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As I always point out we rent because through the years we invested the money not tied up in a house in commercial real estate in manhattan ....not only only does the gains we made pay our rent but they pay all our living expenses in retirement..
That money that wasn’t tied up in a house enables us to buy multiple homes today if we wanted today since the investments we made were so lucrative.
So renting by itself is not a negative...it is the total picture where if you didn’t buy a house what did you invest in ?
Many renters are just poor
But how much do you pay in rent vs. what you'd pay in a mortgage? Can your rent be increased? Is your mortgage a fixed rate that protects you from payment increases? The old adage of needing 20% down is stale and dated so no arguing that the down payment eats into your funds to invest.
Renting is a great option for those that need to remain flexible to pick up and move for jobs or such, but otherwise I think buying makes more sense with such great rates.
In a majority of cases, the COST CENTER of your housing requirement is most economically served by buying a house.
Reducing the COST of your housing does not convert it into a PROFIT CENTER. A small negative number is better than a large negative number, but doesn't make it a positive number.
Distinguishing between a COST CENTER and a PROFIT CENTER seems to be beyond the capability of many people. Calling a COST CENTER an "investment" doesn't make it one. The only way you can get investment value out of your primary residence is if you can sell it and move somewhere that's a lot cheaper.
In a majority of cases, the COST CENTER of your housing requirement is most economically served by buying a house.
Reducing the COST of your housing does not convert it into a PROFIT CENTER. A small negative number is better than a large negative number, but doesn't make it a positive number.
Distinguishing between a COST CENTER and a PROFIT CENTER seems to be beyond the capability of many people. Calling a COST CENTER an "investment" doesn't make it one. The only way you can get investment value out of your primary residence is if you can sell it and move somewhere that's a lot cheaper.
Now, a second house - that can be an investment.
I think it completely depends on the location. In places like Seattle, owning a home does end up as what you call a "Profit Center". Rents are ridiculously high (except for past 6 months) and it makes sense to put that same money towards buying a home. In our case, after considering tax benefits of mortgage, we are not paying that much more to buy vs rent. Ofcourse there will maintenance expenses on a home but they don't matter with the rate at which real-estate is appreciating.
We have been renting for past 4+ years here and if we would have bought a home 4 years ago, we probably would have made more profit than by renting+investing elsewhere. Also, investing that much money in stock market needs a lot of time. Time is also money.
Not to add, owning a home also has phycological advantages. Can't put a dollar amount on this but it does lead to "better and peaceful" life for most people who have stable 9 to 5 jobs.
Not to add, owning a home also has phycological advantages. Can't put a dollar amount on this but it does lead to "better and peaceful" life for most people who have stable 9 to 5 jobs.
Unlike stocks, a home has intrinsic value as a place to live. Let's not rehash the buy vs rent though. And I wouldn't say a home is a bad investment but it shouldn't be looked at primarily as an investment. At the end of the day, or my life, I'd rather have bought the house I enjoyed living in for many years over the house that I never really liked even if the latter saw much greater appreciation in value.
But how much do you pay in rent vs. what you'd pay in a mortgage? Can your rent be increased? Is your mortgage a fixed rate that protects you from payment increases? The old adage of needing 20% down is stale and dated so no arguing that the down payment eats into your funds to invest.
Renting is a great option for those that need to remain flexible to pick up and move for jobs or such, but otherwise I think buying makes more sense with such great rates.
not even close ...
here in cities we have high rises . the economy of scale are way different if comparing an apartment to a house .
homes here start at 1 million ... plus taxes are high here in nyc ..
i rent a 2 bedroom 2 bath apartment with pool for 2250 a month . with not a penny more in expenses ....
in the mean time we are looking at a condo in westchester . the condo is 400-450k , taxes are 8k and hoa fees are 600 a month .
even if i paid cash we would be giving up at least as much as our rent in income on the dough not counting any other expenses.
but we already did our heavy investing with the money not in a house . we are retired and are very conservatively invested now
the money not in the a house generated multiple 7 figures for us so comparing it to now is not accurate
few of us start out day 1 where we can choose to buy a house for cash if we wanted or lump sum in to an investment .
that usually comes later on in life , so early on owning can be a way of developing wealth .
but once you develop a lot of equity , or sell a business , or inherit money , etc , your options increase and renting and investing elsewhere can create far greater wealth .
then later on you can have lots of options again like we do to either buy or rent , but we grew a nice nest egg with that money earlier on .
if it is a primary and you lived in it 2 years or more than if gains are less than 500k for a couple it goes on no lines when you sell
You missed my point. When you buy something, it's not profit till you actually sell it for more than you paid for it. If you have a house appraised for $400,000 more than you paid for it, that is not profit. It's only profit if you actually SELL it for more than you paid for it.
As far as I am concerned, an "investment" is only such if you can sell it for more than you paid for it and spend the profit, or if it yields an ongoing income stream, or both. Most people's primary residence does not yield an income stream, and most people when they sell their primary residence will need to buy another, and there's no guarantee that the next one will cost less than the current one.
So, not an investment.
Don't get me wrong - I am highly in favor of home ownership for most people. Just don't call it an investment. For most people, it isn't. And calling it such doesn't make it one.
That is the problem with a primary home . Equity can only be accessed by using it as collateral for loans ..
Once in , until you sell you do not have access to your money directly ..on the other hand I can sell a piece of my portfolio gain and gain access but you can’t sell the hallway of a house .
So they are two different assets and two different liquidity’s with two different purposes.
A home can be a cost cutting tool in some areas and that is where it’s strength is ...how many times do you hear people say that owning their home let them retire .
My ex wife is living in a coop we both owned for all of 600 a month in kew gardens ...that apartment rents for 1800 -2000 today ....for her it’s a life saver ....she is not an investor
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