About 6 years ago in April 2014 I was considering buying my first home, a 1,000 sq ft. 2 bed room and 2 bath condo in the suburbs of Los Angeles. I was in escrow for a sales price of $245,000. On the advice of members of this forum and to get more value for my offer I countered to $240K which was rejected and I let my first home go.

I often wonder in these past few years if I had come out better ahead. For those of you interested I wonder if I’m missing anything in my calculations. This may be long:

$245,000 sales prices with intention of $61,250 down @ 4.75% for 30 years fixed. Annual property taxes to start I calculated $3,180. HOA last check has continuously been $350 per month. Homeowner’s insurance about $500 per year. Electricity only I calculated at $100 per month.

Roughly over 6 years:

Total interest on loan: $50K, loan remaining $165K

HOA: $25K

Property Tax: $20K

Insurance: $3K

Utilities: $7.2K

Annual maintenance: $15K (using a 1% of sales value)+$10K in initial repairs I knew needed to be made to replace A/C and other items when first bought.

Cost: $130K. I understand that it will be less because of the write off from taxes. Not exactly sure how to figure that in maybe someone with better know how can do that. My annual average income throughout this period is about $65K. I did anticipate renting 1 room out for $700. Using a 11 month per year calculation I would net $46,000 on the conservative side over 6 years.

The property is now worth $404K and a recent property same size in the same complex sold for $415K (the original unit I picked wasn’t as ideal). Minus current loan of $165K so a gain of $170K tax free if I sold now as my primary! Minus cost + rent = $86K!

Opportunity cost! (this gets a bit trickier)

$61,250 from the down payment

The next few amounts I know are over 6 years so not exactly sure how to calculate the over time gain…

$25K from the HOA, $20K from property Tax, $3K insurance, $7.2K utilities

All total: $116,450

Minus my housing cost during this time is $30K including all expenses paid. So I believe base actual opportunity is about $116K - $30K= $86K. Now this part gets even trickier! I estimate that over these 6 years about 30% was invested into Apple stock and the other 70% roughly into S&P 500 and other investments with similar return. Over this period Apple stock rose 336% and the S&P 81.23% (using recent market highs before Corona). Using these growth amounts on $86K I calculate that my total opportunity cost is: $195,788. Minus long term capital gain taxes for the growth so on $109,788 should be about $16.5K so I think about $179K. Now I know I’m missing the dividend return and compound growth on my S&P 500 which I reinvested at 2% that’s 12K over 6 years on a base of $86K minus the taxes on that amount for a grand total estimate of $189K

My conclusion is that by not buying a home I have still gained $103K. The difference between $189K from market investments versus $86K from the sale of the home?

Am I doing this right?