House Owning vs Renting

HAMISH_MCTAVISH

JonnyBravo wrote: »

(We should prob also really be considering 50 years not 40 with life expectany nowadays, that something else that would skew the figures towards buying)

How many years did you factor in the renter having to deplete his savings for rent after retirement?

HAMISH_MCTAVISH

the_ash_and_the_oak wrote: »

Good work!

You have the results for at 25 years and 40 years but do you have the results for at 4 years and at 8 years?

The Times mortgage calculator I linked earlier will show you the results for every year.

At year 4 in the example I used above the buyer is already ahead by around 25K, and at year 8 by around 60K.

Which is why so many of us say it is important to buy young and never waste money on rent.

chucknorris

lostinrates wrote: »

chucknorris, it is poosible though harder (and more expensive IME in UK) to rent with animals. I wouldn't be without my critters and husband either.

I just wouldn't do it though, the pet issue is a main one but there are others too, I am quite fussy about where I live so to rent exactly where I wanted to live with a pet would probably mean paying a very large premium. Also it would mean having to place quite a lot of money into savings/investments (from my house sale) which I would not be too comfortable with especially when I fully retire and sell all the investment properties when there will already be a significant sum to invest/place in savings accounts.

JonnyBravo

the_ash_and_the_oak wrote: »

Good work!

You have the results for at 25 years and 40 years but do you have the results for at 4 years and at 8 years?

At which inflation rate and which rental rate?

the_ash_and_the_oak

IveSeenTheLight wrote: »

My BTL mortgages required that the rent covers 125% of the mortgage interest

This is something I don't understand - I only know about London and I don't know how people do this

http://www.rightmove.co.uk/property-for-sale/property-21246368.html?locationIdentifier=OUTCODE%5E1682&insId=5&minBedrooms=1&maxBedrooms=1&displayPropertyType=flats&oldDisplayPropertyType=flats&pageNumber=1&fromSummary=true&backToListURL=%2Fproperty-for-sale%2Ffind.html%3FlocationIdentifier%3DOUTCODE%255E1682%26insId%3D5%26minBedrooms%3D1%26maxBedrooms%3D1%26displayPropertyType%3Dflats%26oldDisplayPropertyType%3Dflats

#26 is up for sale at 270k

http://www.rightmove.co.uk/property-to-rent/property-27678269.html?locationIdentifier=OUTCODE%5E1682&insId=6&minBedrooms=1&maxBedrooms=1&displayPropertyType=flats&oldDisplayPropertyType=flats&pageNumber=3&fromSummary=true&backToListURL=%2Fproperty-to-rent%2Ffind.html%3FlocationIdentifier%3DOUTCODE%255E1682%26insId%3D6%26minBedrooms%3D1%26maxBedrooms%3D1%26displayPropertyType%3Dflats%26oldDisplayPropertyType%3Dflats%26index%3D20

#24 rents at 1075 pcm

JonnyBravo

IveSeenTheLight wrote: »

Interesting and good post.
My query is over the figures you use being 80%, or 75% or 70% rent of the mortgage repayments.

My BTL mortgages required that the rent covers 125% of the mortgage interest

We also know the mortgage interest is akin to rent, therefore I would have to raise concerns over the figures as to the percentage of mortgage the renter pays.

If there are investors out there subsidising the mortgage, then that would appear straight away to me to be a questionable investment and not necessarily the majority of investments out there.

You do point out very well that only a small variation in inflation results in a vast difference over the term.

Oh absolutely. But I'd bet the average isn't 125% across the country. Yes put it to 90% or even 100% and it's very hard to come out on top as the renter..... not impossible.... you'd just need very very low inflation

JonnyBravo

lostinrates wrote: »

Is everyone going to die early now with heartattacks and diabetes in their fifties?;) I don't have a pension plan. still would like to own though, personally.

chucknorris, it is poosible though harder (and more expensive IME in UK) to rent with animals. I wouldn't be without my critters and husband either.

Move out in early 20's add 50 years and you get to early 70's???

JonnyBravo

HAMISH_MCTAVISH wrote: »

How many years did you factor in the renter having to deplete his savings for rent after retirement?

The point at which it becomes depletion depends on the inflation rate.... if inflation is at 3% they are paying over the £977 for rent by year 14. Of course they are still accumulating wealth as the 8% growth of their investment more than makes up for it but this becomes more and more of a factor clearly.

If inflation is 1.5% they actually don't pay more than the mortgage amount til year 25!

lostinrates

JonnyBravo wrote: »

Move out in early 20's add 50 years and you get to early 70's???

No, thats not what I meant. sigh. never nind. well done JohnnyB, some work went into that.

I have stuff to say, but I'm just tooooooo tired to be sensible today....so I'll probably try and be clearer next week.

phil_b_2

There'll be those 30 yr olds living with mum and dad who'll still be there when they're 50 smiling and thinking 'well I beat all of you!'