|
|
|
|
|
|
by libertyhouse
2980 days ago
|
|
|
Renting or owning from a purely financial point of view is a relatively straightforward problem and is answered quite nicely with the NY Times Rent vs. Buy calculator (with the caveat that the calculator has not been updated to reflect the new tax laws). That being said, the biggest reasoning mistakes I run across are: 1. "You pay the landlords expenses plus some profit." Not true. The rental market is just that - a market that fluctuates with supply and demand. There are plenty of landlords who are losing money on their rental property. 2. "Once I have paid off my house I'm done paying for housing." Not true - you still have taxes, insurance, and maintenance whose costs will most likely increase over time. 3. Forgetting about the opportunity costs. Great - you paid off your mortgage. Now you have $500k in equity. Guess what - if you took that $500k and put it in a 5 year treasury you can earn a risk free 3% or 15k/year on that money. Better yet stick it in a broad based index fund and you will grow 6% albeit with more risk. That's your opportunity cost of your equity. Overall this is such an emotional subject for most. I'm personally glad to see some push-back on the "buying is always better" argument because its been dogma for some time. Edit: fixed typo |
|
|
Only until your current lease term expires, at which point your housing costs will unexpectedly rise (and sometimes quite dramatically). Unless you live in such an undesirable location that the landlord is desperate for any tenant, they aren't crazy enough to agree to a lease on which they'll lose money.