Quote:
Originally Posted by Cowboy89
Would depend on the rate of return he achives on his investments and the rate of condo appreciation minus maintainence/improvement and selling costs. Personally from a financial perspective I'd rather have a well diversified liquid portfolio than a whole whack of home equity that's tied to the value of one asset.
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Yeah, it's an interesting thought experiment.
Lt.Spears's attitude that "rent just throws money away" is only true if you can buy or rent a similar quality home for the same price. That's usually not the case.
In the example of me and my friend from above, it works like this:
For $2,300/month, I get a roof over my head and equity in my home.
For $2,300/month, he gets a roof over his head and $800 to invest.
It's hard to say exactly who comes out ahead after 20 years because you have to make certain assumptions that may not turn out to be correct, such as the average rate of return on his investments versus the appreciation of the value of my home.
There are also other things to consider like the following: he never has to worry about maintenance or special assessments, I have more freedom to make home improvements that increase my quality of life, it's much easier for him to move, etc.