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#1
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Is my thinking off here? (renting vs owning situation)
Assume a person has $300k in equity in a house. They currently have an interest only payment of $1,700 per month for the house.
A comparable house can be rented in the $2,000/mo range. Is there any reason not to sell the home and buy equities while renting out a similar house? A similar house is necessary because of dogs that require a yard. Thoughts? It seems like the $20-30k per year in equity returns way more than offsets the increase in month-to-month housing costs. Also, must factor in no property taxes or maintenance costs which surely tips the scale even more in favor of renting. |
#2
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Re: Is my thinking off here? (renting vs owning situation)
Are you suggesting that renting a home is better than owning a home? If you mean in rare cases then yes, there are exceptions with everything.
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#3
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Re: Is my thinking off here? (renting vs owning situation)
why do you have interest only payments?
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#4
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Re: Is my thinking off here? (renting vs owning situation)
where can you rent a $5-600k home for $2000/mo? that seems pretty ridiculous to me, and is almost certainly a better deal than owning. are you sure your estimate is reasonable?
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#5
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Re: Is my thinking off here? (renting vs owning situation)
[ QUOTE ]
Thoughts? It seems like the $20-30k per year in equity returns way more than offsets the increase in month-to-month housing costs. Also, must factor in no property taxes or maintenance costs which surely tips the scale even more in favor of renting. [/ QUOTE ] You forgot that the house also appreciates in value. There are some cases where renting is better. I'm in such a situation because I have a very unfavourable view of the high-end condo market in my city. If you remove appreciation from the equation than it is usually better to rent otherwise owning is usually the better move. |
#6
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Re: Is my thinking off here? (renting vs owning situation)
And the fact that the mortgage interest is a tax write off, however then you are responsible for upkeep on the house
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#7
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Re: Is my thinking off here? (renting vs owning situation)
This is Gilroy, California.
I'm sure that both the interest payment and the comparable rent are correct as I double checked those myself and the equity is pretty close though I didn't double check it myself just took someones word for it. For real estate as a whole, I pretty much just assume it will do around inflation + 1% or so at best long term. |
#8
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Re: Is my thinking off here? (renting vs owning situation)
You will no longer be able to write off mortgage interest or property taxes. Renting will not be good for you.
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#9
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Re: Is my thinking off here? (renting vs owning situation)
[ QUOTE ]
For real estate as a whole, I pretty much just assume it will do around inflation + 1% or so at best long term. [/ QUOTE ] This seems reasonable. You have all the numbers so it should just be a math problem. What's your estimate on inflation and at what point does that change the decision? |
#10
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Re: Is my thinking off here? (renting vs owning situation)
[ QUOTE ]
For real estate as a whole, I pretty much just assume it will do around inflation + 1% or so at best long term. [/ QUOTE ] If someone understands when it is and isn't a good time to buy/sell a house, and the importance of location, then they can do much better than inflation + 1%. |
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