Rent or Own Home

Renting is always the best option.

Renting wrote:

Renting is always the best option.

Owning is always the best option.

Owning wrote:

Renting wrote:

Renting is always the best option.

Owning is always the best option.

Squatting is always the best option.

Mom's Basement is always the best option.

Like squatting, except frig-raids don't get you in trouble. Also, free interwebs.

Depends on the location. Some cities have a bigger advantage for ownership than others. The hotter the market, the lower the cap rate, since the big owners are willing to pay more relative to NOI for a highly desireable/stable asset.

You have to compare based on your own situation. How long are you planning on living where you are? Do the transaction costs associated with purchasing property offset the lower operating cost? Can't make a generalization about this, it just depends on where you are and what you plan to do.

I'm older than dirt and even I know the meme. You should have said:

Discus.

If you plan to live in your home 5 years or more, and you have a stable job or confidence to find a new job where you live, then it *might* make financial sense to purchase.

15 years in: I could not (or would not) afford my neighborhood today... Home value = half my net worth (which is, statistically, considerable).

My mortgage is probably *half* what I'd have to pay in rent.

Mortgage rates will not be this low forever. 30 yr fixed *today* will be the same payment for.... 30 years. Rents? Goin' up (IMO).

This assumes you live in a desirable, fully built-out area...

Rent? Own? Better is to be the landlord... Workin' on my first property, first step toward independent rentier status.

Owning wrote:

Renting wrote:

Renting is always the best option.

Owning is always the best option.

Wrong.

check out the loads of, "Rent or Buy" calculators out there.

In the US, Germany, Japan....its better to buy now.

Canada, NZ, Denmark, Belgium....better to rent.

Lyndon LaRouche wrote:

Owning wrote:

Owning is always the best option.

Wrong.

check out the loads of, "Rent or Buy" calculators out there.

In the US, Germany, Japan....its better to buy now.

Canada, NZ, Denmark, Belgium....better to rent.

Come back in 5 years time

I rented for about 10 years and threw away 2300- 6000 a year (approx) on rent. I wish I'd bought way earlier but for the first few years I was a student so it wasn't doable.

Doclove wrote:

Lyndon LaRouche wrote:

Wrong.

check out the loads of, "Rent or Buy" calculators out there.

In the US, Germany, Japan....its better to buy now.

Canada, NZ, Denmark, Belgium....better to rent.

Come back in 5 years time

What happens in 5yrs time, other than interest rates probably being higher (and therefore home prices lower in man cases)?

After 5yrs you have amortized 6% of a 30yr loan. Closing costs. So buying a house with a 5yr view is speculating on the appreciation of the property.

There are plenty of people who did this very same thing in the late '80s, in particular in So Cal, and they were blown out.

Real estate is by no means a certain thing. If you plan to live in your house for +10 years, buying makes sense if the numbers make sense. Otherwise, be careful.

If costs about 2%/yr to own a house. Taxes, insurance, maintenance. So whereas you might get paid 2%/year to own the S&P500, a house charges you 2%

The other thing to consider is opportunity cost

For a $1,000,000 home, you'd put down $100k, but probably it would be easier for monthly payments to put down $300k. Say $333,333.

If you think you can make 7-8% with securities investments - funds etc - and you are leveraged 3:1 on your home, the home needs to rise 7.5%/3 = 2.5%/yr for you to be indifferent.

Add the dividends from investment, and costs of a home, and you need your house to rise more than 5%/yr on average to keep up with the return on your portfolio.

Obviously more leverage increases your return, but your payment becomes larger.

there are issues around taxes, and these can have an impact on returns when you sell, but that is at the margin.

If you hold your home to the point the loan is more than 50% amortized, you win. But that can take 60% of the term of the loan.

Get the largest mortgage anyone will give you

Spend all your disposable income at the mall every weekend

Make inadequate provision for retirement

When you run into expenses you haven't anticipated, use a credit card

Get as many store cards as possible

When you get into deep financial trouble blame the government

This is the American Way, baby!