Throw Out the Rent Versus Buy Rules of Thumb

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Are you buying or renting? What are the perks of being a homeowner? Think through and focus on both financial and non-financial reasons.

In this episode of the Finance For Physicians Podcast, Daniel Wrenne talks about the rules of thumb when deciding whether to buy or rent a home.

Topics Discussed:

  • Why buy? Live in it 3-5 years to break even and recoup upfront transaction costs
  • Why rent? The best option if you plan to live there only a couple of months or years
  • Numbers: Mortgage closing, realtor commissions, improvement costs, and ROI
  • Taxes: Deduct ownership expenses; can’t deduct property/mortgage insurance
  • Insurance: Renter’s insurance is less expensive than homeowner’s insurance
  • Homeowners’ Association (HOA) Fees: Added costs for homeownership
  • Uncertainty and Overestimation: Bias of living in a home longer than expected
  • Lifestyle Creep: Living beyond your means and not analyzing home prices
  • Headache Factor: Rent-not your problem; buy-home ownership increases issues
  • The joy of Ownership: Cultural and cool factors to owning your own home
  • Renting: Gets old not being able to do what you want with your place
  • Rent vs. Buy Examples:
    • 2362 Heather Way, Lexington, KY
    • 8704 Grand Ferry Dr., Austin, TX


Real Estate Home Price Indexes

Price To Rent Ratio

Austin Rental Example

Lexington Rental Example

Research on Renting vs Buying

Finance For Physicians