Silicon Valley Real Estate | JLee Realty
Purchase price | $1,250,000 |
Down payment | $250,000 |
Interest rate | 3.4% |
Total interest for 7 years | -$281,494 |
Property tax for 7 years | -$105,000 |
Repairs for 7 years | -$31,250 |
Income tax deduction (~30%) | +$75,640 |
Net cost | -$342,104 |
Appreciation (6.1% per year) | +$513,588 |
Wealth | +171,484 |
Monthly rent | $3,500 |
Total rent for 7 years | -$294,000 |
Wealth | -$294,000 |
(6.1% actual average house value appreciation per year from 1998 to 2020 in Santa Clara County)
*Check with a tax professional about your tax savings!
There are many "calculators" used to compare renting versus buying. There are strong financial reasons for owning rather than renting. The difference in wealth between the average homeowner and the average non-homeowner in the U.S. is quite large, with much of it due to owning a home.
An investor owning a home to rent out has additional factors when deciding to own or continue owning it:
Two good rent vs buy calculators are:
Home mortgage interest rates affect the choice between renting versus buying. A good way to estimate current interest rates is to refer to the current Consumer Financial Protection Bureau's explore interest rates.
If you want to see interest rate trends, the FreddieMac PMMS is an excellent source.