Take the down payment and closing costs as an initial investment, the repair costs and any difference in initial mortgage payment vs rent as regular investments, and adjust maintenance and rent (and the difference between mortgage and rent) for inflation. Run those numbers to estimate total wealth after a given period (both house appreciation and investments) and you should end up with pretty similar numbers. I’m ahead on mine as well, but only by ~10% after about 15 years, and my area had really rapid rent growth.
I think it’s an interesting exercise that may not be applicable to everyone since it doesn’t take into account the discipline needed to invest the difference.
I was forced to move every year I was a tenant. I hated it. And the fees and expenses of moving weren’t insignificant, not to mention the time. Some places I lived I never unpacked.
But now I have kids. Things like school districts matter.
Stability matters beyond the strict dollar amount sometimes, if not most times.
Sure, there are tons of intangibles that go into it. I’m just saying that people shouldn’t buy because that’s the only way to get ahead, they should buy because that’s the lifestyle they want.
If we use some rules of thumb, it gets closer:
Take the down payment and closing costs as an initial investment, the repair costs and any difference in initial mortgage payment vs rent as regular investments, and adjust maintenance and rent (and the difference between mortgage and rent) for inflation. Run those numbers to estimate total wealth after a given period (both house appreciation and investments) and you should end up with pretty similar numbers. I’m ahead on mine as well, but only by ~10% after about 15 years, and my area had really rapid rent growth.
I think it’s an interesting exercise that may not be applicable to everyone since it doesn’t take into account the discipline needed to invest the difference.
That’s also looking at just pure numbers.
I was forced to move every year I was a tenant. I hated it. And the fees and expenses of moving weren’t insignificant, not to mention the time. Some places I lived I never unpacked.
But now I have kids. Things like school districts matter.
Stability matters beyond the strict dollar amount sometimes, if not most times.
Sure, there are tons of intangibles that go into it. I’m just saying that people shouldn’t buy because that’s the only way to get ahead, they should buy because that’s the lifestyle they want.