We’re in our 30s with a $2 million net worth – is it better for us to rent or buy a house with our 2 kids?

A Reddit user with a $2 million net worth and a $575K annual income is trying to figure out whether it makes sense to buy a house or rent. While they are currently renting, they are having another baby soon and they crave the stability and community that would come with buying a home — even though renting has historically been cheaper in the area where they live.

So, should they rent despite the fact that they won’t have the sense of permanence they claim? Or should they make a purchase even if it means incurring higher costs?

Rent or buy is about more than just the monthly payment

The Reddit user explained that their finances are in pretty decent shape. They are currently spending $15K per month, $7,000 of which goes toward rent and $3.5K of which goes to childcare. In addition to their high income, her parents are going to start giving them $30,000 annually for the next five years that they can put toward childcare. 

Their dilemma is that in D.C. where they live, renting is cheaper than buying. She wants to have the financial flexibility to quit her job or at least cut back, and she’s worried about making the “irresponsible” choice of buying when she could pay less to rent. She also said they’re having a hard time setting a budget, as they’d need to spend between $1.5 and $1.7 million to purchase a home that would need renovation while $2 million would give them a finished house.  A home at the lower end of this price range would also be a downgrade compared to the one they are renting and she values a nice house. 

Now, since she does admit that renting is cheaper, it’s tempting to say she should just stick to that forever. However, she also said she hates moving and wants to set down roots, and she believes that having a nice home is important for her happiness. Given that, and given the fact that the couple has plenty of money and will soon have more of it thanks to a parental gift, there’s a case to be made for buying a house anyway. 

Purchasing a home comes with ample benefits — if you can afford it

Buying a home in the right circumstances has both financial and intangible benefits. For one thing, you start building equity so you end up with a valuable asset you own at the end. This means purchasing a property ends up being a kind of forced savings since you basically must make your mortgage payment each month and those payments get you closer to full ownership. 

Rent costs can also fluctuate a lot over time, while your housing costs won’t change too much if you have a fixed-rate mortgage (although property taxes and insurance costs can change). The stability that comes with knowing what your house payment is going to be can be helpful with your budget — plus, since your payment won’t change even as inflation reduces the buying power of your dollars, you eventually get to pay off your home with money that’s worth less. If your house appreciates or goes up in value, then your net worth grows too. 

The Reddit user should take these facts into account when running her calculations, as she may find that buying isn’t such a bad financial choice after all. 

Beyond these financial perks, when you own your own place, you can decorate as you want, feel a sense of permanence, and know that no one can make you move. Since having a home is important to her, the OP may want to pay extra for all these perks — even if that means she needs to make cuts elsewhere to stick with her broader financial goals.

For all of these reasons, if the OP can find a home she is confident would be affordable and can run the numbers and make sure she can pay for the property without compromising on other major things she wants to do, then she shouldn’t let a rent/buy calculator stop her. 

Sure, renting may seem better on paper, but there’s more to life than just running the numbers on major decisions like this. The Reddit user should talk with a financial advisor, get help setting a budget for a home they can comfortably afford, and make the choice that makes her happy as long as she can comfortably afford it, and doing so won’t lead to disaster. 

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