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Patrick
@
2012 Jun 5, 7:55am
The problem with your scnario that renting is cheaper than owning is totally wrong bc you are forgetting that after 30 years of renting you own nothing!
Wrong, and charmingly naive. Let me guess, a realtor told you that and you believed it, right?
Just think for yourself for a minute. If the cost of renting is less than the cost of owning the same thing over the typical holding period (median ownership length in the US is only six years, not nearly 30) then the renter wins.
Assuming 3% to 4% appreciation per year is frankly insane at this point.
Just try out the calculator:
http://patrick.net/housing/calculator.php
Heck, if you're a really landlord you should already know the difference between a house that cash flows and one that doesn't.
There are a lot of other factors involved rather than just price or cost. If price were the only issue, everyone would own a Yugo and there would be no such thing as Mercedes and BMW. Nordstroms would not exist.
When you own, there is no landlord telling you what you can do or not do. You don't have to worry about having to move when the lease expires and the landlord wants to sell the place. You can paint the place any color you want. You can make structural or other changes if you feel like it.
You have more control of your own life when you are an owner and not a tenant. And ultimately the mortgage gets paid off, but the rent never stops. You tell me, what sounds better?
You tell me, what sounds better?
Renting. Your own analogy of the BMWs and Mercedes is a very helpful illustration.
tatupu70
@
2012 Jun 6, 5:23am
Just think for yourself for a minute. If the cost of renting is less than the cost of owning the same thing over the typical holding period (median ownership length in the US is only six years, not nearly 30) then the renter wins.
But you have to agree that there is SOME value to owning the house after 30 years. Granted, you have to discount this value back to present, but it is a nonzero number. And nobody ever accounts for that in rent vs. buy calculations.
Comments 1 - 4 of 30 Next » Last » Search these comments
The problem with your scnario that renting is cheaper than owning is totally wrong bc you are forgetting that after 30 years of renting you own nothing!
If you had stayed in your house 30 years you would own it. Assuming you bought it for $250k as you mention it is very likeley and probable your home would be worth double or even triple what you paid for it after 30 years and that is at a 3-4% increase per year. Yes, we have ups and downs and sometimes values go in reverse for a while but look at the last 30 years and you do the math. ANother note is your rent will NOY STAY at $1200 for 30 years, it will go up and up over time. Also you are getting ZERO TAX deduction so that is another HUGE benefit of owning.If you are living in the Bay Area it will be prtty difficult to live in a decent area for $1200 per month!
Renting is a losing game and always has been in the the economy we live in. Of course if you went out and overpaid and took high risks and were paying outrageous monthly payments from the last RE boom than in that situation you should never have owned anyway and you should rent. If you use your money wisely and make responsible decesions ownng is better 99% of the time. I know...as I have done both. I was a Union truck driver and dock worker for 23 years and I bought 3 homes during that time. I still own them and it has helped me propel myseld in a good position. I now own over 30 homes and many are loan free so my renters who I treat very well pay n me to enjoy a great life. I worked for it. Nothing was given to me, no handouts, I paid for my own mistakes but I didn't waste my money either. Never made over $40k per year as a Trucker up till 1993. You have to sacrice and live below your means. RE still the best investment in the world if you know how to do it.Nothing can beat it. I know. I also have invested on the stockmarket and that is not anythin close to RE. Plus RE rentals give you cash flow month after month year aftyer year. It never stops flowing. Own..do not rent!