To RENT, or to OWN, that is the question—

In Lesson #10, we focused on the homeowner, but what about the people who are trying to decide if homeownership is for them?  Personally, I believe that a home provides more wealth that can be enumerated; however, it is NOT required to be wealthy.  There is no place where this is more truthful, than in New York City where many wealthy people still rent.  If this sounds like a setup, then let me assure you that it is not.  Buying a home may not be the best option for everyone and the truth is that it may ‘not’ save you money, it may ‘not’ be a factor for wealth creation, it may ‘not’ offer the best rate of return, and so on.  It is important that you understand the cons of homeownership as much as the pros.

Education:

A house can be a wonderful thing and in the last two lessons, we discussed the upside (pros) of homeownership, but there is also a downside.    The diagram below depicts some of the additional burdens that come with homeownership.

 

Hands down, the absolute best explanation that I have seen on this topic comes from Khan Academy.  Please take a moment to view this video because Khan will totally change the way that you think about the rent versus buy conundrum.

Resources: 

Khan Academy  – Not-for-profit with the goal of changing education for the better by providing a free world-class education for anyone anywhere.

Important terms from this lesson:

Term	Definition
Lack of Liquidity	The inability to convert an asset to cash, if needed to take advantage of an alternative investment strategy or if cash is just needed.

 Action Step:       Click and Complete!

Go to http://www.kmsykescpa.com/calc-section.php?calc=hom06)

Complete the worksheet to help determine which makes sense for you at this time – to RENT or to BUY.