Renting vs. buying a home (part 2)
Jun.16, 2010 in
House Buying Tips
Factoring in appreciation and depreciation into the rent vs. buy decision.
Tags: appreciation, buying, buying a home, Depreciation, economics, Factoring, finance, home, interest, personal, Rent Vs Buy, renting
February 24th, 2010 at 4:24 am
Superbly put.
February 24th, 2010 at 4:26 am
The guy is stupid… He calculates that $45K interest repayment, but forgets that the amount you pay in interest each year of your loan term drops significantly year on year… Building your equity at the same time.
It’s over-simplified and ignores key facts in order to support his position.
February 24th, 2010 at 4:28 am
Exactly!!!
You did it the right way. This is how home-buying should be conducted and you are living proof that it makes good sense.
February 24th, 2010 at 4:28 am
Exactly.
February 24th, 2010 at 4:29 am
Exactly – This guys numbers are FULL of holes.
February 24th, 2010 at 4:32 am
So glad to see so many comments from smart people like yourself. The guy who made this video made glaring omissions and displayed a fair amount of ignorance of the long term gains in buying a house… Pitting a BEST CASE renting scenario ($1m house rented at a measly $3K/month with $250K in savings AGAINST a $1m house with no savings in bank and an expensive 30year mortgage)…
Doesn’t make any sense.
February 24th, 2010 at 4:33 am
This video is not an excellent explanation… It’s messy, over-simplified, heavily weighted in the direction of the guy’s hoped for result.
February 24th, 2010 at 4:34 am
Agreed.
February 24th, 2010 at 4:37 am
A minute part of the population???
A minute part of the population cannot cause a global financial disaster. That takes an entire population to achieve.
The minority in the UK and US population are the ones who do it right.
February 24th, 2010 at 1:34 pm
Hey, let me throw a monkey wrench in your whole scenario:
PAYING CASH FOR A HOME.
It beats renting and a mortgage hands down.
March 1st, 2010 at 11:35 am
Vortex42, I think he assumes that 250K is the money you never touch. You pay the rent from another source which leads that 250K is a good source to build equity in this case.
However, you are right that Sal neglected the fact that buying a home has different advantages. Well most likely the home will be yours after 30 years, whereas renting will never make you the owner.
I think Sal simplified it just to make it more comprehensible.
Thank Sal
March 5th, 2010 at 3:18 pm
Not necessarily. You’re forgetting the (safe) interest that you could have earned on the $1M by keeping it in the bank vs purchasing the home outright.
March 5th, 2010 at 7:12 pm
You’re forgetting all the things you can save by paying cash:
1. you can literally take off 10% or more right off the top of the price
2. you can remove all the fees and closing costs
3. you can completely avoid letting your personal credit information known
If you pay cash you also get peace of mind of not having a monthly raping and paying extra for your money.
In the entire world, right now, real dollars, banks are paying less than 1% interest on savings accounts / cd’s etc.
March 16th, 2010 at 10:34 am
shakaama no offence but if u have that much cash your spoiled and why would you consider renting at all? lol no one wants a loan they can avoid but who as the cash for a house?
March 24th, 2010 at 12:55 pm
Sal – A house may not be appreciating today or for next 3 years or may be 5 years but tell me a house in a place like California which did not appreciated atleast by 8% in 30 years.
Moreover, even by burning some money on interset you now own a property. So, when you retire, you do not have to worry about paying rents…you have a house where you can live easily. You also get a sense of security by owning a house which you won’t get by renting it.
April 25th, 2010 at 11:22 am
Let’s not forget how much money goes into maintaing the house on the home buyers, where as if you rent, the landlord pays to maintain… But… Long term goes, what happens when you pay off your house? Vs Still paying rent. I have an uncle who rented his entire life.
May 1st, 2010 at 4:45 am
@shakaama sometimes i wonder how dumb some people can get
May 1st, 2010 at 8:12 am
@thegoonist I don’t get it, are you calling me dumb while i’m discussing finance?
Let me check your channel. Oh, ok. gotcha. you’re a winner.
May 1st, 2010 at 9:01 am
@shakaama yea thanks i know i win. oh righttt…your finance videos on your channel. yea cant be bothered since from what i saw you post, its mostly quite poor compared to sal’s.
May 1st, 2010 at 6:09 pm
@thegoonist i don’t get why you’re such a big douche bag? are you just trolling?
i directed a question at sal, not you. and you didn’t evne answer the question you’re just insulting.
i’m done.
May 1st, 2010 at 9:44 pm
@shakaama nah i wasnt insulting i was “wondering” aloud, merely
June 11th, 2010 at 10:26 am
Buying is better, if you consider passing the house to children after you die..