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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: mishedlo who wrote (24945)3/4/2005 11:08:04 PM
From: GraceZ  Read Replies (2) of 116555
 
I'm sure the mover was telling the guy what he should have done a while ago. Easy to see in retrospect where money should have gone.

The house was probably 250k five years ago with interest rates around 8%. So if the guy had bought the place across the street instead of renting the $1000 month apartment, it would have cost him about $700-900 more a month (after factoring in the tax savings above the standard deduction on the interest and RE taxes at the 28% bracket) to have around $220,000 in tax free money in his pocket today. He'd have to get better than 50% returns on his investments and have them be tax free to beat the return on the house vs. renting and investing the diff. Not impossible in that time frame, just not probable.

It gets more than a little dicy trying to project those kinds of returns over the next five years. RE returns, like any investment returns, bunch up and then revert to the mean to make the long run trend.
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