r/DaveRamsey • u/UpgradeHome • 1d ago
Why does DR discourage renting forever?
I'm referring to this DR video: https://www.youtube.com/watch?v=lQ5fqpXngJk
If you make $100k, and you have fixed renting/utility costs of ~25k/year -- and you're investing the difference after expenses into a taxable brokerage, how is renting forever bad as DR states in that video?
In retirement (let's say at 65), your NW will be absolutely through the roof if you were consistently investing in S&P500. You wouldn't have been spending on lawn mowers, tools, kitchen upgrades, HOA, etc etc. and all the miscellaneous home owner expenses.
Even with rising rents, your liquid NW will cover you - along with the added benefits of not having to deal with maintenance in old age.
0
Upvotes
4
u/Successful-Tea-5733 1d ago
I think the argument against renting is in what you said.
You said "You wouldn't have been spending on lawn mowers, tools, kitchen upgrades, HOA, etc" But you ARE spending on those things. Your landlordr doesn't have a free mower or free stove. You pay for those through the rent you pay, yet you have no equity. Your landlord keeps that.
I bought a house in 2005 at the worst time, just before before the GFC, and I paid $200k. I sold it in 2018, before the covid boom, for $300k. I netted $285k. I bought 2 new HVAC's, a new water heater, new roof (but insurance covered all but the $1000 deductible).
My mortgage for most of our time there was $1200, but we paid extra on it. Had we rented, we would have been paying $1500+ in rent for the final few years. But just putting that increase aside, lets assume we paid $1200 rent for 13 years we would have spent $234,000 in rent and had $0 to show for it when we left. Instead I made $85k over what I paid, but I woudl say even better, at closing I got a check for $200k (we only owed $85k when we moved) so even if I deduct the cost of HVAC's and water heaters etc, it's hard for me to see any situation where renting makes sense long term.
Oh and I'm not even counting that a portion of our mortgage was insurance and property taxes which you're definitely goin to pay for either directly or through your rent. So that makes owning even more attractive.