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>I personally do not think of forced savings as a benefit; That is true only if the alternative is doing something financially productive. In this case the al
by clavalle 13y ago
>I personally do not think of forced savings as a benefit;
That is true only if the alternative is doing something financially productive. In this case the alternative is spending the money.
You are seeing the house as an investment. Your analysis is spot on when talking about a house that is not the primary residence. But it fails when applied to the primary residence because the money is being spent on housing either way...
- hhw 13y agoWhy is the alternative necessarily spending the money? If those funds can be taken to the bank each month to pay off a mortgage, why can those same funds not be taken to the bank to deposit into a retirement/savings/investment account? This analysis is specifically taking into account that money is spent on housing either way. Otherwise, we'd be comparing the ROI of purchasing a house and renting it out as a business in comparison to other forms of investment.
- clavalle 13y ago>If those funds can be taken to the bank each month to pay off a mortgage, why can those same funds not be taken to the bank to deposit into a retirement/savings/investment account? Because you have to live somewhere.
- hhw 13y agoRight. What I'm talking about is the differential between the carrying costs of ownership, and the cost of renting, which is what's often referred to as 'forced savings'. Nowhere am I saying you don't have to pay rent. If renting costs less than the carrying costs of owning (which it often is), you can take those cost savings to the bank to be invested. This should also be factored into the cost comparisons.
- clavalle 13y agoOwners of rental properties wish to make a profit. Therefore renting is more expensive, month to month, than owning a property even after factoring in all costs involved. The only time this isn't true is if the owner has a very old mortgage or outright owns the home.