Rent a house or buy/build? How did you decide?

  • Erstellt am 2018-06-03 15:36:35

Knallkörper

2018-06-05 15:23:56
  • #1


Unqualified interim question: Shouldn't you also consider that Climbee saved around 105,000 euros in rent over 20 years? It's not like she used the house as a vacant investment property and still had expenses for living, as it would be with a classic car in the garage. She also (used up) used it. It's like buying a Golf in 1995, driving it for 20 years, and selling it for twice the original price.
 

chand1986

2018-06-05 16:05:40
  • #2


However, she still paid for housing through repayment and interest – how long and how much exactly, I don't know, you would have to know too many parameters, which probably won't all be exactly known after the time anyway.

Let's assume that she wouldn't have been homeless and definitely would have lived somewhere, for comparison you have to consider the delta between rent and repayment during the repayment period. For that, you need to take a fictitious rent if you own the property or a fictitious repayment if you are a renter. She would have had to spend the money either way.

In the case of ownership, it goes into the equity stock, with which she can later calculate her annual return. In reality, you don't calculate x% p.a. on the equity that existed at the time of purchase. That's just a rough simplification. With every installment paid, your equity increases while the period for your calculation shortens simultaneously.

There should be Excel sheets on the web about savings plans with a duration of so many years, which are periodically funded and already interest the euro deposited on the first day with X%, then grow exponentially through compound interest, but also have a linear component due to regular deposits. This is how the apartment should be seen during the repayment period. Only afterward does a “rent-free” period arise, which can be fully credited against rent that would otherwise have to be paid.

Then you have the increase in value upon sale, which, calculated over 22 years, is not that high a % p.a., as I have calculated. Minus repairs, minus inflation, minus interest costs. Plus rent freedom in comparison to a fictitious rent (previously you set the delta here) from the last installment onwards.

That results in something that allows you to calculate a % p.a. return after sale. This is then compared with alternative investments. And then keep in mind that Climbee was able to make a very strong sale in a boom period here, which is certainly not given to everyone.



Here lies a fallacy: For this Golf you would first have had to save equity, for example liquid as a daily allowance account. You could have made your savings plan smaller but started earlier if you had simply bought a different car that you can only sell after 20 years for the simple purchase price (this would be equivalent to a rental apartment). Repairs, interest, you don't have to deduct.

With the Golf, you also had to pay one or the other repair yourself over 20 years, so your resale value is not net at twice the price, as you have to deduct that. Then minus interest costs, because you financed the car (equivalent to the apartment). Then minus inflation.

All these negatives are already included in the fictitious rent, i.e., the comparison value already included(!!), so they do not have to be deducted a second time.

To stay with your car example: With a price doubling after 20 years, after deducting the costs I mentioned above, you might get out 1.4 times. So +40% in 20 years. As % p.a. that’s not great, really not. Just 2% inflation p.a. eats away 30% of your "doubling" in 20 years alone, before you have deducted anything else.
 

Steffen80

2018-06-05 17:08:38
  • #3


pretty dumb luck. If you had put it in the DAX in 1995... it would now be over 1 million. If you had invested in Apple in 1995... oh, never mind

Edit: even with a fixed deposit back in 1995 and the corresponding duration, you would have more than 295,000 EUR today!!!
 

HilfeHilfe

2018-06-05 17:15:20
  • #4

Woulda woulda bike chain
 

ypg

2018-06-05 20:03:57
  • #5

You could never take money into the kingdom of heaven. Why should you give up the comfort and luxury of a self-built single-family house, only to eventually have a full bank account thanks to speculation or horrendous saving?
Maybe you miss something that’s enough for the next show, and then the same game again? Money reassures, but just having it does not make you happy.
is in the same situation as me and makes the same of it: namely living!
We don’t give a damn about returns, we live our lives well like this!
But some probably have to become 50+ to understand that.
A youngster like you will eventually realize that money isn’t everything.
 

Nordlys

2018-06-05 20:40:26
  • #6
You are so right too.... sitting in the garden, admiring my new lawn, [skol].
 

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