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I think what is meant by forced saving by buying a house is you have equity in the house as you pay it off. With rent nothing is accumulated.
Only if you don't have cheaper rent than the cash flow drains of ownership and invest the difference wisely.
Depending on area, you may find rent that is hundreds of dollars a month LESS than what a house would pull from your pockets each month with a low down payment, including PITI, PMI, and maintenance/repair costs.
If you take this difference and invest into a good, low cost, diversified stock mutual fund, then you will build equity as well as the owner. In many cases you will actually have more after 15 or 30 years by renting.
If you spend that extra cash flow instead of investing it, or if you leave it in the bank because you are afraid of the stock market, or if you invest emotionally and bail when share prices have dropped, then that is your problem, not renting per se.
Only if you don't have cheaper rent than the cash flow drains of ownership and invest the difference wisely.
Depending on area, you may find rent that is hundreds of dollars a month LESS than what a house would pull from your pockets each month with a low down payment, including PITI, PMI, and maintenance/repair costs.
If you take this difference and invest into a good, low cost, diversified stock mutual fund, then you will build equity as well as the owner. In many cases you will actually have more after 15 or 30 years by renting.
If you spend that extra cash flow instead of investing it, or if you leave it in the bank because you are afraid of the stock market, or if you invest emotionally and bail when share prices have dropped, then that is your problem, not renting per se.
It's the same reason most here would rather pay rent
to a landlord than own a home. They just don't
understand the concept of making their money and time work for themselves.
It's the same reason most here would rather pay rent
to a landlord than own a home. They just don't
understand the concept of making their money and time work for themselves.
I've been in my present house for just under 14 years. With the benefit of hindsight, I entered actual numbers for house purchase price, current value, mortgage interest rates, utilities, insurance, maintenance, etc.
The upshot is that nearly everything hinges upon just two numbers: (1) the house's appreciation rate, and (2) the alternative investment return rate.
Assuming a 5% alternative investment return rate, I found that buying my house was... staggeringly idiotic! I could rent the same house for around $300/month less than the breakeven monthly cost. And I could rent an apartment (which is all that I really need) for another $500 less. In other words, for a person with my lifestyle, who plans on never moving, it's better to rent... MUCH better to rent.
And in my area prices are simply too high. Have you seen how expensive houses are in Washington, DC and its immediate suburbs?
but this does not to apply to everyone.
I was addressing the OP's request for opinion not yours, but if you feel the need to make it all about you, that is your problem. I have not seen the pricing of DC or 99% of the country, I live in a small suburb outside of the city where pricing is much different than the Downtown area; not sure of the relevance to the OP. The OP wants to stay in the location where they currently live which is where their parents live too.
Quote:
Originally Posted by ncole1
Technically, "rent debt" means you are behind on your rent.
OK, on every lease contract I've used, it includes a total based on the the months times the terms. There is already a contracted amount. Whether or not it is due yet is trivial, there is an amount due at a given time. Call it a debt, monthly liability, monthly bill, is just semantics.
No, if you rent, you are paying the landlord to let you use the housing for a period of time, regardless of if the landlord has a mortgage or not.
I don't even know whether my landlord has a mortgage or not - it has no effect on me.
OK, what difference does it make that the landlord doesn't pay a mortgage as you feel the need to have pointed out
They don't want to do that and live 1000 miles away; what would the point be? I'll move again within the next few years anyway.
Ok, I really don't care what and when you move, you did not ask for any advice. The OP wants to stay where they grew up. Not every thread or comment is about you.
And your house covers your living expenses? Never heard of that happening. As far as I am aware, a house is a brick or wooden box that generates no income unless you have tenants in it.
If you are living in your house by yourself, it is not going to provide you money for food, for energy, taxes, health care, or anything else. At best, it reduces your outlays of cash for housing, but does not eliminate them and does not make them negative.
Read it again, slowly, I said the housing expense will drop 80% after you pay off a mortgage.
Next paragraph - Most people have demonstrated after 15 years of investment, the yield of their investment is far from covering their living expenses. A mortgage is a forced savings plan.
I did not say "pay off your house in 15 years and you won't have to work anymore because your house will generate so much income you can retire."
It's the same reason most here would rather pay rent
to a landlord than own a home. They just don't
understand the concept of making their money and time work for themselves.
which is what you do not seem to understand yourself. other investments like equities historically have blown away increases in home appreciation and the amount of any rent increases.
I would gladly pay a landlord rent to earn what we did on that money not sitting tied up in our house. today it generated enough to buy two homes after subtracting out rent and taxes.
you are trying to generalize and you can't. financially smart renters with money do not throw money away on rent. they use that money not tied up in the property eventually to grow way more money.
renters with no money to invest or renters who don't invest throw money away. there is a big distinction.
I was addressing the OP's request for opinion not yours, but if you feel the need to make it all about you, that is your problem. I have not seen the pricing of DC or 99% of the country, I live in a small suburb outside of the city where pricing is much different than the Downtown area; not sure of the relevance to the OP. The OP wants to stay in the location where they currently live which is where their parents live too.
If you're going to get upset about me bringing my situation into the discussion, just keep in mind I was replying to a post of generalizations. This is an online forum, not a private chat, and we bring our various experiences in. Take it or leave it.
It's the same reason most here would rather pay rent
to a landlord than own a home. They just don't
understand the concept of making their money and time work for themselves.
Huh? Investing the difference in the stock market isn't making your money work for yourself?
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