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Old 03-17-2012, 12:50 PM
 
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you cant talk about rent vs buy without considering oppertunity cost
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Old 03-17-2012, 12:51 PM
 
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chopped my post off...

without adding back into the equation opportunity costs you arent comparing them fairly.

are you telling me that housing you and your family isnt an expense? of course it is. i can buy a generator and cut my electric bill but i wont call it anything except cutting my expenses.

yeah i hear people say im going to invest in a generator all the time but come on, they are going to buy a generator ,you dont invest in one. do we invest in a car so we dont pay bus fare?
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Old 03-17-2012, 12:57 PM
 
Location: Conejo Valley, CA
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Quote:
Originally Posted by mathjak107 View Post
you cant talk about rent vs buy without considering oppertunity cost
When did I suggest you should ignore the opportunity cost of your equity?

As far the expense, again, what is important is the comparison to rent not the fact that its, on some level, an "expense". If owning saves you money over renting then it is an investment since the baseline is not zero, but rather the rental costs.
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Old 03-17-2012, 12:59 PM
 
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Originally Posted by user_id View Post
When did I suggest you should ignore the opportunity cost of your equity?
when you dont acknowledge that renting and investing can do better in areas than buying. you imply that renting vs buying is only the cost of rent without it being offset by perhaps investing elsewhere and thats wrong.

thats why i say in either case after a lifetime of costs the expenses can work out about the same. plain and simple they are all expenses.
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Old 03-17-2012, 01:01 PM
 
Location: Conejo Valley, CA
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Originally Posted by mathjak107 View Post
when you dont acknowledge that renting and investing can do better in reas than buying.
I acknowledged that tacitly, after all unlike yourself I didn't make useless generalizations, instead I claimed that you need to do a rent vs own calculation based on your local conditions. Why would I say that if I thought owning was always more advantageous than renting? I wouldn't....

Regardless, obviously opportunity costs should be part of any rent vs own calculation. Heck, even most online rent vs own calculators consider opportunity costs.
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Old 03-17-2012, 01:07 PM
 
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because the biggest mistake i see people spew is how their cost of ownership is lower than if they were paying rent but they never look at the long term opportunity cost they may be giving up so they are looking at very skewed calculations.

you keep only refering to the the cost of ownership vs only the cost of rent varying from area to area but show me where you have ever said if you rent you have to count back in the opportunity cost you may give up if you buy. i dont remember not one so you will have to show me ..


but that still doesnt change how a personal residence should be viewed and many of us see it as no investment , its only one of many ways of lowering housing expenses.
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Old 03-17-2012, 01:11 PM
 
Location: Conejo Valley, CA
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Originally Posted by mathjak107 View Post
but that still doesnt change how a personal residence should be viewed by many of us and that is its no investment , its only one of many ways of lowering housing expenses.
If you do X and it lowers your housing costs then clearly X was an investment. Just as, if I buy Y and it lowers my long-term electric costs in excess of the cost of Y, it was an investment.

You are operating under, what seems like, a very narrow definition of investment.
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Old 03-17-2012, 01:11 PM
 
105,972 posts, read 107,921,072 times
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Quote:
Originally Posted by user_id View Post
When did I suggest you should ignore the opportunity cost of your equity?

As far the expense, again, what is important is the comparison to rent not the fact that its, on some level, an "expense". If owning saves you money over renting then it is an investment since the baseline is not zero, but rather the rental costs.
wrong way to look at it. its costing you the rental costs.

if i have a two family house lets even say its totaly paid for and i choose to take one of those apartments its costing me what ever i should have collected in rent on that apartment. if you moved in with a girl friend that apartment would then be paying you the amount you gave up by living there.

see the difference in our thinking? im not saving the rent as a financial gain, im living almost free but in effect im losing the rent that money should be generating

Last edited by mathjak107; 03-17-2012 at 01:24 PM..
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Old 03-17-2012, 01:15 PM
 
105,972 posts, read 107,921,072 times
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Originally Posted by user_id View Post
If you do X and it lowers your housing costs then clearly X was an investment. Just as, if I buy Y and it lowers my long-term electric costs in excess of the cost of Y, it was an investment.

You are operating under, what seems like, a very narrow definition of investment.
like i said is a car an investment if it saves you money over public transportation.

sure you could call it that but i think most of us would say we can cut some expenses by buying a car. we are improving cash flow , we are not investing in a car that will have a future value greater than we started with..

i think we have to really define investment vs cutting an expense.

by definition investing is committing capital for future financial gains. having a house is taking more money out of the ole piggy bank than it will most likely be worth long term.

especially when most folks pay 3x the price of the house in mortgage interest and taxes just over the life of a mortgage without even figuring 1 dollar of other costs or future costs and taxes for anything else .

because of this a house fits more in line with cutting expenses and improving cash flow . renting vs buying is about improving cash flow by cutting expenses by going with which ever one gives you the best cash flow and thats my reason for not calling my primary house an investment.

Last edited by mathjak107; 03-17-2012 at 01:42 PM..
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Old 03-17-2012, 02:04 PM
 
Location: Conejo Valley, CA
12,460 posts, read 20,010,755 times
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Quote:
Originally Posted by mathjak107 View Post
if i have a two family house lets even say its totaly paid for and i choose to take one of those apartments its costing me what ever i should have collected in rent on that apartment. if you moved in with a girl friend that apartment would then be paying you the amount you gave up by living there.
I'm not even sure what you're trying to claim, but for the vast majority of adults the meaningful comparison is between rents and ownership. Now, if you can live rent free (or just cheaply) with a family member and are perfectly happy with that situation than that could, perhaps, be the baseline scenario. But, as I said before, one needs to do the calculations for their particular situation.

Now, for an adult that is living on their own, the meaningful baseline is the cost of rent and if ownership saves money, over a specified period, then the home is clearly an investment.

Quote:
Originally Posted by mathjak107 View Post
like i said is a car an investment if it saves you money over public transportation.
Yes, it would be an investment if public transportation was the alternate.

Quote:
Originally Posted by mathjak107 View Post
by definition investing is committing capital for future financial gains.
Yes and reducing an expense is a future financial gain, the fact that you keep denying this is a bit mysterious. Indeed, much of business investment is precisely of this character, namely reducing operating expenses via capital expenditures. So, rather than operating from a narrow definition of investment, you're operating from a narrow definition of "financial gain". You kicked the can down a block.....
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