The math looks good … The math looks good and good concepts but to me the starting points look off. I live on Long Island and 3,000 rent will only get you a home maybe valued at 1/2 million. I am not sure how things work in Cali but here that 1mill home would cost you 5-6k per month, and who is gonna pay you 4%, you would be lucky to get half that
You make a very … You make a very convincing argument but there are a couple issues that I can’t ignore, 1 being that if you rent the house you will never own it, so what happens when you’re no longer earning money, 2 if you never own the house you can never sell the house, 3 I don’t know if a million dollars is typical in California but I live in Missouri and a Million dollar home is a ridiculously large undertaking, a property valued around 300k would actually be more typical of the average home buyer.
@rjwd85 Very valid … @rjwd85 Very valid point. I’d say that if you think you may have to change jobs (like now, with an economy struggling to get back on its feet) that may be a good reason too. Another reason would be if you like the condo/apartment feel. Apartments are typically much less of a hassle than apartments (no association meetings, deciding what should be fixed or not,…). Those are the main reasons if you ask me.
@Momofia No, the … @Momofia No, the initial taxes paid are the same in both examples. Because buying a house gives you a tax credit for the interest payments that affects the initial cash flow. What would perhaps raise the taxes (depending on country/state) are the 10 K you would earn in interest by not buying, so 10 K * ,3 = 3 K. We are not talking about the cash flow as a whole, only the effect on the cash flow by renting vs. buying.
but then again 15 – … but then again 15 – 30 years of paying intresest that is 3 times the cost of my home vs. being disciplined and patient, saving each year and after 5 or 6 years, buying my home in cash: PRICELESS SAVINGS! of the banker and agent, make your long term finances happy.
Id rather save cash and pay it out and the money i earn for the next 20 years go toward improving my home or other ventures, and I’m not a slave to the bank. Watch me.
…and he was right … …and he was right. the housing market got in that horrible situation in part because of the stupid assumption that “buying is always better then renting”. Here in Spain people insist that renting is throwing money away, and here we are … with a devastated economy, 20% unemployment. Of course there are many other problems in the mix.
You totally missed … You totally missed it! When you rent you are also paying more on income tax and that is not in your calculations. You would spend over 50k by renting.
@living4fire Right … @living4fire Right I think the mortage companies shouldnt have given out all these loans to people who are known not to pay on time and have bad credit had they not have did that the real estate market would have been much better than it is now because here in indianapolis certain areas arent selling at all and now the banks have to deal with all those properties
I live in … I live in California. I know what you mean. That is why I plan on buying one that is $50-60K, and once paid off renting it out and purchasing a better home. Payments should be no more than $500 a month which is pretty reasonable considering almost anywhere you rent your going to pay more than that. Prices are a lot higher here in California for everything though, California is an expensive place to live.
@living4fire And go … @living4fire And go out to california and see how many for sale signs you see all those people out there didnt plant things out and looked what happend now people who rent out places are able to get their properties for less than what they paid for and making the rent affordable thats what my landlord does she buys foreclosed houses flips them and then rents them instead of selling
@living4fire But … @living4fire But thats what alot these homeowners do buy a house they know they cant afford having a champagne taste on a koolaid budget the real estate market is just going down and those agents use to making a good amount of money have to leave their million dollar homes
it is going to be better to rent for some and to buy for others, in my situation i am young too and looking for a smaller house that meets my needs in the $50K-60K price range to buy. Payments should be under $500 a month, which is good compared to most places you rent your going to be paying at least $700+ for most places that arent roach motels. To each his own.
@hoffenpot Right … @hoffenpot Right because guess what happens to a home owner who fails to pay HOA Mortage Payment or Property Tax they get that little notice in the mail called a FORECLOSURE lol
Im not wasting … Im not wasting money I am saving money my rent is very much affordable I just cant see my self paying a mortage if i do decide to buy a house it will be in cash form only whether the house is 100,000 or 1 million I am paying cash that way I own my house flat out people dont own their houses until they pay off that final payment so really theres not much of a diffference between renting and a mortage because if you dont pay either your EVICTED
…Renting may be better in some situations but for most people this is not the case. I will not be having a 30 year loan and even if I did I would be paying more than the minimum payment to pay it off within maybe 10 years, after that and I have money saved I can purchase a new home and rent that one out making it an investment property. All that money you are throwing into rent is going down the drain, you have nothing to show for at the end.
sure you get everything taken care of if it breaks, but how often are things going to break, id rather take my chances of fixing things every once in awhile knowing I have a place that is mine. Not to mention when you are renting you cant paint walls, or make any other type of modifications you want to the house. ….
@living4fire I rent … @living4fire I rent and guess what I dont have to worry about anything my landlord takes care of everything I need and is a good landlord I wouldnt want to waste 30 yrs of my life paying off a house no matter how much the montly payments are and I am 19 you mean to tell me if I take out a 30 yr loan I wont own my house until im 49 id rather rent
If you have money … If you have money to be buying or renting a million dollar house than this might be the case, but what about people who are starting out and getting their first house that is 50,000-$60,000. Monthly payments would be probably under $500, cheaper than renting almost anywhere. Not to mention once the house is paid off it is completely yours, if you are renting you are going nowhere. I dont think your theory is correct for the average people. Most people dont have $200K lying around the invest.
The math of renting vs. buying a home. Challenging the notion that it is always better to buy.
May 9th, 2010 at 1:44 pm
The math looks good …
The math looks good and good concepts but to me the starting points look off. I live on Long Island and 3,000 rent will only get you a home maybe valued at 1/2 million. I am not sure how things work in Cali but here that 1mill home would cost you 5-6k per month, and who is gonna pay you 4%, you would be lucky to get half that
May 9th, 2010 at 1:44 pm
You make a very …
You make a very convincing argument but there are a couple issues that I can’t ignore, 1 being that if you rent the house you will never own it, so what happens when you’re no longer earning money, 2 if you never own the house you can never sell the house, 3 I don’t know if a million dollars is typical in California but I live in Missouri and a Million dollar home is a ridiculously large undertaking, a property valued around 300k would actually be more typical of the average home buyer.
May 9th, 2010 at 1:44 pm
@rjwd85 Very valid …
@rjwd85 Very valid point. I’d say that if you think you may have to change jobs (like now, with an economy struggling to get back on its feet) that may be a good reason too. Another reason would be if you like the condo/apartment feel. Apartments are typically much less of a hassle than apartments (no association meetings, deciding what should be fixed or not,…). Those are the main reasons if you ask me.
May 9th, 2010 at 1:44 pm
actually at 55000 …
actually at 55000 now taxes are 15%. i wasn’t earning that much back in 2008 so i’ll take your word for it.
May 9th, 2010 at 1:44 pm
@mbmart2005 glad we …
@mbmart2005 glad we see eye to eye. i get a lot of screw faced looks from people when I share this idea. be encouraged. be free.
May 9th, 2010 at 1:44 pm
@Momofia No, the …
@Momofia No, the initial taxes paid are the same in both examples. Because buying a house gives you a tax credit for the interest payments that affects the initial cash flow. What would perhaps raise the taxes (depending on country/state) are the 10 K you would earn in interest by not buying, so 10 K * ,3 = 3 K. We are not talking about the cash flow as a whole, only the effect on the cash flow by renting vs. buying.
May 9th, 2010 at 1:44 pm
@tdubblz I like how …
Interest paying is the morons way.
@tdubblz I like how you think man.
May 9th, 2010 at 1:44 pm
@sksakm14 what …
@sksakm14 what about jobs renters can easily leave and relocate.
May 9th, 2010 at 1:44 pm
but then again 15 – …
but then again 15 – 30 years of paying intresest that is 3 times the cost of my home vs. being disciplined and patient, saving each year and after 5 or 6 years, buying my home in cash: PRICELESS SAVINGS! of the banker and agent, make your long term finances happy.
Id rather save cash and pay it out and the money i earn for the next 20 years go toward improving my home or other ventures, and I’m not a slave to the bank. Watch me.
May 9th, 2010 at 1:44 pm
if you pay 3000 a …
if you pay 3000 a month to rent a home you may as well buy. what a rip off
May 9th, 2010 at 1:44 pm
…and he was right …
…and he was right. the housing market got in that horrible situation in part because of the stupid assumption that “buying is always better then renting”. Here in Spain people insist that renting is throwing money away, and here we are … with a devastated economy, 20% unemployment. Of course there are many other problems in the mix.
May 9th, 2010 at 1:44 pm
You totally missed …
You totally missed it! When you rent you are also paying more on income tax and that is not in your calculations. You would spend over 50k by renting.
May 9th, 2010 at 1:44 pm
@living4fire Right …
@living4fire Right I think the mortage companies shouldnt have given out all these loans to people who are known not to pay on time and have bad credit had they not have did that the real estate market would have been much better than it is now because here in indianapolis certain areas arent selling at all and now the banks have to deal with all those properties
May 9th, 2010 at 1:44 pm
I live in …
I live in California. I know what you mean. That is why I plan on buying one that is $50-60K, and once paid off renting it out and purchasing a better home. Payments should be no more than $500 a month which is pretty reasonable considering almost anywhere you rent your going to pay more than that. Prices are a lot higher here in California for everything though, California is an expensive place to live.
May 9th, 2010 at 1:44 pm
I agree.
I agree.
May 9th, 2010 at 1:44 pm
@living4fire And go …
@living4fire And go out to california and see how many for sale signs you see all those people out there didnt plant things out and looked what happend now people who rent out places are able to get their properties for less than what they paid for and making the rent affordable thats what my landlord does she buys foreclosed houses flips them and then rents them instead of selling
May 9th, 2010 at 1:44 pm
@living4fire But …
@living4fire But thats what alot these homeowners do buy a house they know they cant afford having a champagne taste on a koolaid budget the real estate market is just going down and those agents use to making a good amount of money have to leave their million dollar homes
May 9th, 2010 at 1:44 pm
thats why you dont …
thats why you dont get in over your head and plan things out.
May 9th, 2010 at 1:44 pm
@jdprice455
it is …
@jdprice455
it is going to be better to rent for some and to buy for others, in my situation i am young too and looking for a smaller house that meets my needs in the $50K-60K price range to buy. Payments should be under $500 a month, which is good compared to most places you rent your going to be paying at least $700+ for most places that arent roach motels. To each his own.
May 9th, 2010 at 1:44 pm
@hoffenpot Right …
@hoffenpot Right because guess what happens to a home owner who fails to pay HOA Mortage Payment or Property Tax they get that little notice in the mail called a FORECLOSURE lol
May 9th, 2010 at 1:44 pm
Im not wasting …
Im not wasting money I am saving money my rent is very much affordable I just cant see my self paying a mortage if i do decide to buy a house it will be in cash form only whether the house is 100,000 or 1 million I am paying cash that way I own my house flat out people dont own their houses until they pay off that final payment so really theres not much of a diffference between renting and a mortage because if you dont pay either your EVICTED
May 9th, 2010 at 1:44 pm
@jdprice455
… …
@jdprice455
…Renting may be better in some situations but for most people this is not the case. I will not be having a 30 year loan and even if I did I would be paying more than the minimum payment to pay it off within maybe 10 years, after that and I have money saved I can purchase a new home and rent that one out making it an investment property. All that money you are throwing into rent is going down the drain, you have nothing to show for at the end.
May 9th, 2010 at 1:44 pm
@jdprice455
sure …
@jdprice455
sure you get everything taken care of if it breaks, but how often are things going to break, id rather take my chances of fixing things every once in awhile knowing I have a place that is mine. Not to mention when you are renting you cant paint walls, or make any other type of modifications you want to the house. ….
May 9th, 2010 at 1:44 pm
@living4fire I rent …
@living4fire I rent and guess what I dont have to worry about anything my landlord takes care of everything I need and is a good landlord I wouldnt want to waste 30 yrs of my life paying off a house no matter how much the montly payments are and I am 19 you mean to tell me if I take out a 30 yr loan I wont own my house until im 49 id rather rent
May 9th, 2010 at 1:44 pm
If you have money …
If you have money to be buying or renting a million dollar house than this might be the case, but what about people who are starting out and getting their first house that is 50,000-$60,000. Monthly payments would be probably under $500, cheaper than renting almost anywhere. Not to mention once the house is paid off it is completely yours, if you are renting you are going nowhere. I dont think your theory is correct for the average people. Most people dont have $200K lying around the invest.