Oddbean new post about login | logout But the minimum down payment is not 100k, it’s 17,500. So he could still “buy” 82,500 worth of bitcoin, when purchasing the house, which seems to be lacking in the analysis. So the opportunity cost is not as great as is indicated, AND increasing cash flows needed to service the rent are not included vs a fixed rate mortgage payment, which is assumed to be covered by cashflow for the life of the loan.
Very good point. Rent is sure to increase massively over the duration of a 30 year fixed.
And as I said, everyone needs a home, so the personal value of owning a home, becoming part of a neighborhood/community, and the security of not being forced out at the whim of an owner, is also lacking. Not to mention moving costs, security deposits lost(effectively a 13th month of rent dependent on an owners willingness to renew a lease), lack of autonomy over one’s lifestyle(want pets? Need owner permission) are all lacking. The calculus is flawed.
Can you show how my math is flawed with actual numbers? Show me how putting 100k in bitcoin and renting an apartment will make me less wealthy than putting 100k down on a house and paying a mortgage over a 30 year time period.
That’s a false comparison, because as your own numbers said, you only need to put 17,500 down to mortgage the house. So if you have 100k to spend, you can actually buy the house AND bitcoin, it’s not either/or you can buy 82,500$ worth of bitcoin, and pay the mortgage.
That’s fine you can use $17,500 instead. Assume that’s all the money I have. How will my net worth make me better off buying instead of renting 30 years from now? Show me the numbers In my initial post, the down payment was $37k and the difference wasn’t even close.
If that’s all the money you have you don’t qualify for the house in the first place.
Yes I do with FHA on a $500k home
If you qualify for FHA with a 3.5% deposit on a 500k loan at 2.5% interest, there are a lot of assumptions to to make about HOA fees, property taxes, PMI, existing debt levels. I made assumptions of 2700/y in property tax’s and 2400/y insurance and mortgage insurance of .8% and no existing debt, suggesting you make ~90k/year and will be paying just about 28k/year on the mortgage. After taxes, and mortgage you should have somewhere around 2500/month left over. Buy your food, and other stuff like phone or utilities and you probably have about 1000-1500$ left over each month. Save in bitcoin. I think this scenario is totally unrealistic. If you’re making 90k per year as a single male, have only saved 17,500 dollars, and are deciding between buying a house or buying bitcoin with your ENTIRE savings, you possibly could have recently acquired a very secure position and are looking to leverage that job security ASAP but most likely have been spending too much. If it’s the former, you could decide to buy the bitcoin now and then proceed to buy the house in one year, or vice versa. If it’s the latter, you most likely can’t budget properly to afford the house or the bitcoin anyways.