Sam Parr  ⚪️

If you’re in the wealth accumulation phase of your life, I think buying a home is a terrible decision (in most cases). Prove me wrong. Seriously. I’m not being rhetorical. I want to see if there’s math that says otherwise.

Everyone forgets foregone rent in the calculus. The incremental cost of ownership in e.g. Manhattan is offset by mortgage interest deduction and equity appreciation plus the chance to flip to an incremental cash flow asset at 0 marginal cost when you move out.

What do you think would come out on top after 10 years :a $300k down payment on a residence in Manhattan plus other costs or $300k average investment property or stocks while renting $5k/month? Broad question. But what are you thoughts

At the “end” of one of those paths I have a New York City real estate asset that can create rental income for me after it has already created some appreciation. The reasons I’m motivated to buy are:

- LBO-style equity value creation. In no other asset will the market structure give me 80% LTV to acquire the appreciation and future cash flow potential of an asset. - Mortgage interest deduction. My effective tax rate in Manhattan is high; deducting interest expense

vs. paying rent post-tax feels more economically efficient. - Asset ownership. At the end of the “decision period” (let’s say 5yrs owning vs renting), when I own, I can choose to sell or rent that asset out, which in a favorable market environment has a higher NPV

Than having created no option value by paying rent. - Future liquidity source: down the line, appreciated equity in a home can be tapped in a few different ways without selling the home and all of the ways are low cost of capital with tax advantages