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Started By
Message
re: 5 Reasons Renting Still Beats Buying
Posted on 3/9/09 at 10:46 pm to wizard of smart
Posted on 3/9/09 at 10:46 pm to wizard of smart
quote:
banks dont have money or dont want to lend and 1/10 people dont have a job.
keep drinking the koolaid. banks are making loans around the clock.
also, south la has some of the lowest unemployment rates in the country, and thats WITH $40 a barrel oil.
1
Posted on 3/9/09 at 10:46 pm to wizard of smart
What would the money talk gurus say about my rent vs. buy situation?
I'm going to start work later this year, will be paid around 70k starting salary.... probably be making 100k after a couple of years. I'm 23, no kids, no girlfriend, just me.
I can get a decent starter house in my area for around 150k, or I can rent a house for about $900 per month. If I buy a house this year I can get the $8000 tax credit. I have a credit score approaching 800, and am very fiscally responsible. I could put about 10k towards a downpayment, and would plan on living in this house for at least 5-10 years. Prices should not depreciate more than 10-20k on the 150k house. So should I rent or buy??
I'm going to start work later this year, will be paid around 70k starting salary.... probably be making 100k after a couple of years. I'm 23, no kids, no girlfriend, just me.
I can get a decent starter house in my area for around 150k, or I can rent a house for about $900 per month. If I buy a house this year I can get the $8000 tax credit. I have a credit score approaching 800, and am very fiscally responsible. I could put about 10k towards a downpayment, and would plan on living in this house for at least 5-10 years. Prices should not depreciate more than 10-20k on the 150k house. So should I rent or buy??
Posted on 3/9/09 at 10:48 pm to Tiger JJ
quote:
Is it your belief that 5 years of mortgage payments = 100% of those payments go towards equity?
of course not. But some equity is better than no equity, right?
Posted on 3/9/09 at 10:48 pm to Cash
This is for anyone that wants to answer. What about other things like cars? do you make all your purchases based on what is best for your checking account? So do you buy the most economical car or the one that looks good to you? what about food,watches,women. What say you. I live in a house because I like houses. I don`t know if there is much that you can hold and truly make a profit on these days after the dues,fees,and taxes that are due when you decide to sell. 
Posted on 3/9/09 at 10:48 pm to TortiousTiger
quote:
the 100% sunk cost of the rent is a certainty. The risk for loss in the home purchase doesnt even come close to that even without calculating the odds that it actually increases in value.
You continue to miss the obvious, reiterated point: you HAVE TO MAKE MORTGAGE PAYMENTS.
Posted on 3/9/09 at 10:50 pm to TortiousTiger
quote:
Lets add that in. Property tax for 160k home without my homestead was about 1200 last year. -1200. -118 a month for insurance. a one time sunk cost of 3k for closing.
That brings the cost of buying down around 18k for 5 years.
You really think that will be more than 80k over a five year period?
For the last time, you are also paying a mortgage payment.
Posted on 3/9/09 at 10:51 pm to GeneralLee
quote:
So should I rent or buy??
I bought, see my previous posts.
Posted on 3/9/09 at 10:52 pm to Cash
quote:
For the last time, you are also paying a mortgage payment.
No shite. This is calculated into the loss of equity.
Posted on 3/9/09 at 10:52 pm to SPEEDY
nice article, thanks
Posted on 3/9/09 at 10:53 pm to GeneralLee
quote:
I can get a decent starter house in my area for around 150k, or I can rent a house for about $900 per month. If I buy a house this year I can get the $8000 tax credit. I have a credit score approaching 800, and am very fiscally responsible. I could put about 10k towards a downpayment, and would plan on living in this house for at least 5-10 years. Prices should not depreciate more than 10-20k on the 150k house. So should I rent or buy??
It's tough to know because there are many variables. Where will you be living and how inflated is the real estate market there? How safe will your job be, and in what field? Do you value mobility a lot, or are you the type that likes to stay in one place for years. Prices could/will easily depreciate more than 7 to 15 percent in many areas in the next decade. Not knowing these variables I will say rent simply because you are so young and what happens if you get stuck with a house you can't sell and need to relocate? Remember that you are taking out a loan of $140,000 in this situation, which is money you have to pay back. That's a huge commitment.
Posted on 3/9/09 at 10:53 pm to Tiger JJ
quote:
You continue to miss the obvious, reiterated point: you HAVE TO MAKE MORTGAGE PAYMENTS.
I give up.
Posted on 3/9/09 at 10:55 pm to GeneralLee
quote:
I'm going to start work later this year, will be paid around 70k starting salary.... probably be making 100k after a couple of years. I'm 23, no kids, no girlfriend, just me.
I can get a decent starter house in my area for around 150k, or I can rent a house for about $900 per month. If I buy a house this year I can get the $8000 tax credit. I have a credit score approaching 800, and am very fiscally responsible. I could put about 10k towards a downpayment, and would plan on living in this house for at least 5-10 years. Prices should not depreciate more than 10-20k on the 150k house. So should I rent or buy??
If you put 10K down and get a 5% mortgage, your P and I is 750/month. Throw in insurance, property tax, maintenance, etc. and you probably get it up to 900 or higher.
Posted on 3/9/09 at 10:55 pm to Cash
What about after you pay off the house,is this better than renting. 
Posted on 3/9/09 at 10:56 pm to TortiousTiger
quote:
koolaid
im in MT. im not even thinking politics. no agendas.
it just doesnt look good to me, factoring in banks, unemployment, politics. unless youre from where im from (
haynesville shale), i wouldnt have much confidence. the only way i would buy something is if i got it for 60-75% off current appraisal. if you can find something that you think is a great deal and will keep its value over these times, then more power to ya
Posted on 3/9/09 at 10:56 pm to LSUtoOmaha
(no message)
This post was edited on 3/17/09 at 10:10 am
Posted on 3/9/09 at 10:58 pm to TortiousTiger
mortgage payment + insurance + tax = 1080/month on a 160k home.
rent for said home is 1400.
Lets pretend EVERY DIME of the mortgage, insurance, and tax is a sunk cost. Over a 5 year period, this would be about 65k.
The RENT for the same five years would be 80k.
rent for said home is 1400.
Lets pretend EVERY DIME of the mortgage, insurance, and tax is a sunk cost. Over a 5 year period, this would be about 65k.
The RENT for the same five years would be 80k.
Posted on 3/9/09 at 10:58 pm to TortiousTiger
quote:
No shite. This is calculated into the loss of equity.
What the hell could you possibly even think you mean? Forget about "loss of equity". In your example, you said the property value went down from 250 to 180 - that's 70K. That has nothing to do with how much equity you have. And you had to make mortgage payments the whole time it was going down.
Posted on 3/9/09 at 10:59 pm to TortiousTiger
quote:
For the last time, you are also paying a mortgage payment.
No shite. This is calculated into the loss of equity.
no you didn't
Posted on 3/9/09 at 11:00 pm to Tiger JJ
You just have to look at it as a matter of living preference and not investment. If you think your salary is going to ramp up that much that quickly, and starting off that high to begin with, I would say it is unlikely that you're still going to want to be living in some starter house/trackhome in five years. Wouldn't you rather just wait and see how shite shakes out for a year or two (job, economy, life in general) and be in a position to buy a house that is more to your liking? Being in a relatively similar position, although I don't think I'll be making anywhere near that type of money, that is my plan, so take that fwiw.
Posted on 3/9/09 at 11:00 pm to Tiger JJ
quote:
What the hell could you possibly even think you mean? Forget about "loss of equity". In your example, you said the property value went down from 250 to 180 - that's 70K. That has nothing to do with how much equity you have. And you had to make mortgage payments the whole time it was going down.
thats your example chief.
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