Renting vs Buying a Home #015

renting or buying. Yeah, Joel, I think this will be a good conversation first of all, because I have good, like fond memories of renting, so just like the emotions that I have towards it are negative. Yeah, I don't have the most fond memories of renting. I think it was kind of fun when you're younger, living with you know, like three dudes in a two bedroom of oar bet or something like that. Yeah, not my favorite times. How much for owning a home right now, and just kind

of the stage of life. I'man I think it's way more fun to be in your thirties than it is to be in your twenties in a lot of ways. That being said, I think there are so many good reasons to be a renter, and we'll get into those in just a minute. I wanted to let you know, speaking of running, we have rental homes and last night I had a fridge crap out at one of my rental homes and so I had to replace it. So we're trying to get me to it. I know. I was sparking up the tree to see if you wanted

to help. Got another friend, Colin, to help me move a fridge. But he's got muscles too, so that's good. Yeah, he's stronger than you are, so that's that's why I reached out to him. I got the best deal I looked on Craigslist, which is we talked about, you know, where to buy certain things. It's great for appliances. Craigslist is an awesome place to buy appliances. Uh you know, it's much harder to find stuff on Facebook or whatever,

but Craigslist is an awesome place for that. I don't want to buy your fridge on eBay, have a ship to you. The shipping would have cost more than the fridge because I paid seventy five dollars that is for a six year old fridge. YEP, So I think this thing will be nice. I loaded it in the back of the mans to five strap strip it down, I mean not all the way, but well enough. Yeah, and I bought it from another dude named Joel. Oh really

around there. So I met a new neighbor. I got a seventy five dollar fridge in the neighborhood close by r Yeah. So he was literally like three or four blocks away from me. Oh no way. Yeah, that's awesome. So it's kind of fun to meet a new neighbor, get a seventy five dollar fridge, hung out with Colin, you know. Yeah, so it was good times. I live

being thrifty man, Yeah I did. I did too. That being said, the last fridge that I bought, I didn't have time to to scour Craigslist, and so I just went to Low's, our local hardware store, and just kind of got a cheaper model there. It was I think it's everybody's local hardware store. Yeah. Uh, but this is before we had a larger vehicle, and when all we had was our Vida Volkswagen. But we had the bars

on top, like uh, what is it totally rack? You know, like the bars that go across the top make you look like you're like an outdoorsman, but in our case, that's where I put my fridge, so literally yourself. Yeah, the the guy, the guy at low it's helping me to get it up there, but he's just like, wait, we're putting this whear because it wouldn't fit inside the back of the wagon. And yeah, man, through a fridge up on top of our volks wagon, strapped it down

and drove it back to the to Uh. It was actually the house that we're moving out of that we were converting into a rental because the fridge that was there was in poor, poor shape. So and by the way, if you want to know why that's the best method of starting owning rental homes, moving out of it and running that out, go back and listen to our Investment

Property Basics episode and you'll find out why. Oh and man, I wanted to tell you one more thing, Emily and I did the budget right before biking over here tonight to do this episode. What do you mean when you say when you say you did you did the budget? Are you recapping the month essentially? And how did things go? Yeah? Where did we overspend? Underspand how can we do better? Where did the actual inside of those specific categories where did the money go? And that helps us know better,

you know, was it a one time thing? I guess. I was just check. I was wondering if you were setting a new budget for this coming month, because for us, it's basically the same budget from last month, like we al really changed things. No, we're just checking in. Yeah, where we're at the recap. But I want to say, it looks like I'm retiring after this episode because I'm that filthy rich. Congratulations, yes, thank you, and so podcast listeners,

I'm sorry we won't be back next week. No, I guest, digest, I stick around. Let's stick around. Please, even if you were retiring, this is I mean, let's be honest, this is what you'd want to be doing. So this is having a good time because we get to drink beer. Because we get to drink beer. Yeah, and so today's beer, Matt, you picked this up for us. It's from a local brewery that we're huge fans of, huge fans of Wrecking

Bar Brewpub. Honestly, Matt, if I had to say a gun to my head, what's the best brewery in Georgia right now? Wrecking Bar Brewpub? I think so. I think so, man, I was, Yeah, that's they're I mean, they're rushing it right now them, I'll be honest with you, and we might have one of these beers pretty seen to you. But Monday Night, yeah, they have been stepping up their

game and making some incredible stuff too. Those are literally that the two places I would tell someone if they're coming into Atlanta and they wanted to find out where to get good beers, Wrecking Bar and Monday Night, go to those two places and you will have awesome beers and awesome experience. Yeah, Wrecking Bar has it's a restaurant as well, and they've got a farm, uh not that far from Atlanta and do Their food is so good too.

That's why Kate and I both love going there. We can get just amazing food and at the same time they're making some awesome, awesome beers. They're doing such a good job with all the beers too. It's not like they're only specializing in amazing I pa is like, we're gonna have tonight. That Russian Imperial style that they have that they put out every month. It's like the Mexican version. So it's got the peppers in it. I guess that's

mind blowing. And then they've got all these different farm arritles, their different stays ons and and obviously all a lot of their I pas are fantastic too. So yeah, that stout I think is probably I think that's like one of the best deprobably the best out in Georgia. It's one of the best outs I've ever had. Yeah, and

it's phenomenal every single yeah. So yeah, So if you're coming to Atlanta, and we need to write a post on this at some point on the site, just introducing people to our town and where do you like, like a local Georgia or a beer guide? Yep, alright, righte it up, Joe done? Can you do that? All right? So let's crack this one cause I'm thirsty. Nice it's got that deeper crack. These are sixty ounce cans for

the trained listener out there. You may have picked up on that, but not as deep as the crowler that we had. That that's like opening up. It's like a shotgun drum of oil. So we didn't even introduce this style. But this is the Juice Bar Pale Ale Yeah, and the and Wrecking Bar has this essentially this juice series where pretty much every time you go the B series Juice Bar series, and they essentially every time you go they have a pale ale or an I p A or double I p A on tap that's part of

this series. And really they're just incredibly juicy, delicious beers. And so this one wasn't cheap, but I mean their beers are good. This this one was worth it. I think, Matt, you paid fifteen bucks for a four pack, right, yeah, fifteen for a four pack. And honestly, though, to be able to pick up a beer that's that fresh, canned days before we picked it up, it is hard to beat. So Jill, that poured a nice golden It's not perfectly filtered.

It's not meant to be super cloudy, I don't think, And I know I was supposed to sniff it first, but I kind of went straight in for the sip. I was just that thirsty. And this is delicious. At five and a half percent, it's um and being a pale ale, it's a little light, but man, it's like all hops. Like there's no malt backbone almost it is all hops, and I'm all about that. Yeah, they've got

to set up to be a session nail. And for those who may have heard that term before, but maybe I don't know, you don't know exactly what that means. It's just a lighter beer um that you can maybe have more than one in a sitting, which we're not going to do tonight. But yeah, that's the idea behind it. And I'm getting more and more into these lower A BV beers so that I can have a couple in

an in an evening for once in a while. And it's Yeah, it's really nice because usually if you want to have three beers in a night, you're drinking Budweiser if you don't want to be hung over the next day. But there's so many good beers weighing in it, you know, five four and five percent now that are full of flavor, so you can actually have a couple. Yeah, and this is full of flavor, man, like you said, just hop forward.

There aren't a ton of beers that I've had that have this much like hot presence but without sort of that thicker body. It's different. I guess I'm just not used to that, but I yeah, I like it. This juice bar pale Ale from Wrecking Bar is delicious. It's like a cumulus cloud on my tongue. I'll take it. Yeah, So this is a beer that I mean, they can they're on site, but they don't distribute or anything like that.

So this is an example of one of those local breweries that are kind of filling the void of local beer for folks to kind of come by and get. And even when they do release it's a very small amount, there's usually a line that's built up. They'll announce it day of over the day before. Hey, we're releasing it eight pm tomorrow and I it or noon on a Friday,

and it's sold out within an hour. So if you're passing through town and it's great to get a beer on draft there, but you're probably not going to get any cans to go at least at this point. Yeah, but hopefully there's a local brewery that is doing something similar to this near wherever it is that you are.

I mean, like we said last in the last episode, that's one of the things we're excited about with the industry as a whole, is just sort of that move back to to more the local local brewery that you that you go and hit up. Yeah, your neighborhood spot. All right, Matt onto the topic at hand, renting versus buying a home, and this is one of those topics that has captured the minds of personal finance experts everywhere.

And I think there's something we can add to the debate, and I think there's some really important things that we need to clarify for people on both sides of the aisle when it comes to this topic. And I think the first thing that we really need to talk about we need to challenge the assumption that buying a home is a quote unquote good investment. That's kind of been the long standing traditional thought that buying home, well, yeah, of course you got to do it. It's an American

dream and it's a good investment. But I think there there is a large element where people have run with that thought and made really poor choices when it comes

to buying a home instead of running edual. I mean, that's my goal right for this specific episode, is that by the end of the conversation that we've caused you guys to think about this sum and that it isn't just sort of like this assumption that it's not an assumption that your home value is only going to continue to increase, you know, like we were just talking about back in uh two thousand seven, Like people, we know that that bought back then, and that was the assumption,

and that didn't really pan out too well for a lot of folks. And if you're buying for the wrong reasons in two thousand seven, oh yeah, then there's a good chance that that that purchase led to heartache. But if you made a purchase for the right reasons, you likely could have weathered that storm even though your home dropped in value, you know, unless you suffered something terrible like a job loss and a bad economy or something, or you know, or some other major devastation happened in

your life. If you're buying at home under the right pretenses, like we'll discuss here, I think you probably still could have weathered that storm of your home just being worthless essentially.

And what you mean by like buying for the right reasons, is you mean buying for reasons other than just purely financial, right, yeah, And I mean I think a lot of people at specifically at that point in time, with the way the real estate was appreciating, they assumed they could buy something one month and sell it the next for a much larger gain, and that is just not and that that's just not typical when it comes to real estate throughout

the history of real estate. Essentially, it appreciates roughly at the rate of inflation. So buying a home with the thought that it's going to appreciate rapidly that's just not normally the case. And so if you buy a home with that rationalization behind it, and you're using very little money down, then that, to me would be an example of someone that's not being thoughtful about the purchase of that home. Yeah. Man, honestly, that's just that's what freaks

me out right now. Like seeing the way that the markets continuing to I mean, it's been climate for the past seven years or something like that, and and the natural tendency is just to think that it's going to continue to do what it what it's been doing. Like that's just for whatever reason sort of what people think.

And I get caught into that sum too, but I think I just get freaked out more like when I see that, it kind of I'm just like, oh man, it can't feed this good forever, you know, like I'm always writing maybe maybe that means I'm more of a pessimist, but I'm like kind of waiting on the other shoe to drop, you know, I'm just like you know that it's not going to be able to continue this, you know, at the at the rate that has been and and when I see folks that are buying and maybe spending

more than they can have, you know, afford or like you said, expecting that appreciation and expecting that equity growth, that makes me nervous. I completely agree. And actually, but I think actually it doesn't make you a pessimist. It makes you a realist because the same thing, right, because when you look at for instance, you know what's happening with the stock market right now, we're having a bit of a correction. We'll see if we have even more.

It is natural human tendency. Though you're completely right to say it's going up, and it continues to go up up, and any bump in that completely shakes us for the most part. In vice versa, if it's going down, it's only going to continue to go down exactly, which is the exact time that you need to be buying because things are on sale. Yeah, and so it's hard for

us to time those things and to know. But ultimately that's why you have to go with some of these time tested reasons and methodology and mathematics ultimately behind buying a home to make sure that you're buying something that you can't afford over time and granted, things happen, right like in two thou seven. Like if you bought in two thousand and seven and then and then you're you're going up towards the recession that hits a No. Eight and you lose your job, that's a different story, right,

you can't plan for that all the way. But for the most part, there were a lot of people that got caught with their pants down, you know, their hand in the cookie jar essentially, and that's what we want to avoid. That kind of mentality when it comes to buying a home, paints down and handing the cookie jar at the same time. Who knew, what are you doing? My mom would find me like then they kitchen and

I'd be like, I'm just hungry, sleeve lock. But I guess the first thing that we need to dispel the common myth is that renting is throwing away money, and so yeah, sort of going back to the same assumption where buying is a smart move as a smart investment. Just as prevalent is the notion that renting is throwing all your money, and that's just not true. Renting can be an incredibly smart decision and a wise financial move and just a great move for a lot of different reasons.

But yeah, that's just always the sort of mentality people are like, just every month, just throwing away money. It's like, no, like there's so much that gives you. And we're gonna get into that later, uh in this episode, but just kind of write that off in your mind. That is not the case. Yeah, you're still getting something for your money, right, a place to live and and and flexibility. So we'll talk about the pros and running in a little bit, but but just no dispel the myth running is not

throwing away money. So, Matt, before we get into the specifics of running versus buying pros and cons, let's talk about some of these overarching rules that we need to follow whether we're renters or buyers. And first, you just don't want to overspend on housing no matter what the whether you're renting or buying, you want to make sure that you're living by at minimum that rule yeah, which

is you don't want your housing expenses. So like you said, renting or buying, you know, so whether it be like a rent check every month or your mortgage, you don't want that to be more than of whatever your take home pay is and not so not your salary, but yeah,

this is your take home pay. So this is after taxes have been taken out by employer um any amounts that are that's going towards retirement savings like your four own k. This is what shows up in your checking account, right, so every month when you get paid that amount, that is the rule. That's what you want to divide that out by. And your rent or your mortgage payment does

not need to be any larger than that. Yeah, And it's easy, I think, depending on where you live and and who you're who you're hanging out with, to say, well, I need to live in this kind of house or I need to live in this neighborhood, and those kind of choices can balloon your monthly rent or mortgage payment really quickly. And so don't be fooled by the way people around you are living. If you want to ultimately have financial independence one day, if you want to live

a rich life where you're not house poor. You need to think not about what everyone else around you is doing, but what you need to do to put your finances in right order. And the biggest piece to this puzzle is how much of your income every month do you spend on housing? That is the biggest piece to the puzzle. And if you can make changes there, if you can move someplace cheaper, whether it's renting or owning, that's gonna have a huge impact on how much you're able to

save and invest for the long term. Yeah, Jill, I mean what we'd recommend is to think about we talked about in a recent episode like the your big why behind money. If housing is a priority for you, than sure, maybe that's something that you can might spend up too closer to But for most folks, I think you might even find that that percentage to even a lot lower, you know, like closer to fifteen or maybe I agree.

The lower you can get it, the more you can stock away for the future, the more quickly you can actually be financially independent. That housing costs is the biggest line on them that's going to help get you there. Yeah, by far. So another overarching point things that you need

to consider before buying home. And I think these are hard and fast rules that you need to have thought about this before you actually go through the process of shopping for a home, getting financing, and then making offers. You need to consider are you going to be in the home for at least five years, and if you're shopping for a condo even longer than that, probably seven to ten years. You want to explain to folks why this is the case. Sure, So it comes down to

a few things. Just like if you're investing in stocks, you're not going to invest heavily today in a mutual fund knowing that you need the money next year, because there's a lot that can happen in a year. Same thing with a home not quite as volatile usually in a normal cycle, but don't know if it's gonna be

worth more in a year or two years. You're you're hoping that in five years at least you've paid down some of the mortgage amount, although you're paying mostly interest in the beginning, and then ultimately you've created a little wiggle room. But more than that, the biggest thing that's gonna drain you is the transaction costs involved involved in buying real estate, and there's a lot of people that

don't take that into consideration. When you're buying a home, you're not thinking about it at all, Like the transaction costs are usually all in the cellar. But when you're selling the home, you're usually giving up a huge piece of the profit if you haven't lived there that long, and likely even dipping into your own savings to pay

the agent's fees if you haven't built up much equity. So, Joe, you're talking about realtor fees basically, and that alone right there is six and then with closing costs on top of that when it comes time to sell, which sellers often pick up a big chunk of the closing costs. Yeah, but I mean you're you're looking at close to ten percent. So I mean, quick math, say you are selling your home for you thousand dollars. That's thirty dollars that you don't get the key. That is a lot of money.

And if you're expecting that equity growth there within a few years for the five years hits and you can't bank on that. Yeah, And so typically in a year or two or three, you're not going to hit that threshold, and you'll be paying money out of pocket to sell your house, and that is not a position you want to be in. Another big rule that you need to follow. I don't think you should really, for the most part, even consider buying a home unless you have to put down.

That's for a couple of reasons. For that equity reason, right that it's it's important that if you're buying something that you they say for it, and you're financially prepared to actually buy this house. And on top of that, you also avoid paying private mortgage insurance which is called p am I that can typically be hundred plus dollars every month that essentially goes to the bank, and so it makes your monthly housing costs go up even more. Yeah, basically it's just a way for them to get money

out of you because you're a little higher risk. By not putting that money down, they're holding more of the balance, which is risk year for them. Oh and that's another thing too, is that like basically the more you you're able to put down, the better rate you're going to get to. And so there's just so many reasons that

you want to you want to have down. That's sort of a solid fast rule and that's something else too that I'm afraid we're starting to see some of that happening again, some lending where lenders are willing to write loans on properties where buyers aren't putting down that And dude, if that's not a sign of a potential, I mean, there's not gonna be a housing crisis again, right, Like, I think that's probably a once in a lifetime thing, what what we went through ten years ago, But that's

still not a great sign. Yeah, I don't know. I don't know if it's once in a lifetime. Honestly, I feel like human behavior is completely I think once two thousand two nine happened, I assumed that people would wise up a little bit. Savings rates are back to where they were in the toilet, like people making risk ere loans. So I I don't know. I don't know if it's never never again, I think we'll see it again a whole another generation of buyers that didn't learn the previous

time because they weren't necessarily buying back then. Yeah, so I think it's important to put down when buying a home. There are very few exceptions. Like Matt said, you're gonna get the better rate, you're gonna avoid p m I. Even if your house does go down in value, you're not gonna be coming out of pocket on top of that. Likely in normal circumstances, if you have to sell in a hurry, you just want to make sure you're financially

prepared to buy a home. Ultimately, if you can't afford to put down on a home or close to it, you just really need to reconsider whether you should be a renter for right now until you can save with that money. That's true, all right, Matt. So let's get into the pros of renting. Then after that we're gonna do the pros of buying, all right, So pros of renting the first thing geographic mobility and flexibility and also a little bit of financial flexibility to yeah, Joel, So

like the geographic mobility, right, that's kind of obvious. It's like, all right, I want to live here for a short period of time, check out the city or maybe just a neighborhood, you know, to be able to have the flexibility and the options to just move to a different part of town or even move cities or countries. That's incredible freedom that you don't really you're not gonna have once you're buying. And the financial flexibility too, that's something

I don't think folks think about quite as often. But when you're renting, your income doesn't need to be quite a stable. So you've got a job and you're renting at a certain certain dollar amount. If you happen to lose your job, well you're gonna be out of that lease pretty soon. So it's not a huge deal. It's not.

It's not a mortgage where you're locked in for say fifteen or thirty years, and sometimes you know that maybe for the next year or the next shovel several months that your your your paycheck is going to be a certain amount, but beyond that you don't really know. And so it can be tough to sign thirty to forty documents saying that you will pay this mortgage, which is what happens when you buy a house. But you know, sign a lease, there's a little less pressure there and

it give gives a little more flexibility. Well, let's say you're young and you've got a job at a city and then you know what, maybe next year you might get a job offer in an a whole another city for a lot more money geography. Yeah, and you can move and if you own a home, it's tethered to

you in a way that renting is not. And so you have this flexibility whether you're young or old, with new, new job opportunities, whatever may come along, moving closer to family, uh, as your your lifestyle changes, as you have kids, whatever it may be. You have this ability to pick up and move almost on a whim, essentially because you're not tied down to any particular location because of a home. Another great reason that geographic mobility is a plus in

the column of running. Let's say you moved to a town and you're not sure what part of town you want to live in yet. Oh yeah, that's yeah, that's huge. You get to know the city for six months or a year while you rent, and then you know exactly where you want to buy. So it gives you that opportunity to figure out the city, the layout, and then decide, Okay, that's that's the side I want to be on. That's the commutes bad if I live here versus there, and you you learn a lot and so renting can be

perfect for those times too. Yeah. He gets into traffic and like you said, you get to know the neighborhoods. I mean, that's exactly what I was talking about at the beginning, how the neighborhood that can now lived in. When we first moved moved to Atlanta, we didn't know anything about Atlanta other than we'd heard of this neighborhood and so we're like, okay, But ultimately we realized that that's just not the neighborhood where we wanted to live.

It didn't have the things that we're looking for. And that's why we ended up where we are now because we had two years of renting up there with all utilities included, which was awesome, and we had those two years to figure out where it was that we did want to live. So, yeah, that's not something we had down. But I totally agree with you from you know, personal experience right there, man, that, uh, it just buys you some time to figure things out. And that's especially true,

I would say for military families. There's so many military families that have to move every two or three years, and it can be a tough decision. I know, you want to put roots down, you want to own a home. There is something really fulfilling about that. And we'll talk about that in the next section the pros of buying. But it's just not worth the financial heartache that can come along with it if you're not going to be

there for long. So if you are a military family in particular, thank you for your service, thank you for what you do for our country. But rent is probably a better idea if you're only going to be at a post for for two years, three at the max. It's just not worth renting and getting into all that because there's so much when it comes to selling a home that's difficult. You're gonna want that geographic mobility factor. Yeah, Jill,

you mentioned financial hardship. That's a huge benefit to renting is you know, when you're renting, you're not tied to the housing market. So if things are declining, well, you're gonna be losing equity. And so if you're in a situation where you have to sell all of a sudden, you're you're losing out and you're basically being forced to sell when the market's low. If you're running, that's the landlord problem. Yeah, you don't have to worry about that

at all. Something else, you don't have to worry about it all when you're renting is fixing stuff that's right, that's right. So that's again is the landlord problem. Right when the fridge goes bust and I gotta go pick up just called Joel at nine at night. I'll bring a fridge over to your house. And my mom's to five any day. So those are the things that as

a landlord you have to worry about. And and a smart landlord, of course has has benefit if they're if they're really smart about what they're doing, if they know what they're getting into. But as a renter, there's a lot of beauty in the fact that you don't have to fix a leaky faucet or a busted air conditioner or a roof that's messed up. There are all these things that let's say you're not financially prepared to put twenty percent down and have you know a fun to

fix your house. Renting is where it's at because you don't have to fix any of those things that come up, Joel. That actually makes me think of Mitch Hedberg. Did you ever listen to him like back in the day, back in college, But I've had so many people quote him to me, Dude, he sounds hilarious weed. Yeah, I'll share some Mitch Hedberg with you. He's he was, he was, he was the best. Make me a mixtape, Matt, I'll

bring you a disk. It makes me think of a joke or like a story or whatever that that he would tell, and it was something like I went to the home depot yesterday, which was totally unnecessary. What I need to do is go to apartment depot where there's a bunch of people standing around and saying we ain't got to fix anything. Which now, as a landlord, I

totally understand the beauty of that joke. When I get a call for a fridge or for fixing a a shed and disrepair or whatever it is, just think of Mitch. I think, man, there's some beauty. I'm hustling. I'm hustling

to make this to make money. As a lord and as a renter man, you can kinda coast easy say that there's beauty right As from a renters standpoint, I guess, I guess that's something you don't really think about as a renter, Like at least I didn't when I was renting that I didn't have to ever worry about any of that kind of stuff. I could just focus on other things like starting a business, which which is you

know exactly what we did. I don't have to worry about the air conditioning uh not working anymore because we had been overrunning it keeping it at fifty degrees or whatever. But yeah, man, there's there's there's there's truth, there no doubt. And the other pro of renting you don't have to put down a huge down payment. It's like we said, really, if you want to buy home, you should have of

the purchase price to put down as a down payment. Yeah, that is a lot of money, I think until you start actually doing the mathematics, like you said earlier, like that's a ton of money. Like if you're looking at buying a two dollar home, that's forty grand plus other expenses associated with it. And we're not even I don't think I even have time to get into all this, but like the inspection, the appraise, like these are all

things that that go into the purchase of a home. Paint, minor repairs immediately when you move in, not to mention major repairs that can come up. I mean, ultimately you probably need to have closer to in savings for the home price because you'll want that ten percent for those other things to be able to do little stuff that should be our new rule. Or you can't buy a home. And the big thing that with with that for me

is there's a big opportunity costs. Yeah. I thought you're gonna talk about that to give up forty dollars on a two dollar home that you could have put elsewhere. So let's say you put that forty dollars towards getting an education, which might ultimately make you more money over the years and more bank for your butt. Yeah. Or you put into the stock market to work for you over the next twenty or thirty years with compounding interest, that's gonna be a lot more for you in retirement.

So I'm not saying that it's not worth while to do that. I'm just saying that is a pro renting that you can have more of your cash available to put towards things that you want now or saving and investing for the future further down the road. And that's just a huge chunk of change that you're gonna need as a down payment that could go elsewhere. Yeah, man, I agree. So you want to get into the pros of of buying next, let's do it, because I feel

like we just made renting sound real good. Yeah, at the beginning of the episode, you talked about how much you like owning a home, and I talked about how much I like renting, or how much I did like renting. I should say, yeah, there's definitely huge pros, huge advantages to owning a home, and uh, yeah, let's let's get into that now. It did just make me a little tired thinking about all the things I do owning four

homes essentially my own home and three investment properties. I was like, man, I do have a lot of things I have to ex all the time, and you get a fridge in the middle of the night times four exactly, and stuff like that. But ultimately, there are so many pros also to buying a home, and let's go through those now. Yeah, man, the number one being that the value of your home tends to rise over time. Yeah, you're gonna see the equity grow in your home most often.

I mean, it's not a guarantee, obviously, but that's a great way for folks to essentially build wealth in an era where folks are under saving anyway, it's good to know that at least by default, some of your monthly mortgage amount is going towards principle, and then the growth

obviously of your house appreciating over time. Yeah, and if you're going to meet that five year rule or what should likely probably be even more like a seven year rule, if you're gonna stay in your house that long or even longer, if you're gonna make a long term decision about where you live and you're buying, that equity factor

really matters and really comes into bear. The further you get along your loan, the more you've paid down, and then the more that the value of the home has risen, you're starting to see, Man, there's actually some decent equity over time. But you can't be shortsighted if you have your sight set on staying in a place a long time. The build up an equity can be a really huge perk. And something else that we will also see kind of

climb over time. Generally speaking, our rents, right, and so in most cities and most markets, rents continue to rise. And when you purchased a home and you have a fixed rate mortgage, your payment is locked in. Certainly, your taxes and your insurance will change slightly here and there, and that will have an effect on your scrow, which ultimately affects your payment. But over the long haul, your payment is really pretty much gonna stay close to what

it is now, which is awesome. How cool is that to know that we've got fixed rate mortgages and dude, in like ten years, our payments are basically going to be the same that they are now. And I do not even want to think about where rents are going

to be in ten years. You have no doubt that's a huge park because if you're a renter in a lot of cities right now, the way rents have been going, it's it's kind of shocking the increases every year sometimes, and like we said, you know, what happens today doesn't determine tomorrow. Like rents going up right now doesn't mean rents are going up next year or the year after that. Apartments are being built and that could calm down a

lot in the near future. But ultimately, the security of knowing that the mortgage you have in place isn't going to change much and that rents can climb a lot over the years, that can make a huge difference. You know, over time, Essentially as your monthly payments stay the same and someone that's renting, there's go up by a lot. Yeah, security man. And another aspect of security two is just

knowing that you've got a place to live. Right, So as long as you keep making your payments every month, when you've got a mortgage, you get to stay in the house. Uh, No one's gonna kick you out. Versus even if you're an on time paying tenant and your your renter, there's a chance that the landlord may not renew your lease for that next year. He might decide to run it out to a friend or cousin, or might be time to sell. I mean, there's just so

many considerations when it comes to investment properties. So if you really want to put down roots where to me, that's like the biggest factor in wanting to buy a house versus renting. If I really want to put roots down somewhere particular, Buying a home gives you that ability to be locked in in a specific location on a specific street with specific neighbors over the long term, and as a renter, you ultimately don't get to make that choice, which can be one of the harder aspects of being

a renter. Yeah, just the having to move. And that's the other thing too, is moving gets expensive, you know, like if you're having you know, say you find a great place that you like and you're there for a year, but then they end up selling it or they jack up the rent too much and you ultimately I want to go somewhere this cheaper, having to move every single time,

and it just sounds exhausting. Yeah, So on that plus side, right for renting, you had that geographic mobility, but on the downside, you have to pay to move essentially every time you want to go somewhere different. Hopefully you don't have a ton of stuff. And another probe buying a home is you have the creative freedom to change things.

So a landlord determines paint colors on the wall and the floor plan essentially can't be changed as a renter, but as a buyer, you can make it whatever color you want bright orange, uh, and you can you can plant plants outside, you can make additions, you can renovate a bathroom. You've got. It's really essentially at your disposal as as the owner of the home. And that's kind of cool that making it your own kind of place.

That's not unique to like Americans, is like anywhere people like to live, like making it their own, like little touches here and there and more than just a throw rug. You know. Yeah, I'll do. Something we haven't talked about

yet either, is the tax benefits of owning. I mean that's a huge sort of financial one too, where if you have a home and when you're making mortgage payments, a portion of your payments goes towards taxes, and a portion of that goes towards interests, and a portion of that goes towards principle, well you can the ducts the portion that goes to taxes and the portion that goes to interest from your oarned income. Is that something like I count on. It's kind of intangible when you're gonna

added us. Yeah, it's like an ad added bonus thing. But um, it's definitely a nice benefit. You know. Like I've never sat down in be like, all right, how much would I would I actually owe in taxes this year if I didn't own a home, but it would actually it might be like a nice exercise to do that. Yeah, it would be. I think most people probably put too much stock in that and they're like, I gotta buy a home because of the mortgage intersduction. Yeah, like, who, No,

that is not a reason. That is a poor reason to buy a home, but it is an added perk of home, yeah, totally. And something else too, it dude, is when you own a home, too, it gives you the ability or the options to potentially convert that home that you lived in into a rental. That's something you've done twice now, it's something that Kate and I have done once. And you know, when you're running, you just

don't really have that option. But to be able to convert something that you were enjoying, uh from a sort of personal standpoint too, then kind of transform that into something that makes you money into something that provides a stream of income, that's awesome. Yeah. Or even subletting while you still live there, Yeah, running out a room on Airbnb or to a friend, stuff like that that can really,

you know, cut your housing costs. So I think if you are buying a home and you're planning on subletting a portion of it too, that's another good perk. Oh yeah, you can use it however you deem fit. Whereas if you're renting a home, there are usually clauses in place. You might want to read your lease thoroughly because you're probably not allowed to sublet. But if you own that home, you can essentially cut your housing costs by renting portions of it out to other people. Yeah, which you did.

I feel like I kind of missed the boat on that. You know, I didn't consider buying a home, and so after I was I was married, and so I've got my built in wife roommate, uh, which is awesome, But I don't want to make it sound like I totally missed out I'm living with other dudes that didn't clean up after themselves, because that kind of sounds terrible a financial side of it. You know, if we can make that happen for you, buddy, we can put you in

that like Big Brother House on TBS or whatever that is. Yeah. I think that's just a really cool way to be able to reduce your monthly mortgage payment by by sharing the space sub letting it. So we've talked about the

pros of renting, the pros of buying. Ultimately, what it comes down to in so many ways is where you're at in your lifestyle and if you're prone to moving if you're tired of your job and are thinking about applying for jobs in other cities, or if you're in an industry where you know there's like a lot of movements, not just within the company, but if that means just literally moving geographic locations as well. That's something you need to keep in mind when it comes to making this

decision of should I rent or should I buy? So much of it comes down to lifestyle and where you're at in life. It's not well who renting one or well who buying a house wins. They're both fantastic decisions for different people at different points in their lives, and hopefully we've dispelled some of the myths that renting is throwing away money and that buying a home is always

a good investment. Yeah, Joe, I think that's just the biggest thing that that folks need to take take into account, right where are they in their life and make the

decisions that are appropriate for that period. Might toss that question up or something similar, I guess up in our Facebook group just talking about if folks had ever regretted, you know, say, purchasing at home, and speaking of lifestyle, someone had mentioned about building a home or purchasing a home before they had kids, and when the time came and they had to start considering schools, they realized they

needed to move. And so for them, I don't want to say that like renting necessarily would have been a great option, But at the same time, had you've been in that situation, I guess if you're renting, there wouldn't be the I guess potential for for financial loss quite as much if you're renting versus buying in that situation. True. Yeah, and for anybody that thinks that buying a home it's

just slam dunk always a good idea. And I think most people in our age, especially after seeing our parents go through the Great Recession and we were kind of coming of age at the same time, most people in our age group, I feel like that notion is mostly dispelled. Buying a home equals always good. But if you're doubt, check out our Facebook group and you'll see some of

the stories. For instance, Amy wrote, purchasing our last home is my biggest financial mistake, and there were a few folks like that that kind of quickly touted their stories of buying a home and how it actually did not work out. In their favor, and the market that we've had lately has been really irregular. It's been a market on the rebound, and so to expect things to continue to go the way they've been going and to think appreciation is going to happen at this sort of torrid pace,

that's not going to be the case. And you need to make sure that the fundamentals behind why you're buying a home and how much money you're bringing to the table make the decision to buy a home actually makes sense for you, all right, Matt. Back to the beer, Juice Bar pale Ale from Wrecking Bar Group Pub, one

of my all time favorite breweries. This is a beer that the more I drink it, the more I like it, you know, like I feel like some of these beers kind of by the end of it, your there's some palette fatigue, and even though I love beers with tons of flavor, sometimes you're kind of getting you're like almost ready for it to be done. You're ready for it to be done with and you're ready to kind of move on. And that is not the case with this one.

I'm getting towards the end of it and I really could just crack open another one of these, I think, and uh, polish it off. I agree, super hot forward, but really mellow and light and so really easy to drink. This feels really crushable but with lots of flavor and so, like we were talking about at the beginning of the podcast, session beers, and this is more like a session pale ale. Ideally you wanted to be one that you could drink three of in a row. And three beers that's a lot, man,

it is. And and and that's not normally what I want in a beer, Like we're drinking one beer. I normally I limit myself. But this is a great beach beer. It's like at the beach, you do want three beers, right because you're the hydrated basically, and and beer helps dehydration. If you're not the hydrad you can swim out into the ocean and then go to the bathroom and exactly.

So this is yeah, great for for like a man Saturday afternoon hang or something like that, where where you want a couple of beers that day, but you don't want to be tipsy after your first one. Oh man, the beach. That's why I was thinking about this beer. Like you're saying at the beach or whatever. A lot of folks have been, I guess recently gone to the beach, but we haven't. But I know that we're gonna be going to the beach together soon. I'm pumped for that

next month. It's gonna be awesome. Can we record an episode together while the waves wash over our feet at night? At night on the beach? Yeah, sitting there, that sounds romantic. We'll think about it. So yeah again. Great beer juice bar Pale Ale from Wreaking Bar. If you live in Atlanta or you're visiting, check it out. Awesome group pub. I guess give out the good work. All right, jel,

let's do our final recap. So yeah, mat. The first thing in overarching rule, make sure you're not overspending on your housing costs. You don't want to be house poor. Whether you're renting or buying, make sure that your overall housing costs are less than twenty of your take home pay. A couple of quick rule to consider before you buy is to make sure that you're gonna be sticking around for a number of years. Uh specifically, you want to

be there for at least five years. And also to make sure you have at least down to put down on the home. That's going to get you a better rate, and that also allows you to avoid p m I, which can sometimes cost you a couple hundred dollars a month. Yeah, that also means you're financially prepared to buy the house. But some of the pros of renting geographic mobility, and there are so many people that need this, whether you're young or old, in the military or regular civilian employee.

The ability to move wherever you want every year because you're a renter, and you can't underestimate that pro of renting. Yeah, and not just for reasons for like your job, but just say moving from one neighborhood to the next, right, yep, exactly. Also not having to fix anything, And if you are a renter right now, you might take that for granted, but but please don't because that is a huge perk. And not having to deal with a busted air conditioner

or a roof that needs to be replaced. Those can be really really costly repairs, and not having to deal with those allows you to focus more on building a business or pursuing other things that you want to do. Really,

it's just less responsibility in general. Yeah, man. And then so a couple of pros of buying is that typically your mortgage amount is going to stay the same while rents will continue to climb and rise in the country, your mortgage will fluctuate a little bit again with insurance and taxes, but for the most part, you're gonna lock in that expense as sort of a fixed monthly amount and that's not going to change until you pay off

your mortgage. Again, there's also a huge security in knowing that you can stay in your house no matter what. If you're a tenant, your landlord has ultimate say over whether you stay in the house from year to year. They might want to sell it or rent it out to a friend, or raise the rent exorbitantly that you're not willing to pay. If you're on the home with a fixed rate mortgage, you don't have to consider that, and whether you want to stay in that home is

ultimately up to you. And again, these are just a couple of the pros of renting and the pros of buying. I guess that maybe we're most drawn to but yeah, hopefully we were able to give you something to think about and definitely consider before you start automatically making the assumption that renting is is throwing away money and that purchasing a home is always the wise decision financially. Yeah, I know, the waters can be a little money, and

hopefully we cleared things up just a little bit. Ultimately, the biggest factor comes down to your lifestyle, where you're at in life. Do some thinking about where you're going to be in five years and if you're planning on being in the same place, that really helps you make that decision. But don't buy a house because that's what everyone else is doing or because that's what you've been told is the right move. All right, man, let's wrap it up. Our home on the web is how Some

Money dot Com. We'll have some show notes up there for you. Thanks everyone for listening. Best Friends Out, best Friends Out. M