The numbers, Renting versus buying our home for over 8 years.

SERE Bear

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I have seen debates on here about renting homes versus Buying a home. Except when stationed in Hawaii I always bought our homes instead of renting. I have followed a few different real estate plans such as - buy the worse house in the best neighborhood & doing a new build in a new subdivision with zero builder upgrades (level 8 granite counters, upgraded lights, upgraded handles, the list goes on and on) and upgrade things you want yourself.

I have claimed to always make money vrs renting and here are the numbers on my house.

Bought home in 2011
93 monthly mortgage payments *1250 = $ 116,000 includes taxes and insurance on a zero down VA loan.
Improvements to home $25,000

Cost to own $141000 or $1517 per month over 93 months.
Equity back to us after sale minus realtor, closing ect. $83,400

Adjusted cost to own after sale price. $57600 or $620 per month

Equivalent house to rent in local area = $1500 @ 91 months = $136,500. Utilities not included.

Bottom line is after it is all over we get a check for $83,000 but digging deeper our adjusted cost to live in that home is $620 per month versus renting for $1500 per month and getting 0 back after over 8 years.

YMMV
 

Dragon Slayer

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Renting is like lighting money on fire every month.
 

BNB

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1. Depends on the area.

2. You were in a position that most people aren't in. You paid off your home in 8 years. Most people can't pay their home off for at least a couple of decades. After a 30-year mortgage, tax, insurance, home repair, home improvement, etc. you will either break even or lose money when you sell your house, most of the time.

Many people that rent can actually make more money than people who own if they save and invest their money wisely.
 
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BNB

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Renting is like lighting money on fire every month.

Depends on how you view it.

Paying taxes on your home, and paying PMI if you can't put 20% down is literally lighting your money on fire, because you aren't getting ANYTHING in return. You are paying for nothing.

When you rent, you do get something in return. A place to sleep, eat, entertain, shower, live, etc.

If the argument not to rent is because it's lighting money on fire and you're not getting anything in return or making your money back, then you shouldn't buy anything, really. When you buy food, supplies, go on vacation, etc., you never get that money back or make money off buying those things.
 

Penny Traitor

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When you rent, you do get something in return. A place to sleep, eat, entertain, shower, live, etc.

Plus the luxury of having someone else pay for everything that breaks.

I won't say either side is wrong, but I always thought owning was overrated. Unless you are the OP, where you are going into the purchase with the idea of making money on the property as opposed to just trying to have a place to live.
 

Dragon Slayer

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Depends on how you view it.

Paying taxes on your home, and paying PMI if you can't put 20% down is literally lighting your money on fire, because you aren't getting ANYTHING in return. You are paying for nothing.

When you rent, you do get something in return. A place to sleep, eat, entertain, shower, live, etc.

If the argument not to rent is because it's lighting money on fire and you're not getting anything in return or making your money back, then you shouldn't buy anything, really. When you buy food, supplies, go on vacation, etc., you never get that money back or make money off buying those things.

I'm not sure I follow. Did you read the OP and the breakdown of renting vs. owning? I thought it was pretty clear on what his cost was/what he got out of it. I wouldn't call that nothing. On the other hand, when your lease is up on your apartment, you are literally left with nothing. He also included insurance/taxes which was lumped into his mortgage through escrow. In my personal situation, my mortgage with interest, insurance and property tax is lower than anything I would even want to rent. Saying you get something in return for renting because you get a place to live is laughable. Does a house with equity in it not provide the same things?

I get it, owning isn't for everyone. All depends on your personal situation, where you live, etc. IMO, I would much prefer to own something and have equity in it. My mortgage will be paid off by the time I'm 45 (possibly sooner depending on career advancement), which gives me 20 years of no mortgage payments in my prime career earning years. Then when I'm ready for retirement, I can sell my house, because I OWN it, use that equity in my home to move wherever I please if I want. If you rent your whole life on the other hand, what do you have?
 

Ares

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Meh.

A rent payment provides just as much shelter as a mortgage payment.

Mortgage payment is an investment in your property.

Rent payment is thrown away, you never have any chance at getting it back.

Sometimes you gotta rent, but it really is throwing money away compared to owning.
 

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Plus the luxury of having someone else pay for everything that breaks.

I won't say either side is wrong, but I always thought owning was overrated. Unless you are the OP, where you are going into the purchase with the idea of making money on the property as opposed to just trying to have a place to live.
I agree there is no real right or wrong answer on this. There are benefits to both, like you mentioned, if you rent you don't have to fix chit. My rebuttal would be, don't buy a piece of shit and learn how to DIY.
 

Urblock

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Always buy. Rent the cost for repairs and taxes are built into the rent.
 

Dragon Slayer

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Always buy. Rent the cost for repairs and taxes are built into the rent.
This is also a good point. My mortgage is a fixed payment. It's never going to change. Rent is only going to go up. I rented for three years out of college and my rent went up every year. They were never like "Hmm you're a good renter, your rent is going down!"
 

BNB

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I'm not sure I follow. Did you read the OP and the breakdown of renting vs. owning? I thought it was pretty clear on what his cost was/what he got out of it. I wouldn't call that nothing. On the other hand, when your lease is up on your apartment, you are literally left with nothing. He also included insurance/taxes which was lumped into his mortgage through escrow. In my personal situation, my mortgage with interest, insurance and property tax is lower than anything I would even want to rent. Saying you get something in return for renting because you get a place to live is laughable. Does a house with equity in it not provide the same things?

I get it, owning isn't for everyone. All depends on your personal situation, where you live, etc. IMO, I would much prefer to own something and have equity in it. My mortgage will be paid off by the time I'm 45 (possibly sooner depending on career advancement), which gives me 20 years of no mortgage payments in my prime career earning years. Then when I'm ready for retirement, I can sell my house, because I OWN it, use that equity in my home to move wherever I please if I want. If you rent your whole life on the other hand, what do you have?

When I was replying to you, I wasn't referencing Sere's post.

If you bought a house for 250k and, let's say you had the 50k to put down to avoid the PMI, and were on a 30-year mortgage let's say 4% interest). By the time you pay off the house, it cost 393,000. That's 143,000 in interest you just paid.

If rent is lighting your money on fire, what is paying 143,000 in interest considered?

That home in my example alone is 390,000. When you add in insurance, property tax, utilities, home repair, home improvement, replacing appliances like the fridge, oven, washer, dryer, furnace, etc. you are shelling out almost 600,000.

That would be the equivalent of renting at 1,666 a month for 30 years.

In that scenario, you'd have to sell your 250,000 home for 600,000 to break even. So you really make no money.

If you rented at an average of 1200 a month for those same 30 years, you'd actually save 162,000 compared to if you bought that home. If you invested that money in meantime, you'd make much more.

So yeah.... if you live somewhere where the rent is like 1,800 a month, then probably buy.

Saying you get something in return for renting because you get a place to live is laughable.

Explain how this is laughable. Do you not get something in return for renting? It's not like you give the landlord money then go sleep on the streets.
 
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Penny Traitor

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Mortgage payment is an investment in your property.

See the above post for a much more detailed breakdown, but in short...I just don't see property being the best investment.
 

RacerX

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There is no absolute answer. It all depends on your current income, your net worth/balance sheet, your risk-profile, and your future earning capacity. And most importantly, it depends on geography. And what your tax situation is, because there are ultra-valuable tax deductions available for mortgage interest and property taxes. It also depends on what makes your wife happy if you know what's good for you.

I may not buy a home in a shit-hole place like Elgin, but in NYC or Bay Area or Austin or many other places, fuck yeah you're a chump not to buy because there's a conveyor belt of new rich people in those markets that don't mind overpaying for your investment.
 

RacerX

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See the above post for a much more detailed breakdown, but in short...I just don't see property being the best investment.

And you would be accurate in some cases, and dead-ass wrong in many others (see above post).
 

Dragon Slayer

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When I was replying to you, I wasn't referencing Sere's post.

If you bought a house for 250k and, let's say you had the 50k to put down to avoid the PMI, and were on a 30-year mortgage let's say 4% interest). By the time you pay off the house, it cost 393,000. That's 143,000 in interest you just paid.

If rent is lighting your money on fire, what is paying 143,000 in interest considered?

That home in my example alone is 390,000. When you add in insurance, property tax, utilities, home repair, home improvement, replacing appliances like the fridge, oven, washer, dryer, furnace, etc. you are shelling out almost 600,000.

That would be the equivalent of renting at 1,666 a month for 30 years.

In that scenario, you'd have to sell your 250,000 home for 600,000 to break even. So you really make no money.

If you rented at an average of 1200 a month for those same 30 years, you'd actually save 162,000 compared to if you bought that home. If you invested that money in meantime, you'd make much more.

So yeah.... if you live somewhere where the rent is like 1,800 a month, then probably buy.



Explain how this is laughable. Do you not get something in return for renting? It's not like you give the landlord money then go sleep on the streets.

I think your breakdown of owning a home is a bit overstated, but I understand what you're saying. Owning a home is expensive. As RacerX mentioned, there are tax benefits to owning a home that you do not get as a renter that helps offset the cost of Interest/property tax. My problem with your post and a question you have yet to answer is, atleast when you sell your home you are recouping some of what you put into it. You're not going to get shit back if you rent for 30 years. So, I ask again, what do you get for renting for 30 years? The answer is nothing. If you play your cards right and buy in a good area, your home value (mainly the land it sits on) will increase significantly. Sure, people have lost their asses over the years, but many people seem to do well (see OP) if you don't buy a complete piece of shit in a bad neighborhood.

Another problem I have with your post - rent will not remain the same for the next 30 years. Completely unrealistic to think you will pay the same rent in 2019 as you will in 2049.

 

Spunky Porkstacker

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There is also the issue of the housing market. The crash in 07/08 was devastating for millions of HO's, doubtful the OP would have those numbers if he purchased a few years earlier...fucking underwater Mortgage.
 

SERE Bear

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I did NOT pay off my house. I did use a VA loan with no money down and no PMI.
Loan amount $217, 000
Payoff after 93 months $186000
Sold for $294000
Our take after realtor & closing $83400

BNB is correct though , we made desicions durring the build geared towards selling later. however I installed a lot of things we just simply wanted, light fixtures , home movie theater, garage ceiling storage .

I didnt have to ask anyones permission because I was the owner
 

Burque

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I think renting is a good option if you don't have the tools necessary to own a property and conversely think if you buy you should never pay full retail price.

I'm a fan of buying, but that's the right choice for my family.
 

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