Originally Posted by Khantahr

That math doesn't math. In three years the interest would be around 100k, not 210k. That's assuming 7% interest and no down payment.

Originally Posted by crewdawg

Lol, too many edits gonig down another rabbit trail that I cut out. Corrected. $231k was if you held it 10 years at 6.8% with a 20% down payment.

Originally Posted by crewdawg

There are plenty of great YouTube videos or articles that explain it better than I type out. WRT to buying investment properties, not all class of investment properties are created equal. A triplex may cash flow nicely while the SFH breaks even. Also remember that many of landlords bought at much better terms and thus their rent isn't as high. If you look at the data, many of the small-time landlords have rents well under market because they either don't know the market or are scared of a vacancy washing out their profits. Anyway, if your kids are looking to buy a house that they plan to spend less than 10-15 years, it's worth exploring both options.







I'm 100% with you on the long-term aspect, I just see too many people who listen to the old adage that buying is better and that's just not always true, especially in today’s market. Depending on who you believe, the average American moves every 8 to 13 years. In that case, which isn't so uncommon for airline pilots, it's not so cut and dry. WRT your properties that had solid returns, did you account for your mortgage interest paid to that point, real estate taxes, insurance, repairs, closing costs, inflation, etc...? On a 3-year hold your down payment money being in the market is admittedly small, but it's not nothing and something worth considering. Clearly this is a bigger factor the longer you stay.



I'm not saying this is you, but so many people just go, I bought it for $350k and sold it for $450k... I killed it! That's just not the whole story. Never mind that with inflation, $350k in 2021, is $421k in today’s dollars. With the interest rates of 2021 (assuming 2.5%), they spent $20k on interest, so they're back to break even. Now add taxes, insurance and repairs. This is best case with 2.5% interest, which we'll be lucky to ever see again. Let’s look at a more relevant example of today...



Since you brought up military, I went and looked in the neighborhoods that I've seen some of my AF buddies have lived in while based at Nellis. I found a nice 3bd/3ba house renting for $2300/month. A comparable house just down the street recently sold for $430k. A mortgage on that is about $2700/month (guessing low on re tax/insurance). With current interest rates, in a 3-year assignment, they'll have spent $70k, just in interest. That's a lot of appreciation to overcome and this doesn't factor in RE taxes, insurance, mx, closing costs on both ends, realtors, etc... The cost to rent over the same 3 years...$83k and your spouse didn't have to deal with that hot water heater failure as you boarded the charter plane, headed out on a deployment (true story lol). Is this an extreme scenario, maybe, but we're in really odd times in the housing markets. All I'm saying, is do the math.

Originally Posted by m3113n1a1

And let's say that they can sell the house for 600k 10 years later (a 40% increase), then you have to take into account real estate agent commissions and other associated costs with selling, let's conservatively say 6% (36k). So you get 564k from the sale. You pay off the roughly 300k remaining on the loan. Now you have 264k left. Which sounds good, but you paid 220k in interest so now you're looking at 44k "profit." But wait, you put 20% down (80k) so now you are actually 36k negative. And that 80k down payment invested making an 8% return would be 177k after ten years. So you're actually 133k down. And this isn't even including the cost of maintenance and repairs and all the other associated phantom costs that come with owning a home. So using an extremely conservative 1% of the purchase price per year on maintenance that's another 43k for mx over 10 years. So now we're down 176k (note: this doesn't even take into account the portion of your payment that went to principal. Just interest). Owning does beat renting over the long term usually, but it's not a home run like everyone seems to think it is (sometimes if you get lucky with timing it is). Your primary home really isn't an investment either, if you like a house and want to live in it, buy it. But just don't try to rationalize it by telling yourself it's an investment.

Originally Posted by Buck Rogers

Sorry, where did you live during that 10 years? Am I missing where you backed out the cost of renting for 10 years? I know you said you don't need much, but a cardboard box under a freeway bridge might be a bridge too far. :>

At 3k /month average rent over 10 years would be 360k.

Also, alot of those military types are getting VA loans

Originally Posted by m3113n1a1

Which is why I said buying isn't ALWAYS the best choice. Just trying to shine a light on the absolutist thinking people like you have.
And I said owning beats renting over the long term.

Originally Posted by Buck Rogers

So I'm the absolutist because I am interested in both sides?

Interesting POV.

In your example the renter is out 360K and the buyer is out 176K. (by the way, your maths didn't math)

This whole rent/buy conundrum can be summed up with the the 3 F's, cars and houses, with the caveat of length of holding period added.

If you intend to keep a wife, boat, plane, or house for 3 years....then rent/lease.

If you are in it for the long haul.....buy.

If your lenght of "ownership" is somewhere in between.....do some analysis.

I thought every body understood this principle


BTW.... can you show me any post where someone/anyone said buying is ALWAYS the best option? Absolutist me arse.