Smart Money Moves: Why Renting Might Be Your Best Bet

Kevin O'Leary, a well-known investor, has some strong opinions on home buying. He thinks it's not always the best move, especially for young adults. His advice? Rent first, invest the savings, and buy later when it makes more sense. O'Leary suggests that buying a home only makes sense if you plan to stay in it for at least five years. If you're early in your career, he recommends renting a place close to work. Walk to your job, save the money you would have spent on transit, and invest it instead. This way, you can build a strong financial foundation before taking on a mortgage. He also points out that buying a home is more than just a financial decision. It's a lifestyle choice tied to stability. O'Leary recommends buying a home when you're ready to start a family and want the consistency of a neighborhood, community support, and a good school system for your kids. Before that, flexibility matters more than locking into a mortgage. High interest rates and closing costs make timing crucial. According to data, closing costs on a purchase typically run about 2% to 5% of the loan, and selling a home often brings agent commissions around 5% to 6% of the price. These expenses are front-loaded, so buyers usually need several years of equity gains and price appreciation to break even versus renting. With today's prices and rates, renting is cheaper than buying in most large U. S. metros for would-be first-timers. O'Leary advises buyers to clear high-interest debt first and to keep mortgage payments under one-third of after-tax income to avoid financial strain.