Posted on 10/17/2006 6:31:54 AM PDT by RayChuang88
I rent because 1) I think the real estate market is overvalued in my area right now and 2) I don't want to tie up 90% of my wealth in a single risky asset (i.e. a condo). Basic modern portfolio theory says that someone with my level of savings (I just finished school and am starting out, so I don't have much) is much better off renting and investing in a diversified portoflio of stocks and bonds.
Which is the better long term investment?
Renting is not an investment. Buying a house or condo is an investment, but by no means the only investment available. If you choose to invest in a house or condo, you have to forego investment in something else. The choice, therefore, is not just renting vs. in owning, but rather investing in a single piece of real estate or investing in a diversified portfolio of other assets, including stocks, bonds, and perhaps even diversified real estate investment trusts. For someone like me, with local real estate prices being what they are, investing in a diversified portoflio of securities and other assets is a much better deal.
Do you believe that solar panels crumble and fall off the roof once they pay for themselves?
No. It's just that with the current technology, istalling solar panels provides a really lousy return on your investment. The fact that it takes twenty years to recoup the costs makes it pretty obvious that an investment in solar panels has a negative net present value.
Would a house with a solar array be more attractive to most buyers than without?
Yes, but in most areas, the amount by which your house would appreciate would not cover the cost of installing the solar panels. If this were not the case, everyone would be installing panels.
I'll even bet you could easily recoup the costs plus some.
That's a bet you would lose, except perhaps in some very remote locations without ready access to the natioanl power grid.
If you're right, then the R&D necessary to make that nanotechnology a reality is what Google should be investing in. Spending money on the buying the inefficient, cost-ineffecitive panels currently available is a huge waste.
My understanding is that solar panel performance degrades at about 5% per year. So after 10 - 20 years they might as well crumble and fall off, it would save the cost of removing them.
Anyone who invests on just the possibility of breaking even (no possibility of profit) in more than 7 years is an idiot.
Really, Do you pay your landlord with peanuts or cash. My mortgage is $540 per month, it's been $540 for the last 14 years and $540 when I make my last payment then it's mine. Last I knew rent usually increases every couple years. Apply this concept to a generator that not only backs you up when the grid goes down but it also saves you $100 bucks a month on your utility bill and all you need is sunshine. That would be nice when the chips are down and you need the extra cash.
the amount by which your house would appreciate would not cover the cost of installing the solar panels
Your telling me you couldn't hide $30K in the price of a $200K home?
Sorry you've been misinformed.
LOL....
Probably would have been cheaper to move closer to a creek.
Voltage.
You're lucky. If I wanted to buy the equivalent of what I'm renting, I'd have to put 60K down and pay around 2000 per month. If I rent I pay 1300 per month. That means by renting I get to invest 60K now and $700 every month that I otherwise would not be able to do. Of course, that $700 in savings per month goes down over time as rents increase, but I still will be saving for a long while. That 60K and savings on my monthly payment will grow as I invest it and is mine whenever I want to take it out. If the real estate and stock markets preform according to their long-run historical averages, I'm much better off renting and investing the downpayment and the amount I save on my monthly payment, even allowing for the increase in rents over time as well as the tax deduction I would get if I bought.
By renting, I'm also not exposing myself to local real estate risk. If I were to buy a home now, my entire nest egg would be tied up in the Seattle real estate markets, which is a much more risky proposition than having my nest egg in a diversified portoflio of stocks and bonds, though being young I don't have much in bonds.
Of course, this may all change if real estate prices decline, which I think will happen. If they drop low enough relative to rents, then it may be worthwhile financially to rent. As of now, however, it's not.
Apply this concept to a generator that not only backs you up when the grid goes down but it also saves you $100 bucks a month on your utility bill and all you need is sunshine. That would be nice when the chips are down and you need the extra cash.
Maybe, but you'd have a lot more extra cash if you took the money you would have spent on the solar panels and put it into a CD.
Your telling me you couldn't hide $30K in the price of a $200K home?
Exactly. If it were that easy, everyone would do it. People aren't doing it, so obviously the increase in price you get on your house doesn't cover the cost of solar panels.
Hmmm, I have 28 Shell 165 watt panels with a 25 year on them. So far they have out performed their spec. I'll get back to you in a few years. Sure you can buy $30K in CD's but odds are you won't. People invest differently, I prefer capital improvements on things that I can see, touch and use.
Gulp.... I guess there's a lot to be said for living out in the sticks. I'm beginning to see your point of view.
Well I try to invest in appreciating assets. I have a lot more than $30k invested. So at my standard rate of return that would be something like $3,600 per year. Even at 5% that would be $1,500 a year which I am positive is more than your depreciating asset is earning you. And in 25 years I will still have the $30k.
Not that long term.
The solar cells die over time.
The solar cells don't last much longer than their payback time.
Lots of developers are converting apartments into condos. I think it's only a matter of time before condo prices start coming down. We'll see, though.
Which most likely means they're a negative NPV proposition.
Google's managers are wasting shareholder money in order to make themselves feel good. It's politically correct looting of shareholders.
Actually, it's better to have AC because you can transmit electric power a lot further with AC than with DC.
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