[logline]

One thing I've yet to see mentioned or considered by the perpetual renters here is that after 30 years of owning (or less than 30, which is more realistic), you have 100% equity... no more housing costs except taxes and maintenance. Meanwhile the perpetual renters will be paying ever-increasing rent for the rest of their lives, thanks to inflation. The average lifespan is about 80+ years. Do the math.

And while we're at it, locking in a 30-year fixed mortgage means inflation is no longer your enemy: it's your friend. People look at the most recent crash in housing and turn that experience into a life philosophy for personal finance. BIG MISTAKE! This crisis was an aberration, not the norm. "Recency effect" is just another psychological pitfall that can have high financial consequences.

BUYING Las Vegas real estate is far more advantageous than renting. No question. No comparison.

[BBMW]

Let's say I can have an investment that yields 10% return. And let's assume most of that return is cap gain, so it isn't taxed till it's realized, and then is taxed at a lower rate than ordinary income. I have $500,000 in available funds. I have a $250,000 mortgage. That mortgage is at 3.25% and, of course, the interest is deductible. You're telling me I'm better off taking $250K of that money, and paying off the mortgage, rather than investing the entire half million?

Originally Posted by ScoopLV

Large Debt = retire at 65+

No Debt/Minimal Debt = retire at 45-


Some debt is necessary. It builds credit score. But keeping a large debt load is a risk. Keeping a large debt load because it might yield an extra six or seven figures in eventual return is beyond foolish. Optimal investing is not about "net worth at time of death." It's all about "quality of life along the way."

[ScoopLV]

Absolutely that's what I'm saying.

As soon as you're entirely/mostly debt free, and your dividends exceed your expenses, you can retire. I could have retired years ago. I work because I like my job. No other reason.

You don't have to quit investing just because you knock debt out of your life. I just keep reinvesting and plowing income into investments because our total yearly expenses are less than $10K. Given an "either/or" choice, I usually find a way to do both.

Based on your scenario, I'd pay off the first house. I'd buy a second house. And I'd use that for rental income and to knock my taxes down. Then I'd take all that money I'm not spending every month and plow it into an index fund. I'm partial to Vanguard, but you should choose an investment that makes sense for you.

I also divert some income to savings, just in case opportunity knocks. That way I don't have to liquidate in order to take advantage. When the savings gets to the point that it's meaningful, I find a way to put it to use. Then I start the process again.

And if I get T-boned at an intersection tomorrow, not being able to work is truly no skin off my posterior. The same goes for my wife. We're not relying on anything in particular.

[iflyjetzzz]

Originally Posted by ScoopLV

I was going to post more investment crap. But it doesn't matter. This isn't an investment thread. And we have personal finance forum for people who are interested in such matters.

This is a Las Vegas real estate thread. And buying in Las Vegas is better than renting for the vast majority of people. Buying rental property is an even better thing to do, because it pays two ways -- rental income, and massive tax deductions. When I hear people whinging on about rental property, I know they don't have any. Because otherwise they'd be crowing about the tax ramifications.

Sure, I don't want a tenant to start a meth lab in one of my houses. But if a tenant does, so what? That's what insurance is for. Knock it down, build another, rent it out and start that sweet, sweet depreciation ball rolling again.

Many people are simply DETERMINED to make this stuff more difficult than it actually is.

My first post here was in response to your post #8423 where you were discussing the investment virtues of buying vs renting. And you cannot sever the investment aspect from real estate if you're going to sing the virtues of being a landlord.

[ScoopLV]

Every time this comes up, and I do mean EVERY SINGLE TIME, it's the same song and dance: "I get a zillion percent return on my investments. So renting is better than owning. As a renter, I don't have to pay taxes. I don't pay for maintenance. In fact, the landlord is basically losing thousands every month renting a house to me."

That's the extreme version. But you get the idea. You're just the latest in a very, very long line of new users who has insisted that this is the case -- until they finally see the light.

We should just label this "Financial Fallacy #1" and create a sticky for it.

[dario77]

Originally Posted by ScoopLV

Absolutely that's what I'm saying.



Based on your scenario, I'd pay off the first house. I'd buy a second house. And I'd use that for rental income and to knock my taxes down. Then I'd take all that money I'm not spending every month and plow it into an index fund. I'm partial to Vanguard, but you should choose an investment that makes sense for you.

I also divert some income to savings, just in case opportunity knocks. That way I don't have to liquidate in order to take advantage. When the savings gets to the point that it's meaningful, I find a way to put it to use. Then I start the process again.

And if I get T-boned at an intersection tomorrow, not being able to work is truly no skin off my posterior. The same goes for my wife. We're not relying on anything in particular.

One thing. Houses are not cheap here anymore. If you buy second house and rent it are you sure u will make profit?
When you add taxes,HOA,maintenance, I don't think its worth.
It would be ok if you buy second house for cheap but I don't think todays market is in your favour now.

[LostVector]

Originally Posted by ScoopLV

Wrong. Tomorrow's stock market close is always an unknown. Look at what's happening this week as an example.

Buying a house (and paying it off) obviates a known monthly expense. I would much rather never pay rent again than take my chances with what the market is going to do in the future. This point has been brought up and dismissed every time we've had one of these "rent vs own" debates.

Frankly, I'm sick of these rent vs. own debates because it's like trying to debate "Is 100 more than 1?"

Rent Vs. Buy Myths That Ruined the Housing Market - The Simple Dollar

Nothing wrong about what I'm saying. Just your preference.

Las Vegas real estate recovery has vastly underperformed the stock market at large ... that is a fact. Too much land and too much carried over supply from the bubble. And this is coming from someone who bought Las Vegas real estate. It did fine, but the stock market would have been much better.

[ScoopLV]

Originally Posted by LostVector

And this is coming from someone who bought Las Vegas real estate. It did fine, but the stock market would have been much better.

Provided you already have free shelter. But if you are going to pay for shelter anyway -- as opposed to living rent-free/inheriting a house/living in a cardboard box with a wifi connection (so you can be the world's most frugal day trader) -- you may as well make your house work for you.

The "I make a zillion percent as a trader so I rent" never justify this. Besides, you can't go live in a commodities option if the market blows up again. Having some real assets is just part of diversifying.

[LostVector]

Originally Posted by ScoopLV

Absolutely that's what I'm saying.

As soon as you're entirely/mostly debt free, and your dividends exceed your expenses, you can retire. I could have retired years ago. I work because I like my job. No other reason.

You don't have to quit investing just because you knock debt out of your life. I just keep reinvesting and plowing income into investments because our total yearly expenses are less than $10K. Given an "either/or" choice, I usually find a way to do both.

Based on your scenario, I'd pay off the first house. I'd buy a second house. And I'd use that for rental income and to knock my taxes down. Then I'd take all that money I'm not spending every month and plow it into an index fund. I'm partial to Vanguard, but you should choose an investment that makes sense for you.

I also divert some income to savings, just in case opportunity knocks. That way I don't have to liquidate in order to take advantage. When the savings gets to the point that it's meaningful, I find a way to put it to use. Then I start the process again.

And if I get T-boned at an intersection tomorrow, not being able to work is truly no skin off my posterior. The same goes for my wife. We're not relying on anything in particular.

You need to divorce your personal preference for a low monthly nut from an optimal investment strategy. A low monthly nut is desirable when s*** hits the fan, but in all other cases it slows down the growth of one's total net worth. It's fine if it helps you sleep better at night, but that doesn't mean everyone should do it.

[LostVector]

Originally Posted by ScoopLV

Provided you already have free shelter. But if you are going to pay for shelter anyway -- as opposed to living rent-free/inheriting a house/living in a cardboard box with a wifi connection (so you can be the world's most frugal day trader) -- you may as well make your house work for you.

The "I make a zillion percent as a trader so I rent" never justify this. Besides, you can't go live in a commodities option if the market blows up again. Having some real assets is just part of diversifying.

That's fine. And just to be clear, in hindsight I think the land / supply issue in Las Vegas prevented a really nice recovery, which is why I'm not as big on it. In other areas of the country buying a home was actually a much better idea.

But I do think buying a home is a good part of diversifying and is even more appropriate once you get to a certain age (where you want to see your monthly nut get low as possible by age 65 or somewhere thereabouts).