I'm looking into whether I should keep renting or buy real estate...details below. Thank you.
CURRENT INCOME: From various trust funds, I have just under $2M in stocks, blue chip companies spread across several industries (banking, energy, utilities, entertainment, etc.). From that, I earn about $50K/year in dividends: most of which is auto-reinvested in those same stocks (leaving enough aside for taxes, IRA contributions, and to build some cash savings). I am 35 years old, and I earn about $80K to $85K in annual salary. I have about $130K in cash at the moment.
CURRENT HOUSING: I pay $2,400 to live in an awesome apartment in the heart of an up and coming city center. I love it here and don't particularly want to leave. I also don't want to pay more than I already am in housing costs, but I like the idea, in theory, of owning property.
HOUSING MARKET: A condo that is as nice as my apartment would cost $750K (and would include a hefty HOA fee probably $500 to $800/month). A house in a nearby community (not as nice but close by), would also probably run me $750K. Real estate prices in my area are a stable investment, but already quite highly valued, so not tons of growth potential.
MY QUESTION: If I put 20% down on a house/condo, I'm still upping my monthly housing costs a lot: principal/interest, taxes (~1.27% of home value/year), insurance, repairs/maintenance, HOA. It would add up to a lot more than $2,400/month. If I sell stock to buy property in cash or make a more sizable down payment, I'm losing the dividend income, plus I get hit with a 25% percent cap gains tax (state and federal), plus I'm still probably paying close to $2K/month in housing.
It seems wrong that renting is financially sounder than buying, but (however I seem to crunch the numbers) I come out ahead by holding on to my stocks and continuing to rent. I would love for someone to convince me otherwise though?
EDIT: Formatting
Submitted May 14, 2018 at 02:21PM by sandersonA19 https://ift.tt/2IlgEoO
