Comments on: Not Time To Buy According To This Unique Rent vs Buy Calculator http://www.geldpress.com/2008/08/mortgage-payments-rent-own/ Finance, Stock Options, Politics, Economics, Stock Market News, and Technology. Sat, 26 Nov 2011 11:21:27 +0000 hourly 1 http://wordpress.org/?v=3.0.4 By: geldpress http://www.geldpress.com/2008/08/mortgage-payments-rent-own/comment-page-1/#comment-1002 geldpress Thu, 20 Aug 2009 18:21:23 +0000 http://www.geldpress.com/?p=77#comment-1002 The choice of buying vs renting is really a personal decision. The information in the post are some guidelines to think about, but ultimately you need to make your own decision. Both renting and buying are risky by nature, but which one do you perceive as the bigger risk? If you sign a 12 month lease and rents drop by 20% you could be stuck overpaying by a few thousand dollars over the course of a year. On the other hand, if you put 20% down on a 500k house and it drops in value by 20%, then you are out $100,000! Sure leverage works in both directions and the upside of buying sounds very appealing when your house appreciates by 10, 20 or 30% over the course of several years. But those false appreciation models are now widely known to be built on nothing but wide scale fraud and rampant deception in lies across all steps of the housing industry. My only advice is to think about it objectively. Consider both sides of the equation and whatever you decide, be prepared and fully understand the risks of your decisions. The choice of buying vs renting is really a personal decision. The information in the post are some guidelines to think about, but ultimately you need to make your own decision. Both renting and buying are risky by nature, but which one do you perceive as the bigger risk? If you sign a 12 month lease and rents drop by 20% you could be stuck overpaying by a few thousand dollars over the course of a year. On the other hand, if you put 20% down on a 500k house and it drops in value by 20%, then you are out $100,000! Sure leverage works in both directions and the upside of buying sounds very appealing when your house appreciates by 10, 20 or 30% over the course of several years. But those false appreciation models are now widely known to be built on nothing but wide scale fraud and rampant deception in lies across all steps of the housing industry.

My only advice is to think about it objectively. Consider both sides of the equation and whatever you decide, be prepared and fully understand the risks of your decisions.

]]> By: Khyati Shah http://www.geldpress.com/2008/08/mortgage-payments-rent-own/comment-page-1/#comment-998 Khyati Shah Mon, 17 Aug 2009 18:51:40 +0000 http://www.geldpress.com/?p=77#comment-998 Hello, I am a first time home buyer in California. We plan to pay around 2400$ for a 3BR , 2Bath in Bay area -Santa Clara community. We are thinking if buying might be a better option. Our target buy in max 750000$ From all of above comments, you seem to have lot of knowledge on this. Could you help us to calculate if renting is good or buying for us? Thanks a lot for your help, Sakhi Hello,

I am a first time home buyer in California.
We plan to pay around 2400$ for a 3BR , 2Bath in Bay area -Santa Clara community.

We are thinking if buying might be a better option.
Our target buy in max 750000$

From all of above comments, you seem to have lot of knowledge on this.
Could you help us to calculate if renting is good or buying for us?

Thanks a lot for your help,
Sakhi

]]> By: geldpress http://www.geldpress.com/2008/08/mortgage-payments-rent-own/comment-page-1/#comment-589 geldpress Sun, 22 Feb 2009 07:20:32 +0000 http://www.geldpress.com/?p=77#comment-589 If I understand you right, you are talking about the lost opportunity cost from your down payment. By putting the $60k down, you lose potential interest earnings from that money. The spreadsheet is not perfect but it does help people to better understand the true cost of ownership. And none of the calculations are hidden - UNLIKE THE BIASED rent vs own calculators from real estate sites. You can freely change the assumptions or calculations to your own liking. If I understand you right, you are talking about the lost opportunity cost from your down payment. By putting the $60k down, you lose potential interest earnings from that money. The spreadsheet is not perfect but it does help people to better understand the true cost of ownership. And none of the calculations are hidden – UNLIKE THE BIASED rent vs own calculators from real estate sites. You can freely change the assumptions or calculations to your own liking.

]]> By: Sameer Adhikari http://www.geldpress.com/2008/08/mortgage-payments-rent-own/comment-page-1/#comment-580 Sameer Adhikari Fri, 20 Feb 2009 18:57:50 +0000 http://www.geldpress.com/?p=77#comment-580 I have a question here about the calculation. For the renter case, apart from the monthly gain I have on the down-payment (that I did not spend), I also have the amount available at the end of the comparison period. For example if I don't put $60K down (by not buying), at the end of 5 years I have $1000 (60000/(12*5)) available per month. If I had put in the down payment, I would not have the money. So, shouldn't the equivalent rent also have this factored in. If we factor this amount then the equivalent rent actually increases. Is there a reason you left this amount out of the calculation? Maybe I am missing something very basic and hence asking a dumb question. But, I am looking forward to the answer. I have a question here about the calculation. For the renter case, apart from the monthly gain I have on the down-payment (that I did not spend), I also have the amount available at the end of the comparison period. For example if I don’t put $60K down (by not buying), at the end of 5 years I have $1000 (60000/(12*5)) available per month. If I had put in the down payment, I would not have the money. So, shouldn’t the equivalent rent also have this factored in. If we factor this amount then the equivalent rent actually increases. Is there a reason you left this amount out of the calculation?

Maybe I am missing something very basic and hence asking a dumb question. But, I am looking forward to the answer.

]]> By: geldpress http://www.geldpress.com/2008/08/mortgage-payments-rent-own/comment-page-1/#comment-576 geldpress Thu, 19 Feb 2009 16:22:03 +0000 http://www.geldpress.com/?p=77#comment-576 You could easily add another row to the spreadsheet for "Miscellaneous expenses". I would suggest coming up with what you think is a fair percentage of the home value per year to use as your misc. expenses. If you say it is 1% - 2500 per year on a 250k home or roughly 200 per month - then just throw that 1% into the spreadsheet and let it grow over time (or shrink) as the home appreciates(depreciates). You could easily add another row to the spreadsheet for “Miscellaneous expenses”. I would suggest coming up with what you think is a fair percentage of the home value per year to use as your misc. expenses. If you say it is 1% – 2500 per year on a 250k home or roughly 200 per month – then just throw that 1% into the spreadsheet and let it grow over time (or shrink) as the home appreciates(depreciates).

]]> By: Melinda McGee http://www.geldpress.com/2008/08/mortgage-payments-rent-own/comment-page-1/#comment-571 Melinda McGee Thu, 19 Feb 2009 06:51:35 +0000 http://www.geldpress.com/?p=77#comment-571 One other factor is that if I buy a house in the price range I can afford, I will most likely need to sink a lot of time and money into it to fix it up. While that may increase the value of the house, over the short term these are direct cash outlays. There are also moving costs, title insurance, points, and other loan fees. Can anyone suggest a way to incorporate this into the spreadsheet? One other factor is that if I buy a house in the price range I can afford, I will most likely need to sink a lot of time and money into it to fix it up. While that may increase the value of the house, over the short term these are direct cash outlays. There are also moving costs, title insurance, points, and other loan fees. Can anyone suggest a way to incorporate this into the spreadsheet?

]]> By: Requirements For Buying A House - Don’t Lose Money | Geldpress http://www.geldpress.com/2008/08/mortgage-payments-rent-own/comment-page-1/#comment-552 Requirements For Buying A House - Don’t Lose Money | Geldpress Thu, 12 Feb 2009 22:14:54 +0000 http://www.geldpress.com/?p=77#comment-552 [...] The total monthly cost of ownership must be a maximum of 5% larger than the cost of renting a near equivalent place.  Regardless of what financing and down payment is actually used, the monthly cost of ownership should be calculated separately assuming a ZERO DOWN loan, with a 30 year fixed MARKET interest rate (NOT TEASER).  Include principal and interest payments, real estate taxes, insurance, association dues, and special charges (i.e. flood insurance) in the monthly cost of ownership.  Also see the Geldpress Rent vs Buy calculator. [...] [...] The total monthly cost of ownership must be a maximum of 5% larger than the cost of renting a near equivalent place.  Regardless of what financing and down payment is actually used, the monthly cost of ownership should be calculated separately assuming a ZERO DOWN loan, with a 30 year fixed MARKET interest rate (NOT TEASER).  Include principal and interest payments, real estate taxes, insurance, association dues, and special charges (i.e. flood insurance) in the monthly cost of ownership.  Also see the Geldpress Rent vs Buy calculator. [...]

]]> By: marketman http://www.geldpress.com/2008/08/mortgage-payments-rent-own/comment-page-1/#comment-83 marketman Wed, 27 Aug 2008 03:14:32 +0000 http://www.geldpress.com/?p=77#comment-83 Good catch Frank, thanks. I just updated the post, and the attached spreadsheet. Lines 46-47 now offset your "equivalent monthly rent" by subtracting out the average monthly built up equity. Good catch Frank, thanks. I just updated the post, and the attached spreadsheet. Lines 46-47 now offset your “equivalent monthly rent” by subtracting out the average monthly built up equity.

]]> By: Frank http://www.geldpress.com/2008/08/mortgage-payments-rent-own/comment-page-1/#comment-82 Frank Tue, 26 Aug 2008 22:55:00 +0000 http://www.geldpress.com/?p=77#comment-82 Hi Marketman, Good work. Thanks for the detailed spreadsheet. I am new to home buying calculations so please correct me if I am wrong. I see a major flaw in this by not considering 'equity' that I would have earned at the end. Consider that, I am seeing my house after 5 years, according to your spreadsheet, I would have earned total equity (amount paid towards principal) of (269*12) + (287*12) + (307*12) + (327*12) + (349*12) = 18,468 Now, add this to your net profit (#F39) and you arrive at equivalent monthly rent of 1,754 am I missing something here? Hi Marketman,
Good work. Thanks for the detailed spreadsheet. I am new to home buying calculations so please correct me if I am wrong.

I see a major flaw in this by not considering ‘equity’ that I would have earned at the end. Consider that, I am seeing my house after 5 years, according to your spreadsheet, I would have earned total equity (amount paid towards principal) of (269*12) + (287*12) + (307*12) + (327*12) + (349*12) = 18,468 Now, add this to your net profit (#F39) and you arrive at equivalent monthly rent of 1,754

am I missing something here?

]]> By: kthomas http://www.geldpress.com/2008/08/mortgage-payments-rent-own/comment-page-1/#comment-81 kthomas Tue, 26 Aug 2008 20:08:38 +0000 http://www.geldpress.com/?p=77#comment-81 Great stuff. Thanks. Great stuff. Thanks.

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