“You’re not a failure if you rent," Ramit Sethi, self-made millionaire of Indian origin and star of Netflix’s How to Get Rich said while sharing his “most controversial money opinion” -- homeownership is overrated.
“I’m tired of the blind obsession with homeownership in America,” Sethi told CNBC Make It, adding that homeownership is an expensive investment that shouldn’t be taken lightly, but the idea that property is always a great investment has become a “religion” in the US.
“That simply doesn’t make sense, especially now, when the price of housing has gone way up and the effect -- especially on young people, people without money, minorities -- is to make them feel that they are failures,” Ramit Sethi told the publication.
Sethi, whose net worth is estimated to be around $20 to $25 million by multiple publications, is also the author of the New York Times bestseller, I Will Teach You To Be Rich.
He has rented homes in some of the most expensive rental markets in the US, including San Francisco, New York, and Los Angeles. “I rented in all of those places by choice. And I made more money renting than I would have owning,” he told CNBC Make It, referring to the potential profit from selling a home.
Sethi also told the publication that although renting is often a cheaper option compared with owning, people always say it’s like “throwing your money away” since the money is going to a landlord rather than into an investment. But that ignores the true costs of ownership such as mortgage payments, closing costs, homeowners association fees, utilities and maintenance.
Sethi encourages home seekers to “run the numbers” to “see if it’s a better decision to buy, or to rent and invest the difference.”
Sharing an example, Sethi said that he himself rented an apartment in Manhattan and explored the one that was for sale next door. It had the same view, square footage, and the same number of bedrooms, he told the publication.
But when he calculated the costs, the monthly expenses of ownership turned out to be roughly double the rent amount. “This is one example of how renting can sometimes be a better financial decision than buying,” Sethi said.
Read more: Indian-origin self-made millionaire shares 3 money rules to build wealth
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