Psst...renters, you are already paying a mortgage. (It's just not your own.)

Dear People on the Internet,

Like many small businesses, I run social media ad campaigns to gain web traffic, as well as to promote my clients' listings and that kind of thing.

I've yet to run a campaign without some troll-y comments.

Recently, I ran a campaign where I called Pittsburgh one of the Country's most affordable cities. If you live in Pittsburgh, you have heard this. If you don't live in Pittsburgh, it's probably one of the reasons you're considering re-locating here.

Here is one of the negative comments I received on this campaign:

"Property taxes are outrageous." 🙄

First, I want to take a moment to mention that property taxes vary from municipality to municipality.

With that out of the way, let's have a reality check:

Even if you are renting, you are paying property taxes.

Yep, read that again. If you are a renter, you are paying property taxes.

Well, it's factored into your rent, which means you can't deduct it from your income taxes the way a homeowner/landlord may. If you rent a single family home, your rent is covering:

• ALL of the property taxes associated with the home

• Your landlord's mortgage on the property (if any)

• Your landlord's property insurance

• Your landlord's portion of maintenance

• Any utilities your landlord pays

After all that is said and done, your landlord is probably still turning a profit.

If you rent one unit in a duplex, your rent is likely covering 50% of the above. If you live in a 10-unit building, you're covering 10%, and so on. But either way, you are paying towards the cost of ownership.

You can apply the same logic to the mortgage. If you are renting, you are already paying a mortgage—your landlord's.

Sure, there is a chance your landlord is a bad business person and is losing money on what is supposed to be an income-producing venture.

But typically, you will pay less to own a home than you would pay to rent that same home.

I have an example to prove my point.

Take my current listing at 137 S 24th St. on the South Side, which is listed for $194,000 (at the time I'm writing this).

When I go to rentometer.com, enter the address and the number of beds and baths, I find that the average rent is over $1,200/mo. Even on the low end, the rent would be over $1,100.

Now, using my mortgage loan officer's calculator, I found that with as little as 5% down, the monthly payment comes to slightly less than $1,100/mo, and that INCLUDES estimated homeowner's insurance and real estate taxes (those outrageous taxes!!)

You can play with the mortgage calculator for this property here.

Even with a tiny 3.5% downpayment, the monthly payment would be less than the average rent. And this is a nice house! So the rent would probably be even higher.

Now, in both of these low downpayment scenarios, I've proven my point. It is cheaper to own!

From my list above, we have covered most expenses (in green below), but you may have noticed we haven't covered them all (in red below):

• ALL of the property taxes associated with the home

• Your landlord's mortgage on the property (if any)

• Your landlord's property insurance

• Your landlord's portion of maintenance

• Any utilities your landlord pays

Keep in mind the low downpayment option is only available to those who are buying a home to live in themselves. A landlord would likely have to put at least 20% down to purchase this home as an investment property, in which case, the numbers would look more like this:

Now, the spread still isn't huge, but it now would likely cover the final two bullet points, and a small profit. A regular homeowner could also put 20% down on this home, which really makes it a no brainer!

Going back to the 3.5% and 5% down payment options, it may be a close call, but in the end, the rent is more expensive than the mortgage. Yes, you may pay a little more in utilities, and you may have to budget for repairs, but I still think it is worth it! There are even more benefits to homeownership, which I will talk about in future blog posts.

What I'm Trying to Say

I am not trying to say that homeownership is for everyone. If you ask me, there are valid reasons to remain a renter. However, "outrageous" property taxes is not one. In general, the costs of homeownership are not an excuse to avoid becoming a homeowner because you are already paying those costs!

If this makes sense to you and you're ready to build your wealth (not your landlord's), contact me.

Best wishes,

izzy

PS If you are living with family or friends and don't pay any kind of rent, this blog doesn't apply to you. In fact, I believe your type of living situation creates the quickest path to saving for a home. So you go, you!