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I never include our home value in our net worth but it's given much higher return lately than stocks and we've gotten much more enjoyment from it and less stress. After my grandparents death and sale of their modest home I calculated they earned over 12% annually in their 50+ years of ownership.
Are you saying that your grandparents' house appreciated at such a rate, that after accounting for taxes, insurance and maintenance, they enjoyed a 12% cumulative annual rate of return?
Quote:
Originally Posted by twinkletwinkle22
Renting works for some people but I love the mental peace that owning gives me.
For some people, indeed. Having sold my house, I profoundly love the "mental peace" of not worrying about bowing foundations or leaking roofs. The other day we had severe rainfall. Rain drumming on the roof, then pooling in the gutters and spilling out, on the perimeter of the building. I know that sound! It's the sound of clogged gutters, or disconnected downspouts. Rain just pools in the adjacent soil, saturating it, and then pressing on the foundation... a nasty business. But now, guess what? It's not my problem. If/when this place finally crumbles, or slides off of the hillside, I simply pack up my various accouterments, and move away. Peace!
mysticaltyger said: There's just no way I'd have the retirement potfolio I have if I'd bought a place. I had to choose between owning either a small condo and being house poor or having a nice retirement portfolio but renting. I wanted the portfolio more than I wanted to own a place. So far, I don't regret that choice.
In a high cost ownership area it can be a challenge to own one's home but in other places home ownership is a good way to provide stable housing cost and the residence often increases in value. Maintenance is definitely a consideration but buying a newer home (good roof/windows) or owning a condo/townhome with maintenance included is a good solution.
I never include our home value in our net worth but it's given much higher return lately than stocks and we've gotten much more enjoyment from it and less stress. After my grandparents death and sale of their modest home I calculated they earned over 12% annually in their 50+ years of ownership. They had no other investments but left a large inheritance that could have been used for their care if they needed it.
Renting works for some people but I love the mental peace that owning gives me.
You make some good points. My main objection is this "you're a fool if you're a lifelong renter" type of mentality. Not all of us renters are broke people who live payday to payday.
I'm totally fine with the bolded. Like I say, to own or rent is as much a lifestyle choice as it is a financial one. Owning is not necessarily financially superior. A lot of people like to present their preference as financially superior, when it's not. It's just what they prefer.
Personally the thought of owning a house stresses me out. But that's me. I understand not everyone is like me. I just don't like it when people imply people who made different choices than they did must be dumb. They might be or might not be. I still maintain the key metric to financial success is not spending too much on housing, whether that be owning or renting, and saving/investing the difference. People who view the house they live in as an 'investment' are more prone to being 'house poor' than those who don't.
I will gladly pay higher housing costs as a renter to Have greater cash flow from growing a far bigger nest egg by investing my money not tied up in a house over the years in far superior growing assets and no headaches of ownership.
I love the mental peace of renting where we do , with no unexpected expenses , work ,chores , renovations or maintenance..
When we owned our second home we couldn’t go anywhere without my wife buying something for the house either . Every time we went there was either work to do or something needing maintenance or repair
You make some good points. My main objection is this "you're a fool if you're a lifelong renter" type of mentality. Not all of us renters are broke people who live payday to payday.
I'm totally fine with the bolded. Like I say, to own or rent is as much a lifestyle choice as it is a financial one. Owning is not necessarily financially superior. A lot of people like to present their preference as financially superior, when it's not. It's just what they prefer.
Personally the thought of owning a house stresses me out. But that's me. I understand not everyone is like me. I just don't like it when people imply people who made different choices than they did must be dumb. They might be or might not be. I still maintain the key metric to financial success is not spending too much on housing, whether that be owning or renting, and saving/investing the difference. People who view the house they live in as an 'investment' are more prone to being 'house poor' than those who don't.
I’ve never particularly even seen ownership as a financial decision as much as a personal one. I would never rent a house, the idea is just awful to me. Someone could not renew my lease and then I’m out? Nah, no thanks. Also the basics like I don’t see how anyone with high standards would be ok with renting a house? It works if you live very simply but otherwise it just doesn’t work. How do I redo the house to be fully smart? How I can tear out things I don’t like and replace them with what I do? I want my house to be exactly the way I want it to be, no compromises if possible, and that requires owning the house so it’s mine to do with as I please. I’d feel weird if I even hung pictures in a rental house. Guaranteed there isn’t one house in the entire world that I wouldn’t want to change something, so for me renting isn’t something financial consideration it’s just a practical one. My house is where I spend all of my time, it’s basically my world, so my world better be perfect.
Are you saying that your grandparents' house appreciated at such a rate, that after accounting for taxes, insurance and maintenance, they enjoyed a 12% cumulative annual rate of return?
I have no way of knowing all their expenses and maintenance over the years, they did not keep those kinds of records. But I can definitely state that they purchased the land for $X and when it as sold it was a tear down so the sale price was based only on the land price no house (property mishandling after their deaths is a long story I was not involved in).
Yes their investment comparing apples to apples grew 12% XIRR. I'd assign taxes (which were very, very low) and maintenance (carpenter grandfather) and insurance (also low) to their housing cost and not part of investment cost. I don't think maintenance, taxes and insurance are ever allowed to be added to ones home basis cost to compute gain.
edit to add: I see my original post stated "sale of their home" but it should have said "sale of their residential property" because the house was teardown at that point.
I will gladly pay higher housing costs as a renter to Have greater cash flow from growing a far bigger nest egg by investing
how so... rents are growing at 6%+ a year, at least wherever I have been living, that seems unsustainable to me.
The problem is that even if rents fall your landlord will NEVER lower your rent, that has been my experience, they will give you all sorts of excuses - i.e. the usual spiel - market rents are only for new renters etc. You have to either threaten to leave or actually leave. Moving costs a TON of money which may make any savings moot.
When you own you don't deal with all this baloney... your outlook is fixed and predictable. That is the upside.
^The evil landlord thing is overplayed and often it’s exactly what they’re telling you. I have a large ownership of a high rise apartment building and I haven’t made a dime in a decade. It may even be slightly above that now. It was an older building so we had to add fire suppression systems to lower insurance costs, we remodeled the lobby, had to replace both elevators, every unit is being redone with nicer finishes, we added a rooftop BBQ and hangout area with a fantastic view, etc. Every dime has went back into the building, but I’m sure the residents think their rents are increasing too much or it’s somehow unfair. Reality is we might sell the building because it doesn’t make us any money anyway.
I’ve never particularly even seen ownership as a financial decision as much as a personal one. I would never rent a house, the idea is just awful to me. Someone could not renew my lease and then I’m out? Nah, no thanks. Also the basics like I don’t see how anyone with high standards would be ok with renting a house? It works if you live very simply but otherwise it just doesn’t work. How do I redo the house to be fully smart? How I can tear out things I don’t like and replace them with what I do? I want my house to be exactly the way I want it to be, no compromises if possible, and that requires owning the house so it’s mine to do with as I please. I’d feel weird if I even hung pictures in a rental house. Guaranteed there isn’t one house in the entire world that I wouldn’t want to change something, so for me renting isn’t something financial consideration it’s just a practical one. My house is where I spend all of my time, it’s basically my world, so my world better be perfect.
I feel the same. I want to be able to make whatever changes I want. I would never be truly happy in a rental, and the thought of having to move gives me the willies. I never ever want to move again. And raising my rent? Oh hell no. Renting is just not for me.
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