How is housing a good investment? (pay, million, rent, taxes)

[floridarebel]

You have to pay for insurance, taxes, maintenance, utilities etc. Even if you paid off your house, sold it and got the money back, you still need to buy another house to live in. Prices went up so even after downgrading to a smaller house, you still have to pay a lot of money out. I can understand where someone obtained a house from someone or bought the house price full in cash. In some places, a basic 20 percent down payment would be the same as an entire house in other areas.

[llowllevellowll]

So, not to burst your bubble on the first part, but if you rent, you're also paying for the landlord's insurance, taxes, and maintenance, and you're ALWAYS paying for your own utilities.

In most locales (not mine, admittedly), it's cheaper to own a home per month than it is to rent that same property.

On one hand, I agree that homes are bad investments compared to the market, but when you consider that you have to live SOMEWHERE, it's definitely an investment I would make. Do you want to rent a home when you're retired? Personally, that's not where I want that much money going when I assume I'll be on a pretty fixed income.

Since I do live in one of the most expensive markets and home ownership is really not a fantastic deal right now, my recommendation for others in similar markets would be to rent locally and frugally and either increase your investment dollars in your IRA or 401k and/or purchase investment property in markets where those numbers do make more sense and hire a property manager to assist in those cities. In that way, you're getting the best out of your local market and you're setting yourself up for a retirement portfolio elsewhere that'll net you some passive income.

[joee5]

I've always owned versus renting. I'd rather pay my own than someone else's mortgage

[athena53]

It's a crapshoot. On two of the houses I owned I barely broke even when selling. BUT: my share of the equity in the marital home when I divorced in 1997 was $100K. Put that down on another house, added a $250K mortgage, sold it 6 years later at a $200K profit and invested most of that because second DH and I moved to a LCOL area. His sold a year later and he cleared $100K. Invested that, too. That was 2004. I estimate that the invested profits from those two sales make up about half my current net worth.

I've always liked living in my own place, too. Rented before that but I was always afraid to put holes in the walls, paint, etc. Current places is getting closer to being "all mine"- worth about $270K and mortgage balance is $77K. Eleven years left on the mortgage.

[SoCal_Native]

There are a lot of other things involved. Are you renting it out? Is it worth your time to be a landlord? Is the rent paying your mortgage?
How does your net rate of return compared to sticking the same amount in a simple index fund at 8% for 30 years?

[galaxyhi]

I was in a position to buy 4 years ago, and did.

We had a mobile home on a rented lot in a park. Every year the lot rent went up by $50/m, regardless.

In 4 years in the house, even with tax increases, the mortgage payment has gone up a total of just $38/m.

So i pay for my garbage collection now, whereas it was the ONLY included item in my lot rent. Basic water of 35k gallons was included, but they surcharged for any overage. I pay less than,$30/m for my water here for the minimum charge plus overage, but we never hit the minimum on water.

We still know people in the park, and in the 4 years weve owned the house, the lot rent has gone up $200/m, and my mortgage just $38/m.

Lot rent is now HIGHER than my mortgage, AND, we could not rent a comparatively house to what we have for anywhere near our low mortgage payment.

Plus, as long as mortgage and thusly taxes are paid, absolutely NOONE can throw me out of my house.

[Wartrace]

The payback is when you sell; you have equity in a home you own and none in a rental. Sure you might be upside down in some instances if you make a bad buy.

[WannabeCPA]

Generally speaking owning is better in the long run than renting. You can do a spreadsheet to estimate your total costs over time, though of course you'd have to do a bunch of estimates. Things like appreciation, maintenance fees, mortgage rates, rent, etc. Owning vs renting is a numbers game. There will always be costs and benefits for both situation. Your objective is to decide what's best for you as an individual given your personal situation. The OP's post really doesn't mean much for people like me since I can just run numbers myself so see what's best for me.

[mathjak107]

There are so many factors .... we made far more money lump summing into other investments and renting then our homes ever made even after subtracting our rent ... there is no answer ...for some who may have owned businesses or homes and have the capital to invest they potentially can make far more elsewhere then tying that money up in another house .....

The way it worked out for us the difference between had we kept our house vs renting and investing the money in what we did has us able to buy multiple homes today after subtracting out all the rent and taxes we paid

[aslowdodge]

Lots of factors as to whether it’s worth it. Much depends on where you live and the real estate market.
Years ago I had two sfh as rentals I paid 600 k for each. I sold both for 720 k each a year later. Today they are worth just under a million.
A few years back I bought a 2/1 house for 135k. Rented it out for 1650 a month. Sold a year and a half later for 340k.