noharleyyet
Well-known member
Break time . . . 'checks HOA'
WildWill
Well-known member
90% luck 10% location.
This housing market is crazy.
D
Deleted member 28227
Guest
Potential example.
Renting is a flat rate so say $1500 a month. Ostensibly you are paying nothing for maintenance, nothing for landscaping, and you aren't making any improvement. Things tend to be funkier but you are more inclined to live with them.
So $18,000 a year total.
$18,000x7 = $126,000
$250,000 house at 6.5%, 20% down on a 30.
$50,000 down payment
$3,000 closing costs
Owning $1500 monthly payment loan + insurance . Then landscaping + maintenance + improvements = $2000
So $20,000 a year
Own for 7 years
$20,000x7 = $140,000
Remaining loan = $180,832.49
Principle Payed off $19,168
Sell the house for $350,000
- $30,000 agent fees, concessions, etc.
-$180,832 remaining loan
-$140,000
-$3,000 original closing costs
= -$3,832
So you lived almost free for 7 years
Renting
-$126,000
Invest $50,000 + invest money not spent on repairs/landscaping etc. $166 a month.
$100,000-$115,000 depending on market.
At year 7
$-26,000 to $-11,000
So if you sold your house for $100,000 more than what you purchased it for after 7 years you likely only beat renting by $5-20K. If you had to do anything major then you absolutely lost money.
In my case I need to do an entire new Furnace/AC system on top of the DIY stuff. Pretty tough for me to come out ahead of renting. Really only way to get my money back would be to hold onto the house and rent it out... but that assumes I can make enough money to have another down payment... which doubtful.
I'm 100% paying for lifestyle, it's not an investment, it's not a smart money decision.
Another sig worthy line.
noharleyyet
Well-known member
It's those darned Madison Avenue intangibles that spur ya . . .
Irrelevant
Well-known member
1. Never treat your home as an investment, it's where you live, and you can't realize any gains without not living there.
2. When has rent stayed the same for 7 years let alone 30? My mortgage will never increase. The next 30 years, it will always stay the same, then at 30 years, I effectively reduce it by 20x and only pay prop taxes. You play the game for the long run, never the short term.
DouglasR
Well-known member
Here we go...
noharleyyet
Well-known member
As stated, timing and location...just hope you're coattailing the community shakers' chess moves.
D
Deleted member 28227
Guest
You need a new roof every what 20, furnace ever 15-25... hot water heater, etc, etc. and while your loan doesn't increase your property taxes will as your home appreciates over time.
but yeah my point is:
and that when folks say I made x $$ on when I sold my house they often aren't doing the full math and rather just doing the difference in Sell price and purchase price which isn't accurate.
Lots of variables you can make renting or buying accretive or both giant money pits.
When I was a renter, I paid for the new roof and new furnace, etc. It's called rent adjustment. I also ended up paying the property tax.
Regardless, this is getting to the point where the dorks are going to math their way in to trying to prove their point, but in reality, they just need another swirlie.
more_cowbell
Well-known member
- Joined
- Feb 26, 2023
- Messages
- 912
Plus, in some areas of the country rental rates increase almost every year. Like in Portland, even with the explosion of new rental units going up everywhere rental rates keep going up.
The better case for home ownership is the one where you reach the point in your life where it is time to transition to a fixed income and you now own your home outright and are not stuck paying a high rent.
WildWill
Well-known member
Thus the 1927 house @TOGIE was right it is a overrated lifestyle.
Property can be an amazing investment in my experience if you have the capital. The house I'm referring to my parents owned and bought out right and was bought solely as a investment. It was in a rural area next to a newer upscale suburbs and was the natural area for expansion but just wasn't there yet. The house was built in 1994 on 2.5 acres (which now has 2 houses on it). My dad calculated their expenses were just under 100k the house was also rented to family almost the entire time for $800 a month so just over 65k in expenses covered.
So 140k for the house in 2012
35k in expenses after rent
175k
Sold in 2019 for 301k.
Capital is king! But agree a home.is much different then a investment.
noharleyyet
Well-known member
Insurance/tax increase, and upkeep neutralizes dividend...
D
Deleted member 28227
Guest
I mean if you want to N=1 the topic lol
I paid the same rate for rent for 3 years in Boston and got to write my rent off my state income taxes. I made spreadsheets till I was blue in the face, there was no possible way that I could have beaten renting in Boston, even if I'd lived there a decade.
Also, some cities have rent controlled units, you also can easily move when renting to find the best price.
Just kinda depends, not really a "correct" answer, but the idea that renting is always a poor choice is inaccurate.
noharleyyet
Well-known member
Can't decide whether to hire you as an accountant...or a life coach.
What say ye Douglas?
D
Deleted member 28227
Guest
Probably say that I should go #*^@#* myself.
But it's a Monday so maybe just some racial epithets.
There is also a lot of physical and financial safety in owning your home. You won't get a 30 year fixed rent rate and you also can eventually borrow low interest money against your rental for an emergency. I don't know that now is the time to be buying but I am definitely happy with a sub 4% rate and the safety blanket my home provides me.
DouglasR
Well-known member
It’s south park bro...
