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in 1987 I paid 169k for my house. today it is 475k. 169k in my bunch of nothing fidelity funds is 2.8 million on the same amount.
I could subtract out every penny of cumulative rent , paid the taxes and bought 2 homes today.
what you all are failing to consider are the resources available. many folks have enough to even pay cash for a house . they earned it investing ,inheritance ,lawsuits ,etc.
where you stand and how much you have can change the equation big time.
my daughter just bought a co-op in a decent area for what it would cost to rent in a better area. she would have little to invest if she rented instead, perhaps just the down payment and closing costs but nothing on going.
on the other hand I can invest the same amount I would buy with and have a big advantage investing , that is a very different scenario than someone starting with little..
perhaps buying would be the best deal starting out. after a few years appreciation perhaps renting and investing that money elsewhere lump sum would work the best.
later on in life at retirement when you are less aggressive as an investor buying and cutting costs may work best.
different stages will yield very different results .
Last edited by mathjak107; 12-02-2014 at 02:16 PM..
What are these "other costs" that youre using to justify your argument? Because Ive owned a home for two years now and haven't put one dime into my house other than the monthly payment and about 40 bucks in paint......
And how far along may I ask are you toward this 4 million you made by being a renter?
I can tell you if I had still owned and not rented I could never ever have been able to take advantage of the commercial real estate investments that I did here in manhattan.
by having that money not tied up in the house I was able to invest it for very large 7 figure returns.
I could not afford to pay an equity loan or risk how long it would have taken for that investment to pay off.
Though this article from Forbes was very interesting... it's basically the same debate we are having here, what is better buying or renting?
Quote:
The Brown School’s Center for Social Development at Washington University in St. Louis, Missouri released a report in 2013, Homeownership and Wealth among Low- and Moderate-Income Households, which showed that low and moderate-income homeowners generated a higher net worth than their counterparts who rented during the same time period. While the study did not argue or conclude that homeownership is always the best avenue, it did show that those people with responsible mortgages increased their net worth on average by $20,000 over three years compared to only $15,000 for those who rented. Furthermore, despite many academic arguments and conceptual arguments that renting should increase wealth faster than owning, a review of the existing research by Harvard University’s Joint Center for Housing Studies shows that time and time again, even after controlling for sociological, economic, and other differences, those who buy homes tend to increase their wealth faster than those who rent.
So it would appear, in a real world scenario, owning ends up being better. However, that said, the article does point out that,
Quote:
Despite strong evidence supporting the financial benefits of homeownership in generating wealth, homeownership might not always be the best decision. First, buying a home requires a large upfront payment which can significantly reduce liquid assets for a time period. Second, all mortgages are not created equal. Make sure you understand the fees, rates, and payment schedule of the mortgage before agreeing to take on that burden. Another important issue is rental costs compared to home prices by geographic location. In some areas in the U.S. renting might be a better deal than homeownership while in other areas homeownership is a much better financial deal.
Like I said earlier, where I live, buying is a much better deal (scarcity of rentals means rent is high and goes up a lot each year... my mortgage started out the same as my rent and is now much lower). Or the nature of your situation might make renting better (say you have a job where you end up moving ever couple of years... etc).
The only thing I want to point out is this. For some reason, I keep seeing in this thread where some people assume renting saves you from fees like property tax and maintenance. Trust me, you pay them. It's calculated into your rent... landlords aren't running a charity, renting is a business. They are charging enough to cover their costs and make a profit.
as a landlord for decades i can tell you i wish i could recapture my expenses with rent increases. you can only charge what the local markets allow. markets do not care if my mortgage rate adjusted upward or i spent 8k for a roof , 10k on a boiler or any of many expenses that go with the territory and are just not recaptureable.
do you really think the market cares if i have a mortgage and the next landlord down the block doesn't? nope i do not get one penny more because i owe a mortagage or had major repairs.
Last edited by mathjak107; 12-02-2014 at 03:16 PM..
Though this article from Forbes was very interesting... it's basically the same debate we are having here, what is better buying or renting?
So it would appear, in a real world scenario, owning ends up being better. However, that said, the article does point out that,
Like I said earlier, where I live, buying is a much better deal (scarcity of rentals means rent is high and goes up a lot each year... my mortgage started out the same as my rent and is now much lower). Or the nature of your situation might make renting better (say you have a job where you end up moving ever couple of years... etc).
The only thing I want to point out is this. For some reason, I keep seeing in this thread where some people assume renting saves you from fees like property tax and maintenance. Trust me, you pay them. It's calculated into your rent... landlords aren't running a charity, renting is a business. They are charging enough to cover their costs and make a profit.
again ,renters are a mixed bag with very wealthy renters and very poor renters and everything in between all lumped together. even lower end homeowners usually have higher incomes and more resourses than the poorest renters ,that is why they are homeowners. of course that study is going to show that.
by cherry picking time frames i can show you time frames homeowners did worse than renters.
just grouping homeowners together and analyzing them is like a space alian going to a hospital and reporting back almost everyone on earth is sick.
homeowners as a group have tended to have more ,earn more and do better if you are just comparing them to renters as a broad group. but they have a house because of it , not the other way round.
people who take world cruises are wealthier than folks who don't, so if you want to be wealthy you have to take a world cruise. same logic.
what creates wealth is discipline. homeownership is a forced discipline to save . if a renter has the same resources and discipline one may not be any better than the other. it is just easier to be forced to save via the home vs being on your own and renting.
any differences are only because renters may lack the discipline or knowledge to invest elsewhere .
Last edited by mathjak107; 12-02-2014 at 03:39 PM..
as a landlord for decades i can tell you i wish i could recapture my expenses with rent increases. you can only charge what the local markets allow. markets do not care if my mortgage rate adjusted upward or i spent 8k for a roof , 10k on a boiler or any of many expenses that go with the territory and are just not recaptureable.
do you really think the market cares if i have a mortgage and the next landlord down the block doesn't? nope i do not get one penny more because i owe a mortagage or had major repairs.
The flip side is that the landlord down the street without a mortgage is laughing all the way to the bank when collecting the same amount of rent as you - that landlord does not cut his prices as would a widget seller in a competitive market.
What are these "other costs" that youre using to justify your argument? Because Ive owned a home for two years now and haven't put one dime into my house other than the monthly payment and about 40 bucks in paint......
Tell me that again in 5 years. I highly doubt you can avoid big repairs forever...
Quote:
Originally Posted by thatguydownsouth
And how far along may I ask are you toward this 4 million you made by being a renter?
About $34,000. However, my income is well too low to qualify for a mortgage and I live with 3 roommates. I'm 27 and in grad school, you know we make very little
Right....government intervention, demanded by the losers that don't want to take PERSONAL responsibility to better their lot in life.
Using government exactly the same way as homeowners use zoning and land use laws to maximize their standard of living and quality of life.
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