Quote:
Originally Posted by Red
It really comes down to this. "Rent" from the bank as you called it or rent from a landlord.
$1800 rent is equivalent to about 400K mortgage. So when you get that mortgage, you pay that "rent" for 25 years. At the end you have a place to live for free. Or you sell it and move in with the kids as payback :-)
Either way, you have an asset.
By renting you sign up to pay that same amount a month (probably more) for all of your adult life. Is that 50 years, 55, 60? A lot more than 25.
You said you'd be scared to have a mortgage till retirement. Isn't having a rent payment in retirement a scary alternative?
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Aren't there still property taxes, maintenance costs, insurance costs when you own a home? Do those diasappear when the mortgage is paid off?
I like the freedom renting brings. It doesn't cost me anything to move beyond renting a uhaul and buying some pizza. I know that buying/selling a home will cost a lot more than that just to the realtor. Lots of people own more than one home in their life, think how much money they paid to a realtor for the privilege.
The houses in the area I live in are around 600k-1.2 million. I get to live in this nice area with amenities like shopping and bike paths area without having to shell out serious money to do so. That's a huge win in my books.
Most of all, if someone invests wisely, the opportunity costs of having money tried up in a mortgage vs being in the markets is a huge hit. I have about 800k in the market rather than buying a house. I haven't seen any properties that have matched the historic annual returns of the S&P 500 of 10% over the last century. My decision to rent has me way ahead of where is be if I bought a house. I'll take early retirement and living on the beach somewhere at 55 while my investments continue to grow, but that's just me.
Does anyone here know anyone who bought a home in Calgary 25 years ago for $150,000 that's now worth $1.6 million, without renovations they would have paid for? That's a 10% annual return.
Again , if people have kids and want a big yard and lots of room, I get it. You want to make sure little johnny or Sally will never have to switch schools? Sure, Buying makes senses. But the financial argument of doing better by owning a house is nonsense.