Renting vs. Buying a Home

Chris over at Investor Geeks has an interesting article on the Misconception: Renting is for Suckers. He repeats a ratio that I have read elsewhere but twists it the other way:

For every $100 you spend in rent a month, you’d be better off buying up to $12,500 in property instead.

So, if you are paying $1,000 a month in rent for your 1 bedroom apartment, you would be better off buying a home for $125,000, or if your rent is $2,000 a month, you would be better off buying a $250,000 home. But, what if a comparable home costs more than you are paying for rent? What if it would cost you $200,000 to buy the home you are renting for $1,000?

But renting is the same as wasting your money, right? Chris points out that paying closing costs and interest is wasted money also. The first couple years of your mortgage are all expenses and interest. Very little goes to equity.

It is a good article, and the follow-up discussion in the comments are well worth reading.