Author Topic: Irvine: Rent vs Buy  (Read 2406 times)

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Offline the.irvine

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Irvine: Rent vs Buy
« on: January 19, 2018, 04:35:35 PM »
What would make sense in Irvine, say

Price 2800-3000 Sqft home: 1.3-1.5m
20% down, all incl montage and taxes approx 6000$ per month

Rent for same size home: 4000-4200 $ per month

Annual cost to buy: 72,000 + 2K maintenances
Rental cost: 50,000$

Five year cost for buying: 370,000
Rental cost for 5 years with 10% increase annually : 250,000$

Unless home appreciate so much, would renting not make sense? Excuse my ignore please, and help if you can :)




Offline Kings

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Re: Irvine: Rent vs Buy
« Reply #1 on: January 19, 2018, 04:40:51 PM »

Offline paperboyNC

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Re: Irvine: Rent vs Buy
« Reply #2 on: January 19, 2018, 07:01:28 PM »
Now that there isn't much tax benefit to buying, your main benefit is paying down the mortgage. How much would you pay down the mortgage in 5 years?

Offline Zippohunter

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Re: Irvine: Rent vs Buy
« Reply #3 on: January 19, 2018, 11:55:28 PM »
Opportunity cost of down payment needs consideration also if buying.

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Offline the.irvine

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Re: Irvine: Rent vs Buy
« Reply #4 on: January 19, 2018, 11:58:24 PM »
Now that there isn't much tax benefit to buying, your main benefit is paying down the mortgage. How much would you pay down the mortgage in 5 years?

Not sure if i will be able to pay more than what i am required to, so on this trend i would pay 100K principal in next 5 year, with balance left to around 935K after 5 years.

Offline fortune11

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Re: Irvine: Rent vs Buy
« Reply #5 on: January 20, 2018, 06:24:16 AM »
you obviously know this, but there are more than just financial reasons to buy a house - ability to customize it to your needs and the needs of the family , not being under the gun in case the owner decides to sell , etc. 

over past few years, I know many people rented and became "sideline buyers " and missed out on home appreciation and improved  quality of life for many years while counting their cash earning 0% .

now if you were someone that had a serious use for your cash otherwise - say in a business, or you were an active day trader who could swing 15% plus returns a year after tax on your capital , I would say , yes maybe renting is more your thing. 

but most people who use opportunity cost as an excuse , never really get to use that " opportunity " in real life . go ahead and buy if you can comfortably afford it , you will be happier for it

Offline shahshah

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Re: Irvine: Rent vs Buy
« Reply #6 on: January 20, 2018, 08:26:34 AM »
Renting is like shorting the market.

Offline Burn That Belly

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Re: Irvine: Rent vs Buy
« Reply #7 on: January 20, 2018, 10:27:41 AM »
Renting is better -if- you wisely invest your money in the stock market and after 30 years, you should come out on top. Of course, at the 30 year mark, you'll have a lumpsum of cash and still no home that you own, but at that point, you can outright pay cash for anything and who knows, the market could be like 2008 and you'll be able to swoop in and pick things up cheaply.

Buying is better if you are a terrible saver and you don't plan well for the long term. Therefore, at the 30-year mark, even if you are broke, assuming your home is now paid off, you have equity. Assume your deadbeat kids don't want to care for you, you can do a reverse mortgage where you now have monthly cashflow and can live in your home as long as you stay alive as the debt doesn't need to be repaid until you die.

Either way, you're going to deplete your assets if you live till say 120 years old therefore, the best solution is.... ding ding ding... breed a lot of high-caliber kids that you can later move in with and spend both -your- money and live off of your kids.  :)  I mean... isn't that what the Kardashian family is doing?
LF = Buick | PS = Hyundai | GP = Volkswagen | CVE = Kia | WBrdg = Ford | EW = BMW | OHR = AMG | OHG = Tesla | LA = Porsche | ALTR = Aston Martin | QH = Volvo | CV = Acura | WB/SG = Infiniti/Lexus | WBE/SGE = Nissan | TR = Land Rover | TL = Cadillac  | TRock = Bentley | HC = Maserati | NPC = Lambo

Offline irvinehomeowner

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Re: Irvine: Rent vs Buy
« Reply #8 on: January 20, 2018, 02:25:48 PM »
What would make sense in Irvine, say

Price 2800-3000 Sqft home: 1.3-1.5m
20% down, all incl montage and taxes approx 6000$ per month

Rent for same size home: 4000-4200 $ per month

Annual cost to buy: 72,000 + 2K maintenances
Rental cost: 50,000$

Five year cost for buying: 370,000
Rental cost for 5 years with 10% increase annually : 250,000$

Unless home appreciate so much, would renting not make sense? Excuse my ignore please, and help if you can :)

The numbers are closer if you take into account lower finance rate and homeowner deductions.

At the 3000sft home range it’s close to a wash not including the down. We did this math a few years ago.
Once you go 3-car garage... your junk can never go back.
3CWG: 3-Car Wide Garage
FCB: Foreign Cash Buyer
I recommend:
www.irvinerealtorsite.com
www.loansbyjw.com

Offline irvineresidential

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Re: Irvine: Rent vs Buy
« Reply #9 on: January 22, 2018, 03:36:26 AM »
What would make sense in Irvine, say

Price 2800-3000 Sqft home: 1.3-1.5m
20% down, all incl montage and taxes approx 6000$ per month

Rent for same size home: 4000-4200 $ per month

Annual cost to buy: 72,000 + 2K maintenances
Rental cost: 50,000$

Five year cost for buying: 370,000
Rental cost for 5 years with 10% increase annually : 250,000$

Unless home appreciate so much, would renting not make sense? Excuse my ignore please, and help if you can :)

The numbers are closer if you take into account lower finance rate and homeowner deductions.

At the 3000sft home range it’s close to a wash not including the down. We did this math a few years ago.

Based on your current finances and how much money you will have in five years or a decade, you have to make a choice considering long-term savings and your monthly expenses. Buying the place on 20% down payment would be suitable for those who have no desire to leave the city. Renting can save you from paying taxes or renovating the place every two years. You can live in a different remodeled house after every few years if you no problem living as a tenant, which most of the people do.
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Offline irvinehomeowner

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Re: Irvine: Rent vs Buy
« Reply #10 on: January 22, 2018, 08:09:34 AM »
Based on your current finances and how much money you will have in five years or a decade, you have to make a choice considering long-term savings and your monthly expenses. Buying the place on 20% down payment would be suitable for those who have no desire to leave the city. Renting can save you from paying taxes or renovating the place every two years. You can live in a different remodeled house after every few years if you no problem living as a tenant, which most of the people do.

Yes, you should only buy if you plan to stay long term. Not sure about having to renovate every 2 years... and moving every 1 to 2 years is not fun either especially if you have stuff to fill a 3000sft home.
Once you go 3-car garage... your junk can never go back.
3CWG: 3-Car Wide Garage
FCB: Foreign Cash Buyer
I recommend:
www.irvinerealtorsite.com
www.loansbyjw.com

Offline momopi

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Re: Irvine: Rent vs Buy
« Reply #11 on: January 22, 2018, 09:31:52 AM »
What would make sense in Irvine, say

Price 2800-3000 Sqft home: 1.3-1.5m
20% down, all incl montage and taxes approx 6000$ per month

Rent for same size home: 4000-4200 $ per month

Annual cost to buy: 72,000 + 2K maintenances
Rental cost: 50,000$

Five year cost for buying: 370,000
Rental cost for 5 years with 10% increase annually : 250,000$

Unless home appreciate so much, would renting not make sense? Excuse my ignore please, and help if you can :)


Buying a home is not just about numbers.  Do you like the house?  How do you feel inside the house?  Would you be happy waking up in the morning inside that house/bedroom?

When I went to buy burial plots at Rose Hills, I would lay down on the lawn at various locations and get a feel.  You'll know when you hit the right spot (or plot).  Same with houses, like "this is the house where I want to live in" and "this room here is sunny with good ventilation/air-flow, if I were to die in my home this would be preferred room".

For me the difference between a rental and a purchased home is that the rental is about fulfilling a short to intermediate term checklist, and a purchased home is about feels and long-term commitment.

Offline akkord

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Re: Irvine: Rent vs Buy
« Reply #12 on: January 22, 2018, 09:38:38 AM »
Buying a home is not just about numbers. 

Agreed, not sure if the op has family/kids, but that was a huge consideration for myself and many others.  Do you want to uproot your kids every few years after they've gotten comfortable?

Offline hello

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Re: Irvine: Rent vs Buy
« Reply #13 on: January 22, 2018, 02:36:37 PM »
What would make sense in Irvine, say

Price 2800-3000 Sqft home: 1.3-1.5m
20% down, all incl montage and taxes approx 6000$ per month

Rent for same size home: 4000-4200 $ per month

Annual cost to buy: 72,000 + 2K maintenances
Rental cost: 50,000$

Five year cost for buying: 370,000
Rental cost for 5 years with 10% increase annually : 250,000$

Unless home appreciate so much, would renting not make sense? Excuse my ignore please, and help if you can :)

You should factor in opportunity costs(which favor renting) and equity build up (favoring buying) into this as well.  The total equity accrued in the first five years would be a little over 100K.  If we assume the housing market and the stock markets keep doing what they have been doing lately, the clear winner is renting in my opinion.  Again this is strictly looking at it from a numbers perspective. 



Offline Liar Loan

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Re: Irvine: Rent vs Buy
« Reply #14 on: January 22, 2018, 04:02:28 PM »
I remember when I bought my first property in 2006 and I assumed the housing market and the stock market would keep doing what they had been doing.  That ended up not working out so well.

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