tldr: like most things in life, there is no "one correct answer". basically, the cheaper the property, the better idea it is to buy. yes. this tool illustra

tldr: like most things in life, there is no "one correct answer". basically, the cheaper the property, the better idea it is to buy. yes. this tool illustrates it perfectly. [http://www.nytimes.com/interactive/business/buy-rent-calculator.html http://www.nytimes.com/interactive/business/buy-rent-calcula...] it actually shows why the khan video is seriously flawed. if you plug in the values he uses in the video: (which are stupid and no money manager in the world would tell you to buy a house like that) - $1,000,000 house - 25% down (all $250k? really?) - 6% interest (ouch...) - $3,000 a month in rent for 1600 square feet? (in the bay area!?!? hahahahahah) that, of course, adds up to a terrible loss of $200k after six years for buying. now, let's change the numbers to something more reasonable. - $1,000,000 house. (1600 square foot house in the bay area) - 10% down. (that's all you need and this leaves $150k for investment) - $4,500 a month in rent (according to zillow, that's what a 1600 square foot house rents for) - 5% interest is more realistic. that is still a loss for the buyer, but it's $45k instead. plus, you haven't completely destroyed your cash flow and investment capital. still bad tho, huh? yeah. because buying a $1,000,000 house in an over-inflated area is dumb. now, let's look at something where it actually makes sense. - same house. - cheaper area -- not everyone wants to live in the bay area. from some real numbers on a house i actually own (tho, i don't live in it - we're renting it out) - $120,000 house. - 10% down. (you have almost *ALL* of that fictional $250k left...) - 5% interest - $1200 a month in rent (again, zillow for that area) that's a net win of $59k if you buy. if i lived in the bay area and didn't need all my intangibles (like, putting in new countertops in my kitchen or adding solar panels if i wanted to), i would totally rent. if i lived in kirkland? i'd sure as hell buy.