37% of Americans are flushing their salaries down the toilet. This popular real estate trap lures you into its cage until 15 years later you realize you’ve been on this hamster wheel the whole time.
It’s sugar-coated and it means that you could be losing $104,778 of your hard-earned money.
Stop paying the landlord and start being the landlord. Your bank account will begin to swell with the amount of money you earn with this simple little switch. It’s so easy if you open your eyes…
If you’re in the 1/3 of the U.S. population that’s currently renting a home or apartment, you might as well skip paying your landlord and throw your money in the garbage—it’s basically the same thing.
The average monthly rent for a U.S. resident is $1,200. The average monthly mortgage payment is $1,061. Right off the bat you can see the point I’m going to make. But there’s more to these numbers.
From the numbers above you see a monthly difference of $139. While this is a nice little chunk of change, it wouldn’t even cover your groceries for the month, never mind the $104,778 you could be saving.
Consider looking at the bigger picture. For example:
When you finance a car, you pay x amount for y months, plus interest, until the car is yours. You can then do what you want with it, maybe even sell it.
When you lease a car, you pay b amount for c months, plus interest, and then you give the car back. Your next step in this cycle would probably be to find another car to lease, or lease the same one.
You see where I’m going with this?
Why would you want to rent (lease) your house, when you could buy it?
This is why there’s so much money to be made in real estate. So many people are willing to pay somebody else to own the property they live in.
When the property is being sold, the renters don’t get any money back, but the property owner usually makes a nice little profit.
Let’s look at some numbers and see how this theory does in practice.
Using the “Should you Buy or Rent” calculator on www.smartasset.com, I came up with the following numbers when comparing buying and renting in different U.S. cities.
Consider the following: you reside in the house for 15 years, the cost of the house refers to the average price of a home in each respective city, and the cost to rent the house would be $1,200 per month (the U.S. average).
Houston, TX
Total cost renting: $249,026
Total cost buying: $144,248
Total money saved: $104,778
Orlando, FL
Total cost renting: $249,026
Total cost buying: $165,174
Total money saved: $83,852
Phoenix, AZ
Total cost renting: $249, 026
Total cost buying: $177,357
Total money saved: $71,669
Denver, CO
Total cost renting: $249,026
Total cost buying: $219,055
Total money saved: $29,971
Buffalo, NY
Total cost renting: $249,026
Total cost buying: $119,215
Total money saved: $129,811
Keep in mind that this doesn’t factor in the profit from the sale of the house, which would boost these numbers by whatever it’s worth. This is strictly comparing the cost of living when buying and the cost of living when renting.
Now, obviously there’s times when you don’t know if you’re going to stay in one place for a number of years. This is when your profits could reach new heights.
Think about the profit that your landlord makes each month off you alone. Now turn the tables and become the landlord. If you’ve bought a house and need to move, then rent it out. It’s clear that the rent paid will cover your mortgage payments and you’ll be making profit each month.
At this point, you can move on to your next property. Just keep in mind that the real estate industry is always finding new ways to lure you onto the hamster wheel. Remain vigilant and stay away from it.
