Rent or Buy? Do This 30-Second Math Before You Sign Anything

Everyone says renting is throwing money away. But owning a home throws money away too, just in places you never see. In this video, I break down the 8.71% rule, a simple way to compare renting and buying fairly in about 30 seconds. You will learn where the number comes from, how to use it with real examples, and where the rule falls short. In this video: Why a mortgage payment is not the real cost of owning a home The three pieces of the 8.71% rule: property tax (1.1%), maintenance (1%) and cost of capital (6.6%) How to calculate the monthly cost of owning any home How to flip the rule and find the maximum home price your rent can justify The 5 flaws of the rule: averages, appreciation, buying and selling costs, rising rent and your own behavior A simple 6-step way to decide whether to rent or buy The formula: Home price x 0.0871 / 12 = estimated monthly unrecoverable cost of owning. Compare that number to the rent for a similar home in your area. This video is for educational purposes only and is not financial advice. The percentages are averages and rules of thumb, so please adjust them to your own situation and talk to a qualified professional before making a big decision. If this helped you, like the video, subscribe for more money explainers, and share it with someone who is about to sign a lease or a mortgage. #RentVsBuy #HomeBuying #PersonalFinance #8.71Rule