3 ms·

I dunno how rational this is, but I've always felt that when I pay my mortgage, I get equity in return, whereas when I pay rent, that money disappears into a ho

by ink_13 6y ago

I dunno how rational this is, but I've always felt that when I pay my mortgage, I get equity in return, whereas when I pay rent, that money disappears into a hole, gone forever. Further, all the carrying costs of owning (mortgage, taxes, utilities, maintenance, etc), come out to less than renting something similar. Maybe my down payment would have done better if I had bought an index fund, but now I have all this equity on top, too, whereas the return on all my rent paid is zero. Yet people smarter than me when it comes to finance publish articles like this one. So what am I missing?

julianlam 6y ago
> Yet people smarter than me when it comes to finance publish articles like this one. So what am I missing? They got lucky. There's always a hedge fund that's never lost money, until they do.
titanomachy 6y ago
> all the carrying costs of owning come out to less than renting something similar. From my experience this is really dependent on the market. When I lived in Vancouver, Canada, the opposite was true: for $X/month I could rent a much nicer place than I could afford to buy with $X/month mortgage payments. My landlord would probably have been better off selling (for redevelopment) but the market was going up fast and she didn't want to get off the ride too early. Then I moved to a different city with 40% higher rents and 30% lower housing prices, and the equation flipped. Suddenly buying made a lot more sense. Even now though, I suspect it's pretty close to break-even financially. Most of the benefits are less tangible: customization of my house, the ability to invest in improvements, the security of knowing that my monthly payment will never go up. (Technically, taxes could go up, but that means the valuation has gone up and my equity is worth more.)

3 ms·

I dunno how rational this is, but I've always felt that when I pay my mortgage, I get equity in return, whereas when I pay rent, that money disappears into a ho

by ink_13 6y ago

julianlam 6y ago
> Yet people smarter than me when it comes to finance publish articles like this one. So what am I missing? They got lucky. There's always a hedge fund that's never lost money, until they do.
titanomachy 6y ago
> all the carrying costs of owning come out to less than renting something similar. From my experience this is really dependent on the market. When I lived in Vancouver, Canada, the opposite was true: for $X/month I could rent a much nicer place than I could afford to buy with $X/month mortgage payments. My landlord would probably have been better off selling (for redevelopment) but the market was going up fast and she didn't want to get off the ride too early. Then I moved to a different city with 40% higher rents and 30% lower housing prices, and the equation flipped. Suddenly buying made a lot more sense. Even now though, I suspect it's pretty close to break-even financially. Most of the benefits are less tangible: customization of my house, the ability to invest in improvements, the security of knowing that my monthly payment will never go up. (Technically, taxes could go up, but that means the valuation has gone up and my equity is worth more.)