To Rent or To Buy? Homeownership Builds Wealth Over Time
Here is a breakdown of renting versus owning over 5 years.
Take a home with a starting value of $400,000 and a conservative appreciation rate of 3% per year.
Year 1: $412,000
Year 2: $424,360
Year 3: $437,091
Year 4: $450,204
Year 5: $463,710
That’s a total increase of $63,710 in home value. Unlike rent, that gain goes back into your pocket as equity.
Year 1: $412,000
Year 2: $424,360
Year 3: $437,091
Year 4: $450,204
Year 5: $463,710
That’s a total increase of $63,710 in home value. Unlike rent, that gain goes back into your pocket as equity.
If you rent at $2,000 per month, that’s $24,000 per year. Over 5 years, you’ll spend $120,000 and none of that comes back to you. It’s money paid out to your landlord with zero return on investment.