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Haha, yes its Ohio..average rent around here is 500 to 700 a month. Our mortgage is 500 monthly which includes taxes and insurance.
Quote:
Originally Posted by mkarch
We've been in our house just under 3 years and it's worth about $200K more than we paid for it. That is the only reason buying was better than renting from a financial perspective. A $20K gain wouldn't even cover the cost of selling it.
Actually its been about 4 years now. We only paid 73500, nice home and in a good area. Was estate type sale. its worth about 90-100k now, maybe more.
how could your 401k not have recovered unless you actually did the wrong thing and bailed or timed things ?
well, not recovered is an overstatement, I should have said that *I* have not recovered from that experience. I do not take anything for granted when it comes to investments in the stock market. I do consider paying off a mortgage a more solid investment for the fact that it will provide rent/mortgage free housing, regardless of the property value. I am reasonably confident that my value in a planned urban community will rise the way it has done since the community was first established but that is of less significance to me.
Why do this if prices are so high that it simply doesn't make sense to buy?
Not sure I'm understanding you. I guess if you are in CA or NE, where the price of a dump the size of a Midwestern garage is a half million dollars, what you say makes sense.
Otherwise, if one chooses to buy, it makes sense to buy under your budget in a good area, which can still be done in most of the country.
Actually its been about 4 years now. We only paid 73500, nice home and in a good area. Was estate type sale. its worth about 90-100k now, maybe more.
Ours was an estate sale as well, nice home in a good area (10 rated elementary 3 blocks away) but it needed everything replaced (heating, plumbing, electrical, roof, drainage, insulation, windows, appliances and all cosmetics) - all of that will come to over $100K, we're about half way there. After that the house will probably be in the low $700K range... way more than I ever figured given what we paid, especially since this was supposed to be a starter home.
Most people on CD are going to say buying a home is better, but if you have a good job and know how to invest you WILL come out much better financially by renting. Nuff said.
From a purely mathematical and frugal point owning is almost always cheaper. And when I say cheaper, its so much cheaper that its just ridiculous (see numbers below). As someone else said, there would never be landlords if it wasn't cheaper to own. I just bought another investment property and paid $71K for it. Rent is $1K/month. So even if we assume that inflation, appreciation and rent increase is at a standstill; the owner still trumps the renter. Those factors heavily benefit an owner over a renter. Yet even without those factors, its no contest. Here are the numbers without those factors involved:
Renter pays: $360K over 30 years.
Owner Pays: $220K over 30 years (100% financed, 30 years mortgage, HOA, insurance all included)
After 30 years every year becomes even more profitable for the owner because the mortgage is gone. If you add in the factors I excluded above, the difference will start to become exponential.
Quote:
Originally Posted by Europeanflava
Most people on CD are going to say buying a home is better, but if you have a good job and know how to invest you WILL come out much better financially by renting. Nuff said.
This is 100% wrong. You will come out ahead by renting and investing ONLY if you rent a place thats inferior to the place you would buy. This is because in most places, renting a comparable place is always more expensive then buying it. Therefore, you never save any extra money over buying with which to invest.
This is 100% wrong. You will come out ahead by renting and investing ONLY if you rent a place thats inferior to the place you would buy. This is because in most places, renting a comparable place is always more expensive then buying it. Therefore, you never save any extra money over buying with which to invest.
Not in high cost markets. Where people have money to buy, buying is more expensive. People pay a grand premium to own a house, end of story. They often make it up in appreciation, but that doesn't factor into the rent/buy calculation for some time. It's a big and important difference between high and low cost areas. You do not find $70K houses in a high cost area, nowhere close to that. Land cost alone might run 4-8 times that in areas where a simple starter home is over $500K.
Not in high cost markets. Where people have money to buy, buying is more expensive. People pay a grand premium to own a house, end of story. They often make it up in appreciation, but that doesn't factor into the rent/buy calculation for some time. It's a big and important difference between high and low cost areas. You do not find $70K houses in a high cost area, nowhere close to that. Land cost alone might run 4-8 times that in areas where a simple starter home is over $500K.
Thats not what I was talking about. I clearly stated that I was talking about comparables, not different areas. If you had two identical houses that are side by side, no landlord is stupid enough to rent out his house for less then his total costs in a normal market. Meaning I'm not talking about guys renting out their places while its going into forclosure or other abnormal scenarios. In a normal market it will always cost more to rent then to own so therefore you can't "save the extra" from renting to invest. That's just a silly notion thats easily debunked by basic mathematics and real estate principles.
Now you could rent a place that's in another cheaper area and save the difference. Then you can invest and come out ahead.
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