Renting vs. Buying a Home: The 5% Rule

Please note that while this content is broadly applicable, it was originally intended for a Canadian audience.

You can’t compare rent to a mortgage payment. This way of thinking about the rent versus buy decision is extremely flawed. Comparing a mortgage payment to rent is not an apples to apples comparison. In order to properly assess the rent versus buy decision, we need to compare the total unrecoverable costs of renting to the total unrecoverable costs of owning.

That may sound like a complicated task, but I have boiled it down to a simple calculation.

Referenced in this video:
The Case for Renting a Home – Part 1 - https://www.pwlcapital.com/the-case-for-renting-a-home-part-1/
The Case for Renting a Home – Part 2 - https://www.pwlcapital.com/the-case-for-renting-a-home-part-2/
The Case for Renting - https://www.pwlcapital.com/resources/the-case-for-renting/
The Credit Suisse Global Investment Returns Yearbook 2018 - https://www.credit-suisse.com/media/assets/corporate/docs/about-us/media/media-release/2018/02/giry-summary-2018.pdf

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