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we likely payed way more than that renting over the years . but renting allowed us to take the money not tied up in a house , invest it in far more lucrative places and today we could buy multiple houses after subtracting out rent and taxes on the gains .
looking at only one aspect is really not the way to judge anything .
But if you could have bought something for the same amount you were paying for rent you would be ahead of the game.
A $1200 a month payment is the mortgage payment on a $256,000 mortgage. There are a heck of a lot of place in the USA where $256,000 will buy you a house that is bigger than a one bedroom apartment. If you are fresh out of college, there is no reason to not move to where you can afford a house.
Even in some very high cost cuties, you can still buy something for $256,000 ( barring Manhatten and perhaps 4 other cities.)
How much did a homeowner pay during the same period? Please include interest, taxes, lawn mowing, snow plowing, home maintenance, etc.
I bet it is almost double.
Then factor in the fact that a renter can move closer to a job. Less commute, less gas, less time spent door-to-door working. Look at the savings of renting what you need, when you need it, where you need it Rent a 1BR first, then a 2BR, then a 3BR, IF you need something that large. Factor in opportunity costs of other investments. Those statistics are priceless.
It is FAR cheaper to rent, than buy.
Last edited by FIREin2016; 05-15-2018 at 07:15 AM..
How much did a homeowner pay during the same period? Please include interest, taxes, lawn mowing, snow plowing, home maintenance, etc.
I bet it is almost double.
Then factor in the fact that a renter can move closer to a job. Less commute, less gas, less time spent door-to-door working. Look at the savings of renting what you need, when you need it, where you need it Rent a 1BR first, then a 2BR, then a 3BR, IF you need something that large. Factor in opportunity costs of other investments. Those statistics are priceless.
It is FAR cheaper to rent, than buy.
Absolutely not. In most cities, a one bedroom apartment rents for the same as a mortgage payment on a three bedroom house twenty minutes from downtown. What do you get for renting? Mobility, I’ll give you that. You won’t have a residency paid for to live in during retirement, though. You’ll have to rent during retirement. I know, I know, a renter can just put the difference between his rent and a mortgage payment in an index fund and miracles happen. But that only works if you live in that dingy one bedroom or studio your whole life. Most people suffer from lifestyle inflation and will eventually have a family and get a bigger place. And renting a house or even two or three bedroom apartment will carry a higher monthly payment than a mortgage (and I am including taxes and insurance in that). Bye-bye savings.
Some other things:
1) Not everybody works downtown and has to commute a long way.
2) Home maintenance carries costs but they are variable and can be contained if you are into DIY
3) Lawn mowing isn’t expensive. You buy a mower once that lasts for 15 years. You’re getting into “time is money,” which is not a measurable statistic. Everybody values their time differently. But I can tell you that a dollar of equity is a dollar of equity.
4) I’m 30. Rents will double, if not triple, by the time I retire. My mortgage will stay the same, other than modest increases in taxes and insurance.
5) Wealthy people largely own property. This is for a reason.
A $1200 a month payment is the mortgage payment on a $256,000 mortgage. There are a heck of a lot of place in the USA where $256,000 will buy you a house that is bigger than a one bedroom apartment. If you are fresh out of college, there is no reason to not move to where you can afford a house.
Even in some very high cost cuties, you can still buy something for $256,000 ( barring Manhatten and perhaps 4 other cities.)
But you have to factor in property taxes and property insurance into that monthly payment. If you can find a place with low taxes and insurance it's cheaper than renting in a lot of areas, but there are also a lot of places with nice $150K homes or large metro areas with condos that cost less than $150K.
That's not true, that's what people think. In some places it may be cheaper to rent a junk studio than to buy a modest condo, but it's not true in general. People rent because they think they can't buy.
Rents go up yearly in many places. Mortgages only increase if taxes or property insurance goes up and it's usually less than rent does.
If you rent a $750 a month apartment after 30 years you paid $270K and that's not taking into account rent increases.
If you buy a $100K home which would rent for more than $750 a month your mortgage can be less than $750 and you gain equity and own and can sell the place in 30 years, When you rent you own nothing and you make your LL richer.
and you don't need to hire anyone to mow your lawn or shovel the snow. My father still does his own and he's old.
Absolutely not. In most cities, a one bedroom apartment rents for the same as a mortgage payment on a three bedroom house twenty minutes from downtown. What do you get for renting? Mobility,
Mobility without stability, Once your lease is up all they have to do is give you 30 days and tell you that you have to find somewhere else to move to. There area a lot of downsides to renting. If people knew that you can own for the same price as renting they would not rent, in some places with high costs of living and high taxes it is cheaper to rent, but even then you may be able to work the numbers in your favor. LL don't rent to you unless they are making a profit. So if you rent a condo or house that is not underwater you can be assured that you are paying more than the LL is if he has a mortgage.
I never imagines I would be able to buy a house, but I moved to a place with lower cost housing and it's the best thing I ever did financially.
Mobility without stability, Once your lease is up all they have to do is give you 30 days and tell you that you have to find somewhere else to move to. There area a lot of downsides to renting. If people knew that you can own for the same price as renting they would not rent, in some places with high costs of living and high taxes it is cheaper to rent, but even then you may be able to work the numbers in your favor. LL don't rent to you unless they are making a profit. So if you rent a condo or house that is not underwater you can be assured that you are paying more than the LL is if he has a mortgage.
I never imagines I would be able to buy a house, but I moved to a place with lower cost housing and it's the best thing I ever did financially.
Some people really do value mobility more than stability for job purposes. There’s something to be said for being able to move from place to place to move up in your career. Sometimes you have to stay in a house for several years before moving makes any real financial sense. I wouldn’t mind a lack of stability if I were single and childless, but a family changes things.
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