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Originally Posted by xpl0sive
somewhere earlier in this or another thread, someone provided an excelled calculation showing how much money you spend on mortgage+maintenance+bills compared to renting.
It's really simple to figure out, if you take your time to actually think, before listening to people who are already in the marker/realtors/mortgage brokers. All those people have a financial interest in the market and want you to be in it too.
I'll do the calculation using some recent sales
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Excellent comparison, but I am not convinced that your "same exact type of 1 bedroom 650 sq ft apartment" can be currently found on craigslist for $1200/month, including utilities, tv, internet. I found a bunch of basement suites that would work, but apartment units are a lot more rare. The few that I found that work with your numbers tend to be located in less convenient locations.
More importantly, I noticed a major flaw in your presentation of the numbers:
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You pay off what you owe on your mortgage, you are left with $110,413.19.
Out of that, your original down payment was $68,000, $39,509.19 was what you've paid off in 5 years, your profit = $2,904.00.
Compared to, you paid rent for 5 years, your $68,000 made you $9,350 and you have at least $36,000 in savings, equaling to $113,350
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The way the numbers are presented seems to emphasize
$2,904 vs $113,350. However, the actual numbers should really be
$110,413.19 vs $113,350. In your $113k rental figure, you counted the $68k you started with and a $36k savings. But with the $110k ownership figure, the $68k and $39k principal were conveniently left out.
Last but not least, this is probably a poor reading comprehension on my part, but would you please explain to me where that $36k saving figure (from the renting scenario) came from? I couldn't figure it out from your post.
So if I am reading things right, the difference between purchasing and renting in our hypothetical scenario only differs by $3k, which amounts to ~3%. That amount is really small enough to swing the argument in either way should any of the variables change slightly. So effectively, I am going to call it a wash. You pretty much end up in the same boat regardless of whether you buy or rent. There is a little less risk involved with renting, but there is also less potential profit as well.