Planning for the Future - Renting vs Owning and How Building Equity Works

They call my generation "generation screwed" for a reason. After covering life expenses like rent or groceries, most of us won't be able to set aside a dime for savings. This sets us up for severe financial distress in the future if we end up with health issues or disabilities (those come with aging!) and it will delay our retirements.

So, with the incoming downpayment assistance programs, many in this age group might now be able to finally consider the benefits of buying as opposed to renting.

This video is long. It's boring. BUT there's a lesson to be learned and sometimes you just have to sit down and look at the numbers. Basically, I did a rough and approximate estimate of what you spend vs gain over ten years when you choose to rent an entire home, vs buying that same home. At first, those numbers look similar. However, when you dive deeper into how real estate tends to appreciate in the long-term, you realize just how effective real estate can be as an investment.

Renting vs Owning: Why the Difference Isn’t Just About Monthly Payments

For a lot of people, the rent vs. own conversation stops at one question: “What’s cheaper per month?”. That’s understandable given that cash flow matters. But focusing only on the monthly number misses the bigger picture. Over time, renting and owning behave very differently, even if/when the payments look similar like in the video.

This isn’t about pressuring anyone into buying. It’s about understanding what your money is doing while you live somewhere, to encourage you to start thinking about how you will save for the future, and to provide an option that could allow you to do so.

The renting reality

Let’s say you’re renting a full detached home.

In today’s market, that often means:

• Paying a premium for decent condition

• No long-term control over rent increases or sale decisions

• No ability to save outside of those rent payments

Renting can absolutely make sense short-term. It offers flexibility and fewer responsibilities. It can allow you to have some cash flow every month when you're willing to sacrifice.

But, over time, one thing stays consistent:

Every payment leaves your pocket permanently.

The ownership alternative

Now compare that to owning a similar home.

With ownership:

• A portion of every payment reduces the mortgage balance

• You build equity automatically, even without appreciation

• You gain control over the property and long-term housing costs

Yes, ownership comes with expenses — maintenance, taxes, and responsibility. That part is real, and pretending otherwise is dishonest. But unlike rent, ownership payments aren’t purely consumptive.

Some of that money comes back to you.

The part people forget: equity isn’t “extra money”

A common misconception is that equity is some bonus prize at the end. It’s not.

Equity is simply:

• The portion of the property you already paid for

• The difference between the mortgage balance and the home’s value

Even if prices stayed flat for years, equity still builds through mortgage repayment alone. Appreciation just accelerates it.

Ten years later: what actually changed?

After a decade:

• A renter has housing memories — but no asset

• An owner typically has a reduced mortgage balance and accumulated equity

That equity can:

• Be carried into the next purchase

• Act as a financial buffer

• Open options that renters often don’t have

It doesn’t mean owning is “always better.”It means ownership changes your financial trajectory in ways renting never can.

This isn’t anti-rent — it’s pro-understanding

There are valid reasons to rent:

• Career mobility

• Short-term plans

• Short term cash flow preservation

But renting long-term without understanding the trade-off is where people get stuck.

The danger isn’t renting. The danger is assuming rent and ownership behave the same way financially. They don’t.