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Rent vs Mortgage – 5 Cities Compared

At some point in our lives, we’re ready to stop throwing money down the rent rabbit-hole and instead build up our assets by investing in a home and paying a mortgage. The sooner, the better. Every monthly rent payment you make lines the pockets of landlords instead of bolstering your assets. If you have a steady job and some money put aside, consider purchasing a home, as each cent you put towards the principal of a house payment is one cent saved for a later date. Let’s look at five major cities and the rental versus mortgage prices, and whether or not the average restaurant server can afford to own a home on their hourly pay and tips (based on a down payment of 10%). 

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#1: Los Angeles, California Rent versus Mortgage

Average Rent According to Rent Cafe: $2,450. 

The figure above is nearly double the national average. In a more affluent sector, this price can be upwards of $5,000 or more. Depending on how much money you make (most rental agreements require at least three times the amount of the rent), you’re throwing out at least a third of your income every month for a place to lay your head. On average, someone renting in Los Angeles is losing $29,400 per year towards rental housing. 

 

Average Mortgage Cost According to Business Insider: $3,048. 

 

The income needed to attain a home at that mortgage rate is $121,939. If you’re married, this means that each person would need to bring just under $61,000. Mortgage rates include escrow amounts for homeowner’s insurance and property taxes as well. This means for $600 more a month, you’ll be able to stop throwing money down the drain and gain financial stability. 

 

With such a high cost of living, Los Angeles offers better pay than other cities within the country. One restaurant server working 40 hour weeks, five days a week, makes on average $71,539 before taxes and including tips (averaged at $150 per day). Homeownership isn’t just a dream. With careful planning and a partner, it can be a reality. 

 

#2: Chicago, Illinois Rent versus Mortgage 

Average Rent According to Rent Cafe: $2,012

 

While Chicago is marginally less expensive than Los Angeles, it’s still much higher than the national average. It’s easy to find cheaper rent, closer to the $600 range, but these neighborhoods come with high crime and poorly performing schools and rental buildings in desperate need of repair. 

 

Average Mortgage Cost According to Business Insider: $1,276

 

The income needed to attain a home at that mortgage rate is $51,031. Remember, if you’re married, that requirement is cut in half per person. This means that even those who rent in rougher neighborhoods can attain a house and begin building their assets up. For many, buying a home could cut their monthly housing payments nearly in half or cost just a modest amount more. 

 

While Los Angeles offers higher pay for the cost of living, Chicago doesn’t have the same rates, but it’s close. A restaurant server working 40 hours per week, five days per week, makes $66,352 before taxes and after tips (averaged at $150 per day). This means the average server which reports all tips on their taxes can afford a nicer than average home on their own. 

 

#3: New York City, New York Rent versus Mortgage

Average Rent According to Rent Cafe: $3,872

 

Manhattan, New York, has rent nearly three times higher than the national average, and over 50% of residents rent instead of owning. The good news is that rent in this city is declining, unlike the previous two on our list. The bad news is that finding lower rental prices means severely reducing amenities and safety. 

 

Average Mortgage Cost According to Business Insider: $2,733

 

The income needed to attain a home at that mortgage rate is $109,313. A married couple would each need to bring in just under $55,000 each. In this case, buying a home versus renting a home would save more than $12,000 per year. That’s a substantial annual savings that can go towards other expenditures. 

 

Thankfully, New York offers one of the highest salaries for a server to offset living costs. A server working 40 hours per week, five days a week, earns on average $88,478 before taxes and including tips (valued at $180 per day). While a single server won’t be able to afford a home on the restaurant pay alone, a side gig can quickly bring them above the threshold needed to buy a home in New York City. 

 

#4: Dallas, Texas Rent versus Mortgage 

Average Rent According to Rent Cafe: $1,338

 

Dallas is slightly lower than the national average, but rent prices have risen 7% in the past year alone and have been steadily increasing. Neighborhoods such as Arbor Place offer rent as low as $770, but the quality and amenities decrease. 

 

Average Mortgage Cost According to Business Insider: $1,779

 

The income needed to attain a home at that mortgage rate is $58,033. Each partner within a marriage would need to bring in just under $30,000 to qualify. Dallas is one of the more affordable cities on our list, and housing is plentiful, so if you’re considering moving from renting to owning, now is the time. 

 

Dallas also offers amenable income for those living and working in the area. The average restaurant server that works 40 hours a week, five days a week, brings in $72,342 before taxes and after tips (based on the average of $120 in tips per day), meaning that the average server could not only afford a home on their pay alone, but they could join someone in purchasing an additional property and renting it out for extra income. 

 

#5: Nashville, Tennessee Rent versus Mortgage

Average Rent According to Rent Cafe: $1,502

 

Nashville falls right along with the national average for rental rates, but the rental market is increasing along the same lines as Dallas, with an uptick of 6% over the past year. While it’s possible to find lower rent within the area, parts of Nashville are heavy tourist attractions and are loud for many hours of the night as bars stay open late. 

 

Average Mortgage Cost According to Business Insider: $1,254

 

The income needed to attain a home at that mortgage rate is $51,294. This means that each partner within a marriage would need to bring home just under $26,000 each. Nashville has a booming market and many surrounding cities with easy access and even more affordable housing, meaning if you have a car, you can easily own your own home and stop paying rent while saving $300+ a month on housing expenses. 

 

Nashville is known for its restaurants and servers that work 40 hours per week, five days a week make on average $76,001 before taxes and after tips (valued at $150 per day). A single server can easily afford their own home in Nashville with enough left over to invest in other avenues. 

For those looking to sell your first home and move into something larger that can accommodate a growing family, please look into our Virtual Staging services. Help a renter buy their first home and pass the dream on! We can save you money on the staging process, and we pride ourselves on speaking directly with every customer to ensure our services meet your needs.