Quote:
Originally Posted by chassis
AlpineWhite_SJ Spot on.
Total return for me means:
Purchase price gain (price sold - price purchased)
Less: interest on loans, whether mortgage or otherwise
Less: property taxes
Less: capital improvements (remodelling, additions, etc.)
Less: maintenance expense
Less: HOA or other site-related fees
Add: tax benefit, if any
Total: Return
Total Return = Return / initial investment (down payment, if any)
Then do a CAGR calculation and compare it to the S&P over the same time frame including dividend reinvestment.
Subjective benefits have already been mentioned, mainly that owning offers the potential to have a higher quality environment for raising at-home children.
One of the main subjective disadvantages of owning a home is illiquidity (boat anchor effect) of the asset.
If a person:
a. does not have at-home children, and
b. seeks maximum net present value, then
owning a home does not appear to be in the best financial interest of said person.
|
You forgot real estate agent commission fees. Granted you can do a FSBO but chances are you still have to pay 3% for the buyer's agent commission.