ACCOUNTANT EXPLAINS: Should You Buy or Rent 2023

I'm 75 and along with my wife we bought our first house back in 1971. We have bought several since then and we also have properties we rent out. We lived through the mega high interest rates of the 1980/90's and saw many people in trouble due to overstretching themselves when buying a property as interest rates went into double digits. It's important to consider what will happen in the future if such a scenario happens as is currently the case. One thing to remember though, if you buy a house and sell it many years later but do not make a lot of profit on the deal, at least you have lived in it "rent free" for all that time. I am definitely on team buy it!

I am in my mid 20s now and working hard to save up for a mortgage deposit. Nischa you are absolutely on point there about the psychological factor to consider. For me personally, since I moved to the UK a decade ago by myself, renting is a vital and nerve-wrecking process for me as I don't have that safety net of moving back with my parents (which I think lots of people don't either due to location, family relationships etc), so personally buying is the only ticket out of the rent-find-a-house-move cycle, which is a bit of a nightmare on its own.

As a property owner in the US, it's way too expensive to buy in the current market. Will be closely watching to see if this changes in 2023.

The fact that you discussed opportunity cost tells me you are truly an accountant! Love it

As a 32 year old mom and step mom of 6 who has made every life mistake under the sun, the biggest and most important life lesson I’ve learned is that whatever stage you’re in, make sure your habits and choices align with your goals. For instance, I went to college in a small town where home prices were already cheap, but then the housing crisis happened. Then the houses were dirt cheap. I came to a very cheap college with enough money saved that could have been used for a down payment as a first time homebuyer. Instead I just blew through all my money like an idiot. That continued to be a theme in my life until quite recently when I was finally forced through life experiences to stick to a strict budget. Later on even, my husband and I look back and kick ourselves for not buying a house with a basement, living in the basement and renting out the main part of the house. It would have covered our mortgage and made it possible to have more dispensable income and travel like we actually wanted to. Now we’re having to start over due to an awful housing market and many other factors.

Just found your channel. Love the clarity and simplicity of your presentations. Subscribed. Great job!

I lucked out when I bought a 4 bedroom house when prices were low after the 2009 housing crash and that has worked out great for me. I've been renting out rooms which covers my mortgage and taxes. I also pretty much do all of the maintenance and repairs myself. I essentially have free housing plus significant increase in equity and value of the home. When you rent out you can also deduct a large amount from your income and expenses like depreciation and cost of supplies and improvements etc. at least here in the US.

Another option is live with your parents 😂

The one single reason i bought was for security, meaning i can make it a home knowing someone cannot kick me out with a month notice and also i can keep the property in a good state of repair where as my landlords in the past have done minimal work on the property's.

Really great video! Really well summarised and the numbers were articulated well! Another thing to consider as well with the buying scenario. Of that £1,780 a month, because interest rates are so high, the interest portion of that monthly payment is £1,350 for the first 5 years which is dead money and principle is around £400. This is due to the amortisation schedule. So when you compare that the dead money you’ll be paying from renting £1,560 and mortgage dead money £1,350 + maintenance to fix anything that breaks, people say renting is throwing money down the drain, renting actually is throwing less money down the drain now. Only difference is the dead money goes to a bank instead of a landlord. Issue is when something breaks, the bank won’t pay to fix it.

A buyer should not forget about the costs of sale. This can typically ad another 8 to 10 percent in costs upon sale of the property. Buying today would most likely create a loss over a 5 year hold vs renting. If you held for 10 years or longer, you would probably be better of buying.

People underestimate how rare is to find a couple who are both good in finance and investing. Rare. Very rare.

Went through the whole series of your "Accountant Explains" and the work that you've put in, is impeccable @Nischa! Great scripts, brief knowledge, beautiful presentation and gold standard narration of the different topics! Keep us posted with this life skill, the knowledge of finance!

I purchased my home eight years ago during a 'peak' in Australia. In that eight years it hasn't gained a cent in value. It dipped then now only worth what I paid for it at the start of this year. I am fortunate that I have put a decent dent in the mortgage and have equity in it now.

This video is all over the place, its very very simple, in major cities where rents are high buy as soon as you can and in the best (LOCATION) for good capital appreciation, if you cant buy property just yet invest in either S&P 500 or Vanguard 500, in the long term property will out perform investments in these funds but its better to invest rather then leave the money in the bank. Outside of major cities you can rent as no point in buying in these locations as they have very low capital apprecation, so it all depends on LOCATION. You must do your own homework and see what locations are in demand by both buyers and renters and near good infrastructure ie transport, schools, amenities.

Hi! I just wanted to take a minute and thank you for your awesome videos. It's not just about teaching basic accounting skills—it's about giving people a better understanding of their finances and helping them develop good habits that will stick with them for the rest of their lives. Unfortunately, these lessons aren't being taught in schools today. That's why there is a need to make sure that people are given the tools they need to build wealth and prosperity for themselves and future generations. These things are so simple, but with some self-discipline and the right mentorship, they could be taught to so many people. Unfortunately, due to lack of this knowledge in today's fast-fashion, instinctive buying and use-and-throw world around 90% of the younger generation will end up being part of the lower wealth gap.

How have I only just discovered this channel? I’ll check out all the vids, but so far so good 😊

Hi Nischa 👋, love your explanations. To the point. I find one thing missing in all the analysis is the part where you miss out on settling on a good locality. If you buy a house today 10 km from the city centre, the city is likely to grow and that suburb in 5 years would become a mini city in itself - see Delhi NCR for example, or even Bangalore or Mumbai. But if one rents all the time, then at the time of buying at later point in life, the person will have to settle 25 km from the city centre because the city has grown and affordable places are outside, making it harder to commute if needed. This is something I miss in almost all analysis videos. Thanks!

Great video, so on point!!! What may be an idea for another video is buying to use property vs. buying to rent out. In Germany for example we have really nice tax benefits for renting, basically almost all of the costs of buying, renovation (if any), maintenance, and mortgage interests are tax deductible. Not sure if that is the same elsewhere, but on top of the rental income that can be really nice bonus.

Thanks Nischa. Such a crisp and clear presentation is well appreciated... After not-so mathmatical analysis, I did purchase last year prior to giant rate hikes, but wondering how the selling cost should be included in the calculation... can be almost 7% in the US.