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.
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Can't it be this simple: when the mortgage payment on a house/apartment you love is cheaper than the rent for the house/apartment you love. Why isn't this financially sound irregardless of happiness?
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You can include taxes into my math. I have. Still works. Are you considering rental price increases? Need examples of opportunity cost.
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A. 100k on a down around 2008 B. 100k in SPY around 2008 Who makes the most? Depends on a jillion other factors. That 100k down has opportunity cost. Making money on houses is luck, like most everything.
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Yeah it’s a huge handicap locking up so much capital and making it illiquid, especially as an entrepreneur who bootstraps businesses for example.
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I'm an entrepreneur who bootstraps businesses. 7 figure agency. 6 figure SaaS App. Assuming we all need housing, why wouldn't you own if the mortgage + taxes are less than equivalent rent? The down payment (maybe)? Maintenance costs? Truly trying to understand
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For us it's a better financial decision, we moved to a rural part of Los Angeles where houses at that time were Rock bottom at 175k 3.5%DP. 5 years later sold the house and enough 20k DP, better neighborhood and slightly higher P&I, taxes and Insurance plus around 30k in case 1/
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No credit card debts and a higher equity home. Ultimately got about 100k in cash in this house already by refinancing and using that money to buy properties while paying lesser than rent. 2/2
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NYT's rent/buy calculator does. I plugged in our actuals. Even at 10% IRR, it's better to own unless we can rent a similar house for less than $2700/mo. Rent on similar homes starts at $3k/mo, no pets, no smoking. We have a dog and I enjoy cigars.
https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html … -
By the way, the entire debate is one of situations and gray areas. For many years, renting was better than buying... *for me*, *for my financial situation*, *in my specific market*, etc. That then changed to buying being a better financial option... *for me*, etc.
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On the flip side, adjust flat mortgage payments for inflation
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