Graham Stephan Reveals Why Renting Is Better Than Buying: 'You Could Rent The Same Home For Half The Price'

Buying a house has long been viewed as a core pillar of living "The American Dream." Homeownership lets you establish your family in a neighborhood, and you will eventually pay off the mortgage if you stick with the monthly payments.

However, real estate content creator Graham Stephan recently crunched the numbers and revealed that renting presents a better opportunity for consumers.

"You could rent the same home for half the price," he stated. 

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Although "The American Dream" suggests renting is the equivalent of burning money and homeownership is the best path forward, a deeper look reveals that things may not be as they seem.

Rent Is Cheaper

Stephan focuses more on the numbers than the intangibles of homeownership when he makes decisions. The real estate investor explained that you can end up with a much lower rent payment than a mortgage payment for the same property.

High interest rates and a low supply of houses for sale are some of the reasons why housing prices remain high even though rent is cheaper than monthly mortgage payments. Owning a house also comes with more headaches, such as maintenance and repairs.

You can take the extra savings and put them into an index fund. Not only do you save on the monthly payments, but you also save on the down payment since you don't have to put any money down to become a tenant. 

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Homeownership Offers Assurance

Although Stephan indicated that the numbers favor renting, he touched upon the intangible benefits of homeownership. Buying a house can give you a sense of accomplishment and help you establish yourself in your neighborhood.

However, buying a house also lets you escape the inconveniences of being a tenant. For instance, you don't have to answer to a landlord or worry that you may get kicked out of the property when your lease is up. Furthermore, once you get a house, your monthly mortgage payments won't go up if you get a fixed interest rate. Meanwhile, your landlord gets to decide if you will have to pay a higher rent bill next year.

Homeownership offers more stability than renting, and Stephan points that out when comparing the two options.

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Homeownership Lets You Build Equity

Most of the comments under the TikTok video favored homeownership over renting due to the equity that you build in the property. Eventually, the mortgage payments will go away, but rent payments stick around. You don't build any equity as a tenant, and that can hurt in 10 years if housing and rent prices continue to climb higher.

Some people mentioned that Stephan owns multiple properties and argued that it benefits him to tell everyone to rent. However, Stephan bought these properties back when interest rates were at record lows. He is currently steering clear from real estate as an investment while keeping his current holdings.

Rent can save you money in the short and medium term. However, you may save more money with a mortgage in the long run and have a less stressful retirement.

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