I think you should calculate the difference of owning a house for 50 years (30 year mortgage) compared to renting the same house for 50 years. You'll pay 30-70% more per month to rent and have no equity whatsoever. Unless you find "living in a van down by the river" an option for raising a family (assuming that fits in your 50 year plan), I'm sure you'll find the "real return" a substantial investment.
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- Thread starter SoapyCy
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I think you should calculate the difference of owning a house for 50 years (30 year mortgage) compared to renting the same house for 50 years. You'll pay 30-70% more per month to rent and have no equity whatsoever. Unless you find "living in a van down by the river" an option for raising a family (assuming that fits in your 50 year plan), I'm sure you'll find the "real return" a substantial investment.
You have a source that says it costs 30% to 70% more to rent per month?
One that includes taxes, PMI, closing costs, and upkeep costs?
Think a few may be including the face value of life insurance policies to their assets. Happens a lot on call in shows.
If not, well done all, well done.
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I'll be paying off student loans until my kids are out of college.
If a house is factored into this, I'm WELL below $0.
I'll be paying off student loans until my kids are out of college.
If a house is factored into this, I'm WELL below $0.
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Whether our house is truly an "investment", I don't know, but my dad always said to buy only what you can afford that meets your needs. Don't count on it going up in value. Treat it as a home, not an investment.
...So we bought a house 175k less than what we were approved for and in my net worth calculation I use my purchase price as it's underlying value.
...So we bought a house 175k less than what we were approved for and in my net worth calculation I use my purchase price as it's underlying value.
2 houses down just got sold & then rented, the rent on it is more than my 30 year monthly mortgage payment (including T & I + PMI + additional principal). And we're in a cookie cutter neighborhood so the houses are nearly identical.
Just think when you’re okd and retired and coming off a hip replacement you can take a vacation to a casino and force a younger relative to cart you around in a wheelchair from slots to blackjack to bingo taking up their entire weekend while you get your blood pressure stable enough to have your knee replaced. Keep saving bro.
I just looked online and it looks like you're correct. If I had a 30 year mortgage, my payment would be less than rent for a similar home. Of course this doesn't take into account things like paying $10k for a new roof.
Or you own a couple hundred acres of land, as would be expected of the demographic supporting a Midwestern Ag school.
Yeah, maintenance is the unknown. How often does something like a roof really need replaced, though? (Without using insurance, at that)
It's not unheard of to only have to replace roof/furnace/AC etc once in a 30 year period, and if insurance replaces the roof after a storm the cost is even less. You'd hope the home value would increase at least that much over 30 years, but I know that's not always the case. Since 2015 when we bought ours the value has already increased more than the cost of all of those things combined, so I'm feeling ahead for now.
Obviously times/locations/markets will always be different.
I don't see where you're giving credit for principal reduction or the effect of the tax benefit for the principal payments.
But regardless I would say don't buy a house unless you have 20% to put down, because PMI is a killer. I am also (now, after several mistakes) a firm believer in the 15 year mortgage
My history of owning houses is as follows:
First house-terrible decision-bought a year out of school, thought we HAD to own a house. Wrong neighborhood, no down payment-wound up selling for $7000 loss after 7 years
Second house-fixer upper great neighborhood in the suburbs. Even though we owned it through the bubble burst we sold it for twice what we paid after 17 years.
Third and current house-retirement home in townhome development (I would only buy an end unit with a 3 car garage as the market is not flooded with those). After 8 years we have about $120K equity and will have it paid off in 10 years (I hadn't become a believer in the 15 year mortgage until we bought it.
So end of the story, real estate can be a good investment if you do it right. Don't trust your realtor because they get paid either way. Find someone you trust and run all decisions by them.
You guys also have to account for the "mobility" that renting affords you on the labor market. This is maybe not as valuable when in the middle or towards the end of a career once you are established or have children, but I was able to jump on two great opportunities in different cities in my 20s because I only had the end of a lease to deal with and very little to up and move when I needed to, which will do a lot to the income side of the ledger in the long-term. Buying can have its advantages, but it complicates being able to jump on such things, which are probably ultimately to your much greater benefit on salary, advancement, and job satisfaction.
Here is a google sheet for you nerdy types that like to crunch your retirement numbers. Sorry for the tinyurl. Pasting the direct link to google sheets causes it to embed directly into the forum, which is not what I want.
Make your own copy of the sheet before editing ( File -> Make a copy)
https://tinyurl.com/yd9789er
Make your own copy of the sheet before editing ( File -> Make a copy)
https://tinyurl.com/yd9789er