So thanks to a long bull run in TC I have been seriously looking to move into a house in the range of $1.2mm - $2mm in NY/NJ region. After crunching numbers and looking at all the data it's obvious to me that I would be throwing money away. These are the top reasons I would rather rent a home or luxury apartment of a similar value instead of buying it: 1. Taxes Even in NJ were taxes are about half as in NY it still doesn't make sense to pay this on top of your 30 year mortgage with interest. Based on my numbers this is akin to paying a 30% monthly premium as compared to a renting a similar space. 2. Downpayment This is a huge opportunity cost. This combined with the first point is like giving a landlord 2-3 years of rent up front to pay a 30% premium every month and owe a 30 year debt. Why the FUCK would I ever do that?!?!!!!?! 3. Maintenance& Repair Now everything is on you. That roof leaks, you have to fix it. Sink hole... fix it. Pool got fucked... too bad. Maintenance for a home is an additional $1,000 a month in my scenario. Pros: Seriously I only see two reasons to buy right now: 1. You absolutely need more space(sqft). Most available house are for sale and not rent because everyone is trying to get rid of this new toxic asset class. So if you really really need more square footage and are willing to give up 2-3 years of savings and pay 30% more than you were every month, then yeah buy. 2. You are moving away from a growing bustling city. You went to retire or just don't care anymore, so you're moving away from a high TC metro area. You would be crazy to rent from your local yokel. Buy in this case. All other claims of home appreciation, and owning where you live or "paying yourself" are totally dumb made up and burn a hole in your bank account. There probably was a time in the US we're buying a home made sense... that's definitely not now. Or am I wrong?
Your math is bad and you’re an idiot. Ok summed that up.
Seconded. OP is a buck too clever to actually be smart. So many of these dumbfucks on Blind .🙄
Could you clarify as to why their math is bad?
When you rent, you're paying the same amount for zero equity.
Depends on market conditions. Real estate is a safer investment bet than crypto.
You did one multiplication? Is that the math?
3% interest loan is literally loaning money for free for a real estate investment because of inflation. You can always rent it out and let tenant pay for the mortgage. It's almost like no sense to not buy a home unless you are lazy or don't have any money for down payment or don't plan to stay in the area for long. Good luck paying others mortgage
One thing you didn't mention is how rent goes up over time with inflation, whereas purchasing a home locks in your monthly payment. If you're in an area where housing is limited, this can be a very good hedge against inflation.
Instead of paying a 20% or 30% downpayment, you could use that money to negotiate a 3-4 year lease to lock in rent.
Good luck with negotiating a multi-year lease that doesn’t include staggering increases in rent payments YoY (generally, you pay for the privilege of NOT moving).
Read about leverage, no one will lend you that much money at that low a rate. With the tax benefits and historical average asset growth, almost all cases I calculated came out on top after 30 years.
If you pay down 20% on a 1 mil home and it appreciates 10% in two years, you almost got 50% return on the deposit money due to “leverage”. Plus you avoided throwing away rent money and built equity. If you cannot understand this only God can help ya
The downside to that is the building can easily also go down 10 percent, I. Which case, you've lost half your money. It's no different than had I gone to my brokerage account and bought options on margin. The only caveat is that the cost of borrowing is stupidly low in real estate. That said, the problem is that everyone and their moms are borrowing money to fund a down-payment so they can then borrow more to buy property. That type of bubble economy for the most part is not sustainable. And when sharp price corrections meet high leverage, it's not a pretty sight.
You are nothing but “bear”. Housing rarely goes down (forget 2008 for a moment) and there is no bubble in housing. Look at TCs of blind members and prices of homes are well justified. So many techies have 2-3 or more homes
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You’re missing a major pro - you get to do what you want with the place. You can paint, landscape, remodel, etc to your exact tastes. I think there is an incredible amount of freedom in that. With renting you’re stuck with the owner’s tastes. That kind of work is not free - far from it, but if you enjoy DIY’ing then it can be a big part of deciding to buy.
There's also an incredible amount of freedom in renting anywhere you want year after year
Depends on what your family situation is. You definitely don’t want to be moving your spouse and 2 kids year after year, but if you’re single or just have one SO, could make more sense.