Why Buying Is Better Than Renting

Comparing the costs of buying a home and renting over three years.

Today I wanted to go over a question I get quite a bit, “How do buying and renting compare over time?” I went ahead and broke down what it would look like if you rented for three years versus if you owned a home for three years. It’s an interesting comparison.

The average rent in Jacksonville, Florida, is $2,000 a month for a 2,000 to 3,000 square foot home. You‘re going to pay out $72,000 over three years. Keep in mind that your rent could increase each year. One of the advantages of purchasing a home is that your mortgage doesn’t change. Once you buy a house, you can lock in your rate for 30 years, and it won’t change unless you want it to.

If you buy a $375,000 home in Jacksonville, Florida, you have to factor in two things: the down payment and the monthly payment. The down payment will need to be around $25,000, and that would give you a monthly payment of $2,383, which includes your taxes, insurance, etc. Over three years, the costs will come out to around $110,000. 

Renting would cost you $72,000, while buying would cost $110,000. However, if you rent, you have no equity after three years. You also can’t sell your home to make any money back. 

If you bought a home for $375,000, it would be worth $434,000 after three years, assuming prices appreciated by 5% per year. After three years of payments, you would still owe $339,000 on that property. This brings your equity to $94,000. 

You have two options: Rent and have nothing after three years or purchase and have $94,000. If you have any questions about this comparison or real estate in general, feel free to call or email me. I’d love to hear from you.