Shadowing Practice: Renting Vs Buying a Home - The Real Math - Learn English Speaking with Video
Choose a practice mode
Each mode opens a full-screen practice room.
235 sentences
If sentences are too short or too long, click Edit to adjust them.
1
Meet Ryan and Steve.
2
They are both 32.
3
They live in the same city.
4
They both earn $80,000 a year.
5
And after years of responsible financial decisions, canceled subscriptions, and convincing themselves that supermarket brand cereal tastes exactly like the expensive stuff,
6
they've both managed to save $80,000.
7
Financially, they are identical.
8
Personality-wise, not even close.
9
Ryan likes stability in every part of his life.
10
He likes having a plan and knowing what comes next.
11
He wants a place that feels permanently his, a garage for tools he may or may not know how to use, a backyard he can slowly become irrationally protective of,
12
and the freedom to make the place completely his own.
13
Steve is different.
14
He values flexibility.
15
He likes keeping his options open and knowing he can change direction whenever he wants.
16
He doesn't know where he'll be five years from now, and honestly, he prefers it that way.
17
The idea of committing to the same address for the next 30 years makes him slightly more nervous than it probably should.
18
Eventually, those two very different personalities lead them to two very different financial decisions.
19
Ryan buys a home.
20
Steve keeps renting.
21
And for the next 20 years, we're going to follow them both.
22
Every mortgage payment, every rent increase, every repair bill.
23
And every dollar Steve saves by renting and actually invests.
24
Then, at the end, we'll see where two people who started with the exact same income,
25
the exact same savings, but chose two completely different paths, actually ended up.
26
Let's find out.
27
Ryan and Steve are currently renting in the same mid-sized American city.
28
After months of searching, dozens of property listings, and more house viewings than Ryan would ever like to admit, he finally finds the one.
29
Three bedrooms, two bathrooms, a small backyard, and a garage large enough to store exercise equipment he will never use.
30
He decides to buy it.
31
The home costs $350,000.
32
Ryan puts $70,000 down, exactly 20%.
33
That leaves him with a $280,000 mortgage.
34
But the down payment isn't the only money Ryan needs to buy the house.
35
There are closing costs, lender fees, title fees, inspections, prepaid taxes,
36
and approximately 46 documents he's asked to sign while understanding almost none of them.
37
Closing costs can often run around 2% to 5% of the purchase price.
38
So on a $350,000 home, Ryan could easily spend somewhere between $7,000 and $17,500 just to complete the purchase.
39
For our comparison, let's assume Ryan's closing costs come to $10,000.
40
So before he has even moved in, Ryan has already put his entire $80,000 into buying the house.
41
$70,000 for the down payment and another $10,000 in closing costs.
42
He takes out a 30-year fixed mortgage at 7%.
43
His monthly principal and interest payment is about $1,863.
44
But that's just the mortgage.
45
Owning the house comes with a few other monthly expenses.
46
Around $350 in property taxes, $150 in homeowners insurance, and Ryan sets aside about $290 per month for maintenance,
47
roughly 1% of the home's value each year.
48
That brings his initial monthly housing cost to about $2,653.
49
Meanwhile, Steve's calculation looks very different.
50
He rents a comparable 3-bedroom home nearby for $2,000 a month.
51
No property taxes, no homeowner's insurance, and if the water heater suddenly decides to retire, that's his landlord's problem.
52
That leaves Steve with an extra $653 every month.
53
For a brief moment, that money starts looking suspiciously like a trip to Thailand.
54
But Steve resists the temptation.
55
Instead, he decides to invest every dollar he saves by renting.
56
Steve puts the $80,000 he did not use to buy a house into a broad stock market index fund.
57
And from that point on, the $653 he saves each month goes straight into the same investment.
58
At least initially, Steve's decision looks pretty good.
59
He lives in a similar house, pays less each month, and has his money working for him in the market.
60
Now, this is usually where someone says, yeah, but Steve is throwing $2,000 away on rent.
61
Ryan's mortgage payment is building equity.
62
And technically, that's true.
63
But there's a small problem.
64
Especially in the early years, Ryan's mortgage builds equity painfully slowly.
65
In his first month, Ryan pays $1,633 in mortgage interest, $350 in property taxes, $150 in insurance,
66
and $290 budgeted for maintenance.
67
So out of Ryan's total $2,653 monthly housing cost, only about $230 actually goes toward building equity.
68
The other $2,423 is simply the cost of owning the house.
69
Meanwhile, Steve pays $2,000 in rent.
70
Yes, that rent builds no equity.
71
But calling rent throwing money away while pretending mortgage interest, property taxes, insurance, and roof repairs are investments is creative accounting.
72
Now let's fast forward three years.
73
Ryan has made 36 mortgage payments, built up some equity, and learned one of the first lessons of homeownership.
74
When you own the house, every strange noise suddenly has financial consequences.
75
One Saturday, the water heater stops working.
76
Ryan watches a YouTube video titled, Easy Water Heater Fix, Anyone Can Do This.
77
Four hours later, he calls someone who actually can.
78
The repair cost him a few hundred dollars.
79
Fortunately, expenses like this are exactly why Ryan has been budgeting for maintenance.
80
After three years of mortgage payments, Ryan's mortgage balance has fallen from $280,000 to about $270,835.
81
He has paid down just over $9,000 of principal.
82
Now let's assume his home has appreciated at between 3% and 4% per year.
83
The house is now worth somewhere between roughly $382,000 and $394,000.
84
That leaves Ryan with approximately $112,000 to $123,000 in home equity.
85
That is real wealth.
86
Meanwhile, Steve has paid $72,000 in rent over those three years, but his original $80,000 has remained invested.
87
At a 10% annual return, that initial investment alone has grown to roughly $106,000.
88
Steve has also continued investing the monthly difference.
89
those contributions and their growth, and his portfolio is now worth roughly $130,000.
90
So after three years, the result is surprisingly close.
91
Ryan has built substantial home equity.
92
Steve has built a substantial investment portfolio.
93
Ryan can paint the living room whatever color he wants.
94
Steve can move next month.
95
But as the years go by, the costs on both sides begin to change.
96
Ryan's principal and interest payment remains fixed, but that doesn't mean the total cost of owning his home stays exactly the same.
97
As the value of the property rises, his property taxes rise with it.
98
Insurance gets more expensive.
99
And as the house gets older, the repair bills start becoming more ambitious.
100
Meanwhile, Steve has a growing expense of his own.
101
Rent.
102
He starts out paying $2,000 a month, but every year his rent creeps a little higher.
103
$2,000 becomes $2,060, then roughly $2,122, then a little more the year after that.
104
Nothing about the house has changed, except the amount leaving Steve's bank account every month.
105
Apparently, his landlord is also a big believer in compound growth.
106
And with rent increasing by around 3% a year, the $653 monthly advantage Steve started with slowly begins to disappear.
107
And this is where time starts working in Ryan's favor.
108
The principal and interest portion of his mortgage stays fixed, while Steve's rent keeps climbing.
109
But Steve still has one major advantage we haven't fully accounted for.
110
Steve's original $80,000 has been invested in the stock market this entire time.
111
And that brings us to one of the biggest factors in this comparison, opportunity cost.
112
At a 10% annual return, that $80,000 has the potential to grow dramatically over the next two decades.
113
And that's before counting any additional monthly investments.
114
That doesn't mean Ryan is losing out.
115
His money went toward a home that was also appreciating and building equity.
116
But that $80,000 had an alternative use, and an honest comparison has to count it.
117
Now let's jump to year 10.
118
Ryan is 42.
119
His home, appreciating at between 3% and 4% per year,
120
is now worth somewhere between roughly $470,000 and $518,000.
121
After 10 years of mortgage payments, his remaining loan balance is about $240,000.
122
That leaves Ryan with roughly $230,000 to $278,000 in home equity.
123
He now walks around the property with the confidence of a man who owns about half of every brick.
124
Over the decade, he has also spent money maintaining and repairing the house.
125
Some of that improved the property.
126
Some of it simply stopped the property from slowly returning to nature.
127
Steve, meanwhile, has kept investing.
128
At a 10% average annual return, his original $80,000 alone is now worth roughly $207,000.
129
And throughout those 10 years, he has also invested the money he saves each month by renting.
130
That amount started at $653 a month, but gradually became smaller as his rent increased by 3% each year.
131
Add those monthly investments and their growth to his original $80,000, and Steve's portfolio is now worth roughly $290,000.
132
So, after 10 years, Steve is still ahead in liquid financial assets.
133
But something important has changed.
134
His rent is no longer $2,000.
135
After 10 years of 3% annual increases, it's approaching $2,700 per month.
136
Ryan's principal and interest payment?
137
Still about $1,863.
138
Now, let's go to year 20.
139
Ryan and Steve are 52.
140
Ryan's home, appreciating at between 3% and 4% per year,
141
is now worth somewhere between roughly $632,000 and $767,000.
142
His mortgage balance has fallen to about $160,000.
143
That leaves him with somewhere between roughly $472,000 and $606,000 in home equity.
144
Steve's portfolio has also been compounding for 20 years.
145
His original $80,000 alone is now worth roughly $538,000 at a 10% annual return.
146
And that doesn't include the additional money he invested during the years when renting was cheaper.
147
Add those monthly investments, plus the returns they earned, and Steve's total portfolio is now worth roughly $750,000.
148
So, after 20 years, on pure net worth, Steve has come out ahead.
149
But their wealth looks very different.
150
Steve's is much easier to access.
151
Ryan cannot sell 8% of the kitchen, at least not without creating some serious questions from future buyers.
152
But Steve still has one cost that never disappears.
153
Rent.
154
After 20 years of 3% annual increases, his original $2,000 rent is now around $3,600 per month.
155
Ryan has only 10 years left on his mortgage.
156
Steve's rent has no finish line.
157
But Steve's result comes with one very important condition.
158
He actually had to invest the difference.
159
Every month, for decades.
160
When the market rises, you invest.
161
When it falls 30%, you invest.
162
When financial news announces the end of capitalism for the fourth time that decade, you invest.
163
The spreadsheet assumes discipline.
164
Human beings often have other plans.
165
The money he was supposed to invest becomes a nicer car, a few holidays, a slightly more expensive lifestyle.
166
And ten years later, the investment portfolio that looked fantastic in the spreadsheet somehow never made it out of the spreadsheet.
167
A mortgage, on the other hand, creates a form of forced saving.
168
Ryan doesn't decide every month whether he feels like building equity.
169
The bank has already made that decision for him, and behaviorally, that matters.
170
But buying has weaknesses of its own.
171
The first is time.
172
If Ryan had sold after only three years, the closing costs going in,
173
selling costs coming out, and interest-heavy early mortgage payments could easily have wiped out much of his advantage.
174
Buying generally needs time for the numbers to work in your favor.
175
The second issue is mobility.
176
Imagine that several years into their journey, both Ryan and Steve receive incredible job offers in another state.
177
Steve's decision is relatively simple.
178
He gives notice, packs, and leaves.
179
Ryan can move too, but he has another decision to make.
180
He can sell the house, which means dealing with selling costs and finding a buyer, or he can rent the house out and move.
181
But now he has a mortgage on one property, rent in another city, and a tenant who may or may not cover all his costs.
182
Any shortfall comes directly out of Ryan's pocket, leaving him with less money to save and invest.
183
Then there is concentration risk.
184
Steve owns a diversified portfolio containing thousands of companies.
185
Ryan owns one house, on one street, in one neighborhood, in one city.
186
If the area performs brilliantly, Ryan benefits.
187
If the local economy struggles, he cannot rebalance his portfolio by selling the upstairs bathroom.
188
And finally, liquidity.
189
If Steve needs $20,000, he can sell part of his portfolio.
190
Ryan needs $20,000?
191
He has to refinance, borrow against his equity, or ultimately sell the property.
192
Home equity is wealth, but it isn't particularly easy to spend.
193
So which is better, buying or renting?
194
The honest answer is, it depends.
195
Buying becomes more attractive when you plan to stay for a long time.
196
7 to 10 years or more gives transaction costs more time to be absorbed.
197
Principal paydown accumulates.
198
A fixed principal and interest payment becomes more valuable as rents rise.
199
And appreciation has more time to work.
200
Buying also becomes more attractive when property prices are reasonable relative to rent.
201
One rough tool is the price-to-rent ratio.
202
Divide the home price by the annual rent of a comparable property.
203
A $350,000 house divided by $24,000 in annual rent gives us a price-to-rent ratio of about 14.6.
204
As that ratio gets much higher, particularly above 20, renting generally becomes more competitive.
205
But it's only a shortcut.
206
Mortgage rates, taxes, insurance, and expected returns still matter.
207
Renting becomes more attractive when home prices are high relative to rent, when flexibility has real value,
208
and when the renter actually follows through on investing the difference.
209
And of course, it doesn't have to be either or.
210
Buying a home doesn't mean you have to stop investing.
211
Because personal finance is rarely about finding one perfect strategy.
212
It's about understanding the trade-offs.
213
Ryan traded liquidity and mobility for stability, leverage, and long-term control over his housing.
214
Steve traded housing certainty for flexibility, liquidity, and more money invested in financial markets.
215
Neither choice was automatically smart.
216
Neither was automatically stupid.
217
The real decision comes down to two questions.
218
How long are you actually going to stay?
219
Because if you buy a house and leave three years later, transaction costs can punish you.
220
And if you rent, will you genuinely invest the difference?
221
Because if you rent for 20 years and spend every dollar you save, the investment advantage disappears.
222
So no, rent isn't automatically throwing money away.
223
Renters pay rent.
224
Homeowners pay interest, taxes, insurance, maintenance, and transaction costs.
225
Both are paying for housing, and homeownership can absolutely build enormous wealth.
226
But it's also an expensive, illiquid asset with ongoing costs, concentration risk, and a roof that occasionally requests $12,000.
227
The winner isn't always the homeowner, and it isn't always the renter.
228
Ryan needed to stay long enough for buying to work.
229
Steve needed to invest consistently enough for renting to work.
230
Because 20 years later, the difference between them didn't simply come down to who bought and who rented.
231
It came down to what they did after making that decision.
232
Subscribe to Logical Money for more videos breaking down the logic behind the financial decisions we make every day.
233
And let me know in the comments, are you buying, renting, or waiting for interest rates and house prices to both come down at the same time?
234
In which case, I admire your optimism.
235
See you in the next one.
Download App
Everything you need to speak fluently
AI PronunciationScore every sentence
IPA PracticeMaster every sound
VocabularyBuild your word bank
Vocab GameLearn while playing
FOR YOU
Recommend Video
B26
44 sentences
Is Renting Better Than Buying In The U.S.?
Daily ConversationWorking Adults
B22
32 sentences
The Single Biggest Financial Decision | Mel Robbins #shorts
Daily ConversationWorking Adults
B21
135 sentences
Mortgages - Real Estate - Homeowners - Finance - Loan - American English - Conversation Practice
Daily ConversationWorking Adults
B21
304 sentences
The Economics of Owning a Restaurant
Daily ConversationWorking Adults
B2101 sentences
Tips For Moving House Without the Stress | Phil Spencer: Home Hero
Daily ConversationWorking Adults
B21
131 sentences
How to Build Wealth in 5 Years (Realistic Version)
Daily ConversationWorking Adults
B22
22 sentences
Would you dip into retirement savings to buy a home? | 9 News Australia
Daily ConversationWorking Adults
B22
875 sentences
His Young Girlfriend Is Stealing His Money | Financial Audit
Daily ConversationWorking Adults
B21
25 sentences
Father explains Life to His Son in less than 60 seconds #comedy
Daily ConversationWorking Adults
B23
35 sentences
Viewing a Flat in London: What's the Catch?
British AccentDaily ConversationWorking Adults
B229 sentences
The American Dream Is Getting Expensive
Daily ConversationWorking Adults
B21
177 sentences
Buying Your First Home in Melbourne - With John and Nicola Kefalianos
Daily ConversationWorking Adults
Vocabulary and speaking notes for this lesson
This B2 speaking lesson is built on the video “Renting Vs Buying a Home - The Real Math”. The speaker keeps coming back to these words: Ryan, rent, Steve, cost, mortgage. This video has 235 sentences and 2462 words to shadow. The speech runs for 17:36. The speaker talks at a steady 140 words per minute, a comfortable pace for shadowing. 84% of the words are among the 3,000 most common in English; the rest is worth studying before you start.
Key vocabulary in this video
The 15 most advanced words in the video, with pronunciation and meaning:
| Word | Pronunciation | Meaning |
|---|---|---|
| portfolio noun | /pɔːtˈfəʊ.liˌəʊ/ | A case for carrying papers, drawings, photographs, maps and other flat documents. |
| homeowner noun | Someone who owns a house. | |
| liquidity noun | /lɪkˈwɪdəti/ | The state or property of being liquid. |
| renter noun | One who rents property or other goods from another. | |
| spreadsheet noun | /ˈspɹɛd.ʃit/ | A computer application for organization, analysis, and storage of data in tabular form. |
| heater noun | /ˈhitɚ/ | A device that produces and radiates heat, typically to raise the temperature of a room or building. |
| flexibility noun | /ˌflɛksɪˈbɪlɪti/ | The quality of being flexible, whether physically or metaphorically. |
| disappear verb | /dɪsəˈpɪɹ/ | To vanish. |
| homeownership noun | The state of being a homeowner. | |
| backyard noun | /bækˈjɑːd/ | A yard to the rear of a house or similar residence. |
| buyer noun | /ˈbaɪ.əɹ/ | A person who makes one or more purchases. |
| mobility noun | /mə(ʊ)ˈbɪlɪti/ | The ability to move; capacity for movement. |
| comparable adjective | /ˈkɒmpəɹəbəl/ | Able to be compared (to). |
| divide verb | /dɪˈvaɪd/ | To split or separate (something) into two or more parts. |
| compound noun | /ˈkɑmpaʊnd/ | Anything made by combining several things. |
Phrasal verbs you will hear
| Word | Pronunciation | Meaning |
|---|---|---|
| come down to verb | To reach by moving down or reducing. | |
| come out verb | /ˌkʌm ˈaʊt/ | To be discovered; to be revealed. |
| break down verb | To stop functioning. | |
| build up verb | To erect; to construct. | |
| end up verb | To bring to a conclusion. | |
| find out verb | To discover, as by asking or investigating. | |
| pay down verb | To partially repay (a loan or, metonymically, the thing financed by it). | |
| put down verb | To insult, belittle, or demean. |
Grammar in this video
The structures the speaker uses most, with the exact words from the video:
| Structure | In the video |
|---|---|
| Present perfect continuous have/has been + -ing — an action that started earlier and is still going on | has been budgeting · has also been compounding |
| Present perfect have/has + past participle — a past action that still matters now | has even moved · has made · has fallen |
| Relative clauses who / which + clause — extra information about a person or thing | people who started · someone who actually · man who owns |
| Passive voice be + past participle — the focus is on what happens, not who does it | has been invested · be absorbed |
Pronunciation to watch
The speaker uses 18 contractions and reduced forms, such as doesn't, isn't, didn't. Say them the short way, as you hear them.
- The “sh” and “zh” sounds: spreadsheet /ˈspɹɛd.ʃit/, irrationally /ɪəˈɹæ.ʃə.nə.li/, shortcut /ˈʃɔːtkʌt/, temptation /ˌtɛmpˈteɪʃən/, calculation /ˌkælkjuˈleɪʃn̩/
- Long words — get the stress right: portfolio /pɔːtˈfəʊ.liˌəʊ/, liquidity /lɪkˈwɪdəti/, flexibility /ˌflɛksɪˈbɪlɪti/, mobility /mə(ʊ)ˈbɪlɪti/, comparable /ˈkɒmpəɹəbəl/
How to practise with this video
- Listen to the whole video once without speaking and note the words you do not know.
- Shadow it sentence by sentence at normal speed, repeating each one until your rhythm matches the speaker.
- Record yourself and compare with the original, paying attention to words like portfolio, homeowner, liquidity.
What is the Shadowing Technique?
Shadowing is a science-backed language learning technique originally developed for professional interpreter training and popularized by polyglot Dr. Alexander Arguelles. The method is simple but powerful: you listen to native English audio and immediately repeat it out loud — like a shadow following the speaker with just a 1–2 second delay. Unlike passive listening or grammar drills, shadowing forces your brain and mouth muscles to simultaneously process and reproduce real speech patterns. Research shows it significantly improves pronunciation accuracy, intonation, rhythm, connected speech, listening comprehension, and speaking fluency — making it one of the most effective methods for IELTS Speaking preparation and real-world English communication.