Renting Vs Buying: Absolutely No Contest

[NotCranky]

[quote=cooprider]This is the best rent vs. buy calculator I’ve come across

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html?_r=1&ex=1185336000&en=92a35496df194374&ei=5070&oref=slogin#

True with renting you don’t own the place, but typically there is a savings in renting, and after 30 years of accumulating that savings you can end up with more cash depending on your rate or return.

Since the claim is the market typically returns 10%/yr you’d likely end up better than a house that returns 2-4%/yr. And you’d still have to sell the house.[/quote]

I think you must be leaving equity and the beneficial proportionate cash flow shift of later years of owning out of the picture. The person who has not accomplished home ownership often uses up or uses a good portion, of their assets or retirement benefits or to provide shelter(to taste) in their later years.

Rent impedes one’s ability to invest the same as a mortgage does. Rent impedes it in perpetuity and gets worse with time as compared to a fixed mortgage. People are bothered by risk and poor returns now but they could be cutting into future costs of shelter with those poorly performing investment dollars instead.

I am assuming we are considering reasonable timing in the purchase of a house or condo and rent at or near their initital mortgage payment threshold.

[Anonymous]

The person who has not accomplished home ownership often uses up or uses a good portion, of their assets or retirement benefits or to provide shelter(to taste) in their later years.

The problem is the average person moves too often to build that much equity in their house through principal repayments. They continually upgrade to better houses and never get out of the “paying mostly interest” and into the “paying mostly principal” phase of the loan. Then they have to sell their old home, because they can’t get a down payment our qualify for a second home loan without doing that. It is possible to buy houses, live in them until they’d cash flow on rent, rent them out and then buy again, rinse and repeat. However, this is beyond the abilities of nearly every homeowner since it requires saving a lot of money while owning a home.

[Anonymous]

The person who has not accomplished home ownership often uses up or uses a good portion, of their assets or retirement benefits or to provide shelter(to taste) in their later years.

The problem is the average person moves too often to build that much equity in their house through principal repayments. They continually upgrade to better houses and never get out of the “paying mostly interest” and into the “paying mostly principal” phase of the loan. Then they have to sell their old home, because they can’t get a down payment our qualify for a second home loan without doing that. It is possible to buy houses, live in them until they’d cash flow on rent, rent them out and then buy again, rinse and repeat. However, this is beyond the abilities of nearly every homeowner since it requires saving a lot of money while owning a home.

[Anonymous]

The person who has not accomplished home ownership often uses up or uses a good portion, of their assets or retirement benefits or to provide shelter(to taste) in their later years.

The problem is the average person moves too often to build that much equity in their house through principal repayments. They continually upgrade to better houses and never get out of the “paying mostly interest” and into the “paying mostly principal” phase of the loan. Then they have to sell their old home, because they can’t get a down payment our qualify for a second home loan without doing that. It is possible to buy houses, live in them until they’d cash flow on rent, rent them out and then buy again, rinse and repeat. However, this is beyond the abilities of nearly every homeowner since it requires saving a lot of money while owning a home.

[Anonymous]

The person who has not accomplished home ownership often uses up or uses a good portion, of their assets or retirement benefits or to provide shelter(to taste) in their later years.

The problem is the average person moves too often to build that much equity in their house through principal repayments. They continually upgrade to better houses and never get out of the “paying mostly interest” and into the “paying mostly principal” phase of the loan. Then they have to sell their old home, because they can’t get a down payment our qualify for a second home loan without doing that. It is possible to buy houses, live in them until they’d cash flow on rent, rent them out and then buy again, rinse and repeat. However, this is beyond the abilities of nearly every homeowner since it requires saving a lot of money while owning a home.

[Anonymous]

The person who has not accomplished home ownership often uses up or uses a good portion, of their assets or retirement benefits or to provide shelter(to taste) in their later years.

The problem is the average person moves too often to build that much equity in their house through principal repayments. They continually upgrade to better houses and never get out of the “paying mostly interest” and into the “paying mostly principal” phase of the loan. Then they have to sell their old home, because they can’t get a down payment our qualify for a second home loan without doing that. It is possible to buy houses, live in them until they’d cash flow on rent, rent them out and then buy again, rinse and repeat. However, this is beyond the abilities of nearly every homeowner since it requires saving a lot of money while owning a home.

[NotCranky]

If a person can not buy a house that performs equally with rent, at the onset of the mortgage and gradually begins to out-perform rent ,and save, how can they rent and save?

A person who can rent and save can be a homeowner and save. If one can’t save in either situation they might as well be homeowner( If they want to and can stay put for a while).

Same disclaimer about reasonable entry time and rents and mortgages being in the same ballpark.

[NotCranky]

If a person can not buy a house that performs equally with rent, at the onset of the mortgage and gradually begins to out-perform rent ,and save, how can they rent and save?

A person who can rent and save can be a homeowner and save. If one can’t save in either situation they might as well be homeowner( If they want to and can stay put for a while).

Same disclaimer about reasonable entry time and rents and mortgages being in the same ballpark.

[NotCranky]

If a person can not buy a house that performs equally with rent, at the onset of the mortgage and gradually begins to out-perform rent ,and save, how can they rent and save?

A person who can rent and save can be a homeowner and save. If one can’t save in either situation they might as well be homeowner( If they want to and can stay put for a while).

Same disclaimer about reasonable entry time and rents and mortgages being in the same ballpark.

[NotCranky]

If a person can not buy a house that performs equally with rent, at the onset of the mortgage and gradually begins to out-perform rent ,and save, how can they rent and save?

A person who can rent and save can be a homeowner and save. If one can’t save in either situation they might as well be homeowner( If they want to and can stay put for a while).

Same disclaimer about reasonable entry time and rents and mortgages being in the same ballpark.

[NotCranky]

If a person can not buy a house that performs equally with rent, at the onset of the mortgage and gradually begins to out-perform rent ,and save, how can they rent and save?

A person who can rent and save can be a homeowner and save. If one can’t save in either situation they might as well be homeowner( If they want to and can stay put for a while).

Same disclaimer about reasonable entry time and rents and mortgages being in the same ballpark.

[peterb]

A home purchase is such a large amount of money that if the house is not appreciating, why buy it? Why take on the financial burden and risk of such an illiquid investment? Until rents and mortgages hit equilibrium, there’s very little financial logic to owning. Especially in a down trending market.
The two strongest financial reasons to own are appreciation and eventually living in a paid-0ff home. But you’ll always have taxes and maintenance to pay as long as you own. And you could have been investing the difference between your mortgage and rent in other assets that are performing better in the appreciation arena.

[peterb]

A home purchase is such a large amount of money that if the house is not appreciating, why buy it? Why take on the financial burden and risk of such an illiquid investment? Until rents and mortgages hit equilibrium, there’s very little financial logic to owning. Especially in a down trending market.
The two strongest financial reasons to own are appreciation and eventually living in a paid-0ff home. But you’ll always have taxes and maintenance to pay as long as you own. And you could have been investing the difference between your mortgage and rent in other assets that are performing better in the appreciation arena.

[peterb]

A home purchase is such a large amount of money that if the house is not appreciating, why buy it? Why take on the financial burden and risk of such an illiquid investment? Until rents and mortgages hit equilibrium, there’s very little financial logic to owning. Especially in a down trending market.
The two strongest financial reasons to own are appreciation and eventually living in a paid-0ff home. But you’ll always have taxes and maintenance to pay as long as you own. And you could have been investing the difference between your mortgage and rent in other assets that are performing better in the appreciation arena.

[peterb]

A home purchase is such a large amount of money that if the house is not appreciating, why buy it? Why take on the financial burden and risk of such an illiquid investment? Until rents and mortgages hit equilibrium, there’s very little financial logic to owning. Especially in a down trending market.
The two strongest financial reasons to own are appreciation and eventually living in a paid-0ff home. But you’ll always have taxes and maintenance to pay as long as you own. And you could have been investing the difference between your mortgage and rent in other assets that are performing better in the appreciation arena.

[Author]

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