A few days ago I argued about this with a friend (I wrote about it). He’s convinced buying is the only sane move. I tried to explain why the numbers, when you actually look at them, don’t always agree.
He didn’t buy it.
Then over lunch I told my father-in-law I was considering renting a bigger place with Elena instead of buying another property. The reply came without thinking.
“But son, renting is throwing money away. Yours, at least, is savings.”
I nodded. But that sentence is where the problem starts. It contains a mistake. An expensive one.
Rent is money that leaves and never comes back. True. What almost nobody calculates is that buying a home also has a portion of money that leaves and never comes back. And in most major-city markets, that portion is bigger than the equivalent rent.
Canadian portfolio manager Ben Felix put numbers on that invisible portion. He called it the 5% Rule.
