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Our home was $200K. If we own it for 30 years, the property taxes will average to about $180K over that time. If we have $70K expenses (roof, HVAC, etc.) then t
by wankle 4y ago
Our home was $200K. If we own it for 30 years, the property taxes will average to about $180K over that time. If we have $70K expenses (roof, HVAC, etc.) then the total would be 250K.
If we sell our home at the end of 30 years for exactly what we bought it for, no raise in value at all, 200K, then 250K of maintenance works out to around $700 per month for each month of those 30 years.
Any amount we can sell the house for over the original $200K price, reduces the taxes and maintenance down from $700 potentially to zero.
If we sell at the end of 30 years for $450K, even accounting for taxes and maintenance, we lived rent free for 30 years.
- jedberg 4y agoYou're confusing assets and cashflow. Yes, after 30 years, you came out ahead. But also, you can't sell your house when the drain breaks and you need $10,000 today to pay for fixing it. Especially if you just bought the house. Also, you forgot to account for the $180K in mortgage interest.
- Spooky23 4y agoDon’t forgot that rent goes up. Renters pay taxes too. My apartment that was $900/month in 2001 is $2200 today. Outside of some of the really stupid markets, it’s almost always better to own. You’ll be fixing that drain every year.
- wankle 4y agoI'll throw in the 180K mortgage interest and the mortgage insurance which I also forgot and wager I still come out ahead. Rent would be somewhere between $750K to $1M over that time and none of it is returned. Since we control our mortgage, we paid it off early, at around 15-16 year mark (due to my wife making me realize the importance of it). We live rent and mortgage free the rest of our lives thank God. I only wish I'd kept either of our 2 former houses instead of taking better job offers requiring moving ultimately to the bay area where we couldn't afford to buy a home. Texas is nice though! My Dad always said, buy a house as soon as you can.
- jedberg 4y agoJust use this calculator: https://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html https://www.nytimes.com/interactive/2014/upshot/buy-rent-cal... In most Bay Area markets, it makes more sense to rent than buy from a purely financial perspective. It's only if you value the ability to modify the home or have a sense of permanence that it starts to flip.
- dbjacobs 4y agoDon't forget the opportunity cost of that $200K of equity. If that money invested earned 5%/yr on average that is another $10K/yr bringing your $700/mo to $1,533/mo. If you sell at $450K after 30 years, that mostly just makes up for that opportunity cost (30yrs at 5% would be 432K).