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We recently came across a compelling video that explored the financial advantages of renting over buying a home. It made some excellent points, particularly in today's market where homeownership has become significantly more expensive. Inspired by this, we wanted to analyze a real-world example here in Northern California to see how the numbers play out over time.
To do this, we’re comparing two scenarios: purchasing versus renting the same home. The property in question is 3870 Westridge Rd, Cottonwood, CA 96022, a 3-bed, 3-bath home with 2,167 sq. ft., previously rented for $2,095/month, and currently listed for $565,000.
We’ll break down both paths over a 10-year period to determine which makes more financial sense.
Maintenance & Repairs: Estimated at 1.5% of home value annually = $8,475 per year ($706/month)
Total Monthly Costs of Ownership:
Expense Type | Monthly Cost |
---|---|
Mortgage Payment | $3,546 |
Property Taxes | $518 |
Home Insurance | $250 |
Maintenance & Repairs | $706 |
Total Monthly Cost | $5,020 |
Total 10-Year Costs of Ownership:
Expense Type | 10-Year Cost |
---|---|
Mortgage Payments | $425,520 |
Property Taxes | $62,150 |
Home Insurance | $30,000 |
Maintenance & Repairs | $84,750 |
Total Costs | $602,420 |
Total Monthly Costs of Renting:
Expense Type | Monthly Cost |
---|---|
Rent | $2,095 |
Renter’s Insurance | $20 |
Total Monthly Cost | $2,115 |
Total 10-Year Costs of Renting:
Expense Type | 10-Year Cost |
---|---|
Rent | $251,400 |
Renter’s Insurance | $2,500 |
Total Costs | $253,900 |
Key Takeaways: Renting vs. Buying Over 10 Years
Metric | Buying the Home | Renting the Home |
---|---|---|
Upfront Cost | $16,950 (down payment) | $0 |
Monthly Cost | $5,020 | $2,115 |
10-Year Total Cost | $602,420 | $253,900 |
Equity Built | ~$180,000 (loan principal paid) | $0 |
Investment Growth Over Time:
Year | Annual Contribution | Interest Earned | Total Investment Value |
---|---|---|---|
1 | $34,852 | $2,440 | $37,292 |
2 | $34,852 | $5,187 | $77,331 |
3 | $34,852 | $8,213 | $120,396 |
4 | $34,852 | $11,537 | $166,785 |
5 | $34,852 | $15,179 | $216,886 |
6 | $34,852 | $19,162 | $271,100 |
7 | $34,852 | $23,510 | $329,792 |
8 | $34,852 | $28,251 | $393,344 |
9 | $34,852 | $33,415 | $462,116 |
10 | $34,852 | $39,037 | $536,504 |
For those prioritizing financial flexibility, renting isn’t just about lower monthly costs—it’s also an opportunity to invest in high-growth assets. If homeownership isn’t an immediate priority, allocating extra savings to a retirement account or diversified investment portfolio can lead to substantial long-term wealth accumulation.
At Authority Property Management, we help renters find high-quality homes in the Redding and Cottonwood area, so they can enjoy financial flexibility while securing a comfortable place to live. Contact us today to explore available rental options!
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Disclaimer: The content on this blog is for informational purposes only and is not intended as legal or advice. Consult with a qualified professional for specific advice.
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Authority Property Management Inc. in Redding, CA is a licensed Property Management Company and Rental Agency. We offer comprehensive real property management services in Shasta County and surrounding areas. Our expertise includes managing rental properties, single-family homes, apartments, and commercial properties.
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