Read most “rent vs. own” articles, and you’ll typically see advice like, “Normally it’s better to own than rent. Here’s a calculator to help you decide which is best for you.” Then they’ll show you a calculator like one of these:
• New York Times Rent Vs Own Calculator
• Smart Money Rent Vs Own Calculator
• Motley Fool Rent Vs Own Calculator
But there’s a problem with these calculators. As with many online calculators offering easy answers to complex questions, in order for them to work, you’re required to know the unknowable. For example, you’re supposed to supply the future price appreciation of real estate, annual maintenance costs, initial fix-up costs, what you expect to earn on your savings, your future tax bracket, future property taxes, future rent increases – lots of key variables that virtually nobody can possibly know.
Had you used any of these calculators back in 2006, you’d have bought a house and made the worst investment decision of your life. Maybe it’s time to understand a few fundamentals when it comes to deciding whether to rent or own. Get these down before using any calculator.
In addition to these calculators check out the Resource Center at One2One Lending for more financial help.
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