3 ms·

Never rent unless in a precarious situation or if just recently moved to a new city. Buy as soon as you can. You will never ever see a penny of what you paid fo

Never rent unless in a precarious situation or if just recently moved to a new city. Buy as soon as you can. You will never ever see a penny of what you paid for in rent. If you buy, even if temporary, you get all your money back, sometimes more, sometimes less, but you always get some. I lived most of my early adult life renting and I can tell you this, more than $100K wasted and no way at all to get one cent back.

alanthonyc 17y ago
Sorry, that line of thinking is dogma. Here's an article that explores this argument: http://www.smartmoney.com/personal-finance/real-estate/renting-makes-more-financial-sense-than-homeownership-21111/ http://www.smartmoney.com/personal-finance/real-estate/renti... Basically, take the "never rent" piece of advice with the same amount of skepticism that you would any other piece of advice that begins with "never." Summary: average annualized return on investment on owning a home barely beats inflation, dating back way, and that's including the boom times. Average return on investing in businesses (i.e. the stock market, your own startup), is a much better place to put your money. Not saying there is no reason to buy a house, there are plenty. But never say never.
yummyfajitas 17y ago
Mathematical identity: price to own = price to rent + speculative ownership premium + transaction costs If you rent, you get to keep that speculative ownership premium and the transaction costs. An additional problem with owning is that your investments are bound to your living situation. Orthogonality is good. I can change my living situation without even thinking about my investments.
- pg 17y ago
  On average the owner does get something in return for the speculative ownership premium, though, so you have to factor that out.
- randallsquared 17y ago
  Ownership and renting do not have that simple a relationship; it's easy for them to get out of sync such that renting is more expensive than owning, for a time.
dionidium 17y ago
This is so far from the truth that you couldn't possibly be doing anything but repeating something you've heard without independent verification. If you have to borrow money, then you have to pay something akin to rent, except you pay it on the money borrowed, not the property itself. Second, under standard mortgage amortization schedules, nearly all of your early payments go toward interest (and by corollary, very little goes toward principal). Length of ownership, prevailing interest rates, and potential maintenance costs should all be factored into a home-buying decision. It is far from obvious that owning is better than renting.
veteran 17y ago
Here is something for you to feel good -- http://patrick.net/housing/crash.html http://patrick.net/housing/crash.html
- ryanwaggoner 17y ago
  I think this is the guy who from 2005 - 2008, was constantly predicting a 50% collapse in property values in SF within the next few months. Not saying he was wrong about overvaluation (though it wasn't rocket science), but I wouldn't try to time the market based on his advice.
ryanwaggoner 17y ago
I used to think this, until I moved to SF and actually ran the numbers. And running the numbers for rent vs. buy is complicated when you do it right, because you're forecasting things like inflation, interest rates, how long you intend to stay, etc. Here's the best calculator I've seen: http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAP...

alanthonyc 17y ago

Sorry, that line of thinking is dogma. Here's an article that explores this argument: http://www.smartmoney.com/personal-finance/real-estate/renting-makes-more-financial-sense-than-homeownership-21111/ http://www.smartmoney.com/personal-finance/real-estate/renti... Basically, take the "never rent" piece of advice with the same amount of skepticism that you would any other piece of advice that begins with "never." Summary: average annualized return on investment on owning a home barely beats inflation, dating back way, and that's including the boom times. Average return on investing in businesses (i.e. the stock market, your own startup), is a much better place to put your money. Not saying there is no reason to buy a house, there are plenty. But never say never.

yummyfajitas 17y ago

Mathematical identity: price to own = price to rent + speculative ownership premium + transaction costs If you rent, you get to keep that speculative ownership premium and the transaction costs. An additional problem with owning is that your investments are bound to your living situation. Orthogonality is good. I can change my living situation without even thinking about my investments.

pg 17y ago
On average the owner does get something in return for the speculative ownership premium, though, so you have to factor that out.
randallsquared 17y ago
Ownership and renting do not have that simple a relationship; it's easy for them to get out of sync such that renting is more expensive than owning, for a time.

dionidium 17y ago

This is so far from the truth that you couldn't possibly be doing anything but repeating something you've heard without independent verification. If you have to borrow money, then you have to pay something akin to rent, except you pay it on the money borrowed, not the property itself. Second, under standard mortgage amortization schedules, nearly all of your early payments go toward interest (and by corollary, very little goes toward principal). Length of ownership, prevailing interest rates, and potential maintenance costs should all be factored into a home-buying decision. It is far from obvious that owning is better than renting.

veteran 17y ago

Here is something for you to feel good -- http://patrick.net/housing/crash.html http://patrick.net/housing/crash.html

ryanwaggoner 17y ago
I think this is the guy who from 2005 - 2008, was constantly predicting a 50% collapse in property values in SF within the next few months. Not saying he was wrong about overvaluation (though it wasn't rocket science), but I wouldn't try to time the market based on his advice.

ryanwaggoner 17y ago

I used to think this, until I moved to SF and actually ran the numbers. And running the numbers for rent vs. buy is complicated when you do it right, because you're forecasting things like inflation, interest rates, how long you intend to stay, etc. Here's the best calculator I've seen: http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAP...