Re: Buying vs renting

You guys better check my maffs.

I wanted to figure out what the actual numbers were.  I took my parent's 
old house in Santa Ana. From zillow:

Santa Ana, CA is a single family home that contains 2,245 sq ft and was 
built in 1962. It contains 4 bedrooms and 2.5 bathrooms. The Zestimate 
for this house is $1,067,118, which has increased by $14,726 in the last 
30 days. The Rent Zestimate for this home is $3,764/mo, which has 
increased by $161/mo in the last 30 days.

Est. Refi Payment
$4,251/mo

4251 - 3764 = $487/month
487/month * 12 months = $5,844 per year
The mortgage & property tax deduction caps out at $10k under the new 
laws, so owning, you'd have a $4,156 advantage on tax liabilities.

10 years of house value increase = 57%
10 years of dow increase = 100%

Doing a simple savings calculator w/ annual compound interest you would 
have $97,359.64 in value plus a place to live for those 10 years. 
http://www.moneychimp.com/features/rule72.htm

For owning, you'd have a place to live, better deductions and a $600,000 
asset? (Paydown + appreciation).

Does that sound right?

Greg

On 2/28/2018 4:13 PM, Marty Halvorson wrote:
> 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.
> 
> On Tue, 27 Feb 2018, J Andrew Rogers wrote:
> "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."
> 
> The false assumption in second sentence is "the same place." In reality, 
> renters seldom want to live in the same place they're willing to rent. 
> In many cases, renters rent for a number of reasons; but chiefly, price 
> or convenience or school district for those with kids.  I moved one time 
> because the school district I was in was one I wasn't willing to expose 
> my children to.
> 
> True enough, the use of the rental unit has value, other than monetary, 
> to the renter. Plus, it's frequently the case that if the unit is a 
> place one wants to live, that an arrangement can be made with the owner 
> to contribute some fraction of the rent to a sales price.
> 
> No argument from me on the "emotional or psychological benefits"of buying.
> 
> Peace,
> Marty
> 
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