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    Middle Income House: To Buy or Not To Buy?: Alternative Action Taken Advantages Disadvantages

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    Ronald Tres Reyes
    The document compares the advantages and disadvantages of three options for a middle-income individual: purchasing a house to live in, purchasing a house to rent out, and not purchasing a house. Purchasing a house to live in has advantages of ownership but disadvantages of monthly mortgage payments and lower investment returns. Purchasing to rent has rental income benefits but also mortgage payment costs. Not purchasing allows investing in higher returning assets but lacks ownership benefits and savings from commuting costs.

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    Middle Income House: To Buy or Not To Buy?: Alternative Action Taken Advantages Disadvantages

    Uploaded by

    Ronald Tres Reyes
    41 views2 pages
    The document compares the advantages and disadvantages of three options for a middle-income individual: purchasing a house to live in, purchasing a house to rent out, and not purchasing a house. Purchasing a house to live in has advantages of ownership but disadvantages of monthly mortgage payments and lower investment returns. Purchasing to rent has rental income benefits but also mortgage payment costs. Not purchasing allows investing in higher returning assets but lacks ownership benefits and savings from commuting costs.

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    Analysis

    Original Title

    Alternative Action Taken

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    The document compares the advantages and disadvantages of three options for a middle-income individual: purchasing a house to live in, purchasing a house to rent out, and not purchasing a house. Purchasing a house to live in has advantages of ownership but disadvantages of monthly mortgage payments and lower investment returns. Purchasing to rent has rental income benefits but also mortgage payment costs. Not purchasing allows investing in higher returning assets but lacks ownership benefits and savings from commuting costs.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    41 views2 pages

    Middle Income House: To Buy or Not To Buy?: Alternative Action Taken Advantages Disadvantages

    Uploaded by

    Ronald Tres Reyes
    The document compares the advantages and disadvantages of three options for a middle-income individual: purchasing a house to live in, purchasing a house to rent out, and not purchasing a house. Purchasing a house to live in has advantages of ownership but disadvantages of monthly mortgage payments and lower investment returns. Purchasing to rent has rental income benefits but also mortgage payment costs. Not purchasing allows investing in higher returning assets but lacks ownership benefits and savings from commuting costs.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 2

    Middle Income House: To buy or Not To Buy?

    Advantage and Disadvantage of the Action Taken:

    Alternative Action Taken Advantages Disadvantages


    1. He will have his own house. 1. He will be paying monthly
    2. He will be able to save time for amortization and cut his
    travel. budget for the amortization.
    3. He will be able to save money 2. The proceeds of loan will used
    Purchase the House and Used it for gasoline consumption and for the down payment, the
    parking fee. opportunity of earning 9.5% in
    4. He can avail overtime and T-bills will be foregone.
    earn extra earnings. 3. Lower return of investment
    compared to 91 T-bills in five
    years.
    4. After five years, there is no
    assurance that he can pay his
    monthly amortization.
    5. The standard of living is higher
    compared to his previous
    residence.

    1. He will be earning monthly 1. He will be paying monthly


    Purchase the House and Rent it rent income. amortization and cut his
    2. He will have a house once he budget for the amortization.
    will decide to use it. 2. The proceeds of loan will used
    3. Live his house and at the same for the down payment, the
    time accepting boarders. opportunity of earning 9.5% in
    T-bills will be foregone.
    3. Lower return of investment
    compared to 91 T-bills in five
    years.
    4. After five years, there is no
    assurance that he can pay his

    COURSE FACILITATOR: Prof. Elsie Villanueva Managerial Economics – BA 203-A


    Middle Income House: To buy or Not To Buy?
    Advantage and Disadvantage of the Action Taken:

    monthly amortization.
    5. He will continue to encounter
    traffic every time he will go to
    office.
    6. He will be spending gasoline.
    7. He cannot avail the 2 hours
    overtime.
    8. It makes his physical body to
    deteriorate due to long hours
    of travel time.

    1. There is high return of 1. He cannot avail the 2 hours


    Not to Purchase investment in the next five overtime.
    years compared to buying 2. He will continue to encounter
    house. traffic every time he will go to
    2. The proceeds of loan will be office.
    invested and earns income for 3. It makes his physical body to
    9.5% T-bills. deteriorate due to long hours
    3. He will not be paying monthly of travel time.
    amortization. 4. He will be spending gasoline.
    5. It makes his physical body to
    deteriorate due to long hours
    of travel time

    COURSE FACILITATOR: Prof. Elsie Villanueva Managerial Economics – BA 203-A

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