Anything paid in your monthly housing expense in excess of reduction of principal or opportunity loss from allocation of capital to RE is essentially rent. You’re paying it whether you own or not. If you look at it from that perspective the question is simply how much you capital you want to allocate to RE.
The other deciding factors are non-financial i.e. stability and independence of ownership vs risk avoidance and liquidity of being a renter.
True. But Analyst Forum isn’t into objective analysis…
…they are into postmodernism (everything is subjective, something is valuable cause I “feels it”, etc).
Who would of figured all the arguments against buying are from the NYC crowd.
Would “have” figured…
I remember ohai mentioning something that the current rental yields there were like 2 percent. At 2 percent renting is the obvious choice. Unless of course price appreciation made up for it. Which could make sense.
and if that is the case pretty sure most niggas there can’t afford shit
True KR - I was just adding color on the intangibles of home ownership.
Yayy - I’m afraid you are probably spot on too - the RE market very well may pull back in the years to come. I’m hoping cities such as Boston, NYC, etc. remain rather immune compared to the greater RE market.
false. no way you’re walking into a kroger and getting jacked about kroger nachos. thin cantina tostitos are the bomb. tostitos salsa’s $hit though.
also, a major factor in the buy decision is do you want a wife or something like a wife? if yes, you’re probably going to buy even if it costs more.
Depends on a wife 
Indeed, go Asian. 
^she love long time?
https://howmuch.net/articles/cost-of-renting-vs-owning-a-home-in-each-state
saw this intersting article. florida is the only play where it is cheaper to buy than rent in usa.
Lets make some assumptions
You have 200K in cash and you choose to buy a condo. Maintenance + HOA cost on the condo are 2.5% of home value on average per year, so $5000 a year or ~$400 a month on average. You do some research and buy in a low tax town so property taxes are 2% ($4000 yearly) and insurance is $400 a year or ~$30 a month. Total monthly cost = ~$800 or about ~$9500 a year. You bought a 2BR with 200K and can rent the 2nd room for $800 a month so now costs are $0 monthly or $0 annually (Rent income = $800 and monthly expense =$800 so 800 - 800 = $0)
Say you have 200K in cash invested in the market and return 4.5% net of taxes and inflation (8% gross - 2% infl *.75 taxes). Your net return is $9000 a year. You pay rent of $750 or $9000 a year so you net $0 here too…
In scenario 1 your cost to live with 200K invested is $0 yearly
In scenario 2 your cost to live with 200K invested is $0 yearly
I would take scenario 1 everytime
The numbers dont matter too much (obviously be smart when buying) but the biggest difference between the 2 scenarios is one has way more volatility than the other. In one scenario it doesn’t matter what the market does because your cost (profit/loss) will remain virtually the same month to month and year to year. If we go back to the Sharpe model then alpha (in this case the cost to live) / STD of returns means if two options have the same expected return but one has lower volatility then choose the one with less risk.
That’s my take and a thank you
so if your roomate turns out to be a psycho how does that change the equation?
“1. Puerto Rico - 85% cheaper to rent than buy”
Paulson bought all the real estate for himself or what?
As an owner you have more options like: raise the rent, boot them and deduct loss of income from accrued rental income, or sell your house and move far far away. As a renter your only option is to move away. Who is better in the psycho roommate situation? I think its pretty even so no changes.
Creating a super simple model and ignoring a ton of relevant stuff you all stated I would follow this
Take the monthly rent and divide by .008 and thats the fair value IMO
$2000/.008 = $250,000
If I owned the house I’d try to rent it for atleast 0.8%+ = 250,000 * .08 = $2,000+
If I were a renter I’d want to rent for 0.8% or less if that’s not possible I would consider buying.
Depending on where you live, renters can have more rights than the owner. Like its great collecting rent until the renter decides to stop paying you then your monthly cash flow goes to $0, or, they like to smoke dope and turn your place into a mini grow op. Sometimes it can be really tough to evict a bad tenant, it can take months and months, all the while you are still missing out on rent, potential for costly legal bills etc.
If you don’t own rental real estate than get out of this thread with your broke a$$. Let the real players talk
Yea there are risks involved with rental property just like there are risks in investing in the market. That’s what some due diligence and security deposit is for, to hedge some of the risk. Ok, I would agree being a renter in a bad roommie situation is easier than being an owner. I personally haven’t had any bad experience…