Changing Your Mindset and Dialogue Around Finances
If you ever find yourself saying things like: I can’t afford that Money doesn’t grow on trees I never have enough money It is a sign that your mindset and …
Owning or renting to build wealth is a debate that continually happens, especially when the markets change, and interest rates rise. The reality is that no matter what the financial experts say, it’s a personal choice that each person must make for themselves depending on their life goals, personal financial situation, the cost of living in their area of the country or world, along with a few more factors.
Below, I share some objective insights to help you choose your personal path to financial freedom.
The real answer to this question is, there isn’t one set answer for everyone. Much of it depends on you, the kind of lifestyle you want and your personal life goals. This is why it’s important to take a look at some of the pros and cons of both options and then decide what matters most to you.
Renting Pros
Renting Cons
Owning
Cons
Even with this small list of pros and cons, you can already see that there are many differences between the two, and why lifestyle and personal goals play an important part when you are debating whether or not owning or renting is the better option for you.
Taking a look at the numbers might be more helpful to figure out which option suits you best. Let’s start with the downpayment amount, which can vary depending on the type of loan you are getting.
According to US Bank:
Depending on the loan option, it may take you a while to save enough to qualify.
After that you must consider the cost of owning versus renting. Depending on the area the average rental rate can be cheaper than a mortgage or it can be more expensive. This is where it pays to do the research and educate yourself about the real estate and rental market in your area.
On top of the downpayment and cost of housing when you are comparing owning to renting, you must also look at mortgage rates, property taxes, insurance, cost of repairs and general maintenance and upkeep when you own your own home. Again, these can all vary depending on where you live, so take the time to gather the numbers before you make your decision.
PRO-TIP: It’s important to remember that while your house can build equity it is not an income producing asset which is an important factor for wealth building and financial freedom. Income producing assets pay you regularly, but purchasing a house does not pay you money each month. This is why in your quest for financial freedom, you may want to consider using a downpayment toward purchasing a rental property, and you can then save the added income from that property to purchase a second home to live in…or maybe even another rental property! True financial freedom comes when you have more money coming in than expenses going out each month and investing in real estate can be a good way to do that.
I always say to my mentoring clients that you can buy, build or create income producing assets. Those kind of assets pay you without continually trading time for dollars. You just have to be open to the many ways you can create multiple streams of income. This means there are other options to build wealth beyond investing in the stock market, but you have to remember you will always be investing time or money or both into something.
You can:
There are many other ways to build wealth, and this is where doing your own research can really help you along. Reaching out to wealthy people you know and admire, and asking them what they did is a great way to avoid costly mistakes and get a better direction. Just ensure the person you turn to is a trusted advisor who has built income streams more than once, and ideally, in more than one way.
I personally think that purchasing real estate as an income producing asset is an excellent way to build wealth and give you financial freedom, but the only way to know if it’s the right thing for you is to consider the lifestyle you want, the types of income generating assets that suit you best, and then decide whether renting or owning is the best way to deliver the lifestyle of your dreams.
If real estate purchasing and investing is of interest to you, or you think you might like to become a real estate agent, you may want to look at opportunities with eXp Realty. To see if it’s a good fit for you, feel free to email me at info@sharonlechtor.com and one of my team members can talk to you about the possibilities.
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