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The decision to buy is prone to two major risks: 1. That the value of the property will fall. 2. That you will be offered a better job in another town and it'
by iwwr 16y ago
The decision to buy is prone to two major risks:
1. That the value of the property will fall.
2. That you will be offered a better job in another town and it's too expensive to move
- yummyfajitas 16y agoA third risk (technically subsumed by 1): your local economy tanks, driving down both your income and the value of your house. Buying a home to live in is a form of un-diversification.
- louislouis 16y agoA fourth risk: Fed raises interest rates then your monthly mortgage payments cost more than renting and hopefully not more than you can afford.
- robryan 16y agoAll of this you have essentially no control over and are exposed to for possibly a 30 year period. At least with renting you can look for a better deal after a 12 month contract ends. I'd imagine a lot of people were lured to buy by people telling them house prices would never fall and lost big.
- smiler 16y agoIf interest rates go up and the person who you're renting off has a mortgage on the place and his interest rates go up - your rent will go up.
- yummyfajitas 16y agoThen you move out and rent from someone who isn't charging above-market rates. "Mark to mortgage" == vacancy. If you want to successfully speculate on real estate (as any homeowner does, landlord or occupant), you need to be willing to take losses over long periods of time.