$25k in 1958 in the S&P with dividends reinvested would have been $4M in 2007. However, that's only a 1.6 percentage point annualized improvement which wouldn't be enough to cover rent. But then again, we didn't consider maintenance and property taxes.rascott wrote: ↑Tue Jun 11, 2019 3:01 pmEthanAllen wrote: ↑Sun Jun 09, 2019 10:37 pmEven incredible stories like this deserve pause and reflection, because they show how people dramatically overrate/overestimate the financial benefits of home ownership. Your post makes this sound like an all-time great deal, but here is something to consider:westie wrote: ↑Sun Jun 09, 2019 7:44 pmMy parents bought their forever house in 1958. They paid 20K for the house they built and the land cost was 5K (5 acres). The adjacent 5 acre lot was for sale but my dad thought $1K an acre was too much and didn't buy it. When my mom past away in 2007 I sold their home for 2 million. This was in Great Falls Virginia.
- If your parents took that 25,000 in 1958 and put it in the stock market and didn’t touch it, a hypothetical S&P fund with dividend reinvestment would have resulted in you having ... MORE THAN 2 MILLION in 2007.
Take out all their ownership and upkeep costs for that house over 50 years. Now take out all the transaction costs of selling the house. Still think it’s an all-time great deal? Maybe less so than it looked when you wrote that post...
Uhhh....you kind of forgot to factor back in what their cost would have been to rent something equivalent for 50 years, no?
Probably OP's dad was smart to buy a residence and NOT buy the adjacent lot. That's typically the case. Buy a residence but don't invest in real estate.