Jason HartmanCEO of Empowered Investor and Real Estate Tools

What Renting REALLY Costs You!

Name: What Renting REALLY Costs You!
Uploaded: 2025-01-22T20:24:30+00:00
Duration: 59 s
Channel: Jason Hartman
Description: In this segment, the speaker explains the business model of a build‑to‑rent company that owns roughly 5,000 entry‑level homes and rents them directly to…

22 Jan 2025 · 1 min

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In this segment, the speaker explains the business model of a build‑to‑rent company that owns roughly 5,000 entry‑level homes and rents them directly to tenants. The company presents a side‑by‑side cost comparison showing that renting one of their homes costs about $2,085 per month, whereas buying the same home would cost about $3,477 per month when factoring in a down payment, mortgage payments, and private mortgage insurance (PMI). The speaker notes that the comparison hinges on variables such as current home prices, rental rates, interest rates, inflation, and household income. He also points out that investors typically avoid PMI by putting down at least 20% of the purchase price, which changes the cost dynamics for buyers versus renters.

Chapters

First off, this is a build to rent company. And what they do is they have about 5,000 homes as a small institutional investor, and they build them to rent them. Basically, they've done a comparison of monthly housing costs to show tenants that it's actually cheaper to rent their house than it is to go and buy the same house. This isn't always true, of course. It changes depending on prices at the time, rents at the time and interest rates at the time, and of course inflation and income. But these charts are pretty telling. And so the first one shows that basically if you rent their home, and these are entry level homes, the cost will be $2,085 per month. But if you buy the same home, not only do you have to put a down payment down, but the cost according to them is $3,477. Of course, they've got PMI in their private mortgage insurance, which is fairly expensive. And we as investors don't have to deal with that because we're always putting 20% down and below. 20% is when you have to pay for mortgage insurance.