Shark Tank’s Barbara Corcoran speaks on buying vs. renting a home | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Whether to rent a place to live or buy one is a perpetual conversation among personal finance experts.

In one camp are the people who believe there are better ways to grow wealth; they recommend renting forever.

The other camp is made up of people who believe that one of the most time-tested ways to build wealth is to own real estate.

💸💰Don’t miss the move: SIGN UP for TheStreet’s FREE Daily newsletter💸💰

In the current housing mortgage, taking the leap isn’t so easy, especially for first-time homebuyers. Interest rates are stubbornly high, and inventory is very low. All in all, it can make the decision about whether to rent or buy confusing and stressful.

In a typical scenario, when it comes time to buy a home, you make an initial investment in the form of a down payment, take out a mortgage to pay for the rest of the house, and then pay the mortgage lender off over 15 or 30 years.

As the value of your home increases, you build equity. Then, if you decide to sell your home, ideally, you capture some profit. Or, you end up with an asset to pass down to your children or grandchildren. People who believe in home ownership say, “You have to live someplace, so why pay someone else’s mortgage?”

Barbara Corcoran is well known as the star of Shark Tank but she got her start in real estate.

shutterstock

Renting vs. buying as an investment strategy

One of the reasons some financial advisors recommend against buying is because, depending on where you live, the value of your house might not go up as much as financial markets typically do. If you live in certain parts of California or New York, where the annual increase is currently around 7-8% your investment in a home may do better than markets. However, in other parts of the country, real estate doesn’t always see such significant increases — in fact, around 4% per year is average.

According to the National Association of Realtors, the average down payment for a home is $71,442, as of January 2025.

If you took that money and instead invested it in a market where it earned 8%, after 30 years you’d have $718,896, according to Capital Group’s Investment Calculator, no matter where you live.

But whether or not the value of your home will have increased 8% year after year depends on where you live and the cost of housing in your region. You also have to consider all the other costs of home ownership, including insurance and maintenance, which can certainly reduce any appreciation.

More on homebuying:

As for the question about whether now is the time to buy a home, real estate guru and Shark Tank star Barbara Corcoran doesn’t have a crystal ball to tell her, or us, whether interest rates will go down in 2025, but she does have one observation.

“There’s more applications for mortgages right now because they went down a quarter of a point,” she told TheStreet exclusively. “So that says to me that people are losing hope that they’re going to go down much more. But will interest rates go down? Who the heck knows? What you should [be doing is getting] out there and looking for an apartment or a home.”

Should you rent or buy?

Corcoran is unequivocal in her advice about whether renting or buying is the smarter financial move. “Always buying,” she says. “Why do you want to pay somebody else for where you live? And you have to live somewhere. You might as well pay for it and own it yourself.”

To this day, Corcoran says, “The best investment [I ever made] was my first studio apartment. I could barely afford it. I could barely scrape the money together. But if I hadn’t bought that studio apartment, I would have never gotten in the market.”

Back to Corcoran’s studio apartment, she says, “I knew it wasn’t my forever home, and I used that to parlay it into a one bedroom, two bedroom, three bedroom. Right now, I live in a gorgeous penthouse. I don’t think it would have been possible if I hadn’t jumped in the market when I was very young.”

Corcoran adds, “I think most people who retire in America have one thing under their belt. They have their home and the equity in it, and it enables them to retire. I think nobody really wants to give up the American dream.”