Re:Maybe Americans aren't dumb enough to keep buying houses?
by mikeryan on Saturday May 14, 2011 @11:33AM
(#2547835)
If you rent a little townhome for $1700/month for just 5 years, that's over $100k gone with nothing tangible in return.
The basic idea is that you spend the same amount (X) every month, in scenario 1 (buying) you spend the whole X on a mortgage and hope to make things up in equity but lose some money in the form of interest.
In scenario 2 you rent (The same house/apt as scenario 1) but only spend Y and have X-Y = Z left over to re-invest in some other investment vehicle. The point of the article is that in some places (Manhattan) you can have the same standard of living but make a better investment because Z is so large.
The basic idea is that you spend the same amount (X) every month, in scenario 1 (buying) you spend the whole X on a mortgage and hope to make things up in equity but lose some money in the form of interest.
In scenario 2 you rent (The same house/apt as scenario 1) but only spend Y and have X-Y = Z left over to re-invest in some other investment vehicle. The point of the article is that in some places (Manhattan) you can have the same standard of living but make a better investment because Z is so large.