Why This Millionaire Entrepreneur Is Still Renting Instead Of Buying a Home

Millionaire entrepreneur and founder of Her First 100K Tori Dunlap says that renting a home was one of the best financial decisions she ever made. In a CNBC Make It report, the author of the New York Times bestseller “Financial Feminist” said that renting a home has led to her making friends and saving up a huge amount of money over the years. Having saved $100,000 by the age of 25, Dunlap could finally buy a home in Seattle where she lives but she has still stuck to renting.

Why this millionaire chooses to rent instead of buying

Dunlap said that she almost bought a condominium near Seattle in her early 20s, acting on her parents’ advice. However, she took a moment before closing the deal and asked herself if she wanted to buy a house and decided against it. “If I would have done that, my life would be very different: I’d be living an hour outside of the city, and I wouldn’t have made friends in the same way,” Dunlap said.

She added that she was just 22 and did not have her career figured out or possess the skills to manage a property. Thus, she resorted to renting which turned out to be one of her best decisions. “I’m single, I don’t have kids and I travel a lot. It’s nice knowing that I have the flexibility to pick up and move if I want to,” Dunlap added to her reasons for renting. She further shared that she grows the funds that she saved in diversified investments instead of tying all her money to a single property.

Is renting really better than buying?

With soaring inflation and high rent prices for about 89% of Americans, renting a two-bedroom home is cheaper than buying a comparable property, a recent analysis by The Economist indicated. Also, in about 45 of the 50 largest US cities, renting is cheaper than buying a starter home, according to an analysis by Realtor.com. Renters also do not have to pay recurring homeownership expenses such as property taxes, mortgage interest, and the cost of repairs or a hefty down payment.

Another thing that works in favor of renting is that homeowners need to maintain a homeowners' insurance policy, which is significantly more expensive than a renter’s insurance policy which covers nearly everything owned, including furniture, computers, and valuables. Thus, according to Dunlap, renting or buying a home has become a false choice for most people in the US.

This stands true as according to an analysis released by the apartment listing service RentCafe, 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 in the same period.

Further, according to Forbes, house prices have outpaced rental prices by more than 40% while rental prices have also increased. However, according to Zumper’s National Rent Report, 2024 could be the Year of The America Renter as rent prices are expected to fall significantly this year. According to an Entrepreneur report, rent in 27 cities across the U.S. fell sharply in the month of January.

Dunlap encourages potential buyers to make sure that the decision of buying a home makes sense keeping all the extra costs in mind. However, she adds that the decision to buy a home is not just financial but also emotional and it should make sense both ways.