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So if I rent a cheaper apartment and take my money I could have sunk in to a house and buy a far more profitable commercial property with that money ,that easily pays my rent and creates a lot of wealth that is getting zero return ?. Not quite how it works unless you have no money to deploy in different assets..
You are generalizing and that would be a false assumption for quite a few renters.. our financial success was because we rented and were free to deploy that money that would have been tied up in a house elsewhere..
We can subtract out decades of rent and buy multiple houses today with the difference ...
Everyone has different financial resources , opportunity , location and investing ability ...
Renting and investing elsewhere at different times in our lives can be far more profitable for some of us..
Owners have this convoluted belief that every renter only has enough money to pay rent or buy with a small down payment ... that is a false belief .. many people have lump sums later on and have the choice of burying it in a house or renting and investing it .. 30-40% of all home sales are cash so there are options for those who want to take another route to building wealth..
In these parts starter homes begin at a million .. but few rent homes .. instead we rent apartments in buildings for a fraction of what it cost to buy ...
Many urban areas are loaded with high rises and apartment houses . These cost no where what buying a single family home costs. In fact half of all rentals in nyc and the boroughs are multi family dwellings ..
Sure ,we could but a co-op apartment for 385k which would cost less then we pay in rent .. but once we count he fact we are giving up 18k in cash flow on the money we will spend , renting is the better deal
Last edited by mathjak107; 02-09-2019 at 02:45 PM..
I am a renter who needs affordable rent in a not-unsafe area that is hopefully not too horribly far from work. I don't care if it's in the "hottest" part of town as I don't care about the bars and trendy stores full of clothes I'd never wear and such, and even if I did, being able to "walk to downtown!!!" is less important to me than being able to afford my rent every month, or being able to afford something *besides* rent every month,
Location is required in order to get a financial gain from real estate.
So I'm a buyer seeking for good location to have a good financial gain.
That's a crucial lesson, and a hard lesson to learn. I've been grappling with it for 20 years. I want to live in a location where my house appreciates in price. Full stop. It's not about lifestyle, security, comfort or even personal dignity. It's about profit potential. If the local properties are not appreciating, then I'm going to hate the area. If real estate doesn't appreciate well in Heaven, then I don't want to go to heaven.
There are two aspects to owning a home and or renting ... there is the cost of housing itself , then there is the investment aspect and they are two separate things .
there is nothing that says the cost of owning is less than it would be renting .. most of us in urban areas never rent as much house as we would buy . Especially because living in high rises or apartment houses can cost way less then buying .... 2400 a month gets you a nice 2 bedroom 2 bath apartments in our area with pool and tennis courts .a starter home begins at a million . Few rent million dollar homes , but millions live in apartment houses as over half of all rentals in the city are apartment house style.
So location and lifestyle are a big factor .
In fact a renter who goes from a 3 bedroom apartment to a one bedroom after the kids are out can see far better cash flow than someone continuing to live in and feed a big house in a high tax area ..
So there is the cost of housing as one aspect ....
Then there is the investment side ... investing in much greater growth potential assets can easily generate far greater profit and gain then the house .
I can tie up 385k today buying a co-op like our rental or I can rent and invest that 385k ..that is very different then a renter with no money or a first time buyer with no lump sum and choice .
so the combination of housing costs and the investment side of owning , can fall way short of the combo Of housing costs renting and wealth generation in other investments
The problem is few people look at the big picture when comparing and they try to turn owning in to one stop shopping with no other comparison except housing cost
Last edited by mathjak107; 02-10-2019 at 04:43 AM..
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