有個客人寫信給我，他告訴我，他跟太太現在房租2400，想買間40萬元的小Condo，我應該下手嗎?
答案絕對是肯定的，讓我們看看我回信的內容。
Q:Should I buy a house for 400K or rent a apt for 2400/month?
Since your rent is pretty high, I will suggest that you just buy a condo.
I believe you did some math already.
Let’s compare renting an apt for $2400 vs. buying a 400K condo.
If you buy a 400K house with 320K, 30 fixed rate 3.75% mortgage.
Mortgage monthly payment is $1481
Property tax:$416 /month
HOA: $250~300/month
Insurance: $20/month
1481+416+300+20=2217/month
From the above, it’s already cheaper than what you are paying per month for rent, but it requires that you have a $80K down payment available.
Mortgage interest and property tax are tax deductible:
The first 48 month, mortgage interest accrues to $46,216. Property Tax (assuming 2.5% annual increase) is around $20762. The tax break is roughly $23K (assuming 35% tax rate).
With that said, 48 months of living in your condo will cost you:
$46216 (interest) + $20762 (property tax) – $23000 (tax break) + $12000 (HOA) + $960 (insurance) ~ $57K.
If you can get 5% annual return on your $80K down payment (if you had invested it rather than buying a house), the “cost” there is $17.2K.
So, the total cost is $74.2K. That’s still significantly less than $115K that you paid in rent over the same period. When you sell the house, there’s ~5% commission, which is $20K (at $400K sale price, assuming no gain). Your total cost is $94K assuming a flat house price. You can easily add or subtract from that number based on your forecast.
Therefore, I know you probably will choose to buy a condo than paying rent.
Ever case is unique, I can calculate for you.
