3 ms·

> typically: 1. rent is less than a mortgage Why do you say this is typical? It depends on what you rent, of course. If you rent a house that was purchased a l

by dahart 6y ago

> typically: 1. rent is less than a mortgage Why do you say this is typical? It depends on what you rent, of course. If you rent a house that was purchased a long time ago, it can be less. But a lot of rentals are in apartment complexes, and are newer and more expensive per square foot than equivalent purchases. I also think typically rental units are smaller than houses for most people, so I wonder whether you're really comparing apples to apples. Consider that for any given house, rent must cover the owner's mortgage, so it cannot be less than the purchase costs. > if you're renting you have an extra $X/mo to invest in the stock market. People usually use the down payment as the capital opportunity cost that you can invest as an alternative to buying a house. My question is this: statistically, how many people actually do it and make better returns than buying a house? It's one thing to talk about it being possible, and another to actually do it. I don't know how to consistently make better returns investing than I've made on my houses, and I'm not sure I have the energy to stay on top of it every month. Note your suggestion to invest instead of rent involves monthly adjustments of your investments.

theptip 6y ago
> Why do you say this is typical? It looks like I'm just mistaken on this one, it seems that in some markets rent is cheaper. I think you're right that it's not apples-to-apples though, I suspect that median rental stock is typically less well maintained than it would be if it were owned, in the markets where rent is cheaper. I think most people are indexing their price point on things like square footage, yard, location, etc., and not necessarily all of the factors that contribute to the cost of ownership to the landlord. > Consider that for any given house, rent must cover the owner's mortgage, so it cannot be less than the purchase costs. While this is true for owners that buy with a mortgage and then rent the property, I don't think this logic works in general -- it's not uncommon for the owner to own the property outright; this could be an individual that inherited a house or paid off their mortgage, or a large company where they are investing capital in houses instead of borrowing (e.g. a REIT); in that case you have a target yield to clear, but no "mortgage costs" per se. > I'm not sure I have the energy to stay on top of it every month. The standard recommendation here is to put your money in an index tracker, which has very low fees and essentially replicates the performance of the S&P 500 or whatever market you want to track. https://investor.vanguard.com/etf/profile/performance/voo https://investor.vanguard.com/etf/profile/performance/voo would be one. Anyone who bought the S&P and held it for 10 years made about 14% YoY (more like 10% if you take the last 30 years), and that's not considering the liquidity premium (i.e. you can exit your stock position whenever you need to, whereas selling a house takes time and effort).
- aries1980 6y ago
  > Anyone who bought the S&P and held it for 10 years made about 14% YoY (more like 10% if you take the last 30 years) Anyone knows a study with other than US markets where they compare local index stock performance with housing cost? E.g. Switzerland, Eastern Europe, etc.

by dahart 6y ago

theptip 6y ago

> Why do you say this is typical? It looks like I'm just mistaken on this one, it seems that in some markets rent is cheaper. I think you're right that it's not apples-to-apples though, I suspect that median rental stock is typically less well maintained than it would be if it were owned, in the markets where rent is cheaper. I think most people are indexing their price point on things like square footage, yard, location, etc., and not necessarily all of the factors that contribute to the cost of ownership to the landlord. > Consider that for any given house, rent must cover the owner's mortgage, so it cannot be less than the purchase costs. While this is true for owners that buy with a mortgage and then rent the property, I don't think this logic works in general -- it's not uncommon for the owner to own the property outright; this could be an individual that inherited a house or paid off their mortgage, or a large company where they are investing capital in houses instead of borrowing (e.g. a REIT); in that case you have a target yield to clear, but no "mortgage costs" per se. > I'm not sure I have the energy to stay on top of it every month. The standard recommendation here is to put your money in an index tracker, which has very low fees and essentially replicates the performance of the S&P 500 or whatever market you want to track. https://investor.vanguard.com/etf/profile/performance/voo https://investor.vanguard.com/etf/profile/performance/voo would be one. Anyone who bought the S&P and held it for 10 years made about 14% YoY (more like 10% if you take the last 30 years), and that's not considering the liquidity premium (i.e. you can exit your stock position whenever you need to, whereas selling a house takes time and effort).

aries1980 6y ago
> Anyone who bought the S&P and held it for 10 years made about 14% YoY (more like 10% if you take the last 30 years) Anyone knows a study with other than US markets where they compare local index stock performance with housing cost? E.g. Switzerland, Eastern Europe, etc.