month eating into your cashflow every month at today's interest rates.

If you were originally saving $2500 a month after all other expenses, now you only save $500. Not good unless you enjoy living on the edge, and complaining about life when you lose your job or when sudden expenses come up.

I personally would do one of these:

Be a Renter + Investor

Rent something cheap and use the buying power to invest in rental properties. I'll write more about rental properties in later articles, so stick around.

This way you spend a small portion of your income on rent while you own properties where people are paying for your mortgage.

When your renters are done paying your mortgage, you've got $450k of free money, if the property went up, you got even more. Then you can sell it and pocket a nice fortune, or you can keep collecting rent and have free money coming in every month.

Be a Home Owner + Investor

This is similar to the one above and is the route I took.

Depending on whether it's a renter's market or a buyer's market. If you can get a small place to live in where the mortgage payment and related expenses for owning the place is cheaper than renting, then this would be a great alternative.

I bought the cheapest apartment I could get where the mortgage payment was cheaper than the average market rent. I used the rest of my buying power to invest in rental properties just like the scenario above. As the property value of my home went up, I used the equity to invest in more properties.

Run a Partial Home Rental

For some people it might be more convenient to just buy a big house and rent out part or parts of the house. And the renters monthly payments end up paying for your mortgage. This is a sweet deal as you are now living in your house for free, while the property value goes up in the long term.

Which One Is Best?

I think all of these would work depending on what you are comfortable with. At least one of them worked for me and I know that other options have worked for many others. In the end, it is not always important to find the most optimal way to live. As long as you are doing something positive towards your future, it will add up.

If you know of even better options, let me know! I'm always interested in learning more!

If you like these types of posts, please give me a like or subscribe to get notified of more of my posts!