> If you have a paid off home, could you sell it and get a better ROI with the cash equivalent and rent instead? (The answer is yes and you should do it)
Could you explain how that makes sense? I can't see it working except if you are willing to accept a huge risk by putting the money into financial markets. Banks offer around 0% in my country, and with 4.5% inflation keeping cash just burns a hole in your pocket.
It’s a uniquely American (which can include Canada) situation - some very nice places to live have extremely strong rental inversion markets; where it costs $4k a month to rent a place that would easily have $10k a month in mortgage and property tax.
Landlords are willing to “subsidize” renters because appreciation has been so high. But it’s really only terribly high when leveraged and often the accounting is soft.
The buy/rent discussion isn’t a clear cut one, and it’s more than financial, but it’s certainly not a “buying always wins” scenario as many seem to think it is.
Yep, this is exactly the situation in the Seattle area. Here it makes little sense to take on a mortgage when renting is so comparably cheap. But go anywhere else like say Atlanta where rents are roughly equal to a mortgage payment and the opposite is true.
Generally you are right. VHCOL (Seattle, SF Bay Area), HCOL (California,...) and MCOL areas are better for renting and LCOL areas are better for buying.
There are two factors really:
- Rent to Buy ratio (or as you put it, rent compared to the mortgage)
Could you explain how that makes sense? I can't see it working except if you are willing to accept a huge risk by putting the money into financial markets. Banks offer around 0% in my country, and with 4.5% inflation keeping cash just burns a hole in your pocket.