Renting vs Buying a Home | Math Teacher Explains

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[@Doctor.Isaiah]

This video was perfect! It seems like it’s more of a 50/50 decision that can lean either way depending on what you want.

[@MrBons1Million]

Thank you so much for your comment. I really appreciate it. And yes, it really just depends on what price the house is compared to your rent. And the most important thing is that you invest over time.

[@TrangNguyen-yp9jo]

Love the spreadsheet where you create the calculations and we can input our numbers and it makes sense how you assess it.

[@MrBons1Million]

Thank you very much for your support Trang! Glad I can help.

[@displayname7t4]

Great video :D thank you for taking the time to do it. I have some observations I'd like to share :D The cost of property taxes and insurance appreciate proportionally to the value of the house which is 5% not the inflation rate in your example. Just this is enough of a deal breaker for me. But then the example assumes that you will acquire new furniture once at the beginning and keep the same furniture for 30 years. The maintenance estimates are very conservative. In the example the total budget for maintenance over 30 years is 18,765$. What if you have children and need to repurpose a room, or want to spend on improvements like adding a pool, remodeling your kitchen, renovating anything? 30 years is a long time, look at your spending habits today and tell me seriously that you won't bust your 24k budget (initial furniture + maintenance) in 30 years. Lastly, the example accounts for the monetary cost of maintenance but does not account for the time cost of maintaining the house which is a third deal breaker IMO For the rent side, I guess we must be looking at different sources, I've found sources saying the average return of the s&p is 9% or more, your 7% estimate is pretty conservative Anyway thanks again for the video :)

[@MrBons1Million]

Thanks for your insight Daniel! And I agree with everything you pointed out. Here's some clarification. 1. I didn't know that tax and insurance was 5% increase a year. Thanks for that. 2. My maintenance cost in the example was $416/month. Which is $5000/year or $150,000. If you add in remodeling and just new furniture, $150k definitely won't cut it for 30 years. 3. The cost of time for maintenance is also a deal breaker for me too. But I didn't know how to quantify that. 4. Yes, s&p is about 9%, it's 7% after inflation. I also wanted to be more conservative on that so people don't cus me out on the comments. Thanks for your insights. I really enjoyed reading it.

[@displayname7t4]

@@MrBons1Million Nice thanks for the reply :D sorry I didn't catch that the maintenance was monthly!

[@professorprofessorson8795]

Rent is better right now, once house prices go down then it’s time to buy

[@MrBons1Million]

I agree with you, but not everyone else will. 😂 It also depends on each specific situation.

[@jeanvaljean-gn5ej]

The whole reasoning is flawed because while a bank will lend you money to buy a house, they won't lend you money to put into an index fund, because they don't have a collateral to cease easily if you don't pay back. One of the primary reasons buying a house is worth it is because of that leverage effect

[@MrBons1Million]

Yes, that leverage effect is a big reason why people buy a house. However, I don't think that the reasoning is flawed. I'm saying that if you invest the money that you put in the house, you would have almost the same amount over 30 years. The leverage effect is offset by the higher rate of return in the index fund and the interest you have to pay back interest for the loan. My thinking is that if your investment is the same as your house after 30 years, then that is a fair comparison. Of course you have to account for capital gains tax and other things.

[@JesusisGod-pj8wo]

you don't borrow to invest. what you invest will be the upfront cash to purchase a house. for renting case no lender involve. you are an investor while renting.

[@MrBons1Million]

I know you don't borrow to invest, but what is the point of having leverage with a house if you can get the same amount of money by investing? After 30 years you would have a house worth $1.7 million dollars or an investment portfolio worth $1.7 million. It seems the same to me.

[@JesusisGod-pj8wo]

@@MrBons1Million that’s true, owning a house is a risky investment too. When city’s regulations change. It can affect houses prices too. Like homelessness, drugs addiction, encampments etc.

[@MrBons1Million]

Yes, any investment is risky. Houses can go down in value. Who knows what can happen over 30 years.

[@JesusisGod-pj8wo]

It has been my thought in the last couple years, I paid off my house and now I am thinking to sell it and put it into investment while renting. I tried to judge is it beneficial or not. I am not sure if this spreadsheet suitable to tell me what to do.

[@MrBons1Million]

I can't give you a straight answer cus I don't know your situation, but I will say that unless you are good with excel or math, it will be hard to change the spreadsheet to your situation. Have you considered a Reverse Mortgage? Usually, if you have a house paid off, it is cheaper than renting. If you need the money that is a separate conversation. Good luck

[@mrsmith5114]

Your mic sounds like you recorded in a bathroom. Great quality videos, just hope you work on the audio part :) Best of luck, I listen on 2x speed.

[@MrBons1Million]

Thanks for your well wishes. For the life of me, I still can't seem to do good audio. I've watched so many videos. Oh, well, it's a learning process for me.

[@mrsmith5114]

@@MrBons1Million Much respect for the grind! I think that is your last biggest hurdle to get over before your videos truly improve slowly over time. Best of luck to you on your journey.

[@MrBons1Million]

Yes, hopefully. Thank you very much 😊

[@iwantmycctv]

@@MrBons1Million Fantastic video, thank you for the info and the work on the spreadsheet! In regards to improved audio: If you're using Adobe Premiere to edit your videos, they just released an exceptionally good "Enhance Speech" setting that uses AI. You can remove all the background noise very easily regardless of mic quality/recording conditions. I'd recommend searching "enhance speech premiere tutorial" on KZbin to check out the difference! Might be the simple solve you're looking for.

[@MrBons1Million]

Awesome thank you so much for the tip. I'll definitely check it out!