hich turns out to be a better scenario to build wealth. Assume that the house was bought with an 80% mortgage with a 3.5% interest rate and 30-year amortization. Taxes and insurance in the first year were 2.2% of the purchase price. The investment can be anything you like, S&P Index, is probably the easiest to deal with but you can use investments that you like. Bitcoin, Home Depot Stock, gold, etc (if you pick specific stocks, a stock cannot be more than 25% of your total portfolio). If you use a specific stock, you must track price, splits, and dividends. Layout the monthly cash flows for the two scen
to create a spreadsheet that tracks and compare the cash flows on a monthly basis for two scenarios
1) purchasing a home and
2) renting a home and investing the down payment for approximately a 10 year period.
The question is which turns out to be a better scenario to build wealth.
Assume that the house was bought with an 80% mortgage with a 3.5% interest rate and 30-year amortization. Taxes and insurance in the first year were 2.2% of the purchase price.
The investment can be anything you like, S&P Index, is probably the easiest to deal with but you can use investments that you like. Bitcoin, Home Depot Stock, gold, etc (if you pick specific stocks, a stock cannot be more than 25% of your total portfolio). If you use a specific stock, you must track price, splits, and dividends.
Layout the monthly cash flows for the two scenarios 1) purchase of the home the houses over time and compare that to the cash flow that you would have received had you not bought a house but rented a home and invested instead. Essentially, the scenario that provides you the greatest wealth at the end of the period is theoretically the better strategy. What is the return for each scenario?
For rent and purchasing value choose any number you like to create the spreadsheet.
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