Why buying a home cost me $300,000

Why buying a home cost me 300K 1 Why buying a home cost me 300K 3 Why buying a home cost me 300K 4 Why buying a home cost me 300K 4 Why buying a home cost me 300K 5
A few days ago I posted on my story about how I just paid an $8,800 bill for my annual property taxes. I offered that as an example of how it’s not JUST renting that is “throwing money away.” (PSA: Neither buying nor renting is throwing money away. It’s paying for housing.) That got me thinking about where I’d be today if I never stopped renting, so I threw all the numbers in a spreadsheet and this is what came out!

For what it’s worth, the results are this dramatic because I made the classic financial mistake of homebuyers: I bought way more home than I was renting. If I was renting a $5,000 penthouse, then downgraded to a studio condo 15 minutes inland, the results would probably be flipped. It’s not whether you rent or buy, it’s WHAT you rent or buy that matters.

That said, to answer some questions you’re going to write in the comments:

• “But MY house blah blah blah”. Yeah, maybe! These are just my numbers, yours are certainly different. Although, 99% of the time I get this comment, it’s not giving honest credit to the opportunity cost of not having your housing money invested.
• “You didn’t include the value of LEVERAGE”. Yes I did. That’s the second scenario where I borrowed 80% of the money to buy the house. It still came in behind renting, plus would have exposed me to risk in the case the housing market went down.
• “Your landlord has to pay taxes too!!!” Yeah, I know. But there’s economies of scale to renting an apartment. Plus I bought more house than I was renting so I’m paying way more in taxes.
• “But property tax/mortgage interest is a WRITE OFF!!!!111”. OH MY LORDY LORD, A WRITE OFF?!?! First of all, you still have to pay those things. Second, the property tax isn’t deductible for me, and it’s likely not for you either. The state/property tax deduction was capped at $10,000 in 2020. I paid over $70K in state income tax, so my property taxes were irrelevant. (I verified this with my CPA).

Remember the two rules.

-Jeremy

via Instagram

MORE POSTS

The debt snowball

The Debt Snowball Method

If you have any debt, other than your mortgage, I think you should put 100% focus on paying it off before you start investing. I

TAKE THE COURSE!

How to invest course
4.9/5

LET'S CONNECT

ABOUT

Jeremy Circle

Hi, I’m Jeremy! I retired at 36 and currently have a net worth of over $4 million. 

Personal Finance Club is here to give simple, unbiased information on how to win with money and become a multi-millionaire!