If you’re debating between renting or buying, let’s break it down in the simplest way possible. We’ll compare the cost of renting a home at $3,800 per month for three years versus the equity you could build by buying a $500,000 home that appreciates at 6.5% per year.
The Cost of Renting
• Monthly rent: $3,800
• Yearly rent: $45,600
• Total rent over 3 years: $136,800
This is money spent with no financial return—it’s gone.
The Equity from Buying
If you buy a home for $500,000 and it appreciates at 6.5% per year, here’s what happens:
• After 1 year: $532,500
• After 2 years: $567,100
• After 3 years: $603,500
That means in three years, your home gains $103,500 in value.
The Big Picture
• Renting for 3 years costs $136,800 with no return.
• Buying builds $103,500 in home equity over the same time.
• The difference? A $240,300 wealth gap in just three years.
Of course, buying comes with additional costs—mortgage payments, maintenance, and property taxes—but even with those factored in, you’re still building wealth instead of paying someone else’s mortgage.
If long-term financial growth is your goal, owning beats renting every time.