Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article

Skip to comments.

There's A Simple, Unbiased Way To Figure Out Whether To Rent Or Buy
Business Insider ^ | 08/10/2013 | LEONARD BARON, ZILLOW

Posted on 08/10/2013 10:34:12 AM PDT by SeekAndFind

If you are a renter and pondering whether it’s time buy a home, one thing that might be on your mind is a rent vs. own analysis. As you can imagine, this analysis will help you determine the financial benefits of owning a home vs. staying a renter.

Many online rent vs. own analysis tools are available, but a little caution is needed, as some of these tools are very biased and skewed. Some always find that it typically makes sense to buy, while others show that you should rarely buy. Most of them look at the difference between the monthly rental and mortgage payments and take into account tax benefits, equity earned, sales prices and other variables associated with home ownership.

The biggest problem with most of these tools is that they are way too complex for the average person to understand. And because this is the biggest financial decision you will ever make, it isn’t a smart idea to just trust, while not understanding, what’s behind the analysis.

But there is a simple way to do a rent vs. own analysis that will return the correct decision the vast majority of the time for the average home buyer. And it’s completely unbiased.

(Excerpt) Read more at businessinsider.com ...


TOPICS: Business/Economy; Society
KEYWORDS: buy; homeowners; homeownership; housing; mortgage; propertytaxes; rent; renters

1 posted on 08/10/2013 10:34:12 AM PDT by SeekAndFind
[ Post Reply | Private Reply | View Replies]

To: SeekAndFind

SIMPLE DECISION MAKING PROCESS:

Ask yourself: Am I very confident that I will own the home at least five years?

If the answer is yes, it probably makes sense to buy because it will improve your net wealth.

If the answer is no, you should stay a renter because owning will most likely diminish your net wealth.

That’s it, the math is just that simple!

CLICK ABOVE LINK TO UNDERSTAND WHY IT WORKS...


2 posted on 08/10/2013 10:35:10 AM PDT by SeekAndFind
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
to me, it was always a matter freedom to able to do with my living space as I see fit... repaint vs putting in paneling, getting rid of my H2O tank for an on demand system, putting in a coal stove, adding a deck, whatever, it's my choice to make not the landlord's
3 posted on 08/10/2013 11:03:35 AM PDT by Chode (Stand UP and Be Counted, or line up and be numbered - *DTOM* -ww- NO Pity for the LAZY)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

bump


4 posted on 08/10/2013 11:24:11 AM PDT by Oratam
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Also for consideration is the ability to pay your property taxes and school taxes. I think having those taxes are wrong and communistic, your property should be yours and your family’s forever but that is a little OT for now. Let’s put it this way, try not paying those taxes for 5 or 10 years (maybe less) and then you’ll see who really owns the property. Sometimes it is better to rent and not worry about taxes and in some cases, utilities although if you have a bad landlord, it can come back and haunt you. There is a side of me that I think living like a turtle would not be bad. Buy a 1960’s era Mercury Park Lane and a bullet trailer and just take my home where I go. I also saw a Soviet Army radio truck for sale, stuff a cot and bathroom/shower inside and instant home for a ham radio operator like me. B-) The downside is if you have kids but it might be good for a single person or a couple.


5 posted on 08/10/2013 11:43:39 AM PDT by Nowhere Man ("The good times are over and someone has heisted the Kawasaki." - Me)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

Do you want to pay your own mortgage or someone else’s?


6 posted on 08/10/2013 11:48:18 AM PDT by bgill (This reply was mined before it was posted.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Nowhere Man
Also for consideration is the ability to pay your property taxes and school taxes.

Don't kid yourself. Those taxes are included in your rent.

7 posted on 08/10/2013 11:49:38 AM PDT by bgill (This reply was mined before it was posted.)
[ Post Reply | Private Reply | To 5 | View Replies]

To: SeekAndFind

The biggest variable of them all is the future of home values, and that can’t be determined by any online tool.


8 posted on 08/10/2013 11:55:20 AM PDT by Cementjungle
[ Post Reply | Private Reply | To 1 | View Replies]

To: bgill
Don't kid yourself. Those taxes are included in your rent.

I don't deny that, you're right but at least you do not have to worry about them directly. In a way, we all rent with having those taxes. We need to get rid of property taxes and school taxes completely then perhaps it would be better to own for some. I think a good start is to eliminate those taxes for seniors at least and I think there should be other ways to fund schools locally. Maybe have middle ground solution is to only have taxes when the property is mortgaged and let the escrow take care of that until the mortgage is paid off and there are no more taxes after that.
9 posted on 08/10/2013 11:56:46 AM PDT by Nowhere Man ("The good times are over and someone has heisted the Kawasaki." - Me)
[ Post Reply | Private Reply | To 7 | View Replies]

To: bgill
What mortgage? Some folks own their place outright.

/johnny

10 posted on 08/10/2013 12:03:37 PM PDT by JRandomFreeper (Gone Galt)
[ Post Reply | Private Reply | To 7 | View Replies]

To: SeekAndFind

If you wish to control your own environment buy.

If you wish others to control you and your environment rent.

The mathematical excercises are mere details.


11 posted on 08/10/2013 12:09:35 PM PDT by buffaloguy
[ Post Reply | Private Reply | To 1 | View Replies]

To: Nowhere Man

Deporting all the illegals whom we’re having to give a “free” education would cut those property taxes in half. Getting illegals off our roads and other tax payer infrastructures would eliminate the need to build more roads, etc. County operated medical centers, the same. Reduce the number of law enforcement needed. Less public housing. The list goes on.


12 posted on 08/10/2013 12:16:30 PM PDT by bgill (This reply was mined before it was posted.)
[ Post Reply | Private Reply | To 9 | View Replies]

To: SeekAndFind

I’m doing much better financially by buying rather than renting, but... Right now I’d like to be able to pull up stakes and move to a healthier economic environment. It would be very difficult to do without just walking away and destroying my credit


13 posted on 08/10/2013 12:19:21 PM PDT by Figment
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

While 5 years is a reasonable rule of thumb, there are many other considerations.

Owning makes me master of my own destiny in ways that renting can never accomplish.

I can repaint, remodel, add on, landscape, etc. Tastefully done all these things can add value to a dwelling. And, when I own, inflation is my friend. When I rent inflation is my enemy.

I have owned houses for 40 years and have never lost money on any of them. Of course, I stayed put through a few panics and mortgage crises.


14 posted on 08/10/2013 12:22:12 PM PDT by CurlyDave
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind
If you can rent for $1,000 mo from a quality owner (and bank the difference) vs buy for $3,200 mo, what would you do?

There is also the difference between buying/renting a primary residence while simultaneously owning and renting an investment property. Lots of properties available that flow positive cash in neighborhoods I would never choose to live.

It all depends on circumstances. It is definitely NOT the best move for many to buy.

BTW, for one summer in High School, I had a beat-to-death '64 Park Lane convertible with the Marauder engine and Cherry Bombs. Could seat 9 people in that car no problem.
15 posted on 08/10/2013 2:31:55 PM PDT by Macoozie (1) Win the Senate 2) Repeal Obamacare 3) Impeach Roberts)
[ Post Reply | Private Reply | To 1 | View Replies]

To: SeekAndFind

None of those financial tools actually include the
unseen bills, including the ever-creeping millage rates
assessed by the municipal government, in their
insane tax and spend policies, and theirattempts to
cover the municipal employees’ ever-expanding costs.


16 posted on 08/10/2013 6:32:05 PM PDT by Terry L Smith
[ Post Reply | Private Reply | To 1 | View Replies]

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
Bloggers & Personal
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson