Why Rich People Would Rather Pay a $10M Rent Than Buy a $10M House
By: David O.
Tags: Money, Real Estate, Wealth, Personal Finance, Finance

Why Rich People Would Rather Pay a $10M Rent Than Buy a $10M House

Making smart financial decisions

Photo by Naomi Hébert on Unsplash

Many people just want to own a house. They want a piece of real estate that is absolutely theirs. They want to be proud homeowners. And sometimes that stems from the fact that they had a difficult childhood. Perhaps the parents had no home they can call theirs, and that becomes the billboard of the difficult childhood experience. And hence the dream to own a house.

For others, owning a house is a symbol of maturity. It is a sign that you have aced adulthood. Your parents raised you in their own house and you must have your own house to prove yourself to your parent.

There is another category of people that don't have any of that story. All they know is that homeownership is a priority the moment they gain some financial stability.

Owning your house is a good thing. But the only reason people are proud of it is that they considered it a goal to strive for. They don't see it as something that they should have. And this is the advantage people from rich families have. Owning a house is not an adulthood goal for them. That is the starting point.

In other words, rich people do not run the same race regular people run. The destination of the regular people is where the rich often starts from. This is why a regular person will feel fulfilled buying a $1 million house and the rich won't flinch at spending that on rent.

Financial success in this world is much like a game that rich people teach their kids. If you understand how to play the game, you need not worry about how much you spend. This is because you will always make it back.

The regular person will consider a $10 million rent absurd. Why would a person spend that much on a house without buying it? But people do it. And the people that do it understand the importance of the environment to financial success.

The houses or apartments that are priced that expensive are not just selling luxury. They are selling proximity, location, and environment. If you want to live around where the action is, you have to pay big for it. But only people who grew up around the action will understand the importance of living where the action is.

And why do they rent? They rent because they don't want to be stuck. If the place of action changes, you want to be able to pack your bags and move to the next place of action. It might not be that there was an outward change, it might just be that you have gained a greater interest in some other place.

Successful people are people that move. Not just moving aimlessly or chasing money, they move to expand their awareness and explore opportunities. For the rich, staying in one place for too long makes you rusty, especially when they are still in the active years of business.

This is not to say that rich people don't buy houses. They do. In fact, they buy a lot of houses. But the interesting part is that many of them rarely live in the houses they bought. They spend their lives where the action is (unless they are retired). And housing properties that exist where the action rarely goes up for sale. They are mostly up for rent.

Does this mean regular people should rent instead of buying a house? It doesn't matter. No matter the advice and who gives it, most people would still buy a house because they have been programmed from childhood for that.

However, people will make a better financial decision if they are conscious of the fact that your environment eventually gets the better of you.

If you are rich and you stay in a poor environment for long, you will become poor. If you are poor but you learn how to live it up among the class of the rich, it won't be long before you join the rich class.

If you are comfortable where you are, you can buy a house there. But if you wish to reach for more success, upgrade your environment and you will force yourself to grow.

Why spend $10 million to rent an apartment? The rich would ask a counter-question — why spend $10 million to buy a house?

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