[lbo-talk] correction: more on house prices

Wojtek Sokolowski sokol at jhu.edu
Fri Aug 24 09:07:14 PDT 2007


Oops, I read values from a wrong row in my Excel spreadsheet

The future value of $50k with compound interest @4.4% per annum is, of course, $179.2k ($3m is the sum of all annual values, a formula for which I had from my earlier rent calculations), and the future value of $5k per annum investment is $305k. So the total money on my hand after 30 years of renting is 179K+305K-352K = $132k.

The total money on my hand after selling my house depend, of course on the selling price, and assuming that 3.3% per annum growth is sustainable for 30 years, my $300k house will be worth $814k in 30 years. Therefore, the total money on my hand after 30 years in that scenario is 814K-558k-150k-49k=$57K.

Therefore, I am still better off renting than buying, not to mention the smaller risk factor.

I apologize for the error in my previous posting.

Wojtek



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