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"Don't worry millenials! You didn't really want a house anyway, it's a terrible idea! Keep paying those student loan payments and renting!" -- Retired boomer with $1MM+ equity in their suburban California home purchased in 1975 for $10k.
*with 1975 property tax locked in thanks to prop 13
Earlier quoted context omitted.
I mean, in the past 7 or so years, all the boats have been rising. What would your returns have been if you put them in stocks? How great was and is the risk you take by taking tenants versus the risk you take by buying stocks?
You do both to diversify (equity and real estate). Having the property as a rental is very tax efficient as well (you get to depreciate a property that appreciates in value). Also, no one is going to let you leverage equity purchases with debt like you can with real estate. Disclosure: I own several rental properties to round out my investment portfolio.
I really fail to see how most of those points are relevant when you consider that a home is an investment you can, you know, live in. The alternative would be to rent indefinitely, which apparently we're ok with even though its not just a 0% return on investment, its an infinitely negative percent return on investment. Even if your house breaks even over 10 years, you still got to live in it for ten years for what is…
Even if they could have done better with stocks, the peace of mind to only have to pay property taxes and upkeep on a house is something that has substantial value in retirement.
As a younger millennial I find myself far more interested in a home from a Maslow’s hierarchy perspective than an investment at this point.
Yes! Tbh I wasn’t really all that interested in buying. I finally gave in after spending a summer working with the homeless, and reading a Priceonomics article about David Raether. I got really afraid. https://priceonomics.com/what-its-like-to-fail/
Renting and owning from a cash flow perspective are usually pretty close, and you need to live, so a suboptimal investment with any return is better than making a landlord money and investing the scraps into 401ks.
I’m in my late 30s and missed the gogo crazy years. But everyone I know in my age cohort has had a positive, meaningful ROI in trading houses up at least once.
The supposed flexibility of renting is overrated as well. No decent landlord will take less than a 1 year lease, and some premium properties will demand a premium if you refuse a 2 year lease. Getting jammed up with buying out a lease early, or getting stuck with a high rent when the market cools is another way that renting is almost always a bad deal for the tenant.
This sounds like a corporate accounting analysis, not advice for people. People don’t benefit from deducting opex.
I really fail to see how most of those points are relevant when you consider that a home is an investment you can, you know, live in. The alternative would be to rent indefinitely, which apparently we're ok with even though its not just a 0% return on investment, its an infinitely negative percent return on investment. Even if your house breaks even over 10 years, you still got to live in it for ten years for what is…
Hang on a minute there. Big citation needed, or caveat for which locality you're talking about. In LA or SF, for example, the interest + property tax + upkeep + HOA fees + closing costs + etc. very often run significantly more than rent on an apartment. And that's after the huge assumption that you can even afford the up-front cost needed to buy a house in the first place.
Earlier quoted context omitted.
*with 1975 property tax locked in thanks to prop 13
Is that accurate? Property taxes can change
It's lower risk / higher return when you think of it that way.
(I do not own a house nor do I plan to own one, however)
I bought a house in 2015 (at 32) and it was the best thing I ever did. Even though I had to move away, I turned it into a rental property, and it’s earning $380 a month in profit. I’ve been using that profit to pay down the principal and add to my 401(k). My only regret is that I didn’t buy a lot sooner.
The sneaky best thing to do is buy a small multifamily unit, live in one, and rent the others. One of my coworkers at the time I bought my building was shopping single-family homes in the exact same price range, and we have almost the same monthly costs. The difference being that my tenant essentially pays my mortgage, and I only have to pay the taxes and insurance. Down the road, when I have a family and buy a real…
This is totally a biased article against home ownership. Not one positive toward home ownership...I can't believe the author would be so biased.
Sure, a house is not a great investment. But there's more to housing than investment. You have to live somewhere, and you're probably going to be paying for it one way or another. There's no perfect solution--you have to figure out what works for you.
We bought this house nine years ago, and hope that we never have to move again. Now the mortgage is about half of what it would cost to rent an apartment in this neighborhood. That's kind of a trap, too. There's no point to thinking about moving--there's no place we could go that would be cheaper than what we have unless we leave the area entirely.