I decided im not buying a house

Why I don’t plan on buying a house for the 3-8 years, and what I’m going to be doing till then, and yes you can steal my or tell me the holes in it, so I can improve it.

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Calculator: For rent or buy
Link: https://smartasset.com/mortgage/rent-vs-buy

Calculator: For investing Goals
link: https://www.investor.gov/financial-tools-calculators/calculators/savings-goal-calculator

Compound interest calculator:
link: http://www.moneychimp.com/calculator/compound_interest_calculator.htm

1. Mathamitcall Break down
– The general idea is that 100% of the money you use to rent is garbage ( gone )
– And that a big junk of the money you pay on a mortgage is equity built up
– But that’s none of those statements are true
Here is a real-life example ( my example, ps feel free to run these numbers with your numbers )
– I want to buy a house that around $300k that’s my budget ( I’ll put down 20% and have a mortgage of around $1,395 including CITI)
– I won’t pay more than $1350 for rent
– Sounds like I’m missing out on a house over $50 ( and I could be $422 every month towards building equity and save money on taxes with interest )
– But its never a good idea to spend $1 to save 30 cents with taxes (it’s stupid if the numbers don’t work )

The truth of these numbers:
– According to this calculator renting is cheaper up until year 8
– Renting would cost $139,044 ( with increases along the way )
– While buying would cost me $138,484 and I would have built-in equity)

Truth:
– On the first year of buying that home ( it’ll cost me 69,000 including the down payment and the closing cost )
– And over 8 years I would have only paid down $45,972 in capital paydown ( but I paid 138k)
– The rest of the money went like this ( 50,252 towards interest bank profit, 31,200 taxes shut out to taxes, and 7488 towards insurance)

Meaning: I still owe the bank $194,028
And over 30 years they make $117,425 from me in interest ( that’s a 48% profit )

2. Investing the difference and the More Numbers
– Now if instead of doing this I invest the money
– Well the numbers look a lot better
– And the bank makes 0 money from me

The Math:
– If I invest that 69k over 8 years at 10 return also investing the dividends ( I would have around $147,907)
– If I also invested an additional $1,108.30 over that 8 years period, I would have $300,000 dollars
– Meaning I can pay cash for the house ( meaning my only expenses is insurance and taxes and that’s only $403 a month)

But Tommy that money is trapped and not growing:
– Well if Invest the difference now ( $992 a month over 30 years at a 10% return)
– In 30 years I will have 2.1M dollars
– My house would be worth $543k

Overall:
– I like that long term math
– And while I have a paid-for house and good income still
– I can start buying rental properties also ( with a similar formula to stop paying the bank all my money)

3. Why I want a house

– I want security like everyone else
– Build my family and give them a home
– And I want to own something that is mine ( like everyone else also )
– But the numbers don’t make sense yet

So overall for the next 3-4 years I’m going to wait
– I’ll rent and keep investing a ton of money
– So when I do buy the numbers make a lot more sense
– Ps. In New York, the numbers are worst

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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