Does "buy better than rent” for primary works outside Bay Area?

[manch]

You are in the top 1% in terms of self control and discipline. Most people, including me I guess, don’t have as good self control.

[myo]

@manch

You are in the top 1% in terms of self control and discipline.

Maybe traits of a Singaporean

[BAGB]

What? Your primary home beats AAPL?

[tomato]

wait, that’s you? crazy pills!

[marcus335]

I can’t find the article, but I think it’s over 50% of people cashout their 401k when switching employers. That’s crazy, since there’s a 10% penalty on top of the taxes. Yet people do it regularly. People are highly irrational about money.

[harriet]

@hanera

I meant to prove both Harriet and manch wrong but guess they are intuitively correct. Anyone want to prove them wrong?

My goodness what did we do to you? Your renters are lurking here or something?

[hanera]

@manch

How does the renter end up with the house?

Renter is also putting aside money equivalent to the principal portion of PI for the house throughout the 30 years. Notice I didn’t compare the full cost of owning a house. The full cost comparison would involve evaluating this equation,

Appreciation of the $325k house vs Investment of downpayment + monthly PI

which I assume the same for zero appreciation for simplicity (isolation of factors?)

@hanera

Assuming zero appreciation of house, hence also assume other costs like property tax, home insurance and HOA doesn’t change, and money if not put into downpayment & monthly PI is also earning zero interest/ return.

Notice I didn’t account for tax incentives for home ownership because the new standard deduction of $24k makes those incentives irrelevant for this case (a SFH in Austin).

[manch]

OK. So even at 0% nominal appreciation owning beats renting.

How about we merely assume house value and rent rise at same pace of inflation? Owning will beat renting even more.

[Elt1]

Hanera just likes to stir things up. He is a homeowner and landlord, so we know his position. But in most flyover states economically speaking there are not a lot of opportunities. In business or in home appreciation. He is talking out of two sides of his mouth. But he actually believes that Austin is a good investment, because he has seen some appreciation. In the long haul though Austin will revert to the Shiller mean and only appreciate at the rate of inflation like most American non coastal cities

[hanera]

@Elt1

He is talking out of two sides of his mouth.

知己知彼，百战不殆
Know thyself, know yourself

[hanera]

@Elt1

Austin is a good investment, because he has seen some appreciation. In the long haul though Austin will revert to the Shiller mean and only appreciate at the rate of inflation like most American non coastal cities

Perfectly ok. Have I not put into Austin rental, I would most likely put into a S&P index fund for diversification. According to my rule of thumb, so long the annual appreciation of the house is greater than the annualized return of the alternative investment vehicle less cap rate is ok.
S&P is the alternative investment vehicle with 7-11% annualized return, and cap rate of Austin is 5%.
That means I only need Austin rental to appreciate at 2-6% which should be achievable. In addition, I would have a passive income stream

[britt522]

To rent or own? Federal tax plan could tip the balance

gonna get screwed on taxes next year with the SALT limits