Nick HutchisonFounder and CEO, BookThinkers

Rent or Buy? #shorts

21 Aug 2022 · 1 min

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0:56

In this short conversation, Nick Hutchison asks Ryan about the benefits of buying a home versus continuing to rent. Ryan explains that rent is a sunk cost that provides no wealth accumulation, as the money simply goes to a landlord and does not build appreciation. He contrasts this with homeownership, where mortgage payments build equity, the property can appreciate in value, and the owner experiences pride in owning the home. Ryan advises viewers to get pre‑approved for a mortgage and avoid paying someone else’s mortgage. He also suggests that after purchasing a first home, many people become interested in buying additional investment properties to further grow wealth through real estate.

Chapters

Ryan, a lot of people my age are wondering what are the benefits of buying versus renting? Because a lot of us are renting.
Oh man, what a great question. I remember when I was renting too and Nicole and I were trying to get our first house. And the reality is rent is 100% going out the door. It's the 100% rate that you're giving to a landlord. So, reality is you can never build appreciation. You'll never build any wealth by renting because that money is just thrown away. It's really what we call sunk cost. You never get it back. So, owning a home provides the benefits of the property actually goes up in value. As your payments are made, you actually gain appreciation in as that's paid down and the loan's paid down. And the third part is you own it. So, there's a pride, I think, to owning a home. And so, I'd say those are the reasons why you should look at being a homeowner and get pre-approved. And you're not paying somebody else's mortgage. No, you shouldn't do that. Once you buy your first home, you'll realize how real estate works. And you'll probably want to buy another property like an investment property or something in there to continue to build wealth.