

Rent vs. Buy: If You Have to Ask, You Should Probably Rent - joshrotenberg
http://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/

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poulsbohemian
This article and the "What your work truck says about you" article linked from
it both miss an important point: taxes. Granted the author uses the example of
Toronto, where I understand there isn't a mortgage interest tax deduction. In
the United States though, that is the largest tax deduction available to
John/Jane Doe and a significant incentive to buy a house in some tax brackets.
With regard to the truck part - I guarantee more than one accountant has
recommended their client buy a big truck as a tax offset.

I appreciate the frugal advice offered in these posts, but they feel
incomplete without the inclusion of tax implications into the discussion.

(Disclaimer: I am not an accountant, seek professional advice.)

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rhino369
[http://www.nytimes.com/interactive/2014/upshot/buy-rent-
calc...](http://www.nytimes.com/interactive/2014/upshot/buy-rent-
calculator.html)

This calculator the NYT made is pretty good.

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sytelus
Article grossly overlooks an obvious advantage of _buy_ option: Over almost
any long enough duration, houses appreciate well in line with inflation over
that period, where "long enough" is usually defined as 18+ years[1]. So you
can effectively live in 2500 sq foot house absolutely _free_ as long as the
duration is long. It doesn't matter if you bought at the peak and sold at
bottom as long as duration is long. There are sure some edge cases like
Detroit or natural disasters like Katrina but overall this rule applies pretty
well statistically[2]. If you were lucky enough to buy at bottom and sell at
peak after 18+ years you can break a bank. But even without much luck, you
will mostly break even, i.e., ~zero cost towards housing as opposed to 100s of
thousands of dollars in rent checks during the same period.

Another strong point for "buy": If your horizon is indeed 30 years then house
is _truely yours_ at the end of the loan. Most people would be planning to
retire after 30 years and not having to have rent expense during this period
is a huge deal. You can even move out to much less expensive area and use the
difference to maintain your life style. Also note that rents almost always go
up over long duration. If inflation happened to kick in high gear when you
retire, you will be toast because your rent would skyrocket while you are
living on a fixed income.

The decision for rent vs buy is therefore very simple: If you think you are
going to be living in given area for 18-30 years of time range, _buy_ is no
brainer provided that (1) your retirement savings remains same (2) you still
have "rainy day" funds (3) there is reasonable income security and (4) you
have recovery plan if natural disaster stricks. So those people doing long
commute are not all fools and "drive until you can buy" is in fact the best
strategy for them. There are some people arguing that you should buy even if
you had time range as short as 5 years but then you will need to time the
market and that's where most failures occur causing people to lose their life
savings. Unfortunately lots of people are in this state and frankly it sucks
to be in that state. You pay huge premium to be mobile and you don't know if
you will ever use that mobility.

[1] [http://www.dce.harvard.edu/professional/blog/how-use-real-
es...](http://www.dce.harvard.edu/professional/blog/how-use-real-estate-
trends-predict-next-housing-bubble)

[2]
[http://www.estateofmindsites.com/subscriber_new/map.php?user...](http://www.estateofmindsites.com/subscriber_new/map.php?user_id=1&share=y)

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itsybitsycoder
(1) is not a given, though. If buying has a higher monthly cost than renting,
that money comes from somewhere in your budget. If you are viewing your home
as a retirement investment (will pay off in 20 years, when you don't have to
pay rent), that's most likely where it comes out of. In that case, when you
take into account the appreciation on the house, you have to also consider the
opportunity cost of not investing the extra money in an alternative
investment.

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vskarine
Try this experiment in SF.

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jordache
myopic article.. the guy is taking a single set of specific requirements and
extrapolating that to the general argument of rent vs buy...

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dsp1234
His conclusion is this:

"The lesson? If you live in an area where houses cost more than $300,000, take
a close look at the rent prices around the areas you currently drive. Budget
your driving costs at at least a dollar per mile (80 cents/km in Canada to
account for higher costs) because you absolutely must put a high value on your
spare time to get ahead in life. Doing the math on life decisions like this
was by far the biggest factor in my own early financial independence.

Buying a house is a great thing to do when you’re settling down in a
beautiful, affordable spot right near everything you need to do for the next
ten years. And if your schedule and temperament allow some time for a good
several hours a week of maintenance work. But for the rest of us, it’s worth
having another look at Rent vs. Buy."

Which seems to be good advice.

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sintaxi
I love reading MMM but how is this hacker news?

