Heh, I did the math last night on the overall gain/loss from owning a house for 13 years (after figuring in the money received at closing), and even with a decent payout it was still a slight net loss compared to renting for the same time period. At least, for this particular instance, the monthly cost ended up just slightly higher than a rental. Not a huge difference though.
As for the light, it wasn’t really that big a purchase… but it happened right after closing so I thought I should share.
I didn’t do more than brief experiments of chatting before Internet service became unlimited time. But, around that time, I heard about people losing their houses to pay phone bills.
Oh, if you pay off the whole mortgage, or buy a multi-plex, the rental price is enough to make a profit. But individual houses around here aren’t profitable to rent out while they still have an active mortgage, since the monthly fees plus maintenance are more than the going prices for rent.
OK, so me explain You do know that there are closing costs, loan initiation fees, maintenance, taxes, interest, maybe paid points, maybe paid association fees to think about too. Plus, an assumption that the house will actually increase in value instead of stay the same or decrease to account for/pay for before you can actually “come out ahead” of renting within less than 10 years usually? On top of that, if you are not staying there forever, when it comes time to sell, the cost must have appreciated enough to cover the costs of listing, and hiring a real estate agent, (and don’t forget probably paying taxes on the appreciation) can be paid for without incurring a loss when you sell? So, there is always a required time period of ownership before owning is actually “worth it” if you take the actual expenses into account.
So, if you aren’t selling soon, or you aren’t paying much interest, it becomes easily profitable to rent it out, but not a smart bargain for those not staying very many years.
I agree, i assume a house will never appreciate in value because cyclical trends are unpredictable, I assume it would be worth the same as it it today (inflation adjusted). If it does appreciate then thats a bonus but i won’t count on it because you cannot predict trends
By selling your in for a world of fees like you mentioned, and same for buying, around here the mantra is less then 5 years your better off renting.