Renting Vs Buying In Houston And Surrounding Areas! (Austin: real estate, rental)

[Texas User]

Whats a better investment? Buying a primary home or renting and then having money to invest in mutual funds?

[LizzySWW]

Buying a fixer in an expensive neighborhood at a "low" price is always a good thing in Houston!

[chris_ut]

The way the markets are these days mutual funds may not be a very good investment unless your investing horizon is 20+ years. Homes in the suburbs are usually no better than a break even investment if you hold them 5 years or more. Some inner loop neighborhoods may be a good investment.

[austin-steve]

Originally Posted by Texas User

Whats a better investment? Buying a primary home or renting and then having money to invest in mutual funds?

Buying a primary home, of course, provided you make a smart purchase in the right area (good schools, convenient location, clean well kept homes).

You'll get an almost immediate $8,000 return with the tax rebate, which a mutual fund cannot produce with an equal investment of your downpayment amount. That's 4% off the top on a $200K home.

Steve

[Texas User]

Originally Posted by chris_ut

The way the markets are these days mutual funds may not be a very good investment unless your investing horizon is 20+ years. Homes in the suburbs are usually no better than a break even investment if you hold them 5 years or more. Some inner loop neighborhoods may be a good investment.

Mutual Funds are meant for long term, 5+ years.

Best time to invest is now. Actually if you stayed in the market from Summer to 2007 to Present, then you are in for a huge gain taking the Dollar Cost Average theory.

[Texas User]

Originally Posted by austin-steve

Buying a primary home, of course, provided you make a smart purchase in the right area (good schools, convenient location, clean well kept homes).

You'll get an almost immediate $8,000 return with the tax rebate, which a mutual fund cannot produce with an equal investment of your downpayment amount. That's 4% off the top on a $200K home.

Steve

You can sell MF's at anytime minus the tax issues. Lot of MF's have 15-25% gains. The most a house will give is like 5%,

[chris_ut]

Originally Posted by Texas User

You can sell MF's at anytime minus the tax issues. Lot of MF's have 15-25% gains. The most a house will give is like 5%,

How about No.

[Texas User]

Originally Posted by chris_ut

How about No.

Give me a good analysis on this.

You do understand that when you buy a property, you are in debt. How secure is your job? What If's down the road ?

[austin-steve]

Originally Posted by Texas User

You can sell MF's at anytime minus the tax issues. Lot of MF's have 15-25% gains.

Not over the long term. Stocks are about flat over the past 10 years.

The most a house will give is like 5%,

Do you understand leverage?

Let's say you put 20% down on a $200K home versus investing the $40K downpayment in mutual funds.

After year one, if the house gains 5% you're up $10 in value.
After year one, if the MF gains 15% you're up $6K in value. And you're still a renter.

Financial freedom, or reaching the level of worth at which you can become a person of independent means, is difficult to achieve without investing long term in real estate. Personally, I'm tutoring and training my kids on how to invest in real estate, not read the Wall Street Journal.

Steve

[atxcio]

I agree with Austin-Steve. Certainly over the past 12 years, I've made more money with RE investments than mutual funds. Besides leverage and steady rental income (vs. uncertain dividends), you won't get anywhere near the tax breaks with MFs than you could with a primary home (mortgage interest) or rental property (mortgage interest + expenses - rent).

If you do it right, real estate can be one of the most reliable ways to build wealth -- slowly, but steadily over time. There is definitely risk involved, but it can often be managed better than a mutual fund or stock investment. With real estate, you are in total control. The mistakes you make investing in RE are your own, rather than some hedge fund manager or corporate CEO's... I prefer it that way.