Justin Bieber has just put down roots—shallow, incredibly expensive roots. Rumor has it that this mop-headed Canadian pop singer has just signed a lease for a 6,000-square-foot rental in Southern California’s San Fernando Valley for a whopping $100,000 per month.
According to sources interviewed by TMZ, Bieber has tired of living in hotels during his long stints in Los Angeles, so he’s decided to splurge on a four-bedroom, seven-bathroom, Mediterranean-style house with lakefront views.
Although this rental’s exact location is undisclosed, based on the one photo posted by TMZ, the place itself looks pretty unassuming, at least from the front. But for 100 grand per month, we’re guessing that, on the inside, the place must be tricked out with solid-gold tubs and a staff of supermodels to massage him to sleep every night!
But the bigger question we can’t help wondering about Bieber’s decision to rent in L.A. is this: Why didn’t he just buy a place instead?
Bieber’s even gained a reputation as a die-hard renter. In 2017, he rented a place in Beverly Hills for $55,000 a month. A year before that, he rented a place in London for $133,000 a month.
Granted, the pop star did just recently buy a property in Ontario for $5 million. But he has yet to put down true roots in L.A.—a place he will no doubt need to visit frequently if he plans to keep his pop stardom in play. All of this suggests he should buy property rather than toss out $1.2 million a year on rent.
Why Justin Bieber should have used a rent vs. buy calculator
While the rent or buy question is always tricky to answer and really depends on an individual’s circumstances, one tool that can help lay out the options in clear terms is a rent vs. buy calculator. You plug in your details like where you live, what you pay in rent, your desired home price, and more. From there, an algorithm incorporating local housing prices, taxes, forecasted appreciation, and more will tell you whether buying is cheaper than renting—or, more accurately, when.
Of course, buying a house is more expensive at the outset, since you’re likely coughing up a huge down payment, closing costs, and other fees. But over time, owning a home can become a smarter financial investment since you slowly chip away at your mortgage and gain equity in your home. Stay long enough, and you reach a point where you’d break even buying versus renting. Stay longer, and home buyers stand to make a nice profit (once they sell, that is).
So where does Bieber stand in all this? Let’s assume, for instance, that he was shopping for a nice, fat mansion in Los Angeles for $10 million. Let’s also assume he’d make a 20% down payment, amounting to $2 million, and get a 30-year fixed-rated mortgage at a 5% interest rate.
Granted, Bieber would cough up more money upfront to own a $10 million place, but he’d actually break even after just two years. In his current scenario, over that time he will have squandered $2.4 million on rent, all of which could have easily covered the $2 million down payment on a $10 million place.
This graph offers a better idea of the numbers involved:
All we can say is, Bieber, you’re missing out!
Price: $10 million
Price: $10 million
Price: $10 million
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