Quote:
Originally Posted by Sly
Your mortgage rate alone is going to be 5-8%. This doesn't include property taxes, homeowners insurance, regular maintenance, major repairs, and down payment. If you are lucky, overtime you might make 3% or so. So you are spending a minimum of 5% on interest, a ton on all of the additional bills, and you might make 3%. Might.
If you know how to spot value, like Tanker... sure, it could certainly work. But that takes a lot of effort and some experience and a lot of patience. Most people cannot pull it off.
Right now I can rent for about half the price that it would cost me to own. I take that extra money and invest it instead. I do also own a rental that pays for itself. If I lived in my own rental, it would significantly increase my personal cost of living. I don't need much, I'm perfectly fine with my low-cost of living and do not want to increase it.
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First off, not sure where you get the 3% figure. The avg annual real estate appreciation in this country since 1968 is 6.4%.
Second, compare apples to apples. If you're renting a place instead of owning if you're lucky you're going to be paying what the owners mortgage is, most likely a little higher. You cant make your argument by saying I would have a $1200 mortage on a $225,000 home but I'm living in a $100k home so I'm only paying $600 and investing the rest. You have to compare what the mortgage costs would be on owning the $100k home.
Third, you're completely discounting the tremendous tax benefits home owners receive that renters do not.
Real estate for investment purposes (ie 2nd and 3rd rental properties) you might have more of a case as you have to put additional money down and the tax breaks arent as great but there is zero argument or sense in choosing to rent when you could buy. Unless of course you only plan on being in a location for a limited amount of time.