Re: You have $400k in cash, buy House with it or rent & invest
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Not many have that kind of 'problem', but if someone had that, would just buying the house for 400k, with no mortgage and interest payments, sway one to buy vs renting, or does it have no effect on the regular rent vs buy debate?
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I'm looking through the responses and, really, this thread could have ended after the first reply.
No, the ability to pay cash for a house should not impact your decision to rent vs. buy, because you'd be crazy to do it.
Assuming you have good credit, the after-tax cost of a typical mortgage these days is somewhere around 4%. Anyone who has enough financial savvy to accumulate many hundreds of thousands of dollars in cash probably has enough savvy to invest it (or to trust someone else to invest it) in a way that would return in excess of 4% after taxes, with minimal risk, and with far more liquidity than a single residential property would provide you.
Mook
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