How is renting cheaper than buying a house?

Intuit what!
Apr 13 34 Comments

Topic says it all.

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TOP 34 Comments
  • Google SergeyBlin
    It costs less
    Apr 13 1
    • Netflix bingos
      This. Simple math.
      Apr 13
  • LinkedIn stuffy🐷
    It costs less in the short term but costs significantly more in the long term.
    Apr 13 7
    • Facebook public2
      Suppose inflation could stop or reduce in the future sure.
      Apr 13
    • Pandora / Eng joystick
      Long-term in California means having to pay for earthquake insurance at some point or losing your equity in the upcoming 8.0 quake.
      Apr 13
    • Facebook public2
      Never buy earthquake insurance. But yep earth is fragile and the entire west coast could disappear tomorrow or in a million years. If you somehow survive don't think you will care about a lost house lol. Long term anywhere land can be wiped out by a variety of man made or natural disasters.
      Apr 13
    • Pandora / Eng joystick
      “Somehow” is not an accurate estimation of risks. There are state reports that use data from various outcome models. The death toll won’t be that large and most of the infra will be restored within a month. It’s unlikely that you will die in this earthquake. If your building is built in compliance with recent California codes you will walk out without major injuries, but you will have to rebuild the house.
      Apr 13
    • Facebook public2
      Well then that isn't a big earthquake. Make sure your house is well built so you dont have to rebuild but if you not a big problem. Most homes can be rebuilt for 500 to 1m. The land is where all the value is and government will help incentivize it. Retrofitting isn't very costly and you can do a steel foundation for under 100k.
      Apr 13
  • Oath / Mgmt Atinlay2
    A lot of ways! (Answer says it all)
    Apr 13 0
  • LinkedIn ask_tools
    If mortgage interest+HOA+property tax+maintenance <= rent, buy. Else wait.
    Don't add the principal portion of the mortgage.
    Apr 13 5
    • Facebook / Eng
      Gkurhhd

      Facebook Eng

      PRE
      Microsoft
      Gkurhhdmore
      Mortgage interest + HOA + property taxes + maintenance - tax deduction - mortgage_balance*0.02 (target inflation) <= rent
      Apr 13
    • PayPal tu57pdl
      Facebook got it right
      Apr 13
    • Google anons2
      Not quite. -(equity invested in stock market instead*return)
      Apr 13
    • Google ovBk62
      Yup, exactly. There's an opportunity cost involved with buying a house.
      Apr 13
    • New hqWe60
      and thats why you work at facebook and not google
      Apr 16
  • Dropbox rawhide
    It’s just a simple mathematical equation.
    Apr 13 0
  • Microsoft TonyM
    You build no equity. It’s just another expense. Buy if you can
    Apr 13 1
    • Pandora / Eng joystick
      Taxes, interest and maintenance also just expenses. You could build equity in something else. It’s all subjective.
      Apr 13
  • Cisco wECx28
    in Bay , with new cap of 750k on mortgage interest deduction, high property tax, cap on state tax deduction...renting seems cheaper in short term
    Apr 13 2
    • Intel restlesss
      What do you mean by short term? How long do you think?
      Apr 13
    • Cisco wECx28
      couple of factors to consider : with more apartments coming up, the rents are getting stabilized or not rising crazy, for the high housing prices the rental income does not cover the mortgage with a 20% down. If the housing prices gets a correction or the mortgage interest deduction goes up, buying will be better
      Apr 13
  • Pandora / Eng joystick
    You need to compare two specific properties that satisfy your needs. One of them you could rent, the other buy. Now calculate how much money you will pay to own the property (subtract annual principal payment from all other costs of owning the house: taxes, interest, insurance, maintenance, etc) and compare that with the rent payments. It may or may not make sense depending on the kind of mortgage you get. With ARM, it could be cheaper to “own” for a few years without building equity. It’s all subjective, but renting obviously offers you a lot more choices, so it’s easier to win by renting. You can argue that a house is an investment, but it’s important to diversify your investments and most people don’t have enough cash to do that while also owning a house.

    I would think you knew the basics being employed at Intuit. TC or GTFO.
    Apr 13 1
    • Pandora / Eng joystick
      All good points ^
      Apr 13
  • Nvidia groovi
    I did similar calculations in 2009 when rent for 1 bed in South Bay was 1050 in decent communities and didn’t buy. Glad I didn’t do the same mistake again and bought in 2013
    Apr 13 0
  • NewRelic m821
    When you buy, your current mortgage rate is the highest you’ll ever have to pay for housing. (Mortgage isn’t inflation adjusted so in 25 years that mortgage is looking darn cheap. Plus you may get an opportunity to refi at a lower rate in the future) When you rent, your current rent is the cheapest you’ll have for housing. (Landlords will always raise your rent. At best the increase is just the rate of inflation but at worst, the market you live in explodes and your rent could double in just a few short years).

    There are all kinds of other things to add to it like deductions and rent control but the above fundamental argument will always hold true.
    Apr 13 0
  • My mortgage and HOA is cheaper than equivalent rent
    Apr 13 2
    • Oath / Mgmt Atinlay2
      Until you have to replace a roof
      Apr 14
    • Ya, that will get you
      Apr 14
  • LinkedIn EngAdvice
    This question starts on the wrong foot. You should be asking: when is renting cheaper than buying?

    And the answer will depend on a lot of things.

    OP, at least throw in some assumption to narrow down the answer space.
    Apr 13 0
  • Apple IDmn34
    I am renting a house in Mountain View for $4000. It’s worth about 2M. Mortgage of a 2M house is much higher than rent.
    Apr 13 0
  • Jet.com / Other
    gtfoorgtfo

    Jet.com Other

    PRE
    Starbucks
    gtfoorgtfomore
    If avg monthly rent is >1% of property cost, it makes sense to buy. Otherwise stocks are better.
    Apr 13 0
  • Cisco wECx28
    tax deduction parameter can be 0 if standard deduction is higher than qualified mortgage interest deduction
    Apr 13 0

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