Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
tax wise it is the renters who tend to get the best deal .. many get to fly the empty seats ... while the homeowner actually pays potentially deductible items like real estate taxes and mortgage interest and spends that money , the renter does not ..so tax wise the renter may get back far more from the standard deduction without spending those dollars on deductible items ...
You don't think the apartment owners are building in a pro-rata share of taxes in the rental rates for each unit? The owner is running a business, all costs are accounted for when setting their "sales price", aka rental rate. Renters pay the embedded property tax that the owner would otherwise incur.
Now, I am generally in favor of buying your primary residence BUT WITH A HUGE CAVEAT - if it is done right within very conservative metrics and if renting a similar place is on par with buying.
However, the vast majority of people I see these days, mostly in the big metros, are extending themselves to the HILT, buying homes with super low down payments, crazy long terms, super high DTIs and most importantly at the cost of saving adequately in investments.
The primary wealth building tool is investing the stock market - not your primary residence. Historically Primary residences have just maintained inflation and when to take into account the total spend on lost opportunity of down payment capital, interest paid, maintenance, property taxes, HOAs etc. it is NOT a great return on capital.
Also a large majority of these people are overestimating their ability to maintain their income for such a long period of time and underestimating the total costs of ownership. Also a large number of people just don't get it financially - they claim that they are using leverage to their advantage by "using" the bank's money to get the appreciation on their home. This is actually a ridiculous argument. Actually you pay for the use of that capital by paying interest, capital is never free so no you don't get to use the bank's money for free unless you don't understand math.
Also, leverage is actually bad... you owe that money. A stock purchase is fully funded and that is 100% yours. If you lose your job you can just hold your stocks but if you don't pay your mortgage you lose your house and everything you have put towards it. Also, you can't just sell part of your house like the kitchen. You could get roommates but that can have it's own issues. Housing is just a very very inflexible and illiquid asset compared to equities. Selling a home is difficult in a bad market and is super expensive, stocks are free to sell and have demand even in bad markets.
It's crazy how many people think that once they "get in" their house is going to make them rich! Biggest myth out there.
Thanks for the #SponsoredAd
I'm just a regular person. We own our home. We didn't buy it as an investment. It hasn't appreciated much in a decade.
But it's [not] shocking to see how very many ::ahem:: reputable sources are saying that buying a home is a poor investment and stocks are a good investment, now that there's no robust tax credit for it anymore.. urging everyone to question owning their home even further.
Makes me want to own even more and owe even less. Shady buggers. So, what's the long-game plan? Because I hear a crashing sound in the distance, and it wasn't me...
Don't knock it down completely. Over-extended lifestyle choices have considerable weight in people's ability to financially move forward in their lives.
I wouldn't disagree with that in the least, but it takes many forms.
"Having too many kids and blowing your money at Walmart" carries a particularly superior tone, however, probably from someone who would take offense at, for example, "buying a new pickup every two years and eating at Olive Garden three times a week."
I wouldn't disagree with that in the least, but it takes many forms.
"Having too many kids and blowing your money at Walmart" carries a particularly superior tone, however, probably from someone who would take offense at, for example, "buying a new pickup every two years and eating at Olive Garden three times a week."
Oh, well, I guess I was thinking Target or Walmart. Sedan or pickup. Olive Garden or PF Chang.
Consumerism is consumerism. For a few of us I think the brand and the associated stereotype doesn't matter.
Oh, well, I guess I was thinking Target or Walmart. Sedan or pickup. Olive Garden or PF Chang.
Consumerism is consumerism. For a few of us I think the brand and the associated stereotype doesn't matter.
Again, I can't disagree in the slightest. But among other points, that's a huge and general issue and just clutter in discussing one aspect of personal wealth. Especially when phrased to cast aspersions on Those Guys Over There, But Not Me, Nuh-Uh.
Consumerism - fostered consumption - is the front-end problem to nearly all of our current social and economic ills. The sooner we come to terms with that, the sooner we can make real progress and quit just pushing the pieces around in a stalemate.
You don't think the apartment owners are building in a pro-rata share of taxes in the rental rates for each unit? The owner is running a business, all costs are accounted for when setting their "sales price", aka rental rate. Renters pay the embedded property tax that the owner would otherwise incur.
As landlords we can only get what markets allow us not what our needs are .... early on it is usually very hard to make money ..real estate is a long term investment so as rents go up returns get better ...
If it really cost the same or less to buy day one we would have few renters .it can be tough to be ahead early on without figuring in depreciation..
Our first investment property cost us 1200 a month for mortage and all costs ....best rents were in the 800-825 range. , this was in 1987 ....so depreciation carried it for us .. today costs are about 700 , no mortgages and rent is 1900 a month
As landlords we can only get what markets allow us not what our needs are .... early on it is usually very hard to make money ..real estate is a long term investment so as rents go up returns get better ...
The point is not landlord returns, but that renters pay all of the costs of housing, just indirectly. Unless you're going to maintain that renting is a loss situation for some number of years. (All you['re saying is it's not as profitable in the beginning, not the same thing.)
Quote:
If it really cost the same or less to buy day one we would have few renters .
It isn't about whether renting and buying cost the same - it's about when a family can afford the hurdle of buying and whether they can buy property that is either flat, relative to long-term rental costs, or an accruing investment, no matter how small.
Here’s an interesting situation. Buy a cheap fixer in a soon to be growth area. Pour in a lot of sweat equity. Live there a long time and when you sell it is worth a lot. But oops you are single and a big chunk of your profit goes to capital gains tax. Take what’s left and buy a different house. You won’t be able to afford the same quality because of that gains gap. But if you had bought and sold every two years this would not happen because your gains would be smaller each time.
That’s unrealistic for most people for the inability to do quality work and to time things buying a cheap house in a soon to be growth area. When you read through that the issues should be rather obvious
You don't think the apartment owners are building in a pro-rata share of taxes in the rental rates for each unit? The owner is running a business, all costs are accounted for when setting their "sales price", aka rental rate. Renters pay the embedded property tax that the owner would otherwise incur.
Rent isn’t set based on owners costs, true an owner might gauge it and try to get cost or cost plus but the rental market is not driven by a particular owners costs
Now, I am generally in favor of buying your primary residence BUT WITH A HUGE CAVEAT - if it is done right within very conservative metrics and if renting a similar place is on par with buying.
However, the vast majority of people I see these days, mostly in the big metros, are extending themselves to the HILT, buying homes with super low down payments, crazy long terms, super high DTIs and most importantly at the cost of saving adequately in investments.
The primary wealth building tool is investing the stock market - not your primary residence. Historically Primary residences have just maintained inflation and when to take into account the total spend on lost opportunity of down payment capital, interest paid, maintenance, property taxes, HOAs etc. it is NOT a great return on capital.
Also a large majority of these people are overestimating their ability to maintain their income for such a long period of time and underestimating the total costs of ownership. Also a large number of people just don't get it financially - they claim that they are using leverage to their advantage by "using" the bank's money to get the appreciation on their home. This is actually a ridiculous argument. Actually you pay for the use of that capital by paying interest, capital is never free so no you don't get to use the bank's money for free unless you don't understand math.
Also, leverage is actually bad... you owe that money. A stock purchase is fully funded and that is 100% yours. If you lose your job you can just hold your stocks but if you don't pay your mortgage you lose your house and everything you have put towards it. Also, you can't just sell part of your house like the kitchen. You could get roommates but that can have it's own issues. Housing is just a very very inflexible and illiquid asset compared to equities. Selling a home is difficult in a bad market and is super expensive, stocks are free to sell and have demand even in bad markets.
It's crazy how many people think that once they "get in" their house is going to make them rich! Biggest myth out there.
I agree but many have also gained wealth investing in their home when it appreciates....this is more common in metros like Seattle but I worry about whether that will continue. My son has a small house outside of Seattle that has doubled in value since he bought it in 2011....now he would have to pay about $1.2M for a decent house in the area where he lives which is crazy if you buy and then the market crashes.
I prefer to go conservative and buy under what I can afford but that would leave me in a small house in that area.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
