What's the better deal over the next 10 years?

[manlymatt83]

Buy a house and pay a mortgage

-=OR=-

Pay rent in a condo/apartment and take your remaining money and save it in mutual funds, etc.

What would be the better deal? Is buying a house to live in vs. renting always a better way to go?

is there a mix of the two? (cheap condo vs. nice house, for instance)

 

[DaveSimmons]

It depends on your self-discipline and where you would be buying the house or condo.

A lot of people won't save the full difference between rent and a mortgage, they'll spend most of it instead.

Some housing markets are declining now, and for years to come.

If you can just barely afford the house, you could lose it if you're laid off, or just have a sad life because you have no spending money.

I still rent, because the idea of buying a $600K condo in the Seattle area just gripes my soul. It's also nice to know that if I lose my job I could take a year off from work before finding another one.

With a brokerage account you can cash out a small part if you need to without raiding the HELOC kitty.

 

[Q]

Apt. is a money drain -- if anything get a condo

 

[Slew Foot]

A condo's probably a worse money drain than an apt. A SFH is probably the best, but RE is likely going to decline for at least a couple years.

 

[Q]

Originally posted by: Slew Foot
A condo's probably a worse money drain than an apt. A SFH is probably the best, but RE is likely going to decline for at least a couple years.

How? You can re-sell a condo but not an apt. A condo is basically a house

 

[Special K]

Try using this calculator:


link

 

[DaveSimmons]

Originally posted by: Quintox

Originally posted by: Slew Foot
A condo's probably a worse money drain than an apt. A SFH is probably the best, but RE is likely going to decline for at least a couple years.

How? You can re-sell a condo but not an apt. A condo is basically a house

As mentioned in the OP, there are two options, buy or rent and invest. For example:

1. Buy a $250K house, put $60K down and pay $1,500 / month mortgage plus property taxes, HOA fees. Get a tax write off when you itemize (but lose the standard deduction).

2. Rent at $750/month, invest the $60K + $750/month in stock index mutual funds. Just get the standard deduction on taxes but no property taxes, HOA or repair/maintenance bills.

With option 1 everything is tied up in the house, with option 2 it's in the stock market but you can sell part or all any time. You can also move across the country without needing to sell your stock funds.

Option 2 is also better if you might lose your job. You can always stop investing for a couple of months but the mortgage payment is with you every month.

 

[Ns1]

lmao


funny we're having this conversation, I just did this argument with my CFP friend last week. Full spreadsheets and EVERYTHING.

Assuming 3% rent increase, you came out ahead RENTING for the first 10 years, and then home ownership blew renting out of the water

We assumed 300k mortgage, 2200 month base rent for the first year