Quote:
Originally Posted by Chatbrat
Ok boys and girls I got my degree in acc't & mg't from Baruch College in NYC. I was taught that a person who rents can be way ahead of a person who owns a house. For the following reasons:
1) interest on a mortgage negates most so -called capital gains.
2) taxes combined with discretionary improvements also negate capital gains
3) having most of your assets locked up into a non liquid asset diminishes opportunity investing
4) real estate like all investments are not guaranteed
5)renters can walk away , so called owners can't
6)fees to realtors also negate capital gains
After backing out every $ spent on a house that you've owned for 30 years & if you have mortgage--the odds are you didn't make a thing--but you felt superior to a renter, who most likely, over the same period ended up with more retirement $$'s
|
Good analysis, EXCEPT one thing----you have to live somewhere!
let's say I bought my house in 1987 for 125K, and put 200K into it over the years for 325K cost basis. And let's say I sell it for 425K. But I paid about 140K in interest and 160K in property taxes, so I'll be 200K "behind" as an owner. But 200K over 28 years = the equivalent of renting for $595/month.
Trust me, you couldn't rent the property I own for 595/mo. Maybe 2595/ mo. would be closer