Comments on: Why renting is better (part 2)

By: bennett real estate

bennett real estate — Sat, 03 Apr 2010 23:06:43 +0000

[...] more than she can take about real estate and Delaware since Toby became an agent in July. …Why renting is better (part 2) | The Freedom FactoryYesterday's prose was very simplistic and did not take into account many of the variables involved [...]

By: CW Sangree

CW Sangree — Sun, 04 Jan 2009 04:33:58 +0000

I just ran numbers specific to my home & area values and there are several glaring problems with Mr. Bennett’s figures. It’s impossible to find rentals for 1/19th the value of the home, at least in the real-estate markets I am familiar with.

If it were possible to rent a home cheaper than purchasing, there would be no profit in renting, which doesn’t make sense. There are many homes in my neighborhood mortgaged and rented for about $200 more than the mortgage + escrow payments.

As was previously mentioned by Jim (12/2/08), rental rates would doubtless rise as properties increase in values over 30 years and that is not figured into Mr. Bennett’s analysis, either.

One other unrealistic figure is the $6000/yr home maintenance and incidentals figure. A more realistic figure for me is about 1/6th that (or $1000).

After crunching numbers for several scenarios I might face, my results proved that the homeowner would be ahead of the renter by about $500,000. I did find the exercise fascinating, however. Thanks for the food for thought!

By: jim

jim — Tue, 02 Dec 2008 17:48:23 +0000

I see a few big holes in your assumptions: a.)you assume constant rents. If the house is increasing in value (absent bubble-type conditions like the last few years where prices overshot rents) than rents would increase as well. b.)You neglect taxes on investment gains. Even if you mostly leave stocks invested, a lot of the gains comes from taxable dividends, and you will owe capital gains when you eventrually do sell. C.) You are really comparing apples to oranges since you are not going to be able to rent a house that has yearly ownership expenses if $25,000 for $15,000 (again, in a non-bubble market). If you want to live in a hovel, you can save a lot of money, whether you rent or buy. And as for those 8%/yr stock gains – how’s that workin’ out for ya?

By: » Why renting is better (part 2)

» Why renting is better (part 2) — Wed, 01 Oct 2008 07:51:52 +0000

[...] Online Marketing Bloggers wrote an interesting post today onHere’s a quick excerpt Yesterdays prose was very simplistic and did not take into account many of the variables involved in the home buying process.� Some of them play a big part in the equation and account for large swings in dollar amounts.� Below is the math which should include all of the variables involved.� My thinking may not be perfect so please comment and let me know what thoughts you have. I think in the end it is very clear which investment is the better one financially.� But many people like to own the [...]

By: Why renting is better (part 2) · Real-Estate-Investing.ExplainedOnline.Net

Why renting is better (part 2) · Real-Estate-Investing.ExplainedOnline.Net — Wed, 01 Oct 2008 07:38:51 +0000

[...] Original post by Money Advice Guide [...]

By: Why renting is better (part 2) · Real-Estate.ExplainedOnline.Net

Why renting is better (part 2) · Real-Estate.ExplainedOnline.Net — Wed, 01 Oct 2008 07:30:21 +0000

[...] Original post by Money Advice Guide [...]

By: Why renting is better (part 2) · Invest-In-Real-Estate.ExplainedOnline.Net

Why renting is better (part 2) · Invest-In-Real-Estate.ExplainedOnline.Net — Wed, 01 Oct 2008 07:19:53 +0000

[...] Original post by Money Advice Guide [...]