Quote:
Originally Posted by Cowboy89
Presumably if you've done the rent vs. own thing properly the accumulated investments you have instead of paying mortgage principal will spin out a return that should at least matches inflation while your home equity pays you nothing.
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I have done the calculations from the position of being a landlord and decided that owning was better than renting in the long run. But I am still a few years worth of rent increases away from being cash flow positive. If you add in the portion of rent that goes to the property manager then a house that I have owned for 5 years is now cash flow positive. Meaning in this situation a renter who started renting a similar unit 5 years ago would have been ahead for the first 5 years from a cash flow perspective and it will likely take another 5 years for the overall cash flow to balance out and turn negative. In that 10 years though I will have reduced my mortgage by 35% or so and the value of the house should have kept up with inflation.
By my napkin calculations that puts my 10 year gains on the $250000 property at $140000 less the money that I will pay to the property manager of about $20000.