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Ramit Sethi, self-made millionaire and author of “I Will Teach You to be Rich,” has made the same argument. Think about it this way, Sethi suggests: “Generally we can assume that over the long term, if we invest in a low-cost diversified index fund, we get about 7%” in terms of annualized returns.
I don't like the NY Times anymore, but their rent-vs-buy calculator is still very good:
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
Does it factor in locality? A rent-vs-buy calculators which doesn't is worthless because it doesn't factor in expected appreciation.
I concur, a house has good attributes but as an investment it’s less than ideal.
But, the concept of borrowed money to own an increasingly valuable house sounds good.
- Renting makes you feel very insecure. We have been kicked out of three rentals because the owners wanted to move back in or sell. This kind of event is very disruptive and stressful on a family, and it makes the children feel unsettled as well.
- In a rental you can't (or even want) to make any substantive changes, so you're stuck with their shitty appliances, carpet, etc.
- Getting a landlord to fix stuff can be a pain in the ass. I had a situation where it was blistering hot and our AC had a refrigerant leak, so the air wasn't very cold.
I HATE feeling like a child who is submissive to a landlord. I'm a grown man making more than these landlords, but renting from them makes you feel beneath them.
I never got treated like a customer, so it's not silly at all to be independent of a landlord
Dude, you were the customer. They needed you and your timely rent payments, more than you needed their asses. Sounds like you bought into the Cool Aid that being a homeowner (debt slave / property tax slave) is a status above not being one. That is silly.
That's how I'm now thinking about it. I need a place to live for the long term so why not get a tax deduction, pay myself back in principal, and make it the way I want it without getting kicked out.
A home is not an investment, a necessity is not an investment, it's a consumable. You have to have a place to live.
it's not silly at all to be independent of a landlord
so why not get a tax deduction
I disagree. You’re paying for their mortgage plus profit. Fuck that.
porkchopexpress says
it's not silly at all to be independent of a landlord
I agree. That's why I was obsessed in my mid-20's of "owning" my residence.
What is silly is to have an inferiority complex to one's landlord.
I am. Off to TN
porkchopexpress says
so why not get a tax deduction
Yep. But you hafta leave the Golden State to get the full deduction.
What is silly is to have an inferiority complex to one's landlord.I disagree.
porkchopexpress saysI am. Off to TN
so why not get a tax deduction
Yep. But you hafta leave the Golden State to get the full deduction.
Say you live in Brooklyn, New York, and pay $2,500 a month to rent. If you buy your own place, you might pay $5,000 a month between your mortgage, taxes and other maintenance costs, Mallouk gives as an example.
This is an example of fucked up market. In such a market renting makes more sense, duh.
Eric Holder says
This is an example of fucked up market. In such a market renting makes more sense, duh.
Yeah.
I looked on Zillow up my own dinky 53 year old stucco sh*tbox on a dinky lot in an undesirable neighborhood of 95148 (San Jose). It said $1.2 M.
It said "refi estimate" $6600 per month. I suppose that includes PITI but not a dime for maintenance on a 53 year old sh*tbox.
I suppose the Santa Clara County tax bill for a $1.2M purchase will be a bit more than $1k per month. Yes, I know, base rate is 1.000%, but there's a lot of Junk Fee assessments piled on.
It said the rent Zestimate® is $3600 per month. I know several renters. I think that's in the ballpark but a little high. Whatever. Suppose $3600.
It means the Greater Fool who would buy this place would pay an ownership premium of $3k per month, ...
I looked on Zillow up my own dinky 53 year old stucco sh*tbox on a dinky lot in an undesirable neighborhood of 95148 (San Jose). It said $1.2 M.
California renters could save $112,000 vs. owning over 5 years
zzyzzx says
California renters could save $112,000 vs. owning over 5 years
But they'll spend it on frivolousness instead of saving it.
https://www.dailybulletin.com/2022/06/29/california-renters-could-save-112000-vs-owning-over-5-years/
California renters could save $112,000 vs. owning over 5 years
zzyzzx says
California renters could save $112,000 vs. owning over 5 years
But they'll spend it on frivolousness instead of saving it.
B.A.C.A.H. says
I looked on Zillow up my own dinky 53 year old stucco sh*tbox on a dinky lot in an undesirable neighborhood of 95148 (San Jose). It said $1.2 M.
SELL!!! Sell it while you can!
.
https://www.cnbc.com/2019/04/18/wealth-manager-buying-a-home-is-usually-a-terrible-investment.html
A lot of people will tell you that buying a home is a good investment, but “that couldn’t be further from the truth,” says Peter Mallouk, a certified financial planner and president of wealth management firm Creative Planning.
“In reality, it’s usually a terrible investment,” he says. That’s because, at the end of the day, owning a home takes money out of your pocket: “You’re paying property taxes, you’re paying maintenance, you’re paying insurance. There are all of these other things that happen with your home that you’ve got to pay for.”
Young homeowners in particular have figured that out the hard way: Underestimating the hidden costs is the No. 1 reason millennials who do own homes have regrets.
Over time, your home might increase in value, Mallouk says, but it probably won’t appreciate enough to offset all of the costs. Instead, if you took what you’d save from not buying a house and invested it in something that’s likely to grow in value, such as stocks and bonds, chances are you’d end up with more money in the long term.
Say you live in Brooklyn, New York, and pay $2,500 a month to rent. If you buy your own place, you might pay $5,000 a month between your mortgage, taxes and other maintenance costs, Mallouk gives as an example. (Other financial experts estimate that, thanks to home ownership costs, buying could cost you about 40% more than renting.)
“If you take the difference and you save it, that extra $2,500 you’re saving in a diversified portfolio is almost certainly, over a long period of time, going to grow to be worth more than what your home equity would have been worth if you had just put the money into a home,” he says.
Ramit Sethi, self-made millionaire and author of “I Will Teach You to be Rich,” has made the same argument. Think about it this way, Sethi suggests: “Generally we can assume that over the long term, if we invest in a low-cost diversified index fund, we get about 7%” in terms of annualized returns. “Can you beat that in your area, over time, with real estate appreciation?”