Is renting really more expensive than buying?

PasturesNew

£55k for a car? You can buy a studio flat in a lot of places for that. Crazy money.

stringsmk2

Hank_Rearden wrote: »

I'm not talking about the investment side of it, but just the cashflow.
Lots of people on here seem to suggest that it's always cheaper to buy.

Last three properties I've been in:
Cottage "in the country" - £650/month. On market for £300k. At 4% that's £1000 on an interest-only mortgage.
3 Bedroom house in NE London - £1500/month. On market for £600k. At 4% that's £2000 on an interest-only mortgage.
2 Bedroom flat in W London - £1350/month. Very similar flat on market for £450k. At 4% that's £1500 on an interest-only mortgage.

Note that I've stacked the deck in favour of buying in at least a couple of ways:
low interest rate.
interest only (which isn't really the cash consideration)
ignoring the maintenance costs etc, etc.

Have I just been very lucky?

My tenant pays me £1175 PCM and my mortgage is £589 PCM

Perhaps you are lucky

the.ciscokid

stringsmk2 wrote: »

My tenant pays me £1175 PCM and my mortgage is £589 PCM

Perhaps you are lucky

Interest only? I assume you are doing well out of the low interest rate environment. When did you buy the house/ flat? Any capital depreciation - be honest...

When calculating yield, you need to compare rent to asset value, not rent paid (for the money borrowed from a bank) versus rent received from the tenant.

Loughton_Monkey

PasturesNew wrote: »

£55k for a car? You can buy a studio flat in a lot of places for that. Crazy money.

And they don't look a patch on the 'old' XJ6. Wondering if a Merc might be better.

Damaged

the.ciscokid wrote: »

Interest only? I assume you are doing well out of the low interest rate environment. When did you buy the house/ flat? Any capital depreciation - be honest...

When calculating yield, you need to compare rent to asset value, not rent paid (for the money borrowed from a bank) versus rent received from the tenant.

Bought Dec 2006 and remortgaged earlier this year at 3.45% IO (there abouts I think)

So yes, been lucky

As for the value, the Woolwich valued £25k more than we bought it for

chucky

Hank_Rearden wrote: »

Lots of people on here seem to suggest that it's always cheaper to buy.

chucky wrote: »

they're fools if they believe that it's always the case

and that goes for the morons that claim it's a bad time to buy now.

make your decision, do your math and don't think that the sale price of the property is what you are going to be paying...

JonnyBravo

Hank_Rearden wrote: »

I'm not talking about the investment side of it, but just the cashflow.

<snip some meaningless guff>

Note that I've stacked the deck in favour of buying in at least a couple of ways

:rotfl:

Very, very funny.

One of the most inventive and one-eyed ways of drawing a comparision that I've ever seen.

Why don't we run a real world experiment?
I've already bought, you rent for the next 30 years and then we compare figures in 2040?
Oh.... I see.... not so keen now? How come?

:rotfl:

JonnyBravo

Loughton_Monkey wrote: »

Well OK. If that's the way you want to play it.

Let's think of everything that way. For a start, absolutely and utterly never buy shares in Tesco. Sainsburys shares are cheaper.

I shall never buy a car again. They want £55K for a new one, and I can lease for only £10K. And I tell you what. Next year they'll want £58K for a new one, and my lease will still be £10K. Boy am I in the money!

I shall never pay another £2,880 for my pension contribution. I've found another company who will do me a pension for just £100 a year! Just as good if I ignore the Investment side of things.

And as for my mortgage, I've been quoted £6,000 for an 'interest-only' mortgage, while the bank next door wants £6,050 for a 15 year repayment mortgage of the same amount. Thanks to your post, I'm thinking only of the cash flow side of it, and not the investment side. So I'm going for the £6,000 one. It's cheaper!

I'm not stupid!

Twice in one day I'd like to thank a post of yours twice!
:T

IveSeenTheLight

stringsmk2 wrote: »

My tenant pays me £1175 PCM and my mortgage is £589 PCM

Perhaps you are lucky

Indeed, I have a property that gets £1,100 per month (rented below market value) whilst the mortgage statement I just received stated the monthly mortgage interest was only £95 per month

wotsthat

IveSeenTheLight wrote: »

Indeed, I have a property that gets £1,100 per month (rented below market value) whilst the mortgage statement I just received stated the monthly mortgage interest was only £95 per month

Don't start showing off yet. There'll be someone along in a minute to tell you that your tenant is the clever one.