Invest $50,000 in cash or borrow $100,000 and get a mortgage?












24















I have $50,000 saved and I'm paying $760 on rent right now. All my relatives are telling me to get a mortgage so I don't "throw money away on rent", but I just don't like the idea of getting in debt and not being able to move any time soon. I'm 28 and I don't have kids or a girlfriend, so I can do whatever I want.



So which one is better, in terms of building wealth:





  1. Buy a small property (retail or industrial) for $50,000 in cash, that I can rent out for $300/mo, or around $275/mo net. That's 6.6% ROI, not counting the asset appreciation (which is around 3% per year on average for the past 50 years or so?). Also debt free. As additional benefits here - can I use that property to get a loan for another real estate? Or is that not how loans work?




    Summary:




    • $275/mo - rent from new property

    • $125/mo - property appreciation (am I calculating this correctly? seems way too much - 50000*0.03/12=125)

    • -$760/mo - my rent


    TOTAL:



    -$360/mo





  2. Get a mortgage so I don't "throw my money away on rent":




    • I go in debt for 20 years

    • $50,000 down payment

    • Property costs $150,000, I borrow $110,000 and end up paying $175,000. $225,000 including the down payment.

    • $663/mo mortgage



    Summary:




    • -$663/mo - mortgage

    • -$100/mo - property taxes, maintenance

    • $414/mo - equity (663*(110000/175000)=414 is that correct?)


    TOTAL:



    -$349/mo





From those rough calculations it seems that my cash flow will be surprisingly similar, but I'm not sure how both options will affect my net worth in 10/20/30 years?



Also which option will put me in a better position RIGHT NOW to get into real estate investing?










share|improve this question




















  • 6





    Why do you think buying a house means you won't be able to move soon? You can sell a house. Still beats paying rent. Rent is literally wasting your money.

    – only_pro
    20 hours ago








  • 3





    jlcollinsnh.com/2012/02/23/…

    – topshot
    20 hours ago






  • 1





    And mortgage interest, property taxes, etc. are deductible, unlike rent.

    – CrossRoads
    19 hours ago






  • 11





    Your estimates of income on your rental property have not included maintenance, taxes, insurance, repairs, and lost income when the property is unoccupied.

    – asgallant
    18 hours ago






  • 2





    why aren't you taking in account appreciation in the 2nd case?

    – aleck
    12 hours ago
















24















I have $50,000 saved and I'm paying $760 on rent right now. All my relatives are telling me to get a mortgage so I don't "throw money away on rent", but I just don't like the idea of getting in debt and not being able to move any time soon. I'm 28 and I don't have kids or a girlfriend, so I can do whatever I want.



So which one is better, in terms of building wealth:





  1. Buy a small property (retail or industrial) for $50,000 in cash, that I can rent out for $300/mo, or around $275/mo net. That's 6.6% ROI, not counting the asset appreciation (which is around 3% per year on average for the past 50 years or so?). Also debt free. As additional benefits here - can I use that property to get a loan for another real estate? Or is that not how loans work?




    Summary:




    • $275/mo - rent from new property

    • $125/mo - property appreciation (am I calculating this correctly? seems way too much - 50000*0.03/12=125)

    • -$760/mo - my rent


    TOTAL:



    -$360/mo





  2. Get a mortgage so I don't "throw my money away on rent":




    • I go in debt for 20 years

    • $50,000 down payment

    • Property costs $150,000, I borrow $110,000 and end up paying $175,000. $225,000 including the down payment.

    • $663/mo mortgage



    Summary:




    • -$663/mo - mortgage

    • -$100/mo - property taxes, maintenance

    • $414/mo - equity (663*(110000/175000)=414 is that correct?)


    TOTAL:



    -$349/mo





From those rough calculations it seems that my cash flow will be surprisingly similar, but I'm not sure how both options will affect my net worth in 10/20/30 years?



Also which option will put me in a better position RIGHT NOW to get into real estate investing?










share|improve this question




















  • 6





    Why do you think buying a house means you won't be able to move soon? You can sell a house. Still beats paying rent. Rent is literally wasting your money.

    – only_pro
    20 hours ago








  • 3





    jlcollinsnh.com/2012/02/23/…

    – topshot
    20 hours ago






  • 1





    And mortgage interest, property taxes, etc. are deductible, unlike rent.

    – CrossRoads
    19 hours ago






  • 11





    Your estimates of income on your rental property have not included maintenance, taxes, insurance, repairs, and lost income when the property is unoccupied.

    – asgallant
    18 hours ago






  • 2





    why aren't you taking in account appreciation in the 2nd case?

    – aleck
    12 hours ago














24












24








24


7






I have $50,000 saved and I'm paying $760 on rent right now. All my relatives are telling me to get a mortgage so I don't "throw money away on rent", but I just don't like the idea of getting in debt and not being able to move any time soon. I'm 28 and I don't have kids or a girlfriend, so I can do whatever I want.



So which one is better, in terms of building wealth:





  1. Buy a small property (retail or industrial) for $50,000 in cash, that I can rent out for $300/mo, or around $275/mo net. That's 6.6% ROI, not counting the asset appreciation (which is around 3% per year on average for the past 50 years or so?). Also debt free. As additional benefits here - can I use that property to get a loan for another real estate? Or is that not how loans work?




    Summary:




    • $275/mo - rent from new property

    • $125/mo - property appreciation (am I calculating this correctly? seems way too much - 50000*0.03/12=125)

    • -$760/mo - my rent


    TOTAL:



    -$360/mo





  2. Get a mortgage so I don't "throw my money away on rent":




    • I go in debt for 20 years

    • $50,000 down payment

    • Property costs $150,000, I borrow $110,000 and end up paying $175,000. $225,000 including the down payment.

    • $663/mo mortgage



    Summary:




    • -$663/mo - mortgage

    • -$100/mo - property taxes, maintenance

    • $414/mo - equity (663*(110000/175000)=414 is that correct?)


    TOTAL:



    -$349/mo





From those rough calculations it seems that my cash flow will be surprisingly similar, but I'm not sure how both options will affect my net worth in 10/20/30 years?



Also which option will put me in a better position RIGHT NOW to get into real estate investing?










share|improve this question
















I have $50,000 saved and I'm paying $760 on rent right now. All my relatives are telling me to get a mortgage so I don't "throw money away on rent", but I just don't like the idea of getting in debt and not being able to move any time soon. I'm 28 and I don't have kids or a girlfriend, so I can do whatever I want.



So which one is better, in terms of building wealth:





  1. Buy a small property (retail or industrial) for $50,000 in cash, that I can rent out for $300/mo, or around $275/mo net. That's 6.6% ROI, not counting the asset appreciation (which is around 3% per year on average for the past 50 years or so?). Also debt free. As additional benefits here - can I use that property to get a loan for another real estate? Or is that not how loans work?




    Summary:




    • $275/mo - rent from new property

    • $125/mo - property appreciation (am I calculating this correctly? seems way too much - 50000*0.03/12=125)

    • -$760/mo - my rent


    TOTAL:



    -$360/mo





  2. Get a mortgage so I don't "throw my money away on rent":




    • I go in debt for 20 years

    • $50,000 down payment

    • Property costs $150,000, I borrow $110,000 and end up paying $175,000. $225,000 including the down payment.

    • $663/mo mortgage



    Summary:




    • -$663/mo - mortgage

    • -$100/mo - property taxes, maintenance

    • $414/mo - equity (663*(110000/175000)=414 is that correct?)


    TOTAL:



    -$349/mo





From those rough calculations it seems that my cash flow will be surprisingly similar, but I'm not sure how both options will affect my net worth in 10/20/30 years?



Also which option will put me in a better position RIGHT NOW to get into real estate investing?







investing mortgage real-estate starting-out-investing






share|improve this question















share|improve this question













share|improve this question




share|improve this question








edited 2 hours ago









Community

1




1










asked yesterday









Nikolay DyankovNikolay Dyankov

22526




22526








  • 6





    Why do you think buying a house means you won't be able to move soon? You can sell a house. Still beats paying rent. Rent is literally wasting your money.

    – only_pro
    20 hours ago








  • 3





    jlcollinsnh.com/2012/02/23/…

    – topshot
    20 hours ago






  • 1





    And mortgage interest, property taxes, etc. are deductible, unlike rent.

    – CrossRoads
    19 hours ago






  • 11





    Your estimates of income on your rental property have not included maintenance, taxes, insurance, repairs, and lost income when the property is unoccupied.

    – asgallant
    18 hours ago






  • 2





    why aren't you taking in account appreciation in the 2nd case?

    – aleck
    12 hours ago














  • 6





    Why do you think buying a house means you won't be able to move soon? You can sell a house. Still beats paying rent. Rent is literally wasting your money.

    – only_pro
    20 hours ago








  • 3





    jlcollinsnh.com/2012/02/23/…

    – topshot
    20 hours ago






  • 1





    And mortgage interest, property taxes, etc. are deductible, unlike rent.

    – CrossRoads
    19 hours ago






  • 11





    Your estimates of income on your rental property have not included maintenance, taxes, insurance, repairs, and lost income when the property is unoccupied.

    – asgallant
    18 hours ago






  • 2





    why aren't you taking in account appreciation in the 2nd case?

    – aleck
    12 hours ago








6




6





Why do you think buying a house means you won't be able to move soon? You can sell a house. Still beats paying rent. Rent is literally wasting your money.

– only_pro
20 hours ago







Why do you think buying a house means you won't be able to move soon? You can sell a house. Still beats paying rent. Rent is literally wasting your money.

– only_pro
20 hours ago






3




3





jlcollinsnh.com/2012/02/23/…

– topshot
20 hours ago





jlcollinsnh.com/2012/02/23/…

– topshot
20 hours ago




1




1





And mortgage interest, property taxes, etc. are deductible, unlike rent.

– CrossRoads
19 hours ago





And mortgage interest, property taxes, etc. are deductible, unlike rent.

– CrossRoads
19 hours ago




11




11





Your estimates of income on your rental property have not included maintenance, taxes, insurance, repairs, and lost income when the property is unoccupied.

– asgallant
18 hours ago





Your estimates of income on your rental property have not included maintenance, taxes, insurance, repairs, and lost income when the property is unoccupied.

– asgallant
18 hours ago




2




2





why aren't you taking in account appreciation in the 2nd case?

– aleck
12 hours ago





why aren't you taking in account appreciation in the 2nd case?

– aleck
12 hours ago










5 Answers
5






active

oldest

votes


















26















I can use that property to get a loan for another real estate? Or that's not how loans work?




That's not how secured loans generally work. You could get a mortgage on your rental property, but the bank will most likely ask why you are getting a loan (to find out if it is because you are in financial distress). You might as well just buy the second property with a mortgage (which I would not recommend either).




Get a mortgage so I don't "throw my money away on rent":




Correct. Instead you'll be "throwing it away" on interest and other expenses (taxes, maintenance, etc.). One common mistake people make is assuming that the entire mortgage payment is "paying yourself in equity instead of the landlord in rent". Which is partially true. You do build equity, but all that does is turn one asset (cash) into another (home equity). You're not building any wealth just from a mortgage payment. You build wealth through income or through investing. Borrowing destroys wealth through interest.




$414/mo - equity (663*(110000/175000)=414 is that correct?)




No, that's not correct. The interest is calculated based on the total amount due and the interest rate, so it decreases as you pay down the mortgage. At the start of the mortgage (say at 4%) your interest will be (110,000 * 0.04 / 12) = 367. The rest of your payment goes toward the principal. As the principal is paid down, the portion of your payment that is interest goes down as well.



If you are content renting, then keep renting. If you want to use your cash to buy a rental and earn more income, then do that. If you want to invest in something else, then do that. Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk.






share|improve this answer





















  • 1





    Thanks for the answer! "Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk." - can you explain that?

    – Nikolay Dyankov
    yesterday






  • 3





    If you are relying on rents to pay the mortgage, you are less patient about finding good renters (you can't afford for the property to sit for a few months). Plus the mortgage might have covenants on how much you can change the property, etc.

    – D Stanley
    yesterday






  • 4





    Your primary residence is not an investment - it's an expense you pay for a place to live. Buying a rental property is more like an investment - and not as passive as people like to think.

    – Chris
    13 hours ago






  • 7





    Being a landlord is not remotely passive. Not only are you now the owner of said property, which means all maintenance is on you, you then need to deal with a renter.. Some renters are complete idiots (I dealt with one that drill HOLES into our floorboards when assembling a bed!!!) That's even assuming you have normal renters. If you have a nasty one, you'll find out (depending on jurisdiction) how ridiculously hard it is to kick someone out, even if they haven't paid rent in months... you must make sure the renter is good.

    – Nelson
    9 hours ago



















14














You've really answered your own question, without even needing to go into the financial details. "I just don't like the idea of getting in debt and not being able to move any time soon." If you want to be able to move at short notice, home ownership is not for you. OTOH, if you plan to stay where you are, like gardening, auto mechanics, woodworking, or any number of other things that you can't do in an apartment, then it probably is.



Financially, I have to disagree with those who say it's a bad idea. My experience is that it can be good, though you have to look at the long term. Historically, you can expect rents to rise over time, while your mortgage payment (on a conventional loan) will remain fixed, except for property tax increases. You can also expect the property to appreciate. Say for example, I bought a house 20 years ago for $150K, with a mortgage payment that was about the same as renting a decent apartment. Now it's worth about $350K, the mortgage payment is maybe 1/2 - 2/3 of apartment rental, and in a few years it'll be completely paid off, so my monthly cost will be only a few hundred for taxes & insurance.



As for real estate investing, IMHO don't do it unless it's something you think you would enjoy. Like investing in individual stocks, it can be a lot of work. Put your money in mutual funds, and relax :-)






share|improve this answer
























  • If you take the difference between the mortgage payment and rent and invest it, you might find at the 20 year mark you're ahead overall even though the cash flow has reversed. Before I bought my first house I built a spreadsheet to compare apples to apples, using the same cash flow for both scenarios.

    – Mark Ransom
    21 hours ago











  • Yeah, from a financial point of view it could be a good idea to get a house. However, renting out something may not be something that OP wants to do, there are endless stipulations to either opening an air b&b or being a landlord. Also, plenty of hobbies can be done just through an apartment, anyone who wants to get a mortgage should do so with extreme, or get any sort of loan, should do so with extreme caution. It's the lack of causing that keeps the credit industry in business :-)

    – thinksinbinary
    19 hours ago











  • @MarkRansom: The difference between a mortgage payment and rent is usually a large negative number. Have fun investing that... ;-)

    – R..
    14 hours ago











  • @R.. it wasn't when I was doing my comparison. My rent was about half of mortgages+taxes+insurance. If owning is cheaper than renting it becomes a no-brainer.

    – Mark Ransom
    13 hours ago











  • @Mark Ransom: You might or might not find either option to be the more profitable. As they say in the prospectus, "Past performance is no guarantee of cuture results":-) But there are two financial plusses to home ownership that I can see. First, it's diversification. Second, it's a more forced investment: you can't really skip making house (or rent) payments without immediate consequences, while you can easily spend excess money insted of investing it.

    – jamesqf
    12 hours ago



















5














I would not factor in appreciation of the property, especially because you applied it on one property and not the other (where it would have made far more of a difference). If you pay off the far more expensive property and the appreciation works the same way, you'd end up with a far more expensive property.



Barring that, though, you're only calculating two options. If you were being more comprehensive with your comparisons you'd be able to get a real sense of what you can do with that money. Imho investing in real estate is not something for beginners. You need to be able to see if a property is a good one for investing, you need to have a good sense of what kinda rent you can get and more importantly (as D Stanly said) you need to get a good sense of how much of the time the property is going to sit empty and cost you money.

I would be far more interested in what kinda money you can get via index fund or other diversified investment.



I ended up buying a house because it was around the same amount of money as renting (mortgage payment includes taxes, mortgage insurance, homeowners insurance.... rent does not). It's very much dependent on the situation in your area.






share|improve this answer































    1














    It depends on the nature of the market where you live



    Where I live, a year of rent is lower than property taxes + insurance + maintenance costs on any property. From a financial point of view, more money would be thrown away buy purchasing a home than renting.



    However, there is the issue of equity growth. Is your money in savings earning the same amount of equity growth as home ownership? This is really a matter of timing. Where I live, the market seems to be in a bubble that is about to burst. There are two choices with real estate:




    1. Buy low and sell high

    2. Buy high and sell low


    So option #2 is no good for most people. Option 1 requires some thought. Specifically, will the equity growth be greater than the difference between rent and ownership costs?



    So, it really is a question of timing.



    I heard it said recently that in the US these days, home ownership is more an emotional purchase than one of finances. It sort of matches with the pressure people are giving you - they should be instead helping you make sure you have the money well invested.






    share|improve this answer

































      -2














      If you're going to go in, go in hard. You have 50k in down payment. Downpayments are usually only 20% so in reality you can afford 250k in loans for property. Not sure if you want to do this. If you did the next step would be to get two 100k rental properties and rent those out after doing tons of research. If you're not in a good market, this is dumb.



      Something I want to point out is that you are paying $700+ in rent. Why would you rental properties not draw at least that amount? Make sure you do research into being a landlord. As it stands now, you don't know enough about real-estate to speculate on which outcome is better. Keep in mind that you get to sell your rental properties down the line too. People usually forget that you build equity when you have a rental property. Do some more research and educate yourself some more so you know what's going on.



      Also, if you're going to go into debt, make sure you make it worth your time. Getting only 100k in loans is kinda a weak move, especially when you know your property value is going to increase.






      share|improve this answer





















      • 3





        "You don't know enough - invest more money" sounds kinda like not a smart move at all.

        – Christian
        7 hours ago











      • @Christian Op should be investing more money, and they should educate themselves about real-estate. Not understanding the need to invest more money is part of why op needs education.

        – Steve
        1 hour ago











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      5 Answers
      5






      active

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      5 Answers
      5






      active

      oldest

      votes









      active

      oldest

      votes






      active

      oldest

      votes









      26















      I can use that property to get a loan for another real estate? Or that's not how loans work?




      That's not how secured loans generally work. You could get a mortgage on your rental property, but the bank will most likely ask why you are getting a loan (to find out if it is because you are in financial distress). You might as well just buy the second property with a mortgage (which I would not recommend either).




      Get a mortgage so I don't "throw my money away on rent":




      Correct. Instead you'll be "throwing it away" on interest and other expenses (taxes, maintenance, etc.). One common mistake people make is assuming that the entire mortgage payment is "paying yourself in equity instead of the landlord in rent". Which is partially true. You do build equity, but all that does is turn one asset (cash) into another (home equity). You're not building any wealth just from a mortgage payment. You build wealth through income or through investing. Borrowing destroys wealth through interest.




      $414/mo - equity (663*(110000/175000)=414 is that correct?)




      No, that's not correct. The interest is calculated based on the total amount due and the interest rate, so it decreases as you pay down the mortgage. At the start of the mortgage (say at 4%) your interest will be (110,000 * 0.04 / 12) = 367. The rest of your payment goes toward the principal. As the principal is paid down, the portion of your payment that is interest goes down as well.



      If you are content renting, then keep renting. If you want to use your cash to buy a rental and earn more income, then do that. If you want to invest in something else, then do that. Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk.






      share|improve this answer





















      • 1





        Thanks for the answer! "Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk." - can you explain that?

        – Nikolay Dyankov
        yesterday






      • 3





        If you are relying on rents to pay the mortgage, you are less patient about finding good renters (you can't afford for the property to sit for a few months). Plus the mortgage might have covenants on how much you can change the property, etc.

        – D Stanley
        yesterday






      • 4





        Your primary residence is not an investment - it's an expense you pay for a place to live. Buying a rental property is more like an investment - and not as passive as people like to think.

        – Chris
        13 hours ago






      • 7





        Being a landlord is not remotely passive. Not only are you now the owner of said property, which means all maintenance is on you, you then need to deal with a renter.. Some renters are complete idiots (I dealt with one that drill HOLES into our floorboards when assembling a bed!!!) That's even assuming you have normal renters. If you have a nasty one, you'll find out (depending on jurisdiction) how ridiculously hard it is to kick someone out, even if they haven't paid rent in months... you must make sure the renter is good.

        – Nelson
        9 hours ago
















      26















      I can use that property to get a loan for another real estate? Or that's not how loans work?




      That's not how secured loans generally work. You could get a mortgage on your rental property, but the bank will most likely ask why you are getting a loan (to find out if it is because you are in financial distress). You might as well just buy the second property with a mortgage (which I would not recommend either).




      Get a mortgage so I don't "throw my money away on rent":




      Correct. Instead you'll be "throwing it away" on interest and other expenses (taxes, maintenance, etc.). One common mistake people make is assuming that the entire mortgage payment is "paying yourself in equity instead of the landlord in rent". Which is partially true. You do build equity, but all that does is turn one asset (cash) into another (home equity). You're not building any wealth just from a mortgage payment. You build wealth through income or through investing. Borrowing destroys wealth through interest.




      $414/mo - equity (663*(110000/175000)=414 is that correct?)




      No, that's not correct. The interest is calculated based on the total amount due and the interest rate, so it decreases as you pay down the mortgage. At the start of the mortgage (say at 4%) your interest will be (110,000 * 0.04 / 12) = 367. The rest of your payment goes toward the principal. As the principal is paid down, the portion of your payment that is interest goes down as well.



      If you are content renting, then keep renting. If you want to use your cash to buy a rental and earn more income, then do that. If you want to invest in something else, then do that. Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk.






      share|improve this answer





















      • 1





        Thanks for the answer! "Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk." - can you explain that?

        – Nikolay Dyankov
        yesterday






      • 3





        If you are relying on rents to pay the mortgage, you are less patient about finding good renters (you can't afford for the property to sit for a few months). Plus the mortgage might have covenants on how much you can change the property, etc.

        – D Stanley
        yesterday






      • 4





        Your primary residence is not an investment - it's an expense you pay for a place to live. Buying a rental property is more like an investment - and not as passive as people like to think.

        – Chris
        13 hours ago






      • 7





        Being a landlord is not remotely passive. Not only are you now the owner of said property, which means all maintenance is on you, you then need to deal with a renter.. Some renters are complete idiots (I dealt with one that drill HOLES into our floorboards when assembling a bed!!!) That's even assuming you have normal renters. If you have a nasty one, you'll find out (depending on jurisdiction) how ridiculously hard it is to kick someone out, even if they haven't paid rent in months... you must make sure the renter is good.

        – Nelson
        9 hours ago














      26












      26








      26








      I can use that property to get a loan for another real estate? Or that's not how loans work?




      That's not how secured loans generally work. You could get a mortgage on your rental property, but the bank will most likely ask why you are getting a loan (to find out if it is because you are in financial distress). You might as well just buy the second property with a mortgage (which I would not recommend either).




      Get a mortgage so I don't "throw my money away on rent":




      Correct. Instead you'll be "throwing it away" on interest and other expenses (taxes, maintenance, etc.). One common mistake people make is assuming that the entire mortgage payment is "paying yourself in equity instead of the landlord in rent". Which is partially true. You do build equity, but all that does is turn one asset (cash) into another (home equity). You're not building any wealth just from a mortgage payment. You build wealth through income or through investing. Borrowing destroys wealth through interest.




      $414/mo - equity (663*(110000/175000)=414 is that correct?)




      No, that's not correct. The interest is calculated based on the total amount due and the interest rate, so it decreases as you pay down the mortgage. At the start of the mortgage (say at 4%) your interest will be (110,000 * 0.04 / 12) = 367. The rest of your payment goes toward the principal. As the principal is paid down, the portion of your payment that is interest goes down as well.



      If you are content renting, then keep renting. If you want to use your cash to buy a rental and earn more income, then do that. If you want to invest in something else, then do that. Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk.






      share|improve this answer
















      I can use that property to get a loan for another real estate? Or that's not how loans work?




      That's not how secured loans generally work. You could get a mortgage on your rental property, but the bank will most likely ask why you are getting a loan (to find out if it is because you are in financial distress). You might as well just buy the second property with a mortgage (which I would not recommend either).




      Get a mortgage so I don't "throw my money away on rent":




      Correct. Instead you'll be "throwing it away" on interest and other expenses (taxes, maintenance, etc.). One common mistake people make is assuming that the entire mortgage payment is "paying yourself in equity instead of the landlord in rent". Which is partially true. You do build equity, but all that does is turn one asset (cash) into another (home equity). You're not building any wealth just from a mortgage payment. You build wealth through income or through investing. Borrowing destroys wealth through interest.




      $414/mo - equity (663*(110000/175000)=414 is that correct?)




      No, that's not correct. The interest is calculated based on the total amount due and the interest rate, so it decreases as you pay down the mortgage. At the start of the mortgage (say at 4%) your interest will be (110,000 * 0.04 / 12) = 367. The rest of your payment goes toward the principal. As the principal is paid down, the portion of your payment that is interest goes down as well.



      If you are content renting, then keep renting. If you want to use your cash to buy a rental and earn more income, then do that. If you want to invest in something else, then do that. Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk.







      share|improve this answer














      share|improve this answer



      share|improve this answer








      edited 16 hours ago

























      answered yesterday









      D StanleyD Stanley

      52.3k8153162




      52.3k8153162








      • 1





        Thanks for the answer! "Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk." - can you explain that?

        – Nikolay Dyankov
        yesterday






      • 3





        If you are relying on rents to pay the mortgage, you are less patient about finding good renters (you can't afford for the property to sit for a few months). Plus the mortgage might have covenants on how much you can change the property, etc.

        – D Stanley
        yesterday






      • 4





        Your primary residence is not an investment - it's an expense you pay for a place to live. Buying a rental property is more like an investment - and not as passive as people like to think.

        – Chris
        13 hours ago






      • 7





        Being a landlord is not remotely passive. Not only are you now the owner of said property, which means all maintenance is on you, you then need to deal with a renter.. Some renters are complete idiots (I dealt with one that drill HOLES into our floorboards when assembling a bed!!!) That's even assuming you have normal renters. If you have a nasty one, you'll find out (depending on jurisdiction) how ridiculously hard it is to kick someone out, even if they haven't paid rent in months... you must make sure the renter is good.

        – Nelson
        9 hours ago














      • 1





        Thanks for the answer! "Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk." - can you explain that?

        – Nikolay Dyankov
        yesterday






      • 3





        If you are relying on rents to pay the mortgage, you are less patient about finding good renters (you can't afford for the property to sit for a few months). Plus the mortgage might have covenants on how much you can change the property, etc.

        – D Stanley
        yesterday






      • 4





        Your primary residence is not an investment - it's an expense you pay for a place to live. Buying a rental property is more like an investment - and not as passive as people like to think.

        – Chris
        13 hours ago






      • 7





        Being a landlord is not remotely passive. Not only are you now the owner of said property, which means all maintenance is on you, you then need to deal with a renter.. Some renters are complete idiots (I dealt with one that drill HOLES into our floorboards when assembling a bed!!!) That's even assuming you have normal renters. If you have a nasty one, you'll find out (depending on jurisdiction) how ridiculously hard it is to kick someone out, even if they haven't paid rent in months... you must make sure the renter is good.

        – Nelson
        9 hours ago








      1




      1





      Thanks for the answer! "Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk." - can you explain that?

      – Nikolay Dyankov
      yesterday





      Thanks for the answer! "Tacking on a mortgage to an "investment" limits what you can do with the investment, and increases risk." - can you explain that?

      – Nikolay Dyankov
      yesterday




      3




      3





      If you are relying on rents to pay the mortgage, you are less patient about finding good renters (you can't afford for the property to sit for a few months). Plus the mortgage might have covenants on how much you can change the property, etc.

      – D Stanley
      yesterday





      If you are relying on rents to pay the mortgage, you are less patient about finding good renters (you can't afford for the property to sit for a few months). Plus the mortgage might have covenants on how much you can change the property, etc.

      – D Stanley
      yesterday




      4




      4





      Your primary residence is not an investment - it's an expense you pay for a place to live. Buying a rental property is more like an investment - and not as passive as people like to think.

      – Chris
      13 hours ago





      Your primary residence is not an investment - it's an expense you pay for a place to live. Buying a rental property is more like an investment - and not as passive as people like to think.

      – Chris
      13 hours ago




      7




      7





      Being a landlord is not remotely passive. Not only are you now the owner of said property, which means all maintenance is on you, you then need to deal with a renter.. Some renters are complete idiots (I dealt with one that drill HOLES into our floorboards when assembling a bed!!!) That's even assuming you have normal renters. If you have a nasty one, you'll find out (depending on jurisdiction) how ridiculously hard it is to kick someone out, even if they haven't paid rent in months... you must make sure the renter is good.

      – Nelson
      9 hours ago





      Being a landlord is not remotely passive. Not only are you now the owner of said property, which means all maintenance is on you, you then need to deal with a renter.. Some renters are complete idiots (I dealt with one that drill HOLES into our floorboards when assembling a bed!!!) That's even assuming you have normal renters. If you have a nasty one, you'll find out (depending on jurisdiction) how ridiculously hard it is to kick someone out, even if they haven't paid rent in months... you must make sure the renter is good.

      – Nelson
      9 hours ago













      14














      You've really answered your own question, without even needing to go into the financial details. "I just don't like the idea of getting in debt and not being able to move any time soon." If you want to be able to move at short notice, home ownership is not for you. OTOH, if you plan to stay where you are, like gardening, auto mechanics, woodworking, or any number of other things that you can't do in an apartment, then it probably is.



      Financially, I have to disagree with those who say it's a bad idea. My experience is that it can be good, though you have to look at the long term. Historically, you can expect rents to rise over time, while your mortgage payment (on a conventional loan) will remain fixed, except for property tax increases. You can also expect the property to appreciate. Say for example, I bought a house 20 years ago for $150K, with a mortgage payment that was about the same as renting a decent apartment. Now it's worth about $350K, the mortgage payment is maybe 1/2 - 2/3 of apartment rental, and in a few years it'll be completely paid off, so my monthly cost will be only a few hundred for taxes & insurance.



      As for real estate investing, IMHO don't do it unless it's something you think you would enjoy. Like investing in individual stocks, it can be a lot of work. Put your money in mutual funds, and relax :-)






      share|improve this answer
























      • If you take the difference between the mortgage payment and rent and invest it, you might find at the 20 year mark you're ahead overall even though the cash flow has reversed. Before I bought my first house I built a spreadsheet to compare apples to apples, using the same cash flow for both scenarios.

        – Mark Ransom
        21 hours ago











      • Yeah, from a financial point of view it could be a good idea to get a house. However, renting out something may not be something that OP wants to do, there are endless stipulations to either opening an air b&b or being a landlord. Also, plenty of hobbies can be done just through an apartment, anyone who wants to get a mortgage should do so with extreme, or get any sort of loan, should do so with extreme caution. It's the lack of causing that keeps the credit industry in business :-)

        – thinksinbinary
        19 hours ago











      • @MarkRansom: The difference between a mortgage payment and rent is usually a large negative number. Have fun investing that... ;-)

        – R..
        14 hours ago











      • @R.. it wasn't when I was doing my comparison. My rent was about half of mortgages+taxes+insurance. If owning is cheaper than renting it becomes a no-brainer.

        – Mark Ransom
        13 hours ago











      • @Mark Ransom: You might or might not find either option to be the more profitable. As they say in the prospectus, "Past performance is no guarantee of cuture results":-) But there are two financial plusses to home ownership that I can see. First, it's diversification. Second, it's a more forced investment: you can't really skip making house (or rent) payments without immediate consequences, while you can easily spend excess money insted of investing it.

        – jamesqf
        12 hours ago
















      14














      You've really answered your own question, without even needing to go into the financial details. "I just don't like the idea of getting in debt and not being able to move any time soon." If you want to be able to move at short notice, home ownership is not for you. OTOH, if you plan to stay where you are, like gardening, auto mechanics, woodworking, or any number of other things that you can't do in an apartment, then it probably is.



      Financially, I have to disagree with those who say it's a bad idea. My experience is that it can be good, though you have to look at the long term. Historically, you can expect rents to rise over time, while your mortgage payment (on a conventional loan) will remain fixed, except for property tax increases. You can also expect the property to appreciate. Say for example, I bought a house 20 years ago for $150K, with a mortgage payment that was about the same as renting a decent apartment. Now it's worth about $350K, the mortgage payment is maybe 1/2 - 2/3 of apartment rental, and in a few years it'll be completely paid off, so my monthly cost will be only a few hundred for taxes & insurance.



      As for real estate investing, IMHO don't do it unless it's something you think you would enjoy. Like investing in individual stocks, it can be a lot of work. Put your money in mutual funds, and relax :-)






      share|improve this answer
























      • If you take the difference between the mortgage payment and rent and invest it, you might find at the 20 year mark you're ahead overall even though the cash flow has reversed. Before I bought my first house I built a spreadsheet to compare apples to apples, using the same cash flow for both scenarios.

        – Mark Ransom
        21 hours ago











      • Yeah, from a financial point of view it could be a good idea to get a house. However, renting out something may not be something that OP wants to do, there are endless stipulations to either opening an air b&b or being a landlord. Also, plenty of hobbies can be done just through an apartment, anyone who wants to get a mortgage should do so with extreme, or get any sort of loan, should do so with extreme caution. It's the lack of causing that keeps the credit industry in business :-)

        – thinksinbinary
        19 hours ago











      • @MarkRansom: The difference between a mortgage payment and rent is usually a large negative number. Have fun investing that... ;-)

        – R..
        14 hours ago











      • @R.. it wasn't when I was doing my comparison. My rent was about half of mortgages+taxes+insurance. If owning is cheaper than renting it becomes a no-brainer.

        – Mark Ransom
        13 hours ago











      • @Mark Ransom: You might or might not find either option to be the more profitable. As they say in the prospectus, "Past performance is no guarantee of cuture results":-) But there are two financial plusses to home ownership that I can see. First, it's diversification. Second, it's a more forced investment: you can't really skip making house (or rent) payments without immediate consequences, while you can easily spend excess money insted of investing it.

        – jamesqf
        12 hours ago














      14












      14








      14







      You've really answered your own question, without even needing to go into the financial details. "I just don't like the idea of getting in debt and not being able to move any time soon." If you want to be able to move at short notice, home ownership is not for you. OTOH, if you plan to stay where you are, like gardening, auto mechanics, woodworking, or any number of other things that you can't do in an apartment, then it probably is.



      Financially, I have to disagree with those who say it's a bad idea. My experience is that it can be good, though you have to look at the long term. Historically, you can expect rents to rise over time, while your mortgage payment (on a conventional loan) will remain fixed, except for property tax increases. You can also expect the property to appreciate. Say for example, I bought a house 20 years ago for $150K, with a mortgage payment that was about the same as renting a decent apartment. Now it's worth about $350K, the mortgage payment is maybe 1/2 - 2/3 of apartment rental, and in a few years it'll be completely paid off, so my monthly cost will be only a few hundred for taxes & insurance.



      As for real estate investing, IMHO don't do it unless it's something you think you would enjoy. Like investing in individual stocks, it can be a lot of work. Put your money in mutual funds, and relax :-)






      share|improve this answer













      You've really answered your own question, without even needing to go into the financial details. "I just don't like the idea of getting in debt and not being able to move any time soon." If you want to be able to move at short notice, home ownership is not for you. OTOH, if you plan to stay where you are, like gardening, auto mechanics, woodworking, or any number of other things that you can't do in an apartment, then it probably is.



      Financially, I have to disagree with those who say it's a bad idea. My experience is that it can be good, though you have to look at the long term. Historically, you can expect rents to rise over time, while your mortgage payment (on a conventional loan) will remain fixed, except for property tax increases. You can also expect the property to appreciate. Say for example, I bought a house 20 years ago for $150K, with a mortgage payment that was about the same as renting a decent apartment. Now it's worth about $350K, the mortgage payment is maybe 1/2 - 2/3 of apartment rental, and in a few years it'll be completely paid off, so my monthly cost will be only a few hundred for taxes & insurance.



      As for real estate investing, IMHO don't do it unless it's something you think you would enjoy. Like investing in individual stocks, it can be a lot of work. Put your money in mutual funds, and relax :-)







      share|improve this answer












      share|improve this answer



      share|improve this answer










      answered 21 hours ago









      jamesqfjamesqf

      3,093917




      3,093917













      • If you take the difference between the mortgage payment and rent and invest it, you might find at the 20 year mark you're ahead overall even though the cash flow has reversed. Before I bought my first house I built a spreadsheet to compare apples to apples, using the same cash flow for both scenarios.

        – Mark Ransom
        21 hours ago











      • Yeah, from a financial point of view it could be a good idea to get a house. However, renting out something may not be something that OP wants to do, there are endless stipulations to either opening an air b&b or being a landlord. Also, plenty of hobbies can be done just through an apartment, anyone who wants to get a mortgage should do so with extreme, or get any sort of loan, should do so with extreme caution. It's the lack of causing that keeps the credit industry in business :-)

        – thinksinbinary
        19 hours ago











      • @MarkRansom: The difference between a mortgage payment and rent is usually a large negative number. Have fun investing that... ;-)

        – R..
        14 hours ago











      • @R.. it wasn't when I was doing my comparison. My rent was about half of mortgages+taxes+insurance. If owning is cheaper than renting it becomes a no-brainer.

        – Mark Ransom
        13 hours ago











      • @Mark Ransom: You might or might not find either option to be the more profitable. As they say in the prospectus, "Past performance is no guarantee of cuture results":-) But there are two financial plusses to home ownership that I can see. First, it's diversification. Second, it's a more forced investment: you can't really skip making house (or rent) payments without immediate consequences, while you can easily spend excess money insted of investing it.

        – jamesqf
        12 hours ago



















      • If you take the difference between the mortgage payment and rent and invest it, you might find at the 20 year mark you're ahead overall even though the cash flow has reversed. Before I bought my first house I built a spreadsheet to compare apples to apples, using the same cash flow for both scenarios.

        – Mark Ransom
        21 hours ago











      • Yeah, from a financial point of view it could be a good idea to get a house. However, renting out something may not be something that OP wants to do, there are endless stipulations to either opening an air b&b or being a landlord. Also, plenty of hobbies can be done just through an apartment, anyone who wants to get a mortgage should do so with extreme, or get any sort of loan, should do so with extreme caution. It's the lack of causing that keeps the credit industry in business :-)

        – thinksinbinary
        19 hours ago











      • @MarkRansom: The difference between a mortgage payment and rent is usually a large negative number. Have fun investing that... ;-)

        – R..
        14 hours ago











      • @R.. it wasn't when I was doing my comparison. My rent was about half of mortgages+taxes+insurance. If owning is cheaper than renting it becomes a no-brainer.

        – Mark Ransom
        13 hours ago











      • @Mark Ransom: You might or might not find either option to be the more profitable. As they say in the prospectus, "Past performance is no guarantee of cuture results":-) But there are two financial plusses to home ownership that I can see. First, it's diversification. Second, it's a more forced investment: you can't really skip making house (or rent) payments without immediate consequences, while you can easily spend excess money insted of investing it.

        – jamesqf
        12 hours ago

















      If you take the difference between the mortgage payment and rent and invest it, you might find at the 20 year mark you're ahead overall even though the cash flow has reversed. Before I bought my first house I built a spreadsheet to compare apples to apples, using the same cash flow for both scenarios.

      – Mark Ransom
      21 hours ago





      If you take the difference between the mortgage payment and rent and invest it, you might find at the 20 year mark you're ahead overall even though the cash flow has reversed. Before I bought my first house I built a spreadsheet to compare apples to apples, using the same cash flow for both scenarios.

      – Mark Ransom
      21 hours ago













      Yeah, from a financial point of view it could be a good idea to get a house. However, renting out something may not be something that OP wants to do, there are endless stipulations to either opening an air b&b or being a landlord. Also, plenty of hobbies can be done just through an apartment, anyone who wants to get a mortgage should do so with extreme, or get any sort of loan, should do so with extreme caution. It's the lack of causing that keeps the credit industry in business :-)

      – thinksinbinary
      19 hours ago





      Yeah, from a financial point of view it could be a good idea to get a house. However, renting out something may not be something that OP wants to do, there are endless stipulations to either opening an air b&b or being a landlord. Also, plenty of hobbies can be done just through an apartment, anyone who wants to get a mortgage should do so with extreme, or get any sort of loan, should do so with extreme caution. It's the lack of causing that keeps the credit industry in business :-)

      – thinksinbinary
      19 hours ago













      @MarkRansom: The difference between a mortgage payment and rent is usually a large negative number. Have fun investing that... ;-)

      – R..
      14 hours ago





      @MarkRansom: The difference between a mortgage payment and rent is usually a large negative number. Have fun investing that... ;-)

      – R..
      14 hours ago













      @R.. it wasn't when I was doing my comparison. My rent was about half of mortgages+taxes+insurance. If owning is cheaper than renting it becomes a no-brainer.

      – Mark Ransom
      13 hours ago





      @R.. it wasn't when I was doing my comparison. My rent was about half of mortgages+taxes+insurance. If owning is cheaper than renting it becomes a no-brainer.

      – Mark Ransom
      13 hours ago













      @Mark Ransom: You might or might not find either option to be the more profitable. As they say in the prospectus, "Past performance is no guarantee of cuture results":-) But there are two financial plusses to home ownership that I can see. First, it's diversification. Second, it's a more forced investment: you can't really skip making house (or rent) payments without immediate consequences, while you can easily spend excess money insted of investing it.

      – jamesqf
      12 hours ago





      @Mark Ransom: You might or might not find either option to be the more profitable. As they say in the prospectus, "Past performance is no guarantee of cuture results":-) But there are two financial plusses to home ownership that I can see. First, it's diversification. Second, it's a more forced investment: you can't really skip making house (or rent) payments without immediate consequences, while you can easily spend excess money insted of investing it.

      – jamesqf
      12 hours ago











      5














      I would not factor in appreciation of the property, especially because you applied it on one property and not the other (where it would have made far more of a difference). If you pay off the far more expensive property and the appreciation works the same way, you'd end up with a far more expensive property.



      Barring that, though, you're only calculating two options. If you were being more comprehensive with your comparisons you'd be able to get a real sense of what you can do with that money. Imho investing in real estate is not something for beginners. You need to be able to see if a property is a good one for investing, you need to have a good sense of what kinda rent you can get and more importantly (as D Stanly said) you need to get a good sense of how much of the time the property is going to sit empty and cost you money.

      I would be far more interested in what kinda money you can get via index fund or other diversified investment.



      I ended up buying a house because it was around the same amount of money as renting (mortgage payment includes taxes, mortgage insurance, homeowners insurance.... rent does not). It's very much dependent on the situation in your area.






      share|improve this answer




























        5














        I would not factor in appreciation of the property, especially because you applied it on one property and not the other (where it would have made far more of a difference). If you pay off the far more expensive property and the appreciation works the same way, you'd end up with a far more expensive property.



        Barring that, though, you're only calculating two options. If you were being more comprehensive with your comparisons you'd be able to get a real sense of what you can do with that money. Imho investing in real estate is not something for beginners. You need to be able to see if a property is a good one for investing, you need to have a good sense of what kinda rent you can get and more importantly (as D Stanly said) you need to get a good sense of how much of the time the property is going to sit empty and cost you money.

        I would be far more interested in what kinda money you can get via index fund or other diversified investment.



        I ended up buying a house because it was around the same amount of money as renting (mortgage payment includes taxes, mortgage insurance, homeowners insurance.... rent does not). It's very much dependent on the situation in your area.






        share|improve this answer


























          5












          5








          5







          I would not factor in appreciation of the property, especially because you applied it on one property and not the other (where it would have made far more of a difference). If you pay off the far more expensive property and the appreciation works the same way, you'd end up with a far more expensive property.



          Barring that, though, you're only calculating two options. If you were being more comprehensive with your comparisons you'd be able to get a real sense of what you can do with that money. Imho investing in real estate is not something for beginners. You need to be able to see if a property is a good one for investing, you need to have a good sense of what kinda rent you can get and more importantly (as D Stanly said) you need to get a good sense of how much of the time the property is going to sit empty and cost you money.

          I would be far more interested in what kinda money you can get via index fund or other diversified investment.



          I ended up buying a house because it was around the same amount of money as renting (mortgage payment includes taxes, mortgage insurance, homeowners insurance.... rent does not). It's very much dependent on the situation in your area.






          share|improve this answer













          I would not factor in appreciation of the property, especially because you applied it on one property and not the other (where it would have made far more of a difference). If you pay off the far more expensive property and the appreciation works the same way, you'd end up with a far more expensive property.



          Barring that, though, you're only calculating two options. If you were being more comprehensive with your comparisons you'd be able to get a real sense of what you can do with that money. Imho investing in real estate is not something for beginners. You need to be able to see if a property is a good one for investing, you need to have a good sense of what kinda rent you can get and more importantly (as D Stanly said) you need to get a good sense of how much of the time the property is going to sit empty and cost you money.

          I would be far more interested in what kinda money you can get via index fund or other diversified investment.



          I ended up buying a house because it was around the same amount of money as renting (mortgage payment includes taxes, mortgage insurance, homeowners insurance.... rent does not). It's very much dependent on the situation in your area.







          share|improve this answer












          share|improve this answer



          share|improve this answer










          answered 23 hours ago









          xyiousxyious

          962313




          962313























              1














              It depends on the nature of the market where you live



              Where I live, a year of rent is lower than property taxes + insurance + maintenance costs on any property. From a financial point of view, more money would be thrown away buy purchasing a home than renting.



              However, there is the issue of equity growth. Is your money in savings earning the same amount of equity growth as home ownership? This is really a matter of timing. Where I live, the market seems to be in a bubble that is about to burst. There are two choices with real estate:




              1. Buy low and sell high

              2. Buy high and sell low


              So option #2 is no good for most people. Option 1 requires some thought. Specifically, will the equity growth be greater than the difference between rent and ownership costs?



              So, it really is a question of timing.



              I heard it said recently that in the US these days, home ownership is more an emotional purchase than one of finances. It sort of matches with the pressure people are giving you - they should be instead helping you make sure you have the money well invested.






              share|improve this answer






























                1














                It depends on the nature of the market where you live



                Where I live, a year of rent is lower than property taxes + insurance + maintenance costs on any property. From a financial point of view, more money would be thrown away buy purchasing a home than renting.



                However, there is the issue of equity growth. Is your money in savings earning the same amount of equity growth as home ownership? This is really a matter of timing. Where I live, the market seems to be in a bubble that is about to burst. There are two choices with real estate:




                1. Buy low and sell high

                2. Buy high and sell low


                So option #2 is no good for most people. Option 1 requires some thought. Specifically, will the equity growth be greater than the difference between rent and ownership costs?



                So, it really is a question of timing.



                I heard it said recently that in the US these days, home ownership is more an emotional purchase than one of finances. It sort of matches with the pressure people are giving you - they should be instead helping you make sure you have the money well invested.






                share|improve this answer




























                  1












                  1








                  1







                  It depends on the nature of the market where you live



                  Where I live, a year of rent is lower than property taxes + insurance + maintenance costs on any property. From a financial point of view, more money would be thrown away buy purchasing a home than renting.



                  However, there is the issue of equity growth. Is your money in savings earning the same amount of equity growth as home ownership? This is really a matter of timing. Where I live, the market seems to be in a bubble that is about to burst. There are two choices with real estate:




                  1. Buy low and sell high

                  2. Buy high and sell low


                  So option #2 is no good for most people. Option 1 requires some thought. Specifically, will the equity growth be greater than the difference between rent and ownership costs?



                  So, it really is a question of timing.



                  I heard it said recently that in the US these days, home ownership is more an emotional purchase than one of finances. It sort of matches with the pressure people are giving you - they should be instead helping you make sure you have the money well invested.






                  share|improve this answer















                  It depends on the nature of the market where you live



                  Where I live, a year of rent is lower than property taxes + insurance + maintenance costs on any property. From a financial point of view, more money would be thrown away buy purchasing a home than renting.



                  However, there is the issue of equity growth. Is your money in savings earning the same amount of equity growth as home ownership? This is really a matter of timing. Where I live, the market seems to be in a bubble that is about to burst. There are two choices with real estate:




                  1. Buy low and sell high

                  2. Buy high and sell low


                  So option #2 is no good for most people. Option 1 requires some thought. Specifically, will the equity growth be greater than the difference between rent and ownership costs?



                  So, it really is a question of timing.



                  I heard it said recently that in the US these days, home ownership is more an emotional purchase than one of finances. It sort of matches with the pressure people are giving you - they should be instead helping you make sure you have the money well invested.







                  share|improve this answer














                  share|improve this answer



                  share|improve this answer








                  edited 3 hours ago

























                  answered 3 hours ago









                  axsvl77axsvl77

                  24517




                  24517























                      -2














                      If you're going to go in, go in hard. You have 50k in down payment. Downpayments are usually only 20% so in reality you can afford 250k in loans for property. Not sure if you want to do this. If you did the next step would be to get two 100k rental properties and rent those out after doing tons of research. If you're not in a good market, this is dumb.



                      Something I want to point out is that you are paying $700+ in rent. Why would you rental properties not draw at least that amount? Make sure you do research into being a landlord. As it stands now, you don't know enough about real-estate to speculate on which outcome is better. Keep in mind that you get to sell your rental properties down the line too. People usually forget that you build equity when you have a rental property. Do some more research and educate yourself some more so you know what's going on.



                      Also, if you're going to go into debt, make sure you make it worth your time. Getting only 100k in loans is kinda a weak move, especially when you know your property value is going to increase.






                      share|improve this answer





















                      • 3





                        "You don't know enough - invest more money" sounds kinda like not a smart move at all.

                        – Christian
                        7 hours ago











                      • @Christian Op should be investing more money, and they should educate themselves about real-estate. Not understanding the need to invest more money is part of why op needs education.

                        – Steve
                        1 hour ago
















                      -2














                      If you're going to go in, go in hard. You have 50k in down payment. Downpayments are usually only 20% so in reality you can afford 250k in loans for property. Not sure if you want to do this. If you did the next step would be to get two 100k rental properties and rent those out after doing tons of research. If you're not in a good market, this is dumb.



                      Something I want to point out is that you are paying $700+ in rent. Why would you rental properties not draw at least that amount? Make sure you do research into being a landlord. As it stands now, you don't know enough about real-estate to speculate on which outcome is better. Keep in mind that you get to sell your rental properties down the line too. People usually forget that you build equity when you have a rental property. Do some more research and educate yourself some more so you know what's going on.



                      Also, if you're going to go into debt, make sure you make it worth your time. Getting only 100k in loans is kinda a weak move, especially when you know your property value is going to increase.






                      share|improve this answer





















                      • 3





                        "You don't know enough - invest more money" sounds kinda like not a smart move at all.

                        – Christian
                        7 hours ago











                      • @Christian Op should be investing more money, and they should educate themselves about real-estate. Not understanding the need to invest more money is part of why op needs education.

                        – Steve
                        1 hour ago














                      -2












                      -2








                      -2







                      If you're going to go in, go in hard. You have 50k in down payment. Downpayments are usually only 20% so in reality you can afford 250k in loans for property. Not sure if you want to do this. If you did the next step would be to get two 100k rental properties and rent those out after doing tons of research. If you're not in a good market, this is dumb.



                      Something I want to point out is that you are paying $700+ in rent. Why would you rental properties not draw at least that amount? Make sure you do research into being a landlord. As it stands now, you don't know enough about real-estate to speculate on which outcome is better. Keep in mind that you get to sell your rental properties down the line too. People usually forget that you build equity when you have a rental property. Do some more research and educate yourself some more so you know what's going on.



                      Also, if you're going to go into debt, make sure you make it worth your time. Getting only 100k in loans is kinda a weak move, especially when you know your property value is going to increase.






                      share|improve this answer















                      If you're going to go in, go in hard. You have 50k in down payment. Downpayments are usually only 20% so in reality you can afford 250k in loans for property. Not sure if you want to do this. If you did the next step would be to get two 100k rental properties and rent those out after doing tons of research. If you're not in a good market, this is dumb.



                      Something I want to point out is that you are paying $700+ in rent. Why would you rental properties not draw at least that amount? Make sure you do research into being a landlord. As it stands now, you don't know enough about real-estate to speculate on which outcome is better. Keep in mind that you get to sell your rental properties down the line too. People usually forget that you build equity when you have a rental property. Do some more research and educate yourself some more so you know what's going on.



                      Also, if you're going to go into debt, make sure you make it worth your time. Getting only 100k in loans is kinda a weak move, especially when you know your property value is going to increase.







                      share|improve this answer














                      share|improve this answer



                      share|improve this answer








                      edited 1 hour ago

























                      answered 19 hours ago









                      SteveSteve

                      1473




                      1473








                      • 3





                        "You don't know enough - invest more money" sounds kinda like not a smart move at all.

                        – Christian
                        7 hours ago











                      • @Christian Op should be investing more money, and they should educate themselves about real-estate. Not understanding the need to invest more money is part of why op needs education.

                        – Steve
                        1 hour ago














                      • 3





                        "You don't know enough - invest more money" sounds kinda like not a smart move at all.

                        – Christian
                        7 hours ago











                      • @Christian Op should be investing more money, and they should educate themselves about real-estate. Not understanding the need to invest more money is part of why op needs education.

                        – Steve
                        1 hour ago








                      3




                      3





                      "You don't know enough - invest more money" sounds kinda like not a smart move at all.

                      – Christian
                      7 hours ago





                      "You don't know enough - invest more money" sounds kinda like not a smart move at all.

                      – Christian
                      7 hours ago













                      @Christian Op should be investing more money, and they should educate themselves about real-estate. Not understanding the need to invest more money is part of why op needs education.

                      – Steve
                      1 hour ago





                      @Christian Op should be investing more money, and they should educate themselves about real-estate. Not understanding the need to invest more money is part of why op needs education.

                      – Steve
                      1 hour ago


















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