House owners VS renters

[singe89]

Originally Posted by MrEleven

Yes i watched his interview on vladtv then a week later grant cardone did the same topic on his own YouTube channel. Valdtv is very anti home owning so he asks alot of his wealthy guests and surprisingly most laugh when asked if they own or rent and the majority rent.
Think about it say you take a mortgage for 25 years the norm and after 25 years you have probably have a house that has doubled in price but add up what you have payed to the bank. Doesn’t look so good now.
Go look at what you could of made is a low cost index fund or gold golds around 400% profit and s and p 500 is even more so owning a house cant even be considered a investment its a liability

Don't go off what you saw on one interview and assume that is fact that works for all. Everyone's situation is different and location location location really matters as well.

"Think about it say you take a mortgage for 25 years the norm and after 25 years you have probably have a house that has doubled in price but add up what you have payed to the bank. Doesn’t look so good now."

Actually it does. You didn't subtract what you have put into principal(paying yourself), saved in tax deductions vs. what you would have paid in rent for a similar place. Chances are rent will be much more.

Rent over a 25 year period should be more expensive than a mortgage locked in 25 years ago. I keep raising rent on my tenants every year but my mortgages on those properties are locked in and use their money to pay down the loan and turn a profit.

I also just passed 5 years in my primary residence. House has been up over 100% ROI vs. the down payment in that time period. I have also gotten the tax deduction and it would cost me $1.5-$2k more per month to rent a similar place.

Outside of the headaches of ownership if you plan on being in one location for a long time and depending on location (rent and property appreciation) it could be much better buying.

[GB-man]

Originally Posted by singe89

Don't go off what you saw on one interview and assume that is fact that works for all. Everyone's situation is different and location location location really matters as well.

"Think about it say you take a mortgage for 25 years the norm and after 25 years you have probably have a house that has doubled in price but add up what you have payed to the bank. Doesn’t look so good now."

Actually it does. You didn't subtract what you have put into principal(paying yourself), saved in tax deductions vs. what you would have paid in rent for a similar place. Chances are rent will be much more.

Rent over a 25 year period should be more expensive than a mortgage locked in 25 years ago. I keep raising rent on my tenants every year but my mortgages on those properties are locked in and use their money to pay down the loan and turn a profit.

I also just passed 5 years in my primary residence. House has been up over 100% ROI vs. the down payment in that time period. I have also gotten the tax deduction and it would cost me $1.5-$2k more per month to rent a similar place.

Outside of the headaches of ownership if you plan on being in one location for a long time and depending on location (rent and property appreciation) it could be much better buying.

Your house looks beautiful Jim

[singe89]

Originally Posted by GB-man

Your house looks beautiful Jim

I wish my views were half as pretty

[imperio]

Originally Posted by crazymcmichael

Guys,



Considering anyone here spends crazy money on watches i was wondering are there any guys that actually don't own a house but rather rent it?

I'd actually would rather rent something than buy something as sonetimes it can be even cheaper on the long run.. Not when you rent something nice offcourse.



Anyone???

We rent even though we can easily afford to buy. We did the math and it works out cheaper to rent. Mortgage interest and property taxes alone for a comparable home are higher than what it costs to rent... Which makes it a no brainer to rent where we are. May be different for other areas.

[East Bay Rider]

Renting has its place.
For a young couple with no kids just starting out it can be a great way to test compatibility, learn what they want, where they want to live and to get their careers started without the pressure of owning.
Also in a multi family apartment house the landlord is (presumably) spreading his expenses (taxes, mortgage, water/utilities) among all the tenants.

[MrEleven]

Originally Posted by singe89

Don't go off what you saw on one interview and assume that is fact that works for all. Everyone's situation is different and location location location really matters as well.

"Think about it say you take a mortgage for 25 years the norm and after 25 years you have probably have a house that has doubled in price but add up what you have payed to the bank. Doesn’t look so good now."

Actually it does. You didn't subtract what you have put into principal(paying yourself), saved in tax deductions vs. what you would have paid in rent for a similar place. Chances are rent will be much more.

Rent over a 25 year period should be more expensive than a mortgage locked in 25 years ago. I keep raising rent on my tenants every year but my mortgages on those properties are locked in and use their money to pay down the loan and turn a profit.

I also just passed 5 years in my primary residence. House has been up over 100% ROI vs. the down payment in that time period. I have also gotten the tax deduction and it would cost me $1.5-$2k more per month to rent a similar place.

Outside of the headaches of ownership if you plan on being in one location for a long time and depending on location (rent and property appreciation) it could be much better buying.

Think ill stick to my stocks and gold for investments and leave real estate alone. I actually bought my house outright and if i had stuck that money into a s and p 500 back then well i would be alot richer than i am today. Also think i would rather take advice for a billionaire through real estate on how bad house are as a investment over a random guy on a watch forum no offence intended but you know what i mean.

[123Blueface]

I scratch my head reading this thread.

My house is paid in full.
My taxes and insurance are $750 a month.
Where on this God given Earth can I rent my home in affluent Boca Raton, FL for under $3,500 to $4,000 per month, minimum?

I paid for it early so saved tons on interest.
I paid $200,000 in 1996 and it is now worth three times.

Please explain to me as if I were a two year old child, how paying rent for the last 23 years would have been better, as some have stated.

[RLX_NY]

There's no right or wrong answer. Everyone's situation is different and owing vs renting might work for some and not others. Each person has to do their pros and cons for renting vs. owing to see what's better for them.

[singe89]

Originally Posted by MrEleven

Think ill stick to my stocks and gold for investments and leave real estate alone. I actually bought my house outright and if i had stuck that money into a s and p 500 back then well i would be alot richer than i am today. Also think i would rather take advice for a billionaire through real estate on how bad house are as a investment over a random guy on a watch forum no offence intended but you know what i mean.

I was just trying to say every situation is different and an intelligent decision would be to figure out if renting vs. buying is right for an individual. Not believing a blanket statement is the best for everyone in every situation.

Same thing with paying for a house in cash. Yes its nice to pay in full but if you can make 10%+ on your cash why pay in full when a mortgage rate 3.5-4.5% and you get a tax deduction as well?

I don't look at a primary residence as an investment or even consider part of overall net worth. If I did it would be up 2x the S&P for that cash down over the same time period. However its a necessity so the goal would be to provide a roof over your head and minimize cash out of pocket.

the best would be to get as close of apples to apples comparison of renting vs. buying (with all tax/ principal deductions and possible appreciation) over a period of time.

Buying rental properties can also be good to diversify a portfolio while creating income and tax advantages.

[brandrea]

Originally Posted by 123Blueface

I scratch my head reading this thread.

My house is paid in full.
My taxes and insurance are $750 a month.
Where on this God given Earth can I rent my home in affluent Boca Raton, FL for under $3,500 to $4,000 per month, minimum?

I paid for it early so saved tons on interest.
I paid $200,000 in 1996 and it is now worth three times.

Please explain to me as if I were a two year old child, how paying rent for the last 23 years would have been better, as some have stated.

[dxbtousa]

Originally Posted by 123Blueface

I scratch my head reading this thread.

My house is paid in full.
My taxes and insurance are $750 a month.
Where on this God given Earth can I rent my home in affluent Boca Raton, FL for under $3,500 to $4,000 per month, minimum?

I paid for it early so saved tons on interest.
I paid $200,000 in 1996 and it is now worth three times.

Please explain to me as if I were a two year old child, how paying rent for the last 23 years would have been better, as some have stated.

$200,000 invested in the S&P 500 , in 1996 would be worth around $ 1,000,000 today - not including any annual expenses which could have hypothetically contributed.

Annual contributions of $9,000 ($750 a month), over a 20 year period, assuming 6% market appreciation results in another $ 350,000 value before tax.

That leaves you with $ 1,350,000 before tax- The way you described, this scenario way out performed your real estate performance; not including alternative accommodation costs.

Hypothetical of course and no need to go into specifics, but as another user has posted there is no right or wrong answer.

[SMD]

Originally Posted by 123Blueface

I scratch my head reading this thread.

My house is paid in full.
My taxes and insurance are $750 a month.
Where on this God given Earth can I rent my home in affluent Boca Raton, FL for under $3,500 to $4,000 per month, minimum?

I paid for it early so saved tons on interest.
I paid $200,000 in 1996 and it is now worth three times.

Please explain to me as if I were a two year old child, how paying rent for the last 23 years would have been better, as some have stated.

200,000 invested in the S&P in 1996 would be worth 1.2 million today.

Again, I never understand why people take their own personal anecdote and think it applies to everyone, in every location under every circumstance.

The place we rent in NYC would cost significantly more to own. The closing costs to get in are several hundred thousand. The costs to get out are even more. Property taxes are massive and cannot be deducted anymore. NYC real estate, outside of a handful of exceptions, has been dead money for the past 10 years. That seven figure down payment would have been far better off in the market.

Everyone’s situation is different.

[pickettt]

Rent in my neighborhood IStwice what my mortgage WAS.

[imperio]

Originally Posted by 123Blueface

I scratch my head reading this thread.



My house is paid in full.

My taxes and insurance are $750 a month.

Where on this God given Earth can I rent my home in affluent Boca Raton, FL for under $3,500 to $4,000 per month, minimum?



I paid for it early so saved tons on interest.

I paid $200,000 in 1996 and it is now worth three times.



Please explain to me as if I were a two year old child, how paying rent for the last 23 years would have been better, as some have stated.

As others have mentioned, had you put 200k in the S&P 500 in 1996, that 200k would have grown to approx $1.3M in 2019.

You can verify that calculation here - https://dqydj.com/sp-500-return-calculator/

The S&P 500 has had an average annual rate of return at 10% since its inception in 1926, so, if you had $200k invested at that compounding rate for any random period of 23 years, one would expect that $200k initial investment to grow to $1.8M. Getting from $200K to $1.3M between 1996 and 2019 is, in fact, lower than one would have expected.

After adding property tax and home maintenance costs, you may or may not have come out ahead had you rented. It really depends on things like how many times you had to repair the roof, replace HVAC system, do you pay for gardening/landscaping, do you refresh the house with a coat of new paint every X years etc.

Even if you DIY-ed everything yourself, there would have been a time cost in addition to cost of materials.

[123Blueface]

Originally Posted by dxbtousa

$200,000 invested in the S&P 500 , in 1996 would be worth around $ 1,000,000 today - not including any annual expenses which could have hypothetically contributed.

Annual contributions of $9,000 ($750 a month), over a 20 year period, assuming 6% market appreciation results in another $ 350,000 value before tax.

That leaves you with $ 1,350,000 before tax- The way you described, this scenario way out performed your real estate performance; not including alternative accommodation costs.

Hypothetical of course and no need to go into specifics, but as another user has posted there is no right or wrong answer.

Originally Posted by SMD

200,000 invested in the S&P in 1996 would be worth 1.2 million today.

Again, I never understand why people take their own personal anecdote and think it applies to everyone, in every location under every circumstance.

The place we rent in NYC would cost significantly more to own. The closing costs to get in are several hundred thousand. The costs to get out are even more. Property taxes are massive and cannot be deducted anymore. NYC real estate, outside of a handful of exceptions, has been dead money for the past 10 years. That seven figure down payment would have been far better off in the market.

Everyone’s situation is different.

What about what I did with the $3500 to $4000 per month in the market?
Which in fact I did.
Your math and logic is flawed.

[imperio]

Originally Posted by 123Blueface

What about what I did with the $3500 to $4000 per month in the market?
Which in fact I did.
Your math and logic is flawed.

Your English is flawed

[dxbtousa]

Originally Posted by 123Blueface

What about what I did with the $3500 to $4000 per month in the market?
Which in fact I did.
Your math and logic is flawed.

We are simply presenting an alternative scenario - Your lack of insight on the topic is clear. No need to have hard feelings on a missing million.

[123Blueface]

Originally Posted by dxbtousa

We are simply presenting an alternative scenario - Your lack of insight on the topic is clear. No need to have hard feelings on a missing million.

Thanks for the laugh.
My house is paid for.
I live in it for $750 a month.
I made millions off my investments.
I’m retired.
I buy expensive watches.
I’m an idiot.
I get it.

[123Blueface]

Originally Posted by imperio

Your English is flawed

Now I know you have no answer if your biggest concern is a rushed is v. are.
BTW, English IS my second language.

[SMD]

Originally Posted by 123Blueface

Now I know you have no answer if your biggest concern is a rushed is v. are.

Forest for trees. The point was simply every market is different. The argument that it always makes sense to buy and renters are fools is ignorant.

[123Blueface]

Originally Posted by SMD

Forest for trees. The point was simply every market is different. The argument that it always makes sense to buy and renters are fools is ignorant.

I personally never said that.
I just asked to have it explained to me as if I were a two year old.

You guys paying rent are much wiser than I can ever dream of I guess.
Carry on.
I’ll bow out. Much more interesting to show my granddaughter baby shark video and sing with her.
https://youtu.be/XqZsoesa55w

[Star Ferry]

Personally I rent. I think most homeowners don't fully get that they are making a highly leveraged (often 5x annual income) investment in a risky asset (one single family home)

When we compare returns to a balanced portfolio, we should also account for the risk being taken. Then there's the countervailing factor of having a landlord v. not having a landlord.

To say "owning is dumb" would be an overstatement, but there's an even larger group that looks down on renters. I have a friend whose parents pay 40K monthly to rent an apartment in NYC. They're happy, they like it, and they're not unsophisticated -- his dad is a real estate financier and prefers to park his capital in his company

For the average person, they should for sure buy. It builds equity in the home. And if they rented, they most likely would build no other savings. I think this is part of the government's rationale when they push for broad home ownership

Some of this depends where you want to live. In a tony suburb, there may be little or no rental stock available. Which means buy or go elsewhere.

[imperio]

Originally Posted by 123Blueface

Now I know you have no answer if your biggest concern is a rushed is v. are.
BTW, English IS my second language.

I was actually referring to these two somewhat incoherent statements below

Originally Posted by 123Blueface

What about what I did with the $3500 to $4000 per month in the market?
Which in fact I did.

Originally Posted by 123Blueface

Thanks for the laugh.
My house is paid for.
I live in it for $750 a month.
I made millions off my investments.
I’m retired.
I buy expensive watches.
I’m an idiot.
I get it.

Well done, but you could have done better. That's all we're saying

[O M Z]

I rent out 3 apartments but I rent my own apartment, does that make sense?


Sent from my iPhone using Tapatalk

[steve099]

Originally Posted by O M Z

I rent out 3 apartments but I rent my own apartment, does that make sense?


Sent from my iPhone using Tapatalk

It makes a lot of sense. It is a common investment strategy.

[CamSLC]

Originally Posted by O M Z

I rent out 3 apartments but I rent my own apartment, does that make sense?


Sent from my iPhone using Tapatalk

Makes a lot of sense. It could be a great opportunity to rent out a few investment properties and live in different locations around the world off the income.

Obviously "ownership/investment" is still in the equation.

What's best is not a right or wrong answer. It depends on the person.

[Andy0331]

Originally Posted by MrEleven

Most wealthy people rent i would think why would you want a mortgage the bank wins its that simple. If your buying a house cash again another dumb move imo could make so much more money from a s and p 500 or even gold. Seen a lot of interviews over the years and alot of super rich just rent including grant cardone infact he just recently did a interview saying just how dumb buying a house was.

One of Grant Cardone's big business ventures is also owning thousands of multi-family apartment complexes and actively sells shares in them to his followers; of course he encourages renting. However, he doesn't seem to have many holdings outside large urban areas; why is that?

As several have noted, the right answer boils down to these factors:

• Planned length of residency in XX area
• Local Market Dynamics
• Personal Financial Discipline

If you are uncertain, or don't plan on staying in an area long; renting makes a lot of sense.

If you are in an area where the market & ownership factors make owning more expensive than renting; renting makes a lot of sense. If you live in an area where renting an equivalent house is ~30% more than a mortgage payment; owning is a better deal (assuming you intend to stay, or would keep & then rent out your property if you moved).

All the talk of "invest the difference in XX" means nothing if you lack the discipline to actually save & invest that money. Most "regular" people lack the willingness or financial ability to save anything. In that case (and the first 2 points make sense), then this individual is now "forced" to save by owning a home, which is far better than years of thousands dollars pissed away on expensive meals, new phones, cars, etc. and little to no savings for retirement.

I think the general demographics of this forum make it easy to forget that the vast majority of people (at least in America) are deep in debt for non-essentials and do not plan for the future at all. I'm sure we all have either friends or relatives that fall into that category.

Yes, I am a homeowner and a commercial landlord. However, it makes sense for me, in my market. You have to look at each market individually.

[Burlington]

Not my words but they do make sense in some circumstances.

Buy what you can rent, rent where you live.

[beshannon]

Originally Posted by crazymcmichael

Guys,

Considering anyone here spends crazy money on watches i was wondering are there any guys that actually don't own a house but rather rent it?
I'd actually would rather rent something than buy something as sonetimes it can be even cheaper on the long run.. Not when you rent something nice offcourse.

Anyone???

No, I buy what I want to own and the money I spend on anything is not "crazy"

[Ballzzz]

Originally Posted by Andy0331

One of Grant Cardone's big business ventures is also owning thousands of multi-family apartment complexes and actively sells shares in them to his followers; of course he encourages renting. However, he doesn't seem to have many holdings outside large urban areas; why is that?

As several have noted, the right answer boils down to these factors:

• Planned length of residency in XX area
• Local Market Dynamics
• Personal Financial Discipline

If you are uncertain, or don't plan on staying in an area long; renting makes a lot of sense.

If you are in an area where the market & ownership factors make owning more expensive than renting; renting makes a lot of sense. If you live in an area where renting an equivalent house is ~30% more than a mortgage payment; owning is a better deal (assuming you intend to stay, or would keep & then rent out your property if you moved).

All the talk of "invest the difference in XX" means nothing if you lack the discipline to actually save & invest that money. Most "regular" people lack the willingness or financial ability to save anything. In that case (and the first 2 points make sense), then this individual is now "forced" to save by owning a home, which is far better than years of thousands dollars pissed away on expensive meals, new phones, cars, etc. and little to no savings for retirement.

I think the general demographics of this forum make it easy to forget that the vast majority of people (at least in America) are deep in debt for non-essentials and do not plan for the future at all. I'm sure we all have either friends or relatives that fall into that category.

Yes, I am a homeowner and a commercial landlord. However, it makes sense for me, in my market. You have to look at each market individually.

At least there are some people on this thread who get it. I see many posters "assuming" people are machines which just isn't true.

Well said, I agree 100%.