Making My Last Rental Payment; Ever?

by Mike

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.

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