“So you’re telling me you can beat an instant return on you money by taking it all and investing it in real estate?” I said. She just stared at me, all stupid like.

Stupid woman.

I bought a house and fortunately – nothing has needed much maintenance. So my costs are mortgage, insurance and $300 for upkeep.

This turns out to be $900 than renting for me. So this is an easy win.

Additionally the first number of years are all interest for a mortgage so you get to write of $20k a year (ever hear of a tax shelter – this is the key)

Next while the market will increase or decrease I am still “earning” money on my house and money to write off of taxes. Renting can’t do that for you.

Now if you want to make money – sell your house in 5-10yrs… Thats where you earn money on the principle from the bank. and protect your assets via your shelter…

sell, upgrade and move along – after doing this a few times you’ve increased your credit and worth.

however,if you cannot afford to get a 30 yr loan with 10% down, you’re probably better off renting.

if you’re going to speculate and buy a house you cannot afford, with a short term ARM you will be in trouble.

thats the only difference which most people didn’t get – but i guess they’re getting now!

Second, there are other considerations against renting, though they are not necessarily financial – who wants to rent to someone with a couple large dogs? What happens when the market heats up and the landlord decides to sell (out you go, add moving costs)? Also, I got sick of living with white walls and no garden and someone telling me how many pictures I could hang. If not renting Single Family homes, add ’shared wall/floor/ceiling’ problems. How do you quantify the value of quality of life and security?

thats why i sold my condo(for a tidy profit) and now rent it back!

So I made one comparing 10% down on a $350K property vs. renting using the same total monthly payment. Since renting an equivalent home in Colorado costs far less than purchase, the extra money is put into an investment fund along with the initial 10%.

Even with pretty agressive appreciation of 5% annually and dirt-cheap property taxes (about $2K in Colorado), I couldn’t reach breakeven in under ten years. And there’s no way we’ll be at the same address even half that long.

The standing advice to buy a home and “build equity” comes from circa World War II. And that was passed down from a time where people bought their homes (or built them) outright without a mortgage. It was fully expected that a family would not only stay for thirty years and own the home, but it would be passed down another generation or more. With the typical family moving every 5-7 on average, that advice simply isn’t as relevant as it once was.

IMHO, the advice to buy a home is supported by the huge real estate industry which takes 5-6% of every transaction plus the mortgage companies.

Re: “that big tax writeoff” that everyone loves. Both renters and homeowners get both standard and personal deductions. For a married couple, call it $10K. The only *additional* benefit to writing off mortgage interest and property taxes is after you exceed that threshold and are willing to itemize.

And it’s only a deduction from gross income, not off your net taxes. If your 2006 mortgage interest was $15K, your actual tax advantage is only the taxes payable on the extra $5K above and beyond the standard deduction everyone gets.

That’s about $1,250 for most people (25% tax bracket). To me, spending $15,000 or more in annual interest to save $1,250 in taxes doesn’t make sense.

Greetings! Here we are at our weekly roundup of personal finance Carnivals and Festivals. Our schedules are very busy these days especially since we are preparing our tax returns – several of them because of relocation. In spite of that we could publis…

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I’ll share the gist of his comments on Wednesday, so if you’re interested in this topic, check back.

Remember that these figures are over 30 years, and for remodeling, consider that most people take out a home equity loan, so the numbers would include interest paid on that loan…. and that interest can last until the mortgage is paid off (if ever). So that $300,000 could easily be $150,000 in repairs/upgrades plus interest.

i don’t know anyone who’s done 300k in repairs/upgrades on a 290k house.

Dorky Dad is correct in his numbers. WSJ is off.
I currently own 6 rental properties and I have bought and sold a dozen more. I think i know more than the average journalist when it comes to calculating costs.