UnThreaded | Threaded | Whole Thread (67) | Ignore Thread Prev | Next
Author: sykesix Big gold star, 5000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 886543  
Subject: Re: Being a renter rocks! Date: 4/28/2003 9:06 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
Aren't I missing out on the tax advantages? Perhaps, but I have many other tax sheltering strategies that I take advantage of. The tax advantages of home ownership would not (in my case) come close to compensating me for the increase in virtually all other housing costs, such as maintenance and property taxes, not to mention the "opportunity cost" of not being able to have all that money put to use in better investments..

I too agree that residential real estate is oversold as an investment, but I think you're exaggerating the downside. First you have to compare apples to apples. You have to presume that your comparing renting the same size home (or condo, townhouse, whatever) to buying the same size house.

Some points I want to address (I only have a couple minutes so I'll do it bullet format):

1) Rent is not neccessarily cheaper. It can be, but not neccessarily. And if you think about it over the long term renting has to be more expensive. You pay all costs to the landlord, plus his profit. You might be able to take advantage of short-term price advantages (by short term 5 or so years) but over the long term you're going to lose.

2) Taxes, maintenance, and insurance. You pay those if you rent as well. Your landlord doesn't take care of those things out of the goodness of his heart.

3) Equity. If you are buying you are at least getting some equity with your monthly housing cost. Rent money just vanishes. Even though most of your intial payments go towards interest, you still get to keep all the price appreciation. Frex, you buy a $200,000 home which appreciates at 4% for three years. The house is now worth $224,000. If you were to sell, you'd get to keep the $24,000--tax free.

4) Inflation is your friend. Ask your parents how much their mortgage payment was/is. Its a ridiculously small amount. When they got it it was large, but 25 years later its laughably small. Thanks to inflation, the home owner's real costs become cheaper and cheaper over time.


Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (67) | Ignore Thread Prev | Next

Announcements

Foolanthropy 2014!
By working with young, first-time moms, Nurse-Family Partnership is able to truly change lives – for generations to come.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Economic Implications of Cuba
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement