tryan said:... and - once again - market rents are no factored into the equation. Point being, what's it gonna REALLY cost you if you do not own your home and put the whole wad in some other market.
My free n' clear rentals average 4.5-5% return from ONLY rents. Appreciation is just icing on the cake.
The author is ONLY looking at appreciation ... appreciation is nice; but is ONLY a side benefit to RE. Everyone needs a roof over thier head!
Delawaredave said:Was digging through my fathers records - found 1960's sales literature for waterfront lot at a lake in Maryland. Think the price was around $15,000. I looked up current comparables a couple years ago - the compounded return was about 7% per year. And that's for desireable waterfront.
What am I missing?
tryan said:Improvements can be made with returns that exceed inflation. In most markets, for example, adding a fireplace will give back 125% of cost. Outdoor landscaping can have the same results (if you know what you're doing).
Of course, if you don't know what you're doing the "improvement" will have the opposite impact ... how many houses have walked into and said "what were they thinking" or "wow, it looks like I did the work."
To me this would be the main reason to buy a house rather than rent long term - protection from inflation.spideyrdpd said:A good reason to pull out your equity and invest it elsewhere ?
Primary real estate doesnt compare to rentals. My tenants cover most of the expenses.
Did the article address the fact that your payment for most mortgages are fixed. Where rents increase over time..
audreyh1 said:To me this would be the main reason to buy a house rather than rent long term - protection from inflation.
Audrey
tryan said:...I've got nearly 20 years of MS money data on the units I keep. So I can run these numbers to the penny. For years my return was in the 6-7% based on only rental income (compared to CURRENT market value). With the cazy run-up in prices returns have DROPPED to 4.5-5%. Every penny of expences has been accounted for in these returns...
retire@40 said:If you are basing your ROI only on rental income, why would you calculate your return using the current market value as the denominator? I would think you would calculate returns based on your cost basis.
If you buy a house for $100K and collect $10K in rent, your return is 10%. Why would the fair market value factor into this?
Even though there are taxes, the mortgage payment is fixed and eventually disappears! It's still got to be cheaper than renting in the long run.ERD50 said:Well, the mortgage payment is fixed, but the tax deduction keeps decreasing. Property taxes, insurance, maintenance and utilities may go up faster than inflation.
Because you could sell it, and invest the proceeds in a CD @ 6% (for example).