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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 68618  
Subject: Re: Here's A Good Question Date: 2/2/2007 2:37 PM
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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.


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