🚀 go-pugleaf

   From: fulford@altos.dec.com (Mike Fulford, MS: UCC, DTN: 544-1313)
   Newsgroups: net.taxes
   Date: 10 Oct 86 19:57:24 GMT
   Sender: daemon@decwrl.DEC.COM

   The following analysis was obtained the Consumer Reports magazine, May 81.

   Proper investing- a 7% yield after taxes is considered to be par.
   The apartment is a large two bedroom, 2 bath, 2 carport, in midtown USA
   The house is a 3 bedroom, 2 bath, two car garage, with average 1/10 acre
    of yard space. Bought in 1970 for $50,000, and sold in 1980 for $100,000
    in midtown USA, and has 1000 cu/ft more space than the apartment

Why are you comparing a 2BR, 2 carPORT apartment with a 3BR, 2 car
GARAGE house?  Go all the way, compare a studio apartment with a
mansion, and REALLY make the renter come out ahead!

   ------------------------------------------------------------------------- 
   National average of time spent on homeownering-
    Time dealing with appraisers- 1 hour/year
    Time shopping and buying for-
     House itself- 50 hours 
     Lawyer- 5 hours
     Financing- 15 hours
     Tax preparation & and general home owner financial managment- 1 hour/mo 
     Permits, inspections, ect- 5/year
    Maintenance-
     Yardwork- 4 hours/week
     Interior work- 2 hours/week
     Shopping for home related items- 1 hour/week
     Dealing with contractors, ect- 5 hours/year
    Total time/year= 457 hours= $4,570 of worth of work.
   ===================================+=====================================
   First year homeowners costs        | First year renters costs
   -----------------------------------+-------------------------------------
   Down payment=   10,200             | Rent=          3,600
   Payments=        5,100             | Deposit=         300
   Closing costs=   4,700             | Utilities=       600
   Time in money=   4,570             | Insurance=       100
   Utilities=       2,100             |                -----
   Maintenance=     1,200             | Nominal total= 4,600
   Property taxes=    920             |  
   Insurance=         200             | Minus renters 
   Tax preparation=   200             |  tax credit=      20
   Water=             240             |                -----
   Legal fees=         75             | Real total=    4,580
   Trash=              60             |
   Inspections=        50             |
   Sewage=             24             |
		  -------
   Nominal total=  29,639
   Tax savings=     4,952 (writing off closing costs, interest, property taxes
		   ------  and tax preparation)
   Real total cost=24,687
   Homeowners real cost minus renters real cost= amount
    avaliable to invest= 20,107
   Properly invested= difference of 21,514

How many renters do YOU know who set aside the entire amount they are
saving by not buying a house?

You make the assumption that if I didn't spend all this time working
around the house, I would work for someone else for ten dollars
instead, and invest it.  Even if you BELIEVE that, the tax savings of
home ownership ought to reflect that the Time in Money is after tax
money, whereas when the renter earns $4570 in his second job he would
have to pay taxes.  Also, every renter I know of has to spend time
dealing with his landlord and often making repairs that the landlord
won't make.  When I rented I was still the one that had to wait for
tradesmen. 

I have NEVER paid $240 in any year for water.

I have NEVER paid $2100 in any year for utilities.  When I lived in
New Jersey, during the height of the energy crisis, in an oil heated
house, I paid 950/yr in oil, and 400 in other utilities (excluding
telephone, which I would have paid in an apartment).  

I did not have to pay anyone to do my taxes in the year I bought my
house.  The only time I did was when I was RENTING OUT two houses, and
it came to about $120.


THESE ARE QUIBBLES COMPARED TO MY MAIN EXCEPTION, which is that you
compare a 2BR apartment to a 3BR house.  You could either compare a
2BR apartment to a 2BR condo (I know of several complexes nearby where
approximately identical units can either be bought or rented) or a 3BR
house with a rented 3BR house.  If you do this, a lot of the expenses
come out the same, or even higher, in a rental property.  For example,
back in New Jersey where it matters, owner-occupied houses tended to
be better insulated than their rental counterparts.



-dick