4 ms·

But remember that the $2k / month you pay to the landlord covers: property taxes, hoa fees, interest costs, and investment losses due to not being able to inves

by xur17 4y ago

But remember that the $2k / month you pay to the landlord covers: property taxes, hoa fees, interest costs, and investment losses due to not being able to invest the money in stocks. Property tax alone is quite significant in my area, and that's something you are ALWAYS going to pay. I actually have a spreadsheet that compares the total cost of ownership when buying and renting over a 10 year period. Believe me, it's really not as cut and dry as you and others are making it out to be. Quite honestly, for me a ton of it hinges on how much the house appreciates in value (since you're making a levered bet via a mortgage).

karmakurtisaani 4y ago
I suppose those costs vary depending on where you are located. My understanding is that where I am (Switzerland), the taxation in fact works in your favour and people often take second mortgages for "repairs" when they're close to having paid out their first ones. The downside here is that you have pay 20% of your mortgage in order to get the rest, and when houses typically cost 1M or more, you can imagine it's not easy to actually buy a decent house. Another thing here is that you can be reasonably confident that the lot you buy will increase in value, so it also biases my point of view.
- pwinnski 4y ago
  Those things are also true here! A "home equity line of credit" or HELOC is very common, especially when interest rates are incredibly low, as they were before last year. Also, most people understand that other than some edge cases like 2008, homes rise in value over time, consistently and dramatically. Most people know of situations where a retired couple bought a house for less than $100k many years ago, and now it's worth five to ten to twenty times that much! That's about where most people stop thinking. Clearly house values go up, I don't want to end up 30 years from now having paid rent and having nothing to show for it, I'm gonna buy a house. There's even one more factor, which is the US federal tax structure gives you a big break on any interest you pay on a home mortgage, so many people think: I get a tax break on my house payment, but not on rent. Of course, most people don't put together a spreadsheet to consider how much money that old couple might have had if they had put that $100k into a stock market index fund the same year they bought the house. Please understand, I'm not saying that buying a house is a bad investment. I'm just saying it's usually not the best investment. I don't think most people over-value buying a home, I think they under-value putting a home-sized chunk of money into an S&P index fund!
  - karmakurtisaani 4y ago
    I suppose I mostly agree with you. I certainly don't consider buying a house a good investment per se, I just want to think compared to renting since you have to also live somewhere. Thanks for the perspective, this is a question I've been thinking a lot recently and you (and others here) certainly have given me a lot to think about.
  - xur17 4y ago
    > That's about where most people stop thinking. Clearly house values go up, I don't want to end up 30 years from now having paid rent and having nothing to show for it, I'm gonna buy a house. And tbh, it isn't the worst thing in the world. Regardless of what the spreadsheets say, my understanding is that buying a house forces a behavioral change on most people - the house becomes a forced savings account.

by xur17 4y ago

karmakurtisaani 4y ago

I suppose those costs vary depending on where you are located. My understanding is that where I am (Switzerland), the taxation in fact works in your favour and people often take second mortgages for "repairs" when they're close to having paid out their first ones. The downside here is that you have pay 20% of your mortgage in order to get the rest, and when houses typically cost 1M or more, you can imagine it's not easy to actually buy a decent house. Another thing here is that you can be reasonably confident that the lot you buy will increase in value, so it also biases my point of view.

pwinnski 4y ago
Those things are also true here! A "home equity line of credit" or HELOC is very common, especially when interest rates are incredibly low, as they were before last year. Also, most people understand that other than some edge cases like 2008, homes rise in value over time, consistently and dramatically. Most people know of situations where a retired couple bought a house for less than $100k many years ago, and now it's worth five to ten to twenty times that much! That's about where most people stop thinking. Clearly house values go up, I don't want to end up 30 years from now having paid rent and having nothing to show for it, I'm gonna buy a house. There's even one more factor, which is the US federal tax structure gives you a big break on any interest you pay on a home mortgage, so many people think: I get a tax break on my house payment, but not on rent. Of course, most people don't put together a spreadsheet to consider how much money that old couple might have had if they had put that $100k into a stock market index fund the same year they bought the house. Please understand, I'm not saying that buying a house is a bad investment. I'm just saying it's usually not the best investment. I don't think most people over-value buying a home, I think they under-value putting a home-sized chunk of money into an S&P index fund!
- karmakurtisaani 4y ago
  I suppose I mostly agree with you. I certainly don't consider buying a house a good investment per se, I just want to think compared to renting since you have to also live somewhere. Thanks for the perspective, this is a question I've been thinking a lot recently and you (and others here) certainly have given me a lot to think about.
- xur17 4y ago
  > That's about where most people stop thinking. Clearly house values go up, I don't want to end up 30 years from now having paid rent and having nothing to show for it, I'm gonna buy a house. And tbh, it isn't the worst thing in the world. Regardless of what the spreadsheets say, my understanding is that buying a house forces a behavioral change on most people - the house becomes a forced savings account.