Renting Vs Buying: Absolutely No Contest

[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.

[carlsbadworker]

[quote=JordanT]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.[/quote]

I strongly support the above statement. Most homeowners over-estimate what they can afford, they simply buy the biggest house that the lenders allow them to. Instead, the wealth-creating policy for home ownership is simply “buy houses, live in them until they’d cash flow on rent, rent them out and then buy again, rinse and repeat”.

[carlsbadworker]

[quote=JordanT]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.[/quote]

I strongly support the above statement. Most homeowners over-estimate what they can afford, they simply buy the biggest house that the lenders allow them to. Instead, the wealth-creating policy for home ownership is simply “buy houses, live in them until they’d cash flow on rent, rent them out and then buy again, rinse and repeat”.

[carlsbadworker]

[quote=JordanT]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.[/quote]

I strongly support the above statement. Most homeowners over-estimate what they can afford, they simply buy the biggest house that the lenders allow them to. Instead, the wealth-creating policy for home ownership is simply “buy houses, live in them until they’d cash flow on rent, rent them out and then buy again, rinse and repeat”.

[carlsbadworker]

[quote=JordanT]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.[/quote]

I strongly support the above statement. Most homeowners over-estimate what they can afford, they simply buy the biggest house that the lenders allow them to. Instead, the wealth-creating policy for home ownership is simply “buy houses, live in them until they’d cash flow on rent, rent them out and then buy again, rinse and repeat”.

[carlsbadworker]

[quote=JordanT]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.[/quote]

I strongly support the above statement. Most homeowners over-estimate what they can afford, they simply buy the biggest house that the lenders allow them to. Instead, the wealth-creating policy for home ownership is simply “buy houses, live in them until they’d cash flow on rent, rent them out and then buy again, rinse and repeat”.

[peterb]

I forgot to mention one thing that I’ve seen ommitted from most analysis regarding home ownership….and that’s the exit strategy. How many investment in the USA let you take $250K to $500k of TAX FREE profit after 2 years of owning the asset?? This is huge and often over looked. Of course, this is no longer ownership once you’ve sold, but you had to be an owner first in order to enjoy this incredible treat allowed by our tax crazy govt.

[peterb]

I forgot to mention one thing that I’ve seen ommitted from most analysis regarding home ownership….and that’s the exit strategy. How many investment in the USA let you take $250K to $500k of TAX FREE profit after 2 years of owning the asset?? This is huge and often over looked. Of course, this is no longer ownership once you’ve sold, but you had to be an owner first in order to enjoy this incredible treat allowed by our tax crazy govt.

[peterb]

I forgot to mention one thing that I’ve seen ommitted from most analysis regarding home ownership….and that’s the exit strategy. How many investment in the USA let you take $250K to $500k of TAX FREE profit after 2 years of owning the asset?? This is huge and often over looked. Of course, this is no longer ownership once you’ve sold, but you had to be an owner first in order to enjoy this incredible treat allowed by our tax crazy govt.

[peterb]

I forgot to mention one thing that I’ve seen ommitted from most analysis regarding home ownership….and that’s the exit strategy. How many investment in the USA let you take $250K to $500k of TAX FREE profit after 2 years of owning the asset?? This is huge and often over looked. Of course, this is no longer ownership once you’ve sold, but you had to be an owner first in order to enjoy this incredible treat allowed by our tax crazy govt.

[peterb]

I forgot to mention one thing that I’ve seen ommitted from most analysis regarding home ownership….and that’s the exit strategy. How many investment in the USA let you take $250K to $500k of TAX FREE profit after 2 years of owning the asset?? This is huge and often over looked. Of course, this is no longer ownership once you’ve sold, but you had to be an owner first in order to enjoy this incredible treat allowed by our tax crazy govt.

[Anonymous]

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

That’s just not the case right now for the majority of San Diego. When rents and house prices are in the same ball park, I’m definitely buying. We’re just not there yet. I’m speaking on the current market, it doesn’t make a whole lot of sense to buy. From looking at the housing calculators, the only reason buying is cheaper than renting over time is because you can sell the house in the current market. However, you will spend significantly more money which will make it harder to save and purchase a second house without being able to access the equity in the first house from a sale.

[Anonymous]

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

That’s just not the case right now for the majority of San Diego. When rents and house prices are in the same ball park, I’m definitely buying. We’re just not there yet. I’m speaking on the current market, it doesn’t make a whole lot of sense to buy. From looking at the housing calculators, the only reason buying is cheaper than renting over time is because you can sell the house in the current market. However, you will spend significantly more money which will make it harder to save and purchase a second house without being able to access the equity in the first house from a sale.

[Anonymous]

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

That’s just not the case right now for the majority of San Diego. When rents and house prices are in the same ball park, I’m definitely buying. We’re just not there yet. I’m speaking on the current market, it doesn’t make a whole lot of sense to buy. From looking at the housing calculators, the only reason buying is cheaper than renting over time is because you can sell the house in the current market. However, you will spend significantly more money which will make it harder to save and purchase a second house without being able to access the equity in the first house from a sale.

[Anonymous]

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

That’s just not the case right now for the majority of San Diego. When rents and house prices are in the same ball park, I’m definitely buying. We’re just not there yet. I’m speaking on the current market, it doesn’t make a whole lot of sense to buy. From looking at the housing calculators, the only reason buying is cheaper than renting over time is because you can sell the house in the current market. However, you will spend significantly more money which will make it harder to save and purchase a second house without being able to access the equity in the first house from a sale.

[Author]

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