Do you agree or disagree with Noah?
What are the things to take into consideration to decide what's right for you?
I'll leave my thoughts in comments below.
What are the things to take into consideration to decide what's right for you?
I'll leave my thoughts in comments below.
https://twitter.com/noahkagan/status/1367472200756977664
Here are some things to consider about buying vs. renting.
I've rented by choice for 15+ years in SF, NYC, and LA. Renting was an awesome lifestyle and financial decision
Why? Because even though house prices appear to go up, most people forget about PHANTOM COSTS
I've rented by choice for 15+ years in SF, NYC, and LA. Renting was an awesome lifestyle and financial decision
Why? Because even though house prices appear to go up, most people forget about PHANTOM COSTS
Here are examples of PHANTOM COSTS:
- Down payment
- Maintenance
- Interest
- Taxes
- Time
- Opportunity cost
Once you factor these in, your returns shrink, often dramatically. This is why granny buying a 1979 house for $100K and selling for $800K didn't actually make $700K
- Down payment
- Maintenance
- Interest
- Taxes
- Time
- Opportunity cost
Once you factor these in, your returns shrink, often dramatically. This is why granny buying a 1979 house for $100K and selling for $800K didn't actually make $700K
You might hear, "You're throwing money away on rent."
Do you say that about eating out at a restaurant? You're "throwing money" away on a meal? No, you're paying for value. Same as renting.
(Of course, to get financially ahead, invest the difference between rent + mortgage.)
Do you say that about eating out at a restaurant? You're "throwing money" away on a meal? No, you're paying for value. Same as renting.
(Of course, to get financially ahead, invest the difference between rent + mortgage.)
The next common response is, "You're paying your landlord's mortgage"
1. Americans HATE the idea that someone is making $ off them
2. Your landlord doesn't just magically pass along their costs. They can only charge what the market bears. Sometimes they profit, sometimes not
1. Americans HATE the idea that someone is making $ off them
2. Your landlord doesn't just magically pass along their costs. They can only charge what the market bears. Sometimes they profit, sometimes not
Now, to @noahkagan's comment
I also know a lot of wealthy people who rent. I think some of it is the renter economy we grew up with: Why buy a car when you can Uber?
Some of it is lifestyle. For example, we moved across the country recently, which was easy because we rented
I also know a lot of wealthy people who rent. I think some of it is the renter economy we grew up with: Why buy a car when you can Uber?
Some of it is lifestyle. For example, we moved across the country recently, which was easy because we rented
I know an entrepreneur in LA who is so successful, she regularly flies private. She told me, "No matter how I run the numbers, it never makes sense to buy here." She rents!
Interestingly...most people buy a house. And the vast majority of wealthy people buy a house.
I will too
Interestingly...most people buy a house. And the vast majority of wealthy people buy a house.
I will too
When I buy, I already know it will be a terrible financial decision. But there are other reasons to buy something -- even the biggest purchase of your life -- besides money
So while I agree there are a lot of young wealthy people who rent, almost all of them will eventually buy
So while I agree there are a lot of young wealthy people who rent, almost all of them will eventually buy
In America, real estate is religion. People irrationally believe they "need" to buy a house. When you point out that real estate might actually not be a very good investment, they get extremely mad
I've been writing about this for 15+ years & I love it
I've been writing about this for 15+ years & I love it
https://twitter.com/chrisippolito/status/1367635362047094789
What would make me change my mind:
- Kids
- Parents moving in
- Want to design a house together
- Just plain want to
NOT "I want to buy a house as an investment." Our future house will not be an investment, it will be a luxury purchase
- Kids
- Parents moving in
- Want to design a house together
- Just plain want to
NOT "I want to buy a house as an investment." Our future house will not be an investment, it will be a luxury purchase
https://twitter.com/mjones_vandy3/status/1367634924925190144
Lots of people like the idea of a mortgage's fixed costs
However
A mortgage is the MINIMUM you'll pay. You have taxes, unexpected expenses, etc
Rent is the MAXIMUM you'll pay. Fridge breaks = $0 to you. Investments pay $$$ more than rent increases
However
A mortgage is the MINIMUM you'll pay. You have taxes, unexpected expenses, etc
Rent is the MAXIMUM you'll pay. Fridge breaks = $0 to you. Investments pay $$$ more than rent increases
https://twitter.com/gladefrancis/status/1367635368372183041
NEVER FEEL GUILTY FOR RENTING!
Read Chapter 9 of my book, where I show you even more surprising details of buying vs. renting. You decide -- don't let society tell you what to do
Read Chapter 9 of my book, where I show you even more surprising details of buying vs. renting. You decide -- don't let society tell you what to do
https://twitter.com/ismat/status/1367635997551452162
Many people make this common mistake:
2BR for $2,000 rent
2BR for $2,000 mortgage
"Same price? I should build equity!"
They forget to add ~30%-50% phantom costs to the mortgage. They don't realize true expenses until it's too late.
2BR for $2,000 rent
2BR for $2,000 mortgage
"Same price? I should build equity!"
They forget to add ~30%-50% phantom costs to the mortgage. They don't realize true expenses until it's too late.
https://twitter.com/jkam12/status/1367639664602075136
Good comment on modeling rent increases.
Yes, model. But remember:
- Rent is governed by supply & demand (e.g., my book now costs $10K, how many buy?)
- Investments can make more than rent increase, esp over long term
- Rents & house values also go down
Yes, model. But remember:
- Rent is governed by supply & demand (e.g., my book now costs $10K, how many buy?)
- Investments can make more than rent increase, esp over long term
- Rents & house values also go down
https://twitter.com/mbrand657/status/1367646011267575808
Great comment on spending $ on things that are important to you.
I've created 5 Money Rules for Buying a House, one of which is having a repairman on call
I'll share the rules on my newsletter. Sign up: iwillteachyoutoberich.com/blog/c/newslet…
I've created 5 Money Rules for Buying a House, one of which is having a repairman on call
I'll share the rules on my newsletter. Sign up: iwillteachyoutoberich.com/blog/c/newslet…
https://twitter.com/sdcrane/status/1367652263733428231
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