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To Rent or to Buy?
Are you ready to be a homeowner? Find out which path makes the most financial sense.
 
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Posted 8:44 AM EST June 07, 2008
Posted by: jeffthewhitegoose
This is a very nice summary on the advantages of buying over renting. I have developed my own theory on helping individuals decided whether or not to buy called 'The Three Fives' or 555 theory. Based on all of the input I have been able to gather from posting such as these. I am interested in what people think. Please visit www.jeffreyaustinwhite.com or <a href='http://www.jeffreyaustinwhite.com/BLOG/archive/2008/06/05/theory-of-the-three-fives-on-renting-vs-buying-a-home.aspx'>555</a>.
Posted 10:44 AM EST June 03, 2008
Posted by: defense20
Sorry, I figured it out... As your rent increases by the property appreciation value (inflation), your monthly rent eventually exceeds your monthly mortgage payment. At this point the calculator starts deducting value from any investments due to the deficit and over time the value will become negative. And, obviously, increasing your rate of return on a negative value will not increase the value of the investment. So, if your value is negative for the return on investment, then it is obviously better to buy than rent. My apologies.
Posted 12:51 PM EST June 02, 2008
Posted by: defense20
This calculator is horrible, I'm not sure that it works at all. I consistently get a negative value for the return on alternative investments; this should be impossible since and down payment would be added to this investment category. Furthermore, adjusting the return rate does not adjust the alternative investment value either. What a waste! Oh, let me guess, you have to sign up to get a functional worksheet.
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