Is a home an asset or liability?

[101lifts2]

Originally Posted by homeslice

an asset is simply something you own that has value. Whether it succeeds in making you any money is irrelevant.

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[pauldun170]

Originally Posted by shmike

Stick to the definitions, Paul.

You just attempted to turn a quantitative question into a qualitative discussion.

You fail finance.

damn...
there goes my TWF gpa

[Homeslice]

Originally Posted by TIGGER

I don't know, this dream where people buy a new house, live in it for over 20 years and sell it for enough to cover all the money they've spent plus some for a down on a new house is a fairytale in most cases.

Uh.........come on dude. You seriously think after 20 years most people won't have enough left over to put a down payment on a new home? Try again.......I know several people who made a nice profit after only 3-4 years.......Some whose home value almost doubled in that time. Granted, that was the heydays of the market.....But come on, quit exaggerating. 20 years is way long enough to go beyond just breaking even and having something to show for it.

[101lifts2]

Originally Posted by Homeslice

Even if it wasn't, it's still an asset.

Your bike is an asset, and your loan on it is a liability. They both exist simultaneously. Your bike isn't prevented from being an asset just because you have a liability (loan) on it.

Bingo again.

[101lifts2]

Originally Posted by t-rock

Are you including rental properties in that assessment?

Renting is the absolute worst as far as long term goes.

It really depends on the situation and if you stay there long. Most people move within 5 years anyway, so they are always paying interest, closing costs, property taxes plus maintenance.

[Flexin]

Originally Posted by TIGGER

Shit, I paid more for rent 20 years ago! Rent has a way of hovering around a certain amount vs average income.

Anyway, so you want to disregard property taxes all together? $2,500 for 25 years= over $60,000 . I guess that you think that his property tax will never go up, right? What about interest? At 4.5% I have him doubling his investment to about $200,000 in 25 years. Then there's repairs that I'll never have to do. Yard work that I'll never have to do.Etc. Oh and apts do replace your carpet, appliances, etc every so often and the homeowner isn't going to replace these things either, so...

I don't know, this dream where people buy a new house, live in it for over 20 years and sell it for enough to cover all the money they've spent plus some for a down on a new house is a fairytale in most cases.

You didn't read what I wrote. You don't cover all that you put in. You have cost no matter what. Its the cost of owning. But on the day you sell you have something of value. When you leave a rental you might get your deposit back.

And when a home owners taxes goes up so does the taxes on the rental. So that means that if the cost get too high they have to increase rent so there isn't a huge savings. And you are paying for the carpet and so on. Your paying it in your rent. They don't just decide to give you something because its tuesday. They are maintaining the property to keep the value in the unit (and stay out of court). You might also be paying for that new Benz in the driveway.

I doesn't matter how you look at it. At the end of a morgage a home owner has something worth money. The renter that rented for those 25 years lives in something that is worth something but that is to the owner.

If renting was so great there would be no where to rent because no one would buy. :P

Renting is right for some but not all.

James

[Flexin]

Originally Posted by TIGGER

I know that, that's why I get a property tax credit every year. It's usually about a month's rent. I understand what you are saying and I realize that I was exaggerating quite a bit but in the end, I honestly feel that you are in the same basic boat either way. There are legitimate advantages to either scenario dependent on your individual circumstances and needs.

Yes your right there are advantages to each. Like Kell said she wouldn't want to be tied down to one place too long so renting is her only choice. Unless she has the money to own and rent out the places she leaves behind.

James

[101lifts2]

Originally Posted by Flexin

....Guy A is a renter. Some how he is able to keep the same place for 40 without an increase. Can't see that happening. $600 a month for 40 years. Thats $288000.

Guy B bought a house. He bought a small house. $100000 for 25 years. $600 for 25 years. Thats $180000.

No I didn't add in any other cost. Yes there is insurance but the renter pays it as well. The home owner will pay more but it won't be a huge amount. Some repairs will need to be done in that time as well. The roof, siding and windows will likely need replacing during that time.

The home owner will spend $108000 less then the renter. That will pay for a lot a lot of repairs and up grades. There is a good chance that there would be still money left over after when you compare the total cost between the renter and owner.

Lets say that the house didn't increase at all in the 40 years. The home owner has a house worth $100000 and the renter has dirty old shag carpet, yellow appliances and a light blue toilet.

Its all in how you look at it. Your looking for "profit". You want the house to cover all cost along the way. That can happen but if you living there your going to have cost. That doesn't matter. You have to pay to live somewhere. But with a house a percentage of that money is still yours. It goes right into the house. Your rent money goes into someone elses place. You pay for that house or help pay for that apartment. They make money every month and then get a nice chunk when they sell.

James

The price isn't 180k, it's more like 220k at 5% interest for 25 years. You also didn't add in closing costs nor all the upkeep plus maintenance which is prolly well over 50grand. Now you are looking at 270k vs. 288k.

[Flexin]

Originally Posted by 101lifts2

It really depends on the situation and if you stay there long. Most people move within 5 years anyway, so they are always paying interest, closing costs, property taxes plus maintenance.

I bought my house for $99999. At the five year mark I think it was valued at $170000. Closing cost and so on were not going to be and issue even if I only sold it for $150000 or 160000. Renting would have never done that for me.

James

[Flexin]

Originally Posted by 101lifts2

The price isn't 180k, it's more like 220k at 5% interest for 25 years. You also didn't add in closing costs nor all the upkeep plus maintenance which is prolly well over 50grand. Now you are looking at 270k vs. 288k.

All I added up was the monthly rent vs the monthly mortgage payment. And I even said the $108000 is more then enough for any up keep during that time. Closing cost were not enough to even talk about.

James