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• I was a proud and committed homeowner for seven years.
• After I sold my home and started renting, I learned that renting was not a waste of money.
•  My advice: Don’t rush into homeownership thinking it’s the only way to build wealth. 

Conventional wisdom is that in the long run, owning a home is wiser than renting. But before you jump on this bandwagon, I encourage you to run the numbers. Building wealth does not have to include owning a home, and owning a home is not the only way to build wealth. 

Renting is not a waste of time and money — and more and more people are realizing this. A study released earlier this year by the apartment listing service RentCafe, using data from the US Census Bureau, found that the number of high-income renters making $150,000 or more jumped 82% between 2015 and 2020, while the number of millionaire renter households tripled during that period. 

So what does this mean? Like I always say, personal finance is personal and there are no hard and fast rules for financial success. Don’t rush into homeownership thinking that it is the fastest way or the only way to build wealth. 

I owned a home for seven years, but now I’m happy as a renter. Here are a few things I learned after going from owning a home to renting:

1. Renters have fewer hidden costs

When I was thinking about buying a home and then going through the purchase process, I was solely focused on the down payment, the cost of moving, and of course, the monthly mortgage payments. But once I was in the home, there was so much more — way more. 

There was homeowners insurance, property taxes, and maintenance and upkeep. These are the costs that people never talk about. It’s not just about the monthly mortgage payment. When I moved into my home, I immediately had serious work to do to stop a leaking roof. I honestly felt like the previous homeowner held the house together with paper clips and tape just long enough to sell it. 

Now as a renter, there aren’t any “hidden costs,” no expenses around maintenance and upkeep, and no property taxes or insurance. Yes, I have renters insurance, but it costs a fraction of what I used to pay for property insurance. 

2. Renters don’t have to worry about inflation’s impact on the housing market

An increase in the federal funds rate can cause mortgage rates to rise. When mortgage rates rise, that leads to an increase in the monthly payments for a loan of the same amount. For example, at a 4% interest rate, a $300,000 mortgage would cost $1,432 per month. At 6%, the same loan would cost $1,799 per month. The effects are greater on larger loans. 

These increases affect a seller’s ability to sell and a buyer’s ability to buy. Renting right now puts me in a place where I am a happy spectator to what is happening in the housing market. While I am still dealing with the effects of inflation, it is from a much different perspective. 

3. Homeownership is not the marker of achievement it used to be

A GoDaddy survey asked 1,000 small business owners to describe what achieving the American Dream means to them. Fifty-four percent responded that it means feeling happy in life and 49% said freedom to follow their passions. Homeownership, historically seen as a marker for success, was fourth on the list at 45%. 

What is the American Dream to me? Living the life that I am living with freedom, flexibility, comfort, and financial security. 

Once again, I am not saying that owning a home or wanting to own a home is a bad thing — I fully intend to own a home again. I am saying, however, that owning a home is not the only indicator of success, and it’s not the only way to build wealth is wrong.