Just curious. How long have your rented. Also, can you estimate on how much you’ve spent on rent alone all this time. I’m just curious. Be truthful. I’m just curious.[/quote]
Not Brian, but have to take up this issue…
While I get your point, flu, one must also consider property taxes + interest + maintenance + depreciation/ – benefit from tax deduction to see how much money home owners have “thrown away” as well.
We’re approaching six years of renting, with total rent of $150,600, plus maintenance/upgrade costs of around ~$6,000, for a grand total of ~$156,600. (During this time, our LL has spent about $25,000 on repairs, maintenance, etc.)
For someone buying an equivalent house when we first rented it, a similar model-match might have sold for around $700K (some went for more). If a buyer put 20% down ($140,000), their P&I payments on a $560K mortgage @ 5% would have been about $3,006.20. Taxes and insurance would have added around $900/month for a total of $3906.20. With deductions of interest and prop taxes, the deduction benefit would have been around $908 [$729 taxes and $2,300 interest X 30%], for a net monthly payment of about $2998.20 (will round this up to $3,000, if you don’t mind). That means they’ve spent about $216,000 over the same period of time on PITI payments. Add the $31,000 of maintenance and repairs (what we and the LL have paid collectively) for a subtotal of $247,000. Now, you might be looking at this and saying, “Well, at least they’ve paid into some equity,” but that would be incorrect.
Our house could probably sell today for about $650K (up a bit from this past summer due to constrained inventory and govt give-aways), so they would have lost about $50K of their down payment. Add in their buying costs when they first purchased of approximately $7,000 in fees and points (might be less?), and you now have a total of $304,000 that has been “thrown away” by this hypothetical owner.
What the owner DID get is six years into a 30-year mortgage, so in 24 more years, he would have a paid-off house.
Anyway, just wanted to dispel the notion that rent is throwing money away. As long as the risk of large-scale depreciation lurks, most buyers would be better off renting, IMHO.
Note: In areas that have already seen 50%+ depreciation, the risks are much smaller. But in the better areas, many of us still feel that the risks are too high. Only time will tell if we are right or wrong, though.
