canopus@amdahl.UUCP (Frank M. Dibbell, III ) (10/11/86)
Mike Fulford posts an extract from Consumer Reports magazine, May 81, regarding an analysis of buying vs renting > <... main text deleted> > General terms- these are national averages from 1970-1980 and are not > to be used as a comparison with your own situation. ------------------------------------------------------------------------- The above line says it all. There is no "average" situation where this might apply. Also, the article had a few inaccuracies in it, some of which can have a profound effect on the outcome: 1. The average home price in 1975 was closer to 40,000 than 50,000 (I bought mine in 1975 for 37,000) 2. The interest rate in 1975 was 9%, not 13% as used in the article (Payments are around $300.00 as opposed to 425.00 per month) 3. 175.00 per mo average for utility bill seems a bit high even for today, much less 10 years ago. I didn't even spend that much for the whole year of 1976 for my gas & electricity! 4. The "time as money" is a red herring. The fact that you might spend 400 hrs per year at a "cost" of 10.00 per hour working/ maintaining your real property does NOT mean that you would have 4000.00 to invest if you were renting. This was an assumption made in the original analysis. 5. Timing. Are interest rates up or down? Is real property appreciating or stagnant? 6. Length of analysis. You stopped after 10 years. What about years 11 through 20? When I bought my house, rents were on a par with my mortgage in 1975. Today, rents are greater than three times my current mortgage. Other things that are intangible, but nevertheless need to be assigned a "dollar" value: 1. Raising children in an apartment environment vs home env. 2. Willingness to live next to/below/above slobs, noisy people 3. Willingness to be considerate of neighbors (no loud music/ parties etc after certain hours) 4. Willingness to deal with intransigent apartment owners in getting leaky roofs fixed, broken plumbing repaired, etc. 5. Your own personal priorities (money == happiness?) And finally, the biggest assumption of all: that you would actually *invest* all that extra cash rather than buying a fancy car, taking a Caribbean cruise, etc. etc. (Be *real* now - if someone gave you $5,000 you'd invest it all???) -- Frank M. Dibbell III (408-746-6493) ...!{ihnp4,cbosgd,sun}!amdahl!canopus Amdahl Corporation, Sunnyvale CA [This is the obligatory disclaimer..]
brahms@spp5.UUCP (Bradley S. Brahms) (10/13/86)
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Lets talk about one more option. At the beginning of the year, my wife
and I moved into our first house. During most of the previous year, with
the help of my father, we were looking for an apartment building to buy.
Why? Because if you look for the right deal, owning an apartment building
would have been the best investment we could have made. However, we
decided, in the end, that we did not want to bring our childern up in an
apratment. So, we ended up with a house where we are renting out a pool
the pool house. At the end of the year, after taxes are figured in, the
house will prove to be much, much better for us then renting, but still
not as good as owning an apartment building.
Of course, none of this takes into account the new tax system, but I still
feel that with the right deal......
-- Brad Brahms
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The opinions expressed above are my own, and may not reflect those
of my employer.