Why This Shark Tank CEO Rents a Home and Doesn't Own

Owning a home isn't always the ideal path.

There's a reason people are often urged to stop renting as soon as they can and buy a home instead. When you rent a home, your housing costs are a pure expense, because you don't get anything "back" for your money other than a temporary roof over your head during the time you're paying that rent.

When you own a home, the payments you make on your mortgage get you closer to owning that asset outright. And since homes have a tendency to gain value over time, owning one could put you in a position to make a nice profit.

But while there are certain benefits to owning a home (including reaping a host of tax breaks), in some cases, renting could make more sense. Plus, it's not just people who can't afford to buy a home who rent for years on end. Sometimes, even wealthy people opt to rent because that suits them better financially.

One such person is Dr. Shaan Patel, the CEO and founder of Prep Expert SAT & ACT Courses. Although Patel is a self-made millionaire who got Mark Cuban to invest in his company following a Shark Tank pitch, he still opts to rent for one big reason.

A financially sound decision

Patel, like many other people, has been told time and time again that if it's possible to make a lower mortgage payment for a home than a rent payment, then owning makes sense. But he argues that the numbers aren't that simple. That's because there are other costs associated with owning a home, and those could make buying far more expensive.

In fact, Patel says he's not interested in buying a home despite being able to because he'd rather rent and invest the money he isn't spending on homeownership costs. Those include property taxes, homeowners insurance, and maintenance.

Should you buy a home?

If you want the stability that comes with owning a home and can afford the costs involved, then by all means, go ahead and buy. But if you decide to keep renting, know that it's not necessarily a poor financial decision.

Say you can rent a home in your area for $1,500 a month. A mortgage payment might only cost you $1,000 a month, but that doesn't include your other recurring expenses. It may be that between property taxes, insurance, maintenance, and repairs, your home actually costs you $2,200 a month. That's an extra $700 you're spending and not investing.

Plus, some people don't want the responsibility of owning a home. When you rent, it's not on you to cut the grass, wash the siding, or service the air conditioner. And when it snows and you're a renter, you may not have to be the one standing outside shoveling for hours. So even if you're able to break even financially by owning rather than renting a home, you might still opt to rent for the convenience factor alone.

All told, Patel says renting a home is a "no-brainer" for him. And that may be the case for you, too. If so, know that there's nothing wrong with being a long-term renter, even if buying is an option for you financially.