November 17, 2021 at 1:38pm | Mikkel Dybvig

Does anyone still think that it is better financially to rent than to buy your own home in most cases? 

I will grant you that if you have to move every 2 years for work it may not make as much sense since buying is usually a long term commitment (according to 2021 statistics, the average length of ownership in the US was 10.5 years) because of the upfront costs. But if you break down the numbers for the costs associated with buying versus renting, and add in the benefits of owning your own home, buying makes way more sense.

Let’s take a look at the zip code that I live in, 89523 in Northwest Reno. The least expensive home that is currently for rent goes for $2195 a month with a 1 year lease, with a $2195 security deposit and a $100 application fee (3 bed, 2 bath, 1324 square foot home). 


Recently a home sold on the same street with similar features and size, for $475,000. With an FHA loan requiring a 3.5% down payment of $16,625 and closing costs estimated at $9,500 (2% of the sales price, but a lot of the costs here are negotiable between the buyer and seller) your total out of pocket costs to close would be around $26,000 with a monthly payment including taxes and insurance of $2,200. I know that is much more than the $4,500 required to rent a similar place, but let's take a look at these costs over time.

Year 1 costs:

Renting:  $2195 + $100 + $26,340 = $28,635

Buying: $16,625 + $9500 + $24,200 = $50,325

Renting is cheaper by $21,690

Those numbers alone make buying seem like a horrible option right? Let’s add in a few more factors as we go then. 

The average appreciation for a home is 3% - 5% annually (according to, but let’s use 3.5% to be on the low end of it), and the average rent increase (according to 2019 statistics from was $196 per month.

Year 2 costs:

Renting: $2391 x 12 months = $28,692

Buying: $2200 x 12 months = $26,400 

(Because of appreciation, the home is now worth $491,625, giving you $16,625 more in equity at the end of year 1)

Buying is now cheaper by $2,292

At the end of year 2, the renter in this scenario has paid $57,327 towards their landlord's mortgage and has no asset to show for it. The home buyer has paid out $76,725 but now has an asset that has appreciated in value by $33,832. If we take what the home buyer has paid and subtract what they have gained in appreciation, the difference is $42,893, making the cost of ownership less expensive than renting by the end of the second year!

There are a lot of other things to consider when comparing renting to buying that we haven’t mentioned here, so I will list a few other considerations now:

  • Homeowners can expect on average (according to American Family Insurance) about $1 per square foot of home in maintenance costs per year. As a renter you won’t have this cost, but you also won’t be able to modify the home in any way without permission from your landlord.

  • Homeowners get tax write offs for property taxes paid, mortgage insurance, and mortgage interest to name a few.

  • Being a homeowner can get you discounts on car insurance and other things.

  • If you own a home and use it as an office you can get an additional tax write off (the simplified version to calculate this is $5 per square foot of office up to 300 square feet, a write off of $1500 a year).

  • Owning your own home gives you creative freedom (limited by an HOA if you have one) to enjoy the home as you please, and to do any additions and remodels that you want and are allowed by your community. If you rent, your creative freedom is really what the landlord allows you to do to their property.


by Mikkel Dybvig
Mikkel has lived in Nevada for the past 23 years.  For more information about Mikkel, please visit his page CLICK HERE


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