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rent or buy calculators
Old 01-24-2013, 02:27 PM   #1
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rent or buy calculators

I have looked at rent vs buy calculators available on line yo look at whether it makes mores sense to buy a house or rent in time of ER. Most sites use the one used by Yahoo! Homes. There seems to be about 3 main ones,

Rent vs Buy Calculator, Should I Rent or Buy? - Yahoo! Homes

Is It Better to Buy or Rent? - Interactive Graphic - NYTimes.com

Rent Vs Buy Calculator - Financial Calculators

But the frustrating thing is that I entered the same information into the calculators, the Yahoo!Homes and NYT said it was better to buy a house, and the realtor.home said it was better to rent, and the difference was not even close. They looked like they had taken into account similar things, including missed opportunity cost with the money used in buying the house.

Do you have experience with those calculators and which one appears to be the most dependable one?
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Old 01-24-2013, 03:59 PM   #2
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I did a similiar analysis in the past, but to me, the biggest variable is my return on investment on the cash I pull out of real estate. With todays historically low ( safe) return rates, my actual costs were a wash. To me, the biggest advantage of renting, say, an apartment, is the ability to put a lock on the door and travel for months at a time with no worries.
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Old 01-24-2013, 05:37 PM   #3
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Zillow says that houses in my neighborhood are renting for over 10% of purchase price, per year. Hmmm.

When I was thinking of buying, I did my own spreadsheets including every aspect of this conundrum that I decided was a valid consideration. I determined that in my situation at the time, it was to my financial advantage to own.

But that was a long time ago. By now, really, I could afford to do either one without adversely affecting my lifestyle. The real reason I own is that I love the simplicity, the permanence, the gratification of ownership, not having to answer to a landlord, and all those other invisible benefits of owning my own home. You know, those "emotional" reasons.
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Old 01-24-2013, 06:36 PM   #4
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Bondi:

I know you didn't ask for a fourth option, but here's a link to a calculator on a web site I use for mortgage calculations:
Rent or Buy? A Simpler Approach - Mortgage Professor
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Old 01-24-2013, 07:41 PM   #5
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OK, just for your entertainment I have to confess that when I saw the title I thought "Who would RENT a calculator? They give these things away these days!" 35 years as an engineer. Pffffffft.
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Old 01-24-2013, 08:31 PM   #6
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OK, just for your entertainment I have to confess that when I saw the title I thought "Who would RENT a calculator? They give these things away these days!" 35 years as an engineer. Pffffffft.
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Old 01-25-2013, 02:09 PM   #7
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I think that the calculators are flawed because they do not take into consideration three important issues. Lifestyle-current or desired, future housing market growth/decline ini your particular area and percentage of a person's total equity that will be committed to the acquisition, ie investment mix.

We are living out of two suitcases. We will be returning home in a few months and will be faced with the rent or buy decision. We have always owned. We like travel and now that we have been travelling for six months or so it has become very clear that we want something that we can simply lock up and walk away from for at least eight weeks at a time.

The second consideration is that housing prices have been firm in our area but our local economy is strongly tied to the price of oil. Oil consumption has decreased and NA oil production is increasing significantly.

So for us, the numbers may not be what they seem.
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Old 01-25-2013, 02:52 PM   #8
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You throw out the REALTOR.com calculation ... I kept uping the price of the house to see if it would EVER say renting was better .... never said it. Clearly biased.

The last example was 1/2 MILLION dollar house renting for 1k/month .... it said BUY.
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Old 01-25-2013, 03:14 PM   #9
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You throw out the REALTOR.com calculation ... I kept uping the price of the house to see if it would EVER say renting was better .... never said it. Clearly biased.

The last example was 1/2 MILLION dollar house renting for 1k/month .... it said BUY.
In my hypothetical scenario, the Yahoo!Homes and NYT calculators said buying is better, and the same numbers put into the realtor.com calculator said renting is better. Quite unlike what you got.
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Old 01-25-2013, 03:19 PM   #10
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How do you plan to swing it with your plan to leave a place unoccupied for 2 months or so? Are you looking at high rise condo or guard-gated community? I am planning on traveling a lot, at least for the early part of the ER. I am always concerned that the place will be burglarized if left unoccupied for 4 to 10 weeks.
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Old 01-25-2013, 03:21 PM   #11
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... I think it's the "inflation rate" in the REALTOR calculator. Assumes the house appreciates with inflation ... bigger house .... bigger return with a positive inflation rate.
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Old 01-25-2013, 03:21 PM   #12
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funny about the Realtor calculator. Guess they haven't updated for 2008.
My home purchases and sales have been good to me.In one case I lived for "free" for 10 years. Equity out was more then total of payments over the years.

I think we ought to merge this thread with the one about unexpected costs, that is the big unknown to me. Right now I'm remodeling because of water leaks from old copper pipes. Big bucks. But my housing costs are half of what it would cost to rent in the neighborhood.
When I move from here I expect to rent. Unless I find a water view property for sale. And it better have a new roof.
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Old 01-25-2013, 03:27 PM   #13
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brett
How do you plan to swing it with your plan to leave a place unoccupied for 2 months or so? Are you looking at high rise condo or guard-gated community? I am planning on traveling a lot, at least for the early part of the ER. I am always concerned that the place will be burglarized if left unoccupied for 4 to 10 weeks.
Always my assumption as well. However, my son works in Africa for last several years and left all his stuff in a nice house, ~250k in reasonable neighborhood. I figured it was just a matter of time before someone got in for TV, stereo, etc. Finally put stuff in storage and is up for rent now. So while may just have been lucky, it can happen.

Well there was one intruder. When wife and I checked in on it were met by a squirrel who apparently had gotten in chimney. It was late at night and scared the H out of us! Unfortunately he made a mess; apparently would try to go back up chimney, then to a window, back to chimney, etc. In other words, all window sills were sooted up. Apparently had eaten a big meal before he intruded, if you know what I mean.
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Old 01-25-2013, 03:37 PM   #14
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I tried out two of the calculators and both said to BUY where I live... BIG TIME...

And here the prices are so low and the rent is high compared to the price that it is a no brainer as long as you plan to stay a few years to cover the broker fees....
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Old 01-25-2013, 04:14 PM   #15
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I saw the thread title and wondered "Why would anyone rent a calculator?"
Never mind.
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Old 01-25-2013, 06:28 PM   #16
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There is a factor missing in these calculators . The fact is both a homeowner and a renter get the same standard deduction.

The homeowner generally spends the full standard deduction on mortgage interest and real estate taxes..

That money really came out of the piggy bank.

On the other hand many renters can not even get close to the standard deduction if they are a couple.

Those folks get to fly the empty seats and actually get money back to put in piggy from the standard deduction that they really never spent.

They have more money in piggy then they paid out so they can use that money to put towards the rent lessening the rent.
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Old 01-25-2013, 09:00 PM   #17
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Bondi688... For us it has to be a home that has zero exterior mtce issues like grass cutting or snow removal. After that we will pay a small fee for someone come in and check the place over...mainly or instances purposes. Prior to leaving on this extended trip we rented a larger safe deposit box where we place important papers, passwords that we may forget, jewelry items etc.

Looking back, downsizing from a five bedroom home to a 16x8x8 storage container was a great move or us. It was incredibly liberating...we should have done it earlier. We now have far more options than before.

I think that we will rent for a while. Our real estate market, although strong, could suffer some setbacks or stagnation over the next year. We believe our after tax return on investments will be higher than the potential increase in property values.
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Old 01-25-2013, 09:28 PM   #18
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OK, just for your entertainment I have to confess that when I saw the title I thought "Who would RENT a calculator? They give these things away these days!" 35 years as an engineer. Pffffffft.
Whew, I thought the same thing.
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Old 01-25-2013, 09:57 PM   #19
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Whew, I thought the same thing.
Me too, even though it did seem like pretty extreme LBYM, even for our frugal members.
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