Renting Versus Owning a Home: What Money Experts Actually Disagree On
Some advisers call buying a home the foundation of wealth, while others warn that many buyers would be better off renting. This piece lays out each side's reasoning and the conditions under which each says its advice holds.
What three things decide the rent-or-buy question across these experts? Show answer
How long you will stay, whether you have savings in reserve, and whether you will actually invest what renting saves.
Why does David Bach say your own home is the easiest real estate to buy first? Show answer
It is the easiest loan to qualify for, the mortgage interest is deductible, and you have to live somewhere anyway.
How does Bach answer the claim that renters avoid maintenance, insurance and taxes? Show answer
He calls it a myth. Landlords pass those costs on by raising rents.
What is Bach's leverage example? Show answer
Put $20,000 down on a $100,000 home. If it rises to $110,000, you made $10,000 on $20,000, a 50 percent return.
What conditions does Bach attach to buying? Show answer
Borrow less than the bank will lend, put down 10 to 20 percent, and set aside six months to a year of mortgage payments.
What is Caleb Hammer's main argument for renting? Show answer
The stock market has beaten real estate, and renting gives flexibility to move for work without a large down payment or maintenance.
What two exceptions does Hammer allow? Show answer
Buying is fine if you know you will stay and want to own, and a house can be forced savings for people who would not invest.
What question does Vivian Tu want answered first? Show answer
Why you want a home. Good reasons are staying five to seven years or wanting to renovate and make it yours.
What fact does Tu state that the others do not? Show answer
Renting is currently cheaper than buying in most major metros.
What middle path does Tu describe? Show answer
Rent where you live and buy an investment property in a cheaper area, as her friend does with Los Angeles and Oklahoma.
On what do all three agree about stock returns? Show answer
That the stock market's raw returns have been higher than real estate's. They disagree on what follows from it.
When does the rent-and-invest case fail? Show answer
When the renter spends the difference instead of investing it, which Hammer admits many people do.