Renting While Investing vs. Owning a Home

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Renting While Investing vs. Owning a Home

Notapor miniming » Dom 25. Jul 2021, 04:37

Renting While Investing vs. Owning a Home

Invitation Homes, a publicly traded REIT spun off from the world’s largest private equity firm, Blackstone BX +1.1%, owns about 80,000 houses around the country, more than 12,000 of which are in the Atlanta metro area. According to their most recent quarterly earnings statement, their houses are worth a combined $16.3 billion, and they collect $1.9 billion in rent annually, which means that when they rent out a house worth about $200,000, they charge around $1,900 in rent each month.

But the mortgage payment for a house worth $200,000 is only about $960, assuming a 4% interest rate, a 20% down payment, and $132 in monthly property taxes. Someone renting an Invitation Homes property will be spending about twice as much every month in rent as their monthly mortgage payment would be if they owned the home.

The renter, though, would have the chance to invest their down payment amount. pg slot

If instead of making a $40,000 down payment, the renter invested $40,000 in INVH on April 2, 2017, their investment would have grown to $63,385 by March 31, 2021, a healthy 12% growth rate per year.

The homeowner would directly benefit from the rising house prices during that time period when he or she went to sell her house. A house purchased for $200,000 in April 2017 would be worth about $261,000 by March of 2021. Because of the power of leverage, the $40,000 down payment became more than $100,000 in equity. And remember, the homeowner had monthly housing payments that were roughly half the cost of the renter’s monthly rental payments.

When you add it all up, including the homeowner’s closing costs and costs of maintenance (but assuming the homeowner doesn’t deduct mortgage interest on their taxes), the homeowner comes out ahead by more than $60,000 over just a four year period. The longer the homeowner stays put, the better of she’ll be.
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Re: Renting While Investing vs. Owning a Home

Notapor goalken » Lun 26. Jul 2021, 09:13

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Re: Renting While Investing vs. Owning a Home

Notapor rejinaariya » Lun 26. Jul 2021, 13:49

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