YouTube excerpt where personal finance author Ramit Sethi discusses financial considerations when deciding whether to buy or rent a home. He emphasizes running the numbers, accounting for more than just mortgage payments (adding ~50% for repairs, labor, interest, and long-term amortized costs), and notes both buying and renting can be financially sensible depending on the calculations.
People go, I'm going to buy a house, and if I don't like it or whatever, I'm just going to rent it out. Okay, fine. But you've got to remember that if your mortgage is $1,000, that's not just the amount you're paying, there's a lot more. In fact, in my estimations, I add 50% to that price. So 1500 dollars a month, which would include a roof repair happening 19 years from now. We've got to amortize that out. Labor costs, interest, all that. If you can rent it out and make a profit, fantastic. It cash flows. That's awesome. My key message is, for the biggest purchase of your life, you've got to run the numbers. Sometimes buying can be a good financial decision. Often, renting can be a good financial decision.
