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I don't necessarily disagree with you, but the "duh" comment was annoyingly snarky.
I am personally tired of hearing you beat the drum on CD about tiny houses, having no income, etc. (and I know I'm not the only one). It would be better if you actually did something constructive, rather than beat the same few dead horses over and over and over and over and over and over and over and over and over again on every thread.
If I had money I would build tiny houses. That would be very, um, constructive.
Well, it most definitely does depend on where you live. In high cost real estate markets, it usually makes more sense to rent the smallest place you can tolerate and save/invest the difference.
The thing that's really important, whether you rent or own, is your total housing cost as a percent of your income. For renters, this is an easy thing to calculate. For homeowners, maintenance, taxes & other expenses are harder to pin down...partly because homeowners conveniently ignore those unexpected expenses when extolling the joys of home ownership.
I don't think one has to invest super aggressively. No, you can't put it all, or even most of it, in savings accounts and CDs. But a 60% stock 40% bond mix is aggressive enough for most people. The key is your savings rate. Of course, the lower your housing costs, the higher your savings rate can be. The higher your savings rate, the less dependent you are on a high rate of compounding as well....so a high savings rate wins a lot of different ways.
My sister is one of those stereotypical renters who invests as an afterthought and has a moderate to low savings rate. Drives. Me. Crazy.
Total housing cost as a percent of your income is a difficult issue for most renters, because renter incomes are generally much lower than homeowner incomes (median renter income in 2010 was almost exactly half median homeowner income) and renting is usually substantially more expensive per square foot than is owning. (I pay $4/sf/month to rent a room, most homeowners pay well under $2 to own.)
Median homeowner cost to own is in the neighborhood of 15-20 percent of income; renters typically spend at least twice as high a proportion of their income on housing. Half of all low income renters spend at least half their income on housing according to Mortgage News Daily; this is pretty much antithetical to saving.
So look at condos not located in a "no-fund zone".
If I were walking down a sidewalk and encountered a blade of grass lying on the cement, I would not let it stop me from going where I wanted to go. I would not in any way find it to be an insurmountable obstacle. I would certainly not just stand there, year after year, wringing my hands and whimpering "but there is a blade of grass in my way!".
Um any condo development that is not majority owner-occupied is in a no-fund zone because lenders make that call. An individual condo owner has NO CONTROL over that, e.g. you cannot stop your neighbors from selling to landlords and thereby making your unit unfundable.
Which means your equity is always at risk of being stripped at sale.
If I'm going to pay for housing, I want the best return possible on my housing dollars. I want to liberate people from the rent inflation and rent slavery that keeps their landlords wealthy while they struggle in penury.
Owning your own tiny home is for many the difference between being able to retire with a modest standard of living and never being able to retire at all.
Shill. I've rented all my life and my net worth is higher than practically every one of my homeowner counterparts, all else being equal.
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Originally Posted by freemkt
Sorry I don't buy that. If I'm going to pay for housing, I want the best return possible on my housing dollars. I want to liberate people from the rent inflation and rent slavery that keeps their landlords wealthy while they struggle in penury.
Owning your own tiny home is for many the difference between being able to retire with a modest standard of living and never being able to retire at all.
Homes average a gain of 1% above inflation, maybe 2%, all costs factored in. Stocks: 7%. Unfortunately, most renters don't invest their remainders, but spend it on consumer goods. That is their downfall. Disciplined renters, in most markets, will come out ahead of homeowners in the accumulation of wealth.
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Originally Posted by freemkt
You, sir are an atypical statistical outlier.
(Puts on "shill for National Association of REALTORS" hat)
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Homeowner net worth ranges from 31 to 46 times that of renters.
Quote: You just need drive to succeed in life. I was able to find a job in senior management in 1959 after I got my MBA at 25 and with that I climbed up to VP. The only limitation for financial freedom is yourself. Sure, some people aren't meant to be the richest. I know I'm only a middle class man despite my 5 apartment buildings and a house. Just be happy for what you achieve in life and don't be jealous of what others have.
Sorry, I am not a people person and never had any desire to manage people. I would have made a great accountant (I took the first year of undergrad accounting in a one-semester honors course and got a B without much effort) but I got the wrong degree and cannot afford to go back to school for the right degree. So here I am with neither marketable job skills nor any desire to pursue 'people' jobs.
I was born to druggies and was raised by drunks and druggies, I have untreated ACOA issues which clearly are exacerbated by the penury which has me stuck renting a room from a volatile angry drunk who can't drive (too many DUIs) and mopes around the house all day because he has no job and no life outside the house. (He has inserted himself as a middleman between his buddy the owner and the peons to whom he rents rooms; he gouges the rest of us on rent to fund his addictions, viz. alcohol, tobacco, women and gambling. He brings home women who move right in and then they start regularly fighting; this house is an ongoing soap opera.)
I have a skill reselling online in a niche; I have $10K inventory sitting in a storage unit because I can't keep it at home with the drunk here. So yes, if I could sell my stuff from home (and make even more money selling for other people) I could make lots of money but that's not going to happen as long as I am living under the same roof with a volatile angry drunk.
[A]s long as I am indefinitely broke (I'm paying 53 percent of income to rent a room) I literally cannot afford to move into any other place. The only way I can even get by is to keep food spending under $100 per month. (p.s. I re-wrote that last post)
Homes average a gain of 1% above inflation, maybe 2%, all costs factored in. Stocks: 7%. Unfortunately, most renters don't invest their remainders, but spend it on consumer goods. That is their downfall. Disciplined renters, in most markets, will come out ahead of homeowners in the accumulation of wealth.
What remainders? Renters as a group have only HALF the median income of homeowners, while spending on housing twice as great a proportion of income as homeowners. Half of all low income renters spend at least half their income on shelter; these renters certainly don't have any remainder to invest.
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