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crashmonitor

Renting V Owning 2012-2016 The Arithmetic

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Completed yesterday after a short stint of owning neatly tied into fifteen quarters from 1st July 2012 to 30th March 2016.

Bought for 242500 and sold for 275,000. Gross purchase 246,680, net sale proceeds 270,279.

The actual sale was pretty much in line with all the indicies with reference to the purchase price.

Account

Profit on sale after all transaction costs...............23,599

Saving on rent.....................................................31,500 (at £700 per month)

Gross Profit.........................................................55,099

Less Costs

Repairs and Renewals.......................6000

Lost investment income at 2%..........19025........25,025

(on principal 246,680)

Net gain..............................................................30,074

Verdict 30 grand not worth the hassle and lack of freedom of renting. Renting wins hands down. especially as I do all the work, the garden, the financials, the DIY, the worrying and the missus does note. she was even at work yesterday while I did all the moving logistics. Not owning feels bloody wonderful. The net gain to me as an individual after all is only 15 grand, knowing what I now know I would have just rented.

Edited by crashmonitor

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Completed yesterday after a short stint of owning neatly tied into fifteen quarters from 1st July 2012 to 30th March 2016.

Bought for 242500 and sold for 275,000. Gross purchase 246,680, net sale proceeds 270,279.

The actual sale was pretty much in line with all the indicies with reference to the purchase price.

Account

Profit on sale after all transaction costs...............23,599

Saving on rent.....................................................31,500 (at £700 per month)

Gross Profit.........................................................55,099

Less Costs

Repairs and Renewals.......................6000

Lost investment income at 2%..........19025........25,025

(on principal 246,680)

Net gain..............................................................30,074

Verdict 30 grand not worth the hassle and lack of freedom of renting. Renting wins hands down. especially as I do all the work, the garden, the financials, the DIY, the worrying and the missus does note. she was even at work yesterday while I did all the moving logistics. Not owning feels bloody wonderful. The net gain to me as an individual after all is only 15 grand, knowing what I now know I would have just rented.

I would expect to do better than 2% for investment income on £250k. Invested over the same period in the average Global fund, it would've delivered a little north of 30% (i.e. a total gain in the ballpark of £80k). In UK equity income that's even better: around 40%. Money-printing has delivered a largely-artificial bull market, and equities have done better than your house on account of having been better value in 2012 (as I believe they still are).

[edit] Meant to add, I'm paying £700/month rent. That's been covered by investment income for the last three years, (2015 I made over £12k) on a portfolio whose total net cost to date is £100k.

Edited by porca misèria

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I would expect to do better than 2% for investment income on £250k. Invested over the same period in the average Global fund, it would've delivered a little north of 30% (i.e. a total gain in the ballpark of £80k). In UK equity income that's even better: around 40%. Money-printing has delivered a largely-artificial bull market, and equities have done better than your house on account of having been better value in 2012 (as I believe they still are).

[edit] Meant to add, I'm paying £700/month rent. That's been covered by investment income for the last three years, (2015 I made over £12k) on a portfolio whose total net cost to date is £100k.

Well I'm a Bear and play it safe.

Still pondering on why I keep buying property....24 year M I's question.....like Everest it screws you up, shortens your life and makes you work like a Trojan. I guess the answer is because it's there.

Edited by crashmonitor

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Well I'm a Bear and play it safe.

Still pondering on why I keep buying property....24 year M I's question.....like Everest it screws you up, shortens your life and makes you work like a Trojan. I guess the answer is because it's there.

Sorry but it is the elephant in the room.

At least my wife, who was desperate to buy, plans on selling up when we get to your age and buggering off.

In your position, isn't renting a nice flat the logical choice? Small, low maintenance, low running costs, no worry, great flexibility?

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Sorry but it is the elephant in the room.

At least my wife, who was desperate to buy, plans on selling up when we get to your age and buggering off.

In your position, isn't renting a nice flat the logical choice? Small, low maintenance, low running costs, no worry, great flexibility?

Exactly what a vendor asked me when viewing a listed Jacobean farmhouse last week, wouldn't you better off with a small flat....but actually dredging the lake and clearly the brambles in the one acre wood sort of appealed...until I've had my fussy of course. Something to do innit.

Edited by crashmonitor

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I'm in bubbly bristol and have owned for a few years.

Looking to sell soon, it all really depends on the price as to if it was worth it. If it sells for what I think its worth what would give a 40k profit, so maybe just worth the 9 months of work I did on it (no job) and living in a mess. However if it sells at the higher end its 90k. This is all due to bubbly bristol and it going crazy recently.

Most people don't bother doing the sums properly like you have and just see the bought and sold values.

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I'm in bubbly bristol and have owned for a few years.

Looking to sell soon, it all really depends on the price as to if it was worth it. If it sells for what I think its worth what would give a 40k profit, so maybe just worth the 9 months of work I did on it (no job) and living in a mess. However if it sells at the higher end its 90k. This is all due to bubbly bristol and it going crazy recently.

Most people don't bother doing the sums properly like you have and just see the bought and sold values.

It goes beyond simply money too, that 9 months of mess is an emotional drain which money can't compensate for. In the beginning the land was pure, and then a socialist called Blair invented an economy based on buying and selling houses into a Ponzied market and it became the economy. Freed from the manacles of being a slave to a house and its value BOY Can I FEEL IT !!!!!!!!!!!!!. It's the elation of being free be it only for a few months, excuse my levity I am demob happy........

Edited by crashmonitor

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Completed yesterday after a short stint of owning neatly tied into fifteen quarters from 1st July 2012 to 30th March 2016.

Bought for 242500 and sold for 275,000. Gross purchase 246,680, net sale proceeds 270,279.

The actual sale was pretty much in line with all the indicies with reference to the purchase price.

Account

Profit on sale after all transaction costs...............23,599

Saving on rent.....................................................31,500 (at £700 per month)

Gross Profit.........................................................55,099

Less Costs

Repairs and Renewals.......................6000

Lost investment income at 2%..........19025........25,025

(on principal 246,680)

Net gain..............................................................30,074

Does "Profit on sale after all transaction cost" include your mortgage interest ?

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Does "Profit on sale after all transaction cost" include your mortgage interest ?

We didn't have a mortgage, I just factored in lost investment income at a rather Bearish 2%, actually I have done about 3.5% over the last four years on investments with a bit of speculating, but I wouldn't have speculated with the top slice (house money) of 250k since 2012 so 2% is fair. The minus when you are owning mortgage free is repairs and renewals and 6k is what has been spent and factored.

A lot of luck came into this account, I sold many can't. The right buyer at the right time. Renting makes sense a every level if you want freedom, so money shouldn't come into it.

Edited by crashmonitor

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It goes beyond simply money too, that 9 months of mess is an emotional drain which money can't compensate for. In the beginning the land was pure, and then a socialist called Blair invented an economy based on buying and selling houses into a Ponzied market and it became the economy. Freed from the manacles of being a slave to a house and its value BOY Can I FEEL IT !!!!!!!!!!!!!. It's the elation of being free be it only for a few months, excuse my levity I am demob happy........

Blair isn't a socialist. Banking criminals and free market capitalists invented the 'light touch' economic model, Blair merely borrowed it.

Edited by zugzwang

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Blair isn't a socialist. Banking criminals and free market capitalists invented the 'light touch' economic model, Blair merely borrowed it.

Yep it needed inverted comas.

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It goes beyond simply money too, that 9 months of mess is an emotional drain which money can't compensate for. In the beginning the land was pure, and then a socialist called Blair invented an economy based on buying and selling houses into a Ponzied market and it became the economy. Freed from the manacles of being a slave to a house and its value BOY Can I FEEL IT !!!!!!!!!!!!!. It's the elation of being free be it only for a few months, excuse my levity I am demob happy........

Totally agree. At the time I said I would never do it again, but now i'm forgetting how bad it was. I'm sure all the dust is the reason now several years later I still have issues with my eyes from time to time. Even at 90k probably wasn't worth it. Was 24/7, I could earn a decent amount doing a job just 10 hours 5 days a week.

What are you doing next?

I'm really looking forward to renting for 6 months while I look for an auction or something sensibly priced. Just not looking forward to moving the vast amount of stuff I've built up.

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Totally agree. At the time I said I would never do it again, but now i'm forgetting how bad it was. I'm sure all the dust is the reason now several years later I still have issues with my eyes from time to time. Even at 90k probably wasn't worth it. Was 24/7, I could earn a decent amount doing a job just 10 hours 5 days a week.

What are you doing next?

I'm really looking forward to renting for 6 months while I look for an auction or something sensibly priced. Just not looking forward to moving the vast amount of stuff I've built up.

I'm hoping to do absolutely nothing, the chartered accountant that is supposed to be taking on my remaining clients hasn't got in touch and hope that is just because of Easter.

It's bloody great I earn diddly squat and can't even retire because of duty of care whilst bloody CEOs can walk out the next day.

Edited by crashmonitor

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Saving on rent.....................................................31,500 (at £700 per month)

was even at work yesterday while I did all the moving logistics. Not owning feels bloody wonderful. The net gain to me as an individual after all is only 15 grand, knowing what I now know I would have just rented.

Can I just clarify are you saying the difference between your mortgage cost and what you would have paid for rent was £700? Sounds like a daft question but just curious about how you worked this out.

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Completed yesterday after a short stint of owning neatly tied into fifteen quarters from 1st July 2012 to 30th March 2016.

Bought for 242500 and sold for 275,000. Gross purchase 246,680, net sale proceeds 270,279.

The actual sale was pretty much in line with all the indicies with reference to the purchase price.

Account

Profit on sale after all transaction costs...............23,599

Saving on rent.....................................................31,500 (at £700 per month)

Gross Profit.........................................................55,099

Less Costs

Repairs and Renewals.......................6000

Lost investment income at 2%..........19025........25,025

(on principal 246,680)

Net gain..............................................................30,074

Verdict 30 grand not worth the hassle and lack of freedom of renting. Renting wins hands down. especially as I do all the work, the garden, the financials, the DIY, the worrying and the missus does note. she was even at work yesterday while I did all the moving logistics. Not owning feels bloody wonderful. The net gain to me as an individual after all is only 15 grand, knowing what I now know I would have just rented.

Thanks for this cm. Fascinating insight. Could I ask if you factored in EA fees, solicitor fees, surveyor fees and building insurance?

Also, would it be possible to run the same calculation for a 10. % down 25 year mortgage? I'm curious to see if the buyer would have made an actual loss in real terms. Thanks for your work on this. Great research.

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Did you not consider just renting it out??

How would that help?.......if it is rented how can you use it?.......if you can't use it, why would you keep it?.......cash you can use. ;)

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I'm hoping to do absolutely nothing, the chartered accountant that is supposed to be taking on my remaining clients hasn't got in touch and hope that is just because of Easter.

It's bloody great I earn diddly squat and can't even retire because of duty of care whilst bloody CEOs can walk out the next day.

Sounds like the best thing to be doing.

What are you doing for housing? Said something about only renting for a short amount of time

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We didn't have a mortgage, I just factored in lost investment income at a rather Bearish 2%, actually I have done about 3.5% over the last four years on investments with a bit of speculating, but I wouldn't have speculated with the top slice (house money) of 250k since 2012 so 2% is fair. The minus when you are owning mortgage free is repairs and renewals and 6k is what has been spent and factored.

A lot of luck came into this account, I sold many can't. The right buyer at the right time. Renting makes sense a every level if you want freedom, so money shouldn't come into it.

Fair enough, And If you take 3% as the figure, what does that give you ?

Some things you cant factor for....lost opportunity, what if you'd lost your job and had to move, crazy ba8start neightbours moving in next door.

It's an interesting example though, definitely worth posting.

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