BonelessSugar t1_iujwbt5 wrote on October 31, 2022 at 9:55 PM

Reply to comment by Casterial in Advice regarding stocks, 401k, early retirement. by joma417

Is housing actually an investment? Considering all the taxes and maintenance and repairs that houses need, I'd assume that would cancel out any profit. Especially because you can only live in one house at a time.

Casterial t1_iujx2yp wrote on October 31, 2022 at 10:01 PM

My current house cost the same as my rent did (mortgage payment+taxes is equal to my rent I was paying). without taxes I would be saving about $400/mo. (I pay almost double in taxes and get a check cut to me yearly for the overpayment from escrow, but due to how taxes change my escrow plays it safe)

For example, say my rent was $2k/mo, thats $24k a year with no equity. Now say you pay $2k/mo in mortgage+taxes, thats $2k toward interest and your equity.

You can use that equity as an asset when taking out loans, or cash-out refinance it later to purchase more properties. (This is what most house flippers did).

Rent at fair market value for a house my size is already $2300/mo. In about 5 years it'll probably be ~$2600/mo(2% increase yearly). Thats $600 profit from renters who also pay my mortgage for me.

edit: clarification/cleaning it up

BonelessSugar t1_iuk37o5 wrote on October 31, 2022 at 10:49 PM

Ah, the opposite is the case where I live. Rent is like $1-1.5k while a house would be like $2-4k/mo with taxes and mortgage, not including maintenance and repairs.