Should You Rent or Buy a Home? Financial Planning Insights from BrooklynFi

AJ Ayers and John Owens are back with the fifth edition of their popular Rent vs. Buy debate, this time with a Freaky Friday twist. For the first time ever, AJ took the side of Team Rent, while John made the case for Team Buy. Whether you are weighing renting vs. buying a home in 2025 or trying to decide what makes the most sense for your financial goals, this recap breaks down the biggest takeaways and key resources to help you answer the question: Should you rent or buy?

Before we get started, let’s agree on some basic facts:

  • Average home value appreciation: Historically, home prices increase about 3% per year. Some markets see higher growth, but it is not guaranteed and varies by location.

  • Average rent increases: Nationwide, rents rise about 2% annually, although some major cities such as New York City experience significantly higher increases.

  • How long people stay in a home: The average homeowner stays in their property for 7 years, not the 30 years often used in mortgage calculations. Most buyers move well before paying off their loan.

  • Investment portfolio returns: A diversified investment portfolio typically returns around 8% annually over the long term, based on historical averages. From 2010 to 2020, average annual returns were closer to 13.6%.

Team Rent Takeaways:

#10 Browsing on Zillow is a hobby, not an investment

  • Don’t get caught up in “keeping up with the Joneses” - your friend buying their dream home has different financial circumstances

  • We don’t assume every home on Zillow is a good investment

#9 Buying a home is not as easy as you think

  • Gather the troops: real estate lawyer, trusted broker, inspector, mortgage lender 

  • The emotional roller coaster: “they have a verbal offer in, you need to do 40% down and 10% over asking to get this place!”

  • Competitive markets create demand - demand requires more cash down > don’t get sucked in and lock up MORE of your dollars

  • Markets like NYC, SF, LA rarely get reprieve from competitive buying markets 

#8 Low Transaction Costs

  • No 20% down payment required - keep your money invested and working for you

  • No fat commission for Real Estate agents

    • You can shop this cost now, but you’re still going to pay something!

  • No surprise closing costs

#7 Property taxes, assessments, HOA fees creep up

  • Rent is negotiated and reviewed each year - easy to move if you don’t like it

  • Once you’re in the house, it owns you

  • HOA in NYC is typically $800-$1000 PER BEDROOM 

  • Assessments are the enemy you never knew existed. SURPRISE: we need $10,000 from every condo owner for a new “facade” - whatever the fuck that means

#6 Diversification

  • Your net worth is not stuck in an illiquid asset

  • More money to put into your business, retirement accounts, and other investments

#5 Homes aren’t great investments

  • Prices appreciate a few percent per year on average

  • INVEST YOUR DOWN PAYMENT IN THE MARKET AND GET RICH WITHOUT A HEADACHE AND A DIVORCE 

  • The real estate success stories often leave out the hundreds of thousands of dollars spent on repairs and renovations (real estate influencers make money from your views, not the cash flow from their rentals) 

  • Remember: ILLIQUID!

#4 Nobody keeps their house the way it is

  • Renovations cost a lot of money and often go over budget

  • Many people discount these expenses in their analysis

#3 Selling your home is hard and expensive

  • HEY - AJ - remember that time it took you 3 YEARS to sell that Co-Op??

  • Oh, get out of your house, someone is coming to look at it

  • Pay 6% commission to a broker who is going to tell you to spend $20,000 to renovate the bathroom and replace the kitchen cabinets before you sell

#2 Cash flow

  • No extra costs, surprises, shit you need to fix when it breaks. 

  • Lose your job? Take a paycut? Move to a cheaper apartment instead of losing your house or selling into a down market.

#1 Flexibility

  • Quitting your job? Girlfriend breaks up with you? Moving across the country? (doing all three at once and now have a big therapy bill?)

  • Quick, easy, and relatively financially painless

  • It’s really not that hard to move out of a rented home. It can take YEARS to sell and move out of a home you own.

Team Buy Takeaways:

#10 Access to Cheap (or gifted) Capital

  • No one is going to loan you hundreds of thousands of dollars to invest in the stock market 

  • You can’t throw a housewarming party in your portfolio 

  • Older generations are attached to real estate (parents, grandparents)

#9 Mortgages are awesome

  • Tax savings! 

  • Build up equity  

  • Your mortgage payment stays the same as income grows

  • 2022: What a great time to borrow - 3% or lower! 

  • 2023: Holy hell those rates are high but you get a nice deduction for all that interest you’re paying. 

  • 2025: Rates are coming down, buy while you can and refi later (but don’t bank on it)

#8 Automated savings

  • Automated and forced savings (you might skip that $3,000 deposit to savings but you won’t skip your mortgage payment)  

  • This is a really important one!

#7 The Market - Can you pick a winner?

  • Rental market is expensive and buying a home is the only option 

  • Get in early on a neighborhood that’s changing (gentrification!) 

  • EX: Buy in Austin, TX in 2009, sell for a massive profit just a few years later or be glad you don’t have to participate in a 30% rent increase each year

#6 Taxes 

  • Mortgage deduction

  • Property tax deduction - now expanded under HR1

  • $250,000 exclusion of your gains PER SPOUSE when you sell (thank you Bill)

#5 Security

  • Having a place of your own

  • Having as many pets as you want 

  • Landlord can’t kick you out when they sell the building - security for children and elders 

#4 Tangible and Easy to Understand

  • Real estate is something you can feel and touch

  • You family is going to be very proud of you 

  • The stock market can be intimidating

#3  Building Equity

  • Access cash and borrow against your equity 

  • Home values can increase more rapidly than the national average in some areas at the right time

#2 Lock in a low housing payment

  • You can potentially retire without significant housing costs - not having a mortgage or rent payment when you own your home outright allows you to keep your withdrawal rate low 

  • Your friends see their rent go up  -> your mortgage stays the same

#1 The feels 

  • Numbers aside, the real reason to buy a home is because it feels good

  • You can paint and drill holes in the walls to your heart’s content 

  • Is there anything better in life than custom built-in bookshelves???

The Winner: It Depends!

When it comes to deciding whether to rent or buy, there’s no clear-cut winner. (Even if by majority vote, AJ and Team Rent did win this round!) The right choice depends on your personal situation. Factors like how long you plan to stay put, your cash flow, job stability, lifestyle goals, and even your tolerance for home maintenance all play a role. Buying can help you build equity and create long-term stability, but it also ties up cash and adds ongoing costs like property taxes and repairs. Renting, on the other hand, offers flexibility and lower upfront expenses, freeing up funds for investing or other priorities. The smartest move isn’t about “winning” the rent vs. buy debate — it’s about aligning your housing decision with your broader financial plan and the life you actually want to live.

Want Some Additional Help?

The New York Times has a handy Rent vs. Buy Calculator you can check out. Additionally, you can head to our mortgage page, where you can use our mortgage calculator to help you figure out what’s best for you.

AJ Grossan