…ish. My wife and I just did this calculation and (at least in America) property taxes throw a wrench into it.
A decent rental home in Texas costs about $2650 per month. A similar house costs about $460k to buy, and run about $1000/mo in taxes. So you’ll only save about $1650 per month.
Even putting that 460k into a bank account at 4.5% interest will give you $1725/mo, let alone stocks, index funds, and all the other investments you could be doing that will out-perform real estate.
Of course, that doesn’t disprove your point about poverty since you need to have the money to buy/invest. But it’s just a reminder that houses are not the wealth builder that a lot of people imagine them to be.
Always research and determine the best option for your financial situation. Gate-keeping financial literacy is another tool the wealthy use to keep people in poverty.
A decent rental home in Texas costs about $2650 per month. A similar house costs about $460k to buy, and run about $1000/mo in taxes. So you’ll only save about $1650 per month.
This would amount to an annual tax rate of 2.6% which is possibly some of the highest property tax rate in all of the United States. The median property taxes paid by homeowners in the US is only $2000 per year.
Even putting that 460k into a bank account at 4.5% interest will give you $1725/mo, let alone stocks, index funds, and all the other investments you could be doing that will out-perform real estate.
I agree that real estate as an investment is generally not the best option, but I don’t think that says anything about real estate as a wealth building tool for the middle class. If you compare renting to buying using a mortgage (the typical options) over, say, a 50 year period, buying will almost certainly come ahead in terms of wealth built.
For a primary residence that you plan to occupy long term, i would recommend buying almost every time. If you’re looking to build more wealth after that, I think there’s usually better options than e.g. buying a second house and renting it out.
I agree with your last sentiment too. Warren Buffett said the memories he made in his house are worth way more than the money he lost by not investing it. We’re thinking of buying for the same reason.
Exactly. To use another example it’s cheaper to simply own your home outright than to pay rent for the rest of your life.
…ish. My wife and I just did this calculation and (at least in America) property taxes throw a wrench into it.
A decent rental home in Texas costs about $2650 per month. A similar house costs about $460k to buy, and run about $1000/mo in taxes. So you’ll only save about $1650 per month.
Even putting that 460k into a bank account at 4.5% interest will give you $1725/mo, let alone stocks, index funds, and all the other investments you could be doing that will out-perform real estate.
Of course, that doesn’t disprove your point about poverty since you need to have the money to buy/invest. But it’s just a reminder that houses are not the wealth builder that a lot of people imagine them to be.
Always research and determine the best option for your financial situation. Gate-keeping financial literacy is another tool the wealthy use to keep people in poverty.
This would amount to an annual tax rate of 2.6% which is possibly some of the highest property tax rate in all of the United States. The median property taxes paid by homeowners in the US is only $2000 per year.
I agree that real estate as an investment is generally not the best option, but I don’t think that says anything about real estate as a wealth building tool for the middle class. If you compare renting to buying using a mortgage (the typical options) over, say, a 50 year period, buying will almost certainly come ahead in terms of wealth built.
For a primary residence that you plan to occupy long term, i would recommend buying almost every time. If you’re looking to build more wealth after that, I think there’s usually better options than e.g. buying a second house and renting it out.
Eeeeeeeyup!
1.9% for the county: http://www.tax-rates.org/texas/travis_county_property_tax
0.7% for the Public Improvement District: https://spdpid.comptroller.texas.gov/view/2024/103225659
I agree with your last sentiment too. Warren Buffett said the memories he made in his house are worth way more than the money he lost by not investing it. We’re thinking of buying for the same reason.