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The problem is in USA renters are treated either like dumb idiots ("you're a sucker to be 'throwing away your money'"), or like lepers to be pitied ("oh you poor thing, you are still renting..."). This is all so weird, you don't see such intense personalized arguments with other types of investing.
So, "renters" are investing? In their rent? For a renter, that sounds like a poor investment, as there's very little cash flow. Now, as a rentee, that could make sense, as there IS cash flow to you, not away from you. I suppose some renters are investing their add'l funds after paying their rent, if there IS any.
So, "renters" are investing? In their rent? For a renter, that sounds like a poor investment, as there's very little cash flow. Now, as a rentee, that could make sense, as there IS cash flow to you, not away from you. I suppose some renters are investing their add'l funds after paying their rent, if there IS any.
Yup, weird alright.
like i said hundreds of times , yes renters can be investors ..
you are thinking in terms of poor renters , not renters who sold homes , properties, businesses and now have the choice of renting and investing a large sum of money instead of buying again .
very different situation .
i have all the money not tied up in a house anymore invested , not only paying our rent but all our bills while still growing itself .
we have an 18k minimum difference in better cash flow renting a year then if we bought an equivalent condo or co-op and had that dough tied up in equity
being retired cash flow is king not having the money dead in home equity for us .
so housing costs are one side of the equation , what our money deployed else where can generate is the other side.
both sides can be better or worse then owning and it is the combo that determines how you did financially.
what is weird is how this has to be explained over and over
Last edited by mathjak107; 06-26-2023 at 12:13 AM..
Yes, depends so much on the circumstances and so many factors are at play.
Here, people whose retirement income is likely to be mostly the state Aged pension (which is non-contributory but asset and income tested) are much better off when owning rather than renting.
Here interest on principal place of residence is not a tax deduction but interest is deductible on income producing rental properties. So some people with home based businesses are better off renting.
Retired people owning apartments can find the overheads excessive. We bought an investment property last year and the lady who sold it is renting it back. Better for her particular circumstances.
In my country it is all but impossible to get a lease for more than a year but apparently in parts of Europe leases for several years are possible. (I don’t know about the US)
Here there is no inheritance tax whereas in parts of Europe the tax can be substantial. So there families will gift their homes to their kids fairly early to avoid the tax.
Here there usually is no capital gains tax paid on the sale of a principal place of residence which encourages home ownership. Probably not the case everywhere.
I see mortgage as a rent control thing. Sooner or later, owning will be cheaper than renting.
Of course it will. I bought a 2BR 1Ba condo in 2010. Mortgage, interest, and insurance were about $50 less than the $1400 I had paid for my last 2BR 1Ba apartment, plus I have an attic, a front porch, and a little fenced-in private patio and garden area. The HOA fee was $200 in addition to that. And of course I now had a tax deduction for the interest and property tax.
13 years later, you can't rent a 2BR apartment around here for less than $1800 at a very minimum, and that would get you about 700 sf in an old garden apartment complex with laundry in the basement. My condo is worth $100k more than I paid. (HOA fee is up to $305.)
Still got to deduct interest last year, but I have paid down so much that this year I might be under enough to take the Standard deduction instead, despite property taxes now being higher.
it isnt so much a case of being mortgage free as it is having the assets to pay off the mortgage at any point .
getting 5-6% on your money and paying 2-3% interest is well worth it .
if its not then simply pay it off .
having lots of liquid cash available for tough times can be very comforting as well.
2008 saw people with loads of home equity and job loss .
with helocs cut off by most banks they were house rich and cash poor .
so comfort comes from not having fionancial stress no matter how it is arrived at.
one does not have to be mortgage free if they have the cash and assets to cover things.
the problem is when you have a mortgage and not enough liquid assets to cover things
Most of us aren't getting 5-6% on our money right now, dear. But I do have 3.25% mortgage, and I've slowed down a bit with the race to pay it off while I build savings and add to my newish S&P 500 index fund, which so far has only lost money. But I hear if we hang in long enough, it will go up...
Most of us aren't getting 5-6% on our money right now, dear. But I do have 3.25% mortgage, and I've slowed down a bit with the race to pay it off while I build savings and add to my newish S&P 500 index fund, which so far has only lost money. But I hear if we hang in long enough, it will go up...
You can earn 5% on a FDIC insured CD these days. Short term U.S. treasuries also pay 5%+.
I've owned 3 homes over the years. Only the first one had a mortgage.
The other 2 were bought cash from the sale of the previous home.
And I was able to take advantage of the cap gains tax exclusion twice.
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But I do have 3.25% mortgage, and I've slowed down a bit with the race to pay it off while I build savings and add to my newish S&P 500 index fund, which so far has only lost money. But I hear if we hang in long enough, it will go up...
