Making My Last Rental Payment; Ever?
by The Stoic Investor
Yesterday I wrote out a check for what will likely be the last rental payment for at least the next 12-24 months. Saying it is the last one I will ever write is a bit of a stretch, but it’s a nice thought. Some people are ok with writing out that check each month, but I have to say that for me it is the one expense I loathe the most.
Housing is one of the most expensive budget items that most people will encounter as can be seen by the following:
Spending for housing eats up close to 30% of total spending for the average American. I’m not far from that mark. To date my rent payment has made up 32% of my monthly spending. For the next half of the year I expect it to be much less.
My rent covers a roof over my head in a one bedroom apartment with all utilities except electric included. I don’t have to worry about paying for garbage, water, lawn care, insurance or taxes. Sounds like a fairly reasonable deal for 8100.00 a year plus a 100.00 for rental insurance. Even though going forward I will have to pay all of the expenses listed above myself I still believe I will come out ahead, actually I’m banking on it as saving a portion of that 8200.00 a year was part of the appeal of investing in real estate to begin with. I won’t know exactly how much I’m saving until I move in and start seeing a few of the monthly expenses associated with owning a house.
For the sake of comparison once I have a few months of housing expenses I will look at what it would cost in invested capital to be able to pay for my shelter. For example, based on my current housing expense of 8200.00 a year I would need $205,000.00 at as SWR of 4%. That is a decent sum of money just to pay for one expense. To be fair I could always find cheaper housing or have a roommate to cut the expense. Even with those options I still believe I will come out ahead by taking the route I’ve chosen.
Later in the fall I will have some actual numbers from the monthly expenses associated with owning a home and at that time can do a better comparison. Until then I would love to hear your take on how I’m accounting for the expenses. Agree with my view? Think I’m missing something? Leave me a comment.