Renting – Somebody Is Getting Rich
Most renters say they prefer renting over buying a home because it’s less headache than owning a home. The fact is they are just making their landlords rich.
What if someone told you that if you purchased a home, you wouldn’t have to make any monthly payments on it? On top of this, I’d promise you that when the house was sold, you would get to keep all of the equity gain in the home. Sound too good to be true? This is exactly what renters are doing for their landlords.
Regardless of how you break down a renting versus homeownership argument, there is one universal fact. If you rent, you are building equity for your landlord. Let’s take a look at a simple example.
Assume you rent a unit in a duplex and pay $1,200 a month for it. Assume further that you live in the unit for three years. During this period, you will have paid your landlord a total of $42,400. You can further assume that your landlord’s mortgage payment was less than $42,000 or he would raise your month payment. The end all effect of this situation is you have paid his mortgage for three years. Think about that for a minute.
Over the three years, you have made every single mortgage payment for your landlord. In doing so, you have helped him build equity in the home through the part of the mortgage payments applied to the principal of the loan. On top of that, the equity growth in the property is entirely his. If you’ve paid off $10,000 in principal and the home has appreciated by 100,000, you’ve just put $120,000 into his pocket. Yep, you’ve been making other people rich.
If you’re renting, you will probably find the above scenario very disturbing. Unfortunately, it gets worse. Go ahead and make a list of your assets and debts. List every single thing you can think of and then subtract the total debts from the total assets. Whatever the number is, would it look better if you had added $120,000 to your balance sheet instead of your landlords?
Renting is a necessity, not an option. You should only rent if you cannot get into a home for some reason. With all of the different loan options out there, home ownership should be at the top of your priority list. You may also want to contact a realtor who specializes in Arkansas Real Estate
Feel free to fill out our quick application to the left to give us an idea of what you are looking for in financing or call us at 501-225-5626 for more information. All consultations are free.
Renting – Somebody Is Getting Rich
Most renters say they prefer renting over buying a home because it’s less headache than owning a home. The fact is they are just making their landlords rich.
What if someone told you that if you purchased a home, you wouldn’t have to make any monthly payments on it? On top of this, I’d promise you that when the house was sold, you would get to keep all of the equity gain in the home. Sound too good to be true? This is exactly what renters are doing for their landlords.
Regardless of how you break down a renting versus homeownership argument, there is one universal fact. If you rent, you are building equity for your landlord. Let’s take a look at a simple example.
Assume you rent a unit in a duplex and pay $1,200 a month for it. Assume further that you live in the unit for three years. During this period, you will have paid your landlord a total of $42,400. You can further assume that your landlord’s mortgage payment was less than $42,000 or he would raise your month payment. The end all effect of this situation is you have paid his mortgage for three years. Think about that for a minute.
Over the three years, you have made every single mortgage payment for your landlord. In doing so, you have helped him build equity in the home through the part of the mortgage payments applied to the principal of the loan. On top of that, the equity growth in the property is entirely his. If you’ve paid off $10,000 in principal and the home has appreciated by 100,000, you’ve just put $120,000 into his pocket. Yep, you’ve been making other people rich.
If you’re renting, you will probably find the above scenario very disturbing. Unfortunately, it gets worse. Go ahead and make a list of your assets and debts. List every single thing you can think of and then subtract the total debts from the total assets. Whatever the number is, would it look better if you had added $120,000 to your balance sheet instead of your landlords?
Renting is a necessity, not an option. You should only rent if you cannot get into a home for some reason. With all of the different loan options out there, home ownership should be at the top of your priority list. You may also want to contact a realtor who specializes in Arkansas Real Estate
Feel free to fill out our quick application to the left to give us an idea of what you are looking for in financing or call us at 501-225-5626 for more information. All consultations are free.