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Your not saving any money to invest. When you rent, you pay for the owner’s expenses plus their profit.
Rental properties are typically not built for effiecency. The owner doesn’t care what your electric bill is. They’re not going to opt for the highest SEER HVAC unit.
You are entirely missing the fact that people buy more than they rent typcially. Can you buy a bedroom in someone’s house? Buying a one bedroom house isn’t common either. My house is 3 bedroom 2900 Sqft but I decided to rent it wouldn’t be anything near that. I can rent a 1 bedroom apartment for well under the 3200 a month my house cost me, so if I rented I could save and invest.
Went you rent you pay roughly market price not owner’s expense plus profit
You are entirely missing the fact that people buy more than they rent typcially. Can you buy a bedroom in someone’s house? Buying a one bedroom house isn’t common either. My house is 3 bedroom 2900 Sqft but I decided to rent it wouldn’t be anything near that. I can rent a 1 bedroom apartment for well under the 3200 a month my house cost me, so if I rented I could save and invest.
Went you rent you pay roughly market price not owner’s expense plus profit
And in what kind of market would rent be cheaper than the owner’s cost? That’s unsustainable and nobody would ever rent out their house if that were true.
You’re getting a little off topic. Yes it’s expensive to buy a 5 bedroom house on 5 acres when you only need a 1 bedroom apartment (you can also rent out those rooms if your the type who do sit mind living with roommates). That’s an entirely different discussion. If you want to buy a 1 bedroom condo, it’s entirely possible to do so. As far as basic apples to apples rent vs buying, buying is the financially better option all else being equal.
And in what kind of market would rent be cheaper than the owner’s cost? That’s unsustainable and nobody would ever rent out their house if that were true.
A lot of markets are that way when you consider most people buy more house than they rent. Meaning a couple isn’t in most cases going to rent a 3 bedroom apartment but could very likely buy a 3+ bedroom house.
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You’re getting a little off topic. Yes it’s expensive to buy a 5 bedroom house on 5 acres when you only need a 1 bedroom apartment (you can also rent out those rooms if your the type who do sit mind living with roommates). That’s an entirely different discussion. If you want to buy a 1 bedroom condo, it’s entirely possible to do so. As far as basic apples to apples rent vs buying, buying is the financially better option all else being equal.
I disagree with this entire premise. People very rarely actually consider buying/renting the same size, type and location of property. People buy more house than they rent. It’s the way most of the real world works.
When you say all else being equal rent vs buying, buying is considered the better option financially where do you factor in the transaction cost to buy and sell the residence if needed? Let’s say in year 2 or 3 of ownership
A lot of markets are that way when you consider most people buy more house than they rent. Meaning a couple isn’t in most cases going to rent a 3 bedroom apartment but could very likely buy a 3+ bedroom house.
I disagree with this entire premise. People very rarely actually consider buying/renting the same size, type and location of property. People buy more house than they rent. It’s the way most of the real world works.
When you say all else being equal rent vs buying, buying is considered the better option financially where do you factor in the transaction cost to buy and sell the residence if needed? Let’s say in year 2 or 3 of ownership
So you're entire premise is to buy or rent just enough home that you need. That's is not the same thing as overselling the idea of financing a home.
It’s well proven if you only need a shelter for a few years renting is the way to go.
I bought and moved up. Yes I probably bought more house than I “need” but so what? A smaller home is t much cheaper and when I sell someone will look at a bigger house also over a small one.
The difference in price for me was less than 40,000 dollars. I’ll take the bigger house for a few bucks more a month.
So you're entire premise is to buy or rent just enough home that you need.
Nope that’s incorrect. I said the financial benefits of buying are over sold and they are. The vast majority of people holding a mortgage get little to no tax benefit from buying a home. Additionally for the vast majority of the US home prices do not appreciate historically much more than inflation and the transaction cost to buy/sell can swamp appreciation in the first few years. That’s a bit different that what you’ve attempted to boil my entire premise down to
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That's is not the same thing as overselling the idea of financing a home.
You are right it’s not the same thing so why you fabricated it in the first place I haven’t a clue. What I did say is that most people buy more house than they would rent and that’s true
You are entirely missing the fact that people buy more than they rent typcially. Can you buy a bedroom in someone’s house? Buying a one bedroom house isn’t common either. My house is 3 bedroom 2900 Sqft but I decided to rent it wouldn’t be anything near that. I can rent a 1 bedroom apartment for well under the 3200 a month my house cost me, so if I rented I could save and invest.
Went you rent you pay roughly market price not owner’s expense plus profit
And you are missing the fact that not everyone is in a situation to have roommates. I am married with 2 kids. There is no way I am going to rent a single bedroom in a house or a studio apartment for me and my family.
So instead of renting a 3 Bed house, if I buy it and my mortgage+ taxes are the same as the rent, I will be ahead only after ten years, even after including the maintenance payments.
After the house is paid off, I get to live in it for free, saving me the rent that I otherwise would have paid if I had rented all this while. Now THIS would be "savings".
Also, if I am short of money, I can sell this house or reverse mortgage it. Try doing that to a house that you have rented for 40 years.
As for people buying house more they need, well that is a spending problem, and is applicable everywhere- buying more clothes or a more expensive car that you need. Buying a house within your financial limits scores over renting any day.
Now, there could be really hot real estate markets where the rent for a house may be considerably cheaper than the mortgage+ taxes. In these situations, renting may indeed may sense over buying. However, when the market cools down (and every market does), buy when you can afford it, using fiscal prudence.
BTW: If you believe in your "rent and save" theory so much, why don't you sell your house and rent instead?
Also, a 2900 Sqft 3BHK? You seem to be one of those "buy-too-much-house" people that you are talking about.
Last edited by nirvana07; 05-12-2018 at 03:46 AM..
People always complain about the cost of items; specifically for interest payments (houses, college loans, and autos). If you don't like them then save up enough money to pay for a vehicle outright.
IMO the crazy part at least is the depreciation people are willing to eat on a vehicle. People are buying a $60k Audi with a 4 cylinder brand new. In 3 year that vehicle is worth $35k. So maybe they pay $7k in interest over that period of time but incur $25k of depreciation on top of that. All the while they will eat the loss and then buy a new car to start the whole depreciation cycle again. Next time they will buy something bigger/better/more expensive and make it even worse.
Shhhh....let them do it. Someone needs to take the depreciation hit to make that car a great buy to me, used.
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