As a homeowner, you want to get the most out of your investment. Whether you're planning to sell your home soon or just want to increase its value over time, there are several steps you can take to
The Real Cost of Renting vs Buying 2022
Dated: January 13 2022
Views: 294
Let’s think about 2 people, one decides to buy a 3br/2ba in good condition in a nice neighborhood in Chico. It costs them $450,000 to buy. Their neighbor rents the house next door for $2200 per month.
The buyer puts down just 5% to buy the house, their monthly payments will be $2271 per month (excluding insurance because the renter will also pay for that).
So it costs the buyer an extra $71 per month right? That’s not quite the whole story….
The buyer has that $2271 mortgage payment locked in for the next 30 years. After the 30 years is up they own the house outright and all they have to pay is taxes! Even if we assume property prices grow 4% per year (slower than historical averages) the house will be worth $1,403,393.
How is the renter doing in 30 years? Even with rent control, that rent could go up by 10% per year. Let’s assume they have a generous landlord who only puts up the rent by 6% per year… In 30 years the renter will be paying a whopping $11,920 per month in rent.
Over 30 years of paying the mortgage the buyer will pay a total of $817,560 which sounds like a lot but the renter will pay a staggering $2,087,136.
So to be clear: the renter pays an extra $1,269,576 and has spent all of that money making their landlord a millionaire.
The homeowner now has a home worth $1.4million and has had an extra $1.2m that they could have invested or spent as they see fit.
That is the TRUE cost of renting vs buying a home.
Oh and let’s not forget, the buyer can have pets if they want to, remodel their home the way that they like and will never have to worry about the landlord selling their home and forcing them to move.
Contact us today and let’s make a plan for your path to home ownership.
Nick & Brittney Allison
We are a Husband-Wife real estate team located in Chico and serving the wider Butte County area. As professional full-service Realtors, we are able to assist buyers, sellers and investors at all stage....
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