When to Buy vs. Rent a Home

Here is a bit of news – knowing when to buy vs. rent a home is actually thing!  Whether it’s an investment property or a primary home; sometimes price and costs are just to high for it to be a good financial decision.

Many people think that you only run the numbers on investment properties to see if a home will cash flow or not.

However, there are also calculations that can help you decided whether buying a primary home or renting makes more sense.

Let’s dig into this a bit…

Know Your Market

Whether you are looking in your local market or out of state; being aware of the sales prices, rental prices, tax and insurance costs is integral.  Trust me, it does vary from city to city and state to state.

With that information you can ascertain if an area is affordable or not and if a rental will cash flow.

Buy vs. Rent

Yes, believe it or not this is a thing.  Sometimes it makes more sense to actually rent than it does to buy.

There are several factors that go into this calculation, such as:

  • Rental Prices
  • Taxes
  • Maintenance costs
  • Mortgage Rate
  • How long you plan to stay in the home
  • Closing costs
  • Inflation rate

And on and on….

The New York Times produced an article with a tool calculating all this and deriving a price point you can use as the make or break for renting vs. buying.

You can find it here —> Buy vs. Rent Calculator


Buying a Rental Property or Not

As for purchasing a rental property, we know it is all about cash flow.  Thus, first step is to use the ScaredyCatGuide property calculator to see if a property has an estimated positive cash flow.

What I love about using the calculator is that it forces me to know my market if want to have any hope of inputting good data to produce a useful result.

Sometimes there just aren’t any acceptable deals in a local market and you need to look elsewhere.  Or better yet, you can be in a market where deals can be found with alot of time and effort, but tell me this – would you rather find one deal in 6 months in your local area or three a couple hours away from where you live?

Remember, your time has a value too!


If you enjoy my rental property investing tips, you will love the book:

ScaredyCatGuide – Investing in Rental Properties

I walk you step-by-step through finding, buying and renting out a rental property.  The book is your personal mentor!

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