You have $400k in cash, buy House with it or rent & invest

[PokerPaul]

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?

[haakee]

I'd rather get a tax-deductible 30-year 6% loan than pay cash, so in the US, no it wouldn't impact my decision.

[Henry17]

I just started a similar thread yesterday. It basically comes down to do you think

appreciation + (rent saved - property taxes) > Return on $400k

In my case it doesn't seem like it is worth it.

[Tien]

Depends on what you want to do.

If you want to throw money into a money pit, buy a house. It isn't only rent saved and property taxes. It's insurance, repairs, furniture for a house, lawn mower, appliances, etc etc etc.

Don't forget that as your house appreciates, the dollar inflates as well. So 5% appreciation isn't really 5% appreciation.

If you want that money to have actual return on investment, rent and invest.



I personally would only buy a house when I have a substancial amount of cash flow from passive investments to support being able to have a house.

[Henry17]

Well if he rents he'll need furniture and some insurance as well. The only big difference is the appliances but that is not significant.

[Tien]

Repairs is probably the biggest significance by the way because it is the biggest expense a homeowner has besides the mortgage payment.

[Henry17]

It depends on what he buys. Older properties would need repairs but something new should be pretty maintains free.

He also needs to consider what he could buy for $400k vs what he ends up renting. The property has to be the same value. Comparing a cheap rental to a nice owned property ignores quality of life issues.

[PokerPaul]

thats a very good point i didnt consider completely.

Because one could probably for equivalent monthly payments rent a $500k property, or own the $400k.

Maybe not a huge difference, but yes, you probbably can enjoy a little better lifestyle going the rent route....

[Jimbo]

[ QUOTE ]
thats a very good point i didnt consider completely.

Because one could probably for equivalent monthly payments rent a $500k property, or own the $400k.

Maybe not a huge difference, but yes, you probbably can enjoy a little better lifestyle going the rent route....

[/ QUOTE ]

Not where I live, the opposite would be true.

Jimbo

[Brad1970]

Look at it this way...if you are old enough & mature enough for homeownership...go for it. You'll never be evicted & the rent will never go up.