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The way I see it right now, I'm burning $600/mo on rent. Just down the toilet it goes. Plus, I'm earning no rental income as I would be if I purchased a 2-3 bedroom place. It seems like I'm passing up on a chance to put $600 + ~$600 (in rental income) per month by not having a house.

If you consider your entire rent payment to be "burnt", then when you buy a home you will be "burning" all of these:
- structural maintenance (roof, walls, floors, plumbing, wiring)
- landscaping
- leaf raking, snow shoveling, grass mowing
- repair/replacement on major appliances
- property taxes
- mortgage insurance
- mortgage interest
- the portion of insurance that corresponds to structural
- water bill
- sewer bill
- garbage bill

Right now your landlord is paying for all of these. When you buy, you will pay all of these.

And by the way, rental income is taxable. You do get a few more deductions to partially offset it though.
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