RENT OR OWN?
To rent or to own: that is the question.
Whether ’tis nobler in the mind to suffer The slings and arrows of outrageous fortune with real estate ownership, Or to take arms against a sea of troubles and rent instead.
Are you perplexed about what to do? Is owning always the best choice? We have developed a guide to help you answer this question critical to your financial and emotional well being.
Renting versus owning is both an intellectual, financial decision and an emotional one. The financial decision is first and foremost an analysis of the comparative cost of renting versus owning. Some people spend a great deal of effort evaluating the costs of ownership to determine if is a correct decision, but many people do not. Some people make the decision to purchase the most expensive asset they will ever own with no analysis at all. The decision to buy a house is primarily an emotional one. Even those who go through all the analysis generally only do so to provide rationalizations for their emotional decision.
Don’t make the same mistakes as many others who made a foolish emotional decision, paid too much, then lost their homes in a foreclosure.
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Table of Contents
- 3 – Renting Versus Owning
- 5 – Reasons to buy a house
- 5 – Have a place to raise a family
- 5 – Be a part of a neighborhood and community
- 6 – Following parent’s advice
- 6 – Build equity and hedge inflation
- 7 – Acquire an asset to pass on
- 7 – Gain a tax deduction
- 7 – Reasons not to buy and rent instead
- 7 – Flexibility to move
- 8 – No money spent on upkeep
- 8 – Monthly payments exceed comparable rental
- 9 – Take on too much debt
- 9 – Ties up too much savings
- 10 – Mistakes and fallacies about renting or owning
- 10 – Buying for rapid appreciation
- 11 – Renting is throwing away money
- 12 – Owners are better people than renters
- 13 – What is Ownership?
- 13 – A Conceptual History of Real Estate Ownership
- 15 – Money Rentership (Loan Ownership)
- 16 – What is Rental Parity?
- 16 – Rents Capture Premiums
- 17 – Moving Beyond Rental Parity
- 17 – Uniqueness and Quality
- 18 – Reservoir of Value
- 19 – How Much a House Really Costs
- 19 – Mortgage Payment
- 20 – Property Taxes
- 21 – Homeowners Insurance
- 21 – Private Mortgage Insurance
- 22 – Special Taxes and Levies
- 22 – Homeowner Association Dues and Fees
- 23 – Maintenance and Replacement Reserves
- 23 – Tax Savings
- 24 – Hidden Savings
- 24 – Lost Down Payment Interest
- 25 – Ownership Cost Math
- 27 – Cost of Ownership Detailed Analysis
- 27 – Four Major Variables that Determine Market Price
- 28 – Borrower Income and Wage Inflation
- 28 – Prices should mirror incomes
- 29 – Allowable Debt-to-Income Ratios
- 30 – Interest Rates
- 31 – Interest Rates Impact Mortgage Balances
- 32 – What happens when interest rates rise?
- 35 – Down payment requirements
- 36 – Savers gain advantage bidding on real estate
- 37 – PITI
- 37 – Property Taxes
- 38 – Mello Roos Taxes
- 39 – Determining Mello Roos
- 40 – Homeowners Insurance
- 40 – Homeowner Association Dues and Fees
What you will learn:
- The main reasons people chose to buy a house
- The main reasons chose to rent instead
- The false beliefs people rely on that often gets them in trouble
- Is buying a house really a good investment?
- Is the tax deduction worth the price?
- The downsides to home ownership
- The negatives of renting
- The “bundle of rights” people actual own — it’s not what most people think
- How to compare renting to owning
- The features that add value to residential real estate
- The detailed cost of ownership of any house
- Will you need private mortgage insurance?
- How much the tax deduction will really save you
- The opportunity cost of buying a home
- The four variables that determine the purchase price of any property
- How wage inflation impacts house prices
- How debt-to-income ratios impact house prices
- How interest rates impact house prices
- What happens when mortgage interest rates rise
- How much you should expect to put down
- What PITI means, and why it’s important.
- What Mello Roos taxes are
- And much more!