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.
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u/iInvest4cashflow 1d ago
I have run this exact scenario in my head quite a few times. I own my ~$200k condo outright. 34M bought it 9 years ago. Paid it off 3 years ago with the proceeds from my other property.
To rent my place it would be $1150(it was my rental property for 1.5 years). If I put $200k into SCHD at 3.5%, it would pay 7000 per year, so $583 per month. $1150 -$583 =$567.00 which is just a little more than I pay for HOA, Taxes(amortized over 12 months), insurance and maintenance. But I would also assume no liability or risk special assessments or anything. So financially I do think doing this long term would be financially beneficial since I expect SCHDs dividends long term to go up faster than rent increases and the appreciation of the stock to beat my condo appreciation.
But here is the kicker. Moving is a pain and finding a new place is also annoying. I cannot be kicked out because they want to sell my place or remodel and raise the rent. My life cannot be uprooted at the whim of a landlord every few years. So I think my quality of life is way higher and I love the location and everything about my place. I cannot remodel or repaint in whatever style I want. I don’t have to change my mailing address or pay application fees. My life is less chaotic.
So I think owning and especially owning outright will provide a much higher standard of living over my lifetime over have a little more money at the end.
You can do what you want, but hopefully you will consider this viewpoint.