Re: Buying vs renting

This conversation has been surprising.

The USA Today articles represent a pretty solid consensus. Home values rise
more slowly than the stock market, therefore you should grow your net worth
by moving assets over. I expected the hardcore rationalism in FoRK culture
to reflect this.

Instead, not a single person is living in accordance with it.

Arbitrage opportunity? Or is original math wrong, and how?


On Wed, Feb 28, 2018 at 8:09 AM, Lucas Gonze <[email protected]> wrote:

> That all makes sense but the last part. His friend's estate would have
> been worth more if he'd taken the month by month savings and put them in a
> stock index fund.
>
> On Feb 28, 2018 7:24 AM, <[email protected]> wrote:
>
>> I've read the responses and the best example I have is the following:
>>
>> My father joined the US Navy straight out of High School along with
>> his best friend.  They both served in the USN for 20 years and both
>> retired with full benefits. They both got married at around the same
>> time and they both had 2 kids.  They both were rotated around the
>> country every 2 years.  The major difference is my father always
>> bought and sold a private home (every 2 years) when changing duty
>> stations.  His friend always stayed in on-base family housing paid
>> for by the USN.  When they both retired to their original home town,
>> my father had bought his home outright ($185,00.00).  He didn't have
>> a monthly house payment for a 1600 sq/ft house on a wooded 1 acre lot.
>> His friend also bought a similar house ($165,000.00) 5 miles away on
>> similar property and had to pay $1024.00 month out of his
>> retirement,  (which my father  didn't have to do).  My father, with
>> the savings, was able to  buy a boat and RV, his friend just scraped
>> by.  When my dad died his estate was worth approximately $425,000.00
>> and when his friend died, his estate was worth around $35,000.00.
>> I find this was the best argument for buying over renting (when
>> renting was free in this situation).
>>
>> Regards
>>
>> Sent from my IBM Selectric III
>>
>> ----- Original Message -----
>> From: "Friends of Rohit Khare" <[email protected]>
>> To:"FoRK Rohit Khare" <[email protected]>
>> Cc:
>> Sent:Tue, 27 Feb 2018 22:00:27 -0800
>> Subject:Re: [FoRK] Buying vs renting
>>
>>  > On Feb 27, 2018, at 3:03 PM, Marty Halvorson <[email protected]>
>> wrote:
>>  >
>>  > Despite Tom's excellent thoughts on the subject, my observation is
>> this: All the money spent renting is benefiting only the owner of the
>> rental unit.
>>
>>  Presumably you get use of the unit you are renting. The common
>> fallacy of renting as “throwing away money” is predicated on the
>> renter and the owner having an identical cost basis for the same
>> place. This assumption is rarely true. Renting is often a way to split
>> the difference between your cost basis to buy and the owner’s lower
>> cost basis. In such cases, there is literally no way for you to come
>> out ahead by buying the same place no matter how you try to explain
>> the numbers unless you are loaded with cash (which is probably a bad
>> investment of said cash). And this is the case more often than not in
>> the US.
>>
>>  I find the arguments that some people gain emotional or psychological
>> benefits from buying more compelling than arguments for financial
>> benefits. Of course, the calculus is a bit different if you plan on
>> living in the place you buy for the rest of your life. Admittedly, I
>> have not gotten to the “last place I am going to live” stage yet.
>>
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