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Seattle Bubble Forum Archive • View topic - Rent Vs Buy example

Rent Vs Buy example

Anything and everything relating to Seattle-area real estate.

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Rent Vs Buy example

Postby RedHotLama » Wed May 02, 2007 6:08 pm

So right now my fiance and I are looking to rent a house. We plan on staying up here for about another 4.5 years for sure, then after that who knows.

So right now we are looking at this place



They are duplex style townhouses. $340K now we don't have much saved, say $20k for this example.

Now 2 of these places are up for rest at $1400 per month.

Is there any possible way it makes sense to buy one of these. I can't figure it out.

My big this is that the everyone says you get to deduct interest. Which doesnt help much. I figure that loan would at 7.5%. So in a year youd pay like 25k in interest. And normally you get 10k deduction married so you only save taxes on 15K in interest, which at most would be 5k.

So is it all appreciation that people are banking on??????????????
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Re: Rent Vs Buy example

Postby EastSider » Wed May 02, 2007 7:49 pm

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Postby small_far_ugly » Wed May 02, 2007 8:02 pm

I don't put much by the rent vs buy calculations, because they all compare for 30 years. I'm 30 now -- so let's say I plan to live until 85. Any real calculation has to be 30 years for owning, and 55 years for renting.

I think there's a certain break point where it doesn't make much sense to get into a mortgage, because once you've paid it off you're nearing the age where people either die or move to assisted living, so you get minimal benefit out of having paid your house off.


To be valid, those calculations should count 30 years for owning, and compare against a lifetime of renting, in which case owning is always better.



P.S. - I currently rent.
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Re: Rent Vs Buy example

Postby george » Thu May 03, 2007 6:00 am

RedHotLama:

First you have to make a guess about where you think the housing market is headed in the next few years. After that I think it depends a lot on what you do with your savings if you do decide to rent.
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Postby vthokies » Thu May 03, 2007 6:12 am

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Postby anforowicz » Thu May 03, 2007 8:30 am

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Re: Rent Vs Buy example

Postby george » Thu May 03, 2007 3:47 pm

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Postby small_far_ugly » Thu May 03, 2007 6:40 pm

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Re: Rent Vs Buy example

Postby george » Sat May 05, 2007 8:34 am

Interesting tidbit on the price/rent ratio here from the Financial Times -

"Shiller's Case-Shiller house price indices show US house prices moved in line with rents for years. Then they exploded. During the past 10 years they have increased 182 per cent, while rents barely moved. Why?"

http://www.ft.com/cms/s/4c93a12a-f991-1 ... 10621.html
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Postby deejayoh » Sat May 05, 2007 9:33 am

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Postby RedHotLama » Tue Oct 02, 2007 10:50 am

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Re: Rent Vs Buy example

Postby MrRational » Tue Oct 02, 2007 11:18 am

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Postby Alan » Tue Oct 02, 2007 1:33 pm

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Re: Rent Vs Buy example

Postby Lake Hills Renter » Tue Oct 02, 2007 1:40 pm

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Re: Rent Vs Buy example

Postby rose-colored-coolaid » Tue Oct 02, 2007 1:58 pm

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