No. of Recommendations: 0
GusSmed writes,

If I bought a condo, I'd only reduce my housing expenses by about $200 month -- $2400 per year. That's less than the $3,000 per year I'd get in interest on the $60,000 in a 5% CD.

But you did indeed reduce your housing expenses with a purchase, and the a 5% return on your money is more than the safe withdrawal rate when adjusted for inflation. Your rent on your apartment will certainly increase in time at roughly the rate of inflation.

You need to look at that again. Purchasing the condo only saves me $2400/year at the cost of forgoing $3,000/year interest on the CD. That leaves me $600/year in the hole. Also, for some reason Houston has a chronically overbuilt apartment market. My lease today is at the 1996 level after the landlord reduced my rent the last three years.

I know this doesn't work everywhere, but it's good to be a renter in Houston.


Print the post  


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.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! 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.