I’ve heard it all …

• Don’t you know renting is a waste of money, as you’ll never build up any equity
• Renters are poor people, it’s what you do if you can’t afford to buy a house
• Renting means your paying your landlord’s mortgage and not your own

While all those things are technically right, they are also quite wrong and only really valid if you are doing an apple to apples comparison — you are buying the same house in the same location.

The problem with that logic is that in most cases the house your buying or building is going to be larger and more costly to own and operate then the place you currently live in. Your commute will be longer, you’ll burn through more gas and junk cars quicker. The additional costs of an upgraded building, combined with mortgage costs tied to a single, non-diversified asset may not be a good investment at all. Forced savings — bank required mortgage payments — might be a good idea for those lacking discipline, but it’s still a non-diversified asset that is difficult and often expensive to convert to cash.

While buying can lead to an asset that accumulates in value, there are many things in owning a house that are immediate money sucks or depreciate in value:

• Cost of automobile commuting compared to riding a bicycle or taking a bus to work
• Replacing worn-out appliances and parts of a house
• Energy costs of heating and lighting a larger stand-alone building
• Interest paid to a bank may reduce your income in eyes of tax man, but a lower taxable income certainly doesn’t cover the cost of interest

Suddenly, if you looking at buying or building a house, the numbers don’t seem so great after all. It’s not to say it’s not a worthwhile goal for other reasons — like being able to own land and livestock or have a bigger house with more amenities, but to view renting as a waste of money or something only poor people do is a rather silly way to look at it.