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This is just ridiculous. Not nearly the same thing by any means.
Atleast when you BUY things, you are free to do with them as you chose when you are done with them. Buy some clothes, and then outgrow them? Great news! You can resell sell them.... hold a garage sale, go to a consignment shop... make some of your investment back.
But when you rent, it's just money out the window.... It's never REALLY yours.
What about energy that you buy to heat your home, or food that you consume ? Can you resell it ? Is it ever "really" yours ? Or is it money that is "thrown away" ?
You are comparing apples & oranges here....
You just can't deny the equity you build in a home!
Very ridiculous hypothetical situation:
Let's say you and I each move into new places with a total of $12,000: $1,000 bucks a month to spend.
You rent for a year, paying $1,000 rent.
I buy for a year, paying $1,000 mortgage.
After a year, you move out, and are broke
After the same year, I move out, but sell my place, for $15,000.... I made money!
But I will give you the benefit of the doubt. Economy sucks. My house only sold for $12,000. Oh well. Atleast I made my money back.
You on the other hand are still broke.
I would never rent. I work way too hard for my money.
You would never rent because you clearly suck at math.
You don't get your property taxes back, you don't get your interest back, you don't get your maintenance costs back, you don't get your insurance back, and so on.
I could buy the place I'm currently renting - the landlord offered it to me 2 weeks ago. But it would cost more to buy than rent. Not just more in terms of payments, more in terms of just the things that aren't "equity".
That's because we are still a bit bubbly. Rents will go up or prices will go down in the future and it'll be cheaper to own (as it should be) - but it hasn't been for the last decade due to a real estate bubble I'm sure you heard of ( well unless you flipped during the bubble and converted to renting).
The topic here is a four year time frame, there is no way you make your transaction costs back to beat renting for such a short time frame.
You would never rent because you clearly suck at math.
You don't get your property taxes back, you don't get your interest back, you don't get your maintenance costs back, you don't get your insurance back, and so on.
I could buy the place I'm currently renting - the landlord offered it to me 2 weeks ago. But it would cost more to buy than rent. Not just more in terms of payments, more in terms of just the things that aren't "equity".
That's because we are still a bit bubbly. Rents will go up or prices will go down in the future and it'll be cheaper to own (as it should be) - but it hasn't been for the last decade due to a real estate bubble I'm sure you heard of ( well unless you flipped during the bubble and converted to renting).
The topic here is a four year time frame, there is no way you make your transaction costs back to beat renting for such a short time frame.
You don't need to be a jackass in your feeble attempt to prove a ridiculous issue.... I do not "suck at math"....
I was simply comparing base rent to a base mortgage payment.
I stated in the beginning it was a bareback comparison... not meant to take taxes / insurance / utilities / etc. into consideration.
Sorry, but you will never be able to convince be renting is better than owning.
But since we agree to disagree, feel free to rent something I own, and give me your money any day. I'll gladly take it.
You don't need to be a jackass in your feeble attempt to prove a ridiculous issue.... I do not "suck at math"....
I was simply comparing base rent to a base mortgage payment.
I stated in the beginning it was a bareback comparison... not meant to take taxes / insurance / utilities / etc. into consideration.
Sorry, but you will never be able to convince be renting is better than owning.
But since we agree to disagree, feel free to rent something I own, and give me your money any day. I'll gladly take it.
Your comparison was completely meaningless. Might have well have said "renting costs $2000/month and a mortgage cost $25/month, oh look buying is better".
You can rent the same place for a lower payment (factoring in taxes and so on), that much should be obvious - otherwise no one would rent.
You don't need to be a jackass in your feeble attempt to prove a ridiculous issue.... I do not "suck at math"....
I was simply comparing base rent to a base mortgage payment.
I stated in the beginning it was a bareback comparison... not meant to take taxes / insurance / utilities / etc. into consideration.
You can't just "not count" the costs of home ownership and then conclude that it's cheaper. Renting is cheaper if you "don't count" rent as an expense.
"Not counting" transaction costs is a huge (and potentially very costly) error. If you have to move a year after you buy, the 2.5-3% commissions for listing and buyers agents will probably leave you bringing cash to the table (and that's ignoring money you spent on interest and property tax)
Quote:
Sorry, but you will never be able to convince be renting is better than owning.
Do the math. If you own for a year, renting comes out way ahead.
Owning: you pay about 5% the value in transaction costs, property tax is about 2.3% of the value of the place, and interest is about 5% of the 80% you borrow (4%), then there's another 1% or so (the opportunity cost of the 20% that you used as a down payment instead of investing -- 5% of 20%). So your costs are about 5 + 2.3 + 4 + 1, or about 12.3%. So you need price/rent ratio to be less than 8 for it to be better to buy. Notice that if you didn't have those transaction costs (that 5 at the start), the picture would change substantially.
Quote:
But since we agree to disagree, feel free to rent something I own, and give me your money any day. I'll gladly take it.
This is a flawed analysis. You assume that for the landlord to win, the renter has to lose (I'd hate to have someone with this mindset as a landlord!)
Actually, it's possible both sides win. Having the landlord hold the property for longer than most tenants occupy it reduces transaction costs.
The other problem with comparing the landlord vs renter is that it's the wrong comparison. You're comparing the renters consumption expenses with the landlords investments. A better comparison would be the renters investments versus the landlords investments, or the renters primary residence costs versus the landlords.
Everyone's situation is different, sure.
All I know, I worked hard, lived home way longer than any of my friends, and saved a good sum of money.
I'll be damned if I am going to p!$$ it away in rent payments.
I am investing my money in my home, which I OWN.
You all can justify your rent payments anyway you want. Throw down a million equations, knock yourself out.
Again, you will never convince me renting is better than owning... makes no sense. And yet again, I am happy to agree to disagree with you all.... and feel free to rent from me what I own any day of the week. I will be more than happy to take you rent payments.
Everyone's situation is different, sure.
All I know, I worked hard, lived home way longer than any of my friends, and saved a good sum of money.
I'll be damned if I am going to p!$$ it away in rent payments.
I am investing my money in my home, which I OWN.
You all can justify your rent payments anyway you want. Throw down a million equations, knock yourself out.
Again, you will never convince me renting is better than owning... makes no sense. And yet again, I am happy to agree to disagree with you all.... and feel free to rent from me what I own any day of the week. I will be more than happy to take you rent payments.
That's fine, supports the math thing though. If the rent doesn't cover the holding costs then clearly renting is cheaper but it's fine if you will never be convinced.
That's fine, supports the math thing though. If the rent doesn't cover the holding costs then clearly renting is cheaper but it's fine if you will never be convinced.
Whoever said what is cheaper = what is better....?
Everyone's situation is different, sure.
All I know, I worked hard, lived home way longer than any of my friends, and saved a good sum of money.
I'll be damned if I am going to p!$$ it away in rent payments.
I am investing my money in my home, which I OWN.
You all can justify your rent payments anyway you want. Throw down a million equations, knock yourself out.
Again, you will never convince me renting is better than owning... makes no sense. And yet again, I am happy to agree to disagree with you all.... and feel free to rent from me what I own any day of the week. I will be more than happy to take you rent payments.
The idea that the landlord-tenant relationship is win-lose is flawed, as I pointed out before.
Landlord provides capital, assumes market risk, and holds to reduce transaction costs.
Tenant has free capital for other investments (which could provide much better return than your investment property), and doesn't face high transaction costs if they move.
As for the "I will never be convinced", this strikes me as not just bad at math but also willfully ignorant.
Whoever said what is cheaper = what is better....?
We aren't talking about "better" we are talking about which is cheaper.
Yes owning a home is better in a lot of ways - freedom to make updates, etc, etc. Then again renting is better in a lot of ways - no need to worry when house prices fall, no need to care when the AC fails and a new one needs to be bought, etc, etc. Different strokes for different folks.
But none of those have anything to do with whether renting is "throwing money away" or not, which is the topic at hand.
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My house only sold for $12,000. Oh well. Atleast I made my money back. 
