2Yr·

Topic Buy or Rent!

It is always discussed hotly 🔥 and with emotion. There is probably no one right way. It is also a bit of a personal lifestyle decision.

Here are the latest insights from Gerd Kommer on this topic. Unfortunately, we cannot predict how it will develop in the future🔮.

Gerd Kommer has determined by comparing the average annual returns of residential real estate between 1970 and 2020 with those of stocks and bonds. Anyone who bought their own home in the 1980s or 1990s is on average worse off financially today than if they had continued to live in rented accommodation and invested on the side.

With the new millennials, the wind has changed, his calculations show. The average home buyer would have made a better deal than a renter both between 2000 and 2020 and between 2010 and 2020.

Source: Gerd Kommer: Buy or Rent. 2021, S77

Own opinion:

Nowadays, investing in the stock market is a lot easier and more accessible than it was in the 1980s and 1990s. Therefore, I think that for many people it was almost without alternative to invest their money in real estate at that time. Also, financial education was not as good as it is today.

Who has bought from the 2000s, has certainly made a good investment.

And in own thing still. It is simply good to know that no one can terminate the apartment/house because of own need. This security is worth a lot. Especially in big cities where there is a massive housing shortage.

Kind regards

Stock market bear 🐻

#immobilie
#immobilien
#kaufen
#mieten

15 Comments

Pope Donkey XXI@DonkeyInvestor

2Yr

Ultimately, it is primarily a question of the desired lifestyle, I agree completely. However, a property does not fit my desired lifestyle and financially it makes no sense at all in my region. But it's a very individual decision and return on investment isn't everything. Some time ago I summarized how you can calculate for yourself and in your individual situation whether buying or renting makes more sense. Of course, the examples have not been adjusted (interest rates have risen in the meantime), but they illustrate the theoretical calculation. Calculated: Own a home or stay a tenant? Basics + Theory https://app.getquin.com/activity/FoLdCxttXY A detailed calculation example https://app.getquin.com/activity/evjQvBldso Influence of variables + more examples https://app.getquin.com/activity/GEBmMewkKS

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JUNl@JUNl

2Yr

Of course, this is a highly personal issue that is also always very closely linked to one's own life (mainly due to professional and family reasons) and probably also to one's regional origins and, of course, to the current real estate and interest rate market. For myself, renting would never be an option again. In the middle of the 2000s (I was in my 20s) I was shocked to discover that I had already spent almost 90,000€ on rent in my then young life, a lot of money back then, just before that was still Mark and 180,000 Mark, that was already a lot of money. In addition, I had always saved (for every mark / euro I spend, put one aside), so I actually bought a house from it at the time and financed the rest for 10 years in the amount of my monthly rent at the time, so I did not even perceive the financing. I'm now in my early 40s and since my mid-thirties I've been living in a paid property, haven't really changed my consumption and saving behavior (except that I can save/invest even more and just work part-time) and have also bought more properties when the cash and opportunity is right (i.e. cash, not financed), they are rented long-term to nice people at a slim rate. But I also come from a region with the highest homeownership rate and reasonably passable real estate prices. Financially pulling the neck because of a property, however, would never have been an option for me.

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Pope Donkey XXI@DonkeyInvestor

2Yr

@JUNl What you have forgotten is the return that your equity could have achieved on the stock market. But you bought at a very good time and probably did better with it than on the stock market. Plus you are comfortable with it and that alone makes it the right decision for you. Everything done right 👍

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JUNl@JUNl

2Yr

@DonkeyInvestor As it happens, I have a few figures at hand, the return on the rented apartments is 15.4% p.a. and the land alone (i.e. undeveloped), on which my paid for owner-occupied house stands, is currently worth somewhat more than the total price of the house was at the time, not to mention the total investment. But then, I didn't stop investing at all in the early 2000's, I just paid for a house instead of rent. Saved (i.e. not invested) money was all on old building savings contracts for 5.4%. It just fit the cycle, a similar one we are in right now (keyword also saving can be worthwhile when you are young).

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Stefan L.@Salamistar

2Yr

For me, home ownership is clearly a lifestyle choice. In Corona time I have seen with my brother how stressful it can be to be a tenant. 4 people, 2 of them small children. 85m2 on the 2nd floor with mini balcony, then Kitas closed, home office, etc. Pure stress. But they are of course flexible when it comes to jobs, move to the emergency ready. I live with my parents on about 230m2, with 6650m2 plot. For me pure luxury. I spend my vacations in my garden and enjoy myself. My brother prefers to go away 3 times a year for 2 weeks...

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Alfred E.@Papiertiger

2Yr

Own home is often pure luxury that you want to afford and many "invest" then also too much then in kitchens, furniture, etc. and in maintenance, because it's mine and then the return is there again. I'm also rather just become a landlord without really having planned it and then at least a passive income comes out with and if necessary when selling the return, which is probably different for each object. Being a landlord and being a tenant makes more sense in many cases. Just my naive opinion 😂

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Ludwig@LUD

2Yr

Correct representation of "there is no right or wrong". In the here and now, however, there are clear key figures that say "buy dat ding" or "hands off". Of course, paired with very many "softer" criteria. For me, the rule is: buy so many apartments that the positive cash flow at least pays my current warm rent. :)

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Tim@investorsapiens

2Yr

Rent = lifetime loan without repayment. Anyone who wants to finance third-party real estate for life is welcome to do so.

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Nico@Lucki_Lucki

2Yr

It also always depends on how you can finance everything. In my area, a loan is almost as expensive as the rent, so I build up assets and do not pay the rent to strangers.

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K K.@kkkkkk

2Yr

I think it is an investment if comparable housing in rent is not too far from the loan amount. If your housing costs 1000€ in rent and 2300€ on credit, then that is already a luxury property / consumer goods. But if the loan amount is only so 20-30% above the rental amount, then that is then okay.

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Seventrader@7Trader

2Yr

I share your opinion on many points, but your last paragraph is not correct (at least according to Austrian law): The MRG includes the termination according to personal need (even if difficult) and according to ABGB (even without personal need) anyway, provided that the existing right is not secured by land register.

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Sparfuxx 🦊.@Sparfuxx

2Yr

@7Trader I refer exclusively to Germany. Did not know that Austrians are allowed here 😅✌️.

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Seventrader@7Trader

2Yr

@stock_market_bear Well, then you've learned something 😉 In Germany, too, there's the possibility to terminate a contract for own use. And I wouldn't be surprised if you also copied the regulation regarding single-family houses from our ABGB 😝

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Tim S.@TimundStruppi

2Yr

Rather rent cheaply than buy expensively or rather buy cheaply than rent expensively?🤣

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Carsten B.@mrvalue

2Yr

Absolutely personal decision, which is rarely made under yield aspects in case of owner occupation. In tight rental markets (like ours in Munich), there are exciting things to observe: Buying property in times of low interest rates was often very attractive, as the monthly burden often made no difference compared to renting (and that even with repayment rates of 2% to 3%). Currently, the pressure on the rental market has increased dramatically in our country, as many potential buyers have been taken off the market due to interest rate developments and are now stuck renting or can only look to rent. However, the supply of rentals cannot keep pace, as the new seekers and the strongly positive net influx of new tenants are countered by too little new rental housing, as building has also been reduced to a basic level, so to speak. Thus the rents rise still more strongly and equal piece by piece again the (at present slightly sinking) purchase costs. On the distance thereby unfortunately the average and/or normal income earners (stupid terms, but me grad nothing better comes), for which buying is not representable, but the rent market due to increasing better earning competition, often also remains closed. Remains still the local and/or social rent housing construction. But Vonovia and Co. are now paying nice dividends on the old municipal stock that has been sold off, and it is doubtful whether new municipal construction will achieve any noticeable numbers. The political energy goes rather in the direction of over-regulation of existing housing, which is already currently the shortage rapidly further fires. There I am (in my personal constellation!) Already glad that I sit in my Häusl and can write these lines 🏡.!

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