Most renters in Little Rock are waiting for mortgage rates to drop before they consider buying, but according to Jerry Larkowski, Managing Broker at ESQ. Realty Group, LLC, that wait may be costing them every month. Larkowski, a dual-licensed attorney and broker, argues that renting essentially means paying 100 percent interest on someone else's property, with no equity built.
"When you rent, you’re basically paying 100 percent interest every month. You are building up no equity. You are not paying down any principal," Larkowski said.
Every dollar of rent goes to the landlord, while a mortgage payment splits between interest and principal, with some of each payment reducing what you owe. Additionally, the home may appreciate over time. In contrast, renting provides no asset at the end of five or twenty years—just the total of every check written.
Larkowski highlights a common scenario: if a landlord pays $1,100 a month on their mortgage and charges $1,500 in rent, the tenant covers that note and generates cash flow for the owner. "You’re already buying a house," he says. "You’re buying it for your landlord."
Renters often compare current mortgage rates to the low rates of a few years ago, seeing the gap as a reason to wait. However, Larkowski points out that the person who bought at 3.5 percent owns a house, while the person waiting owns nothing. Interest rates are unpredictable, but what buyers control is when they stop paying someone else's mortgage.
Larkowski's rule: buy when prices are low and interest rates are high. "You can never change the price you pay for a house. You can always change the interest rate," he said. If rates fall, refinancing lowers the payment while keeping the lower purchase price. If rates stay the same, the decision was reasonable at a fair price. If rates rise, the buyer comes out ahead. Waiting only clearly wins if prices drop significantly alongside rates—a scenario unlikely in Central Arkansas's historically stable market.
Currently, the Little Rock market offers more inventory and less pressure on buyers. Quality single-family homes are available at price points where a mortgage payment is competitive with many rents. Arkansas's low property taxes further reduce ownership costs. A fixed mortgage payment also remains stable, unlike rent, which can increase at the landlord's discretion.
For those renting in Little Rock, the key question is whether the current monthly payment builds anything. More information on available properties is on the ESQ. Realty Group active listings page. ESQ. Realty Group, LLC is a full-service real estate brokerage serving Little Rock and Hot Springs, led by Jerry Larkowski. Learn more at esqbrokers.com.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
