A Spacetime Investment

Dated: 11/29/2017

Views: 190

The M Real Estate Group

Renting vs. Owning

By Scott Albright, REALTOR®

The M Real Estate Group

(505) 247-1002 ext. 156

If time is money, and money buys space, then real estate is a spacetime investment. Landlords know this all too well. They rent out space over a period of time to earn a certain amount of money – a spacetime investment. Renters, on the other hand, do not reap the same benefits from this investment, as they are spending money to occupy spacetime rather than earning money from the ownership of it.

According to 2010 U.S. Census data, there were 89,063 renter-occupied housing units in Albuquerque for that year, compared to 224,330 owner-occupied units.[1] That means 28% of all occupied units in Albuquerque were being lived in by people who did not own their spacetime. The other 72% of those units were being occupied by people who either owned their spacetime outright, or who had partial ownership through their earned equity. Those who were paying on a home loan seven years ago, may not only have complete ownership today, but may also have turned around and sold the property to pay off the loan and earn a profit to put down towards another piece of real estate. Even before outright ownership, those who gained equity through continuous loan payments could still use that equity as a tool to invest in more spacetime, while those paying rent, had no such tool available to them.

Let’s do a quick cost comparison between renting and owning to get a clearer picture of what renters are losing out on. According to my local MLS, a 1,483-square foot, three-bedroom, two-bathroom home on Alvarado Dr. NE cost $160,000 to own.[2] Using Fidelity National Title’s online mortgage calculator, the monthly mortgage payments on that home at 4.75% interest over a 30-year period of time would be $834.64, not including taxes, insurance, or any type of down payment.[3] A 1,224-square foot, three-bedroom, one bath rental home, also on Alvarado Dr. NE, would cost $1,075 a month in 2016. So, a renter in this neighborhood would have 259 square-feet of less space, one less bathroom, and $240 more in monthly payments to occupy that spacetime compared to a home owner just down the street. We may not be comparing apples to apples here, as there are many other factors that come in to play, but on the surface the advantage of home ownership vs. renting is pretty clear.

Besides being able to borrow against their equity or sell their property for a profit, home owners reap many other benefits renters don’t. Control of their spacetime is one of the biggest benefits I see, as renters often get stuck in a predicament where they never have enough time to make the money needed to afford a down payment on a home, and end up having their spacetime controlled by someone else. An owner, on the other hand, may not have enough time to make more money than currently available, but each payment towards the principle on their loan earns equity in that home which translates back to more money that can buy them the time they need to re-invest and gain further wealth, giving them more leeway in how they decide to manage their own spacetime. And that spacetime is everything – it gives owners lifestyle choices not available to renters, it provides for more mobility and flexibility, and it translates to more freedom. As a real estate professional, I can help you to secure that freedom and make home ownership a reality for you today. Call (505) 918-2370 to get a jump on your next spacetime investment.

[1] City of Albuquerque, “Housing Inventory and Market Analysis.” https://www.cabq.gov/family/documents/albuquerque-housing-market-analysis.pdf

[2] flexmls.com

[3] Fidelity National Title, “Mortgage Calculator.” https://www.fidelitydesktop.com/pages/mortgage-calculator.aspx

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