Rent vs. Own a Home, The Way to Analyze - FabriceGrinda.com

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2 points·xg··3 comments

Biggest question: how does Fabrice's analysis play out for someone that isn't extremely wealthy?

Yes, if you have $20 M dollars and are talking about simply allocating assets he is probably correct. However, what about for the avg working person who's buying a house with money that isn't his (a mortgage) so that by the time he retires, he isn't burdened with paying for a place to live.

Also, as an aside: I think most people don't have the personal fiscal discipline to take the money they would save by not paying a mortgage and invest it--they spend it. A mortgage is like a forced savings account for many.

However, what about for the avg working person who's buying a house with money that isn't his (a mortgage) so that by the time he retires, he isn't burdened with paying for a place to live.

In that light, it also feels odd to consider a house as a source of cash flow. A lot of analysis I've read seemed to miss the fact that people pay for houses because people need places to live.

And then this article uses a Manhattan apartment/condo as its example, so I don't think the advice is even meant for the "avg working person."

What I don't understand is why people who say, "Why should I pay rent? That money is just going down the drain" never think to themselves, "Why should I pay interest on a mortgage? That money is just going down the drain."

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