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Owning nothing is now a luxury, thanks to a number of subscription startups

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Re: Owning nothing is now a luxury, thanks to a number of subscription startups

#121

Post by consp »

gambiting wrote: post #111
xivzgrev wrote: post #108

Earlier quoted context omitted.

No? In San Francisco median rent is much lower than equivalent monthly cost would be on median home. You are correct that rent includes all the costs plus markup. But a big factor is that housing costs (esp in california) remain pretty steady once you buy. So that rent does include the housing cost...from 10, 20, x years ago. Alternatively a developer builds a building and rents out the unit instead of marking up and…

Isn't SF an outlier in literally every financial question though? I'm currently in the process of buying a house in the UK and our mortgage payments are going to be a lot less than we were paying for rent in the same area. Like, 40% less. If you have any kind of stability and are not planning to move in 2-3 years it's crazy not to buy.

It's about the same here (Netherlands, excluding Amsterdam). Rent is about 30-50% more than mortgage payments before taxes and after taxes it's even cheaper (due to weird rules giving tax breaks to home owners). You definitely pay a premium.

note: Amsterdam an outlier like SF.

Re: Owning nothing is now a luxury, thanks to a number of subscription startups

#122

Post by dagw »

Barrin92 wrote: post #114
TeMPOraL wrote: post #109

Earlier quoted context omitted.

As a regular middle-class person, how do you put $1950 in stock to make more than $400 in 5 years risk-free and time/effort-free?

index funds, they've averaged about 7-8% over the last 20 years and cost you basically nothing. mind you renting your toothbrush probably isn't worth it, but if you're thinking about spending thousands of dollars and compare that to the compound interest you earn in a passive fund over a few years, you'd be surprised how much you lose out on. In fact that's one of the drivers between middle class and upper class ineq…

compare that to the compound interest you earn in a passive fund over a few years

So I did. Remember you've still got pay the $50/month out of that savings. Even with 7% guaranteed annual interest on your initial investment you're still losing money after month 46 with renting at $50/month compared to paying $2000 up front.

Re: Owning nothing is now a luxury, thanks to a number of subscription startups

#123

Post by stunt »

After successfully implementing the illusion of control, we want to implement the illusion of wealth now. A good way to make more money!

I'm not against the concept. But I'm not fully sold. The subscription model is great for many things but not everything. Companies are seeing this as a new opportunity and they're driving their marketing strategies around it by selling a subscription model to everything.

Re: Owning nothing is now a luxury, thanks to a number of subscription startups

#124

Post by ahje »

Bombthecat wrote: post #102
jaabe wrote: post #82

Earlier quoted context omitted.

In Denmark where I live you can loan 1 million Danish kroner at around 5k each month. A decent downtown apartment in a bigger city or a house in the suburbs is 2-4 million. Renting the equivalent is 10-15k, and with renting you obviously skip a lot of the maintenance cost and taxes. On the flip side loans are tax-deductible, meaning you actually don’t pay 20k to borrow 4 million, you pay 12k. It can still be cheaper…

I doubt that the house would be 4 million. Thanks to reducing population, increased building and housing. Plus who knows how the weather will be, I'm not sure that owning a house is the right thing in 20 years.

When I lived on Amager about six years ago, the prices were definitely around the 3-4 million mark in the suburbs. Prices fell somewhat once you got out of Copenhagen, but it was still ludicrously expensive.

Are you saying the prices droppped sharply the last 5-6 years?

Re: Owning nothing is now a luxury, thanks to a number of subscription startups

#125

Post by maccard »

Barrin92 wrote: post #107
durnygbur wrote: post #104

Earlier quoted context omitted.

After 4 years you paid for the sofa 2400$, "rest of your money" is -400$, sofa doesn't belong to you, and in case of scummy renter you own money for damage repairs and cleaning. Ready for legal litigation?

The point of the exercise is to invest the money you didn't pay into something that earns you money. If you put the 1950 bucks you didn't spend into stock, you're making money. And in case of damages and repairs, if you own the sofa, you're always sitting on the damages. Homeowners for example routinely spend thousands of dollars per year on their houses, whereas renters (generally), have repairs covered by the landl…

> You can't just tally up the renting costs while ignoring the freed up capital, this is the exact mistake people make when they prematurely buy.

And you're deliberately oversimplifying the calculation, which is just as bad. You're assuming a guaranteed return of 7%, and that the capital isn't touched for the years. If withdraw $50 from your investment capital per month to pay the rental, the numbers don't come out as favourably. similarly, if you reduce the returns (7-8% is an average return, but it's not a guaranteed return, especialy on smaller sums where you may have to pay $25 per trade, or 1+% fees in fund management every year, or tax on the returns).

Your point about renting being a viable option is valid though, your numbers are just inflated.

Re: Owning nothing is now a luxury, thanks to a number of subscription startups

#126

Post by mapleoin »

scirocco wrote: post #110
Bombthecat wrote: post #102

Earlier quoted context omitted.

I doubt that the house would be 4 million. Thanks to reducing population, increased building and housing. Plus who knows how the weather will be, I'm not sure that owning a house is the right thing in 20 years.

"Buy land, they're not making it anymore" - Mark Twain

The problem is we've started deleting it now.

https://en.wikipedia.org/wiki/Sea_level_rise

Re: Owning nothing is now a luxury, thanks to a number of subscription startups

#127

Post by Dylan16807 »

Barrin92 wrote: post #114
TeMPOraL wrote: post #109

Earlier quoted context omitted.

As a regular middle-class person, how do you put $1950 in stock to make more than $400 in 5 years risk-free and time/effort-free?

index funds, they've averaged about 7-8% over the last 20 years and cost you basically nothing. mind you renting your toothbrush probably isn't worth it, but if you're thinking about spending thousands of dollars and compare that to the compound interest you earn in a passive fund over a few years, you'd be surprised how much you lose out on. In fact that's one of the drivers between middle class and upper class ineq…

$1950 invested and pulling out $50 every month. If you get 10% interest, at the end of four years you have... negative thirty dollars.

And you still don't own the couch.

$50 a month for a $2000 couch is equivalent to a debt at 26%. You can't overcome that with investment. It only makes sense if you're planning to throw it away very soon.

Re: Owning nothing is now a luxury, thanks to a number of subscription startups

#128

Post by maccard »

Izkata wrote: post #120
Retra wrote: post #45

Earlier quoted context omitted.

When I moved frequently I bought an inflatable bed or cot. I didn't buy a king sized bed and throw it out every two years. That's insane.

> and throw it out every two years. Um, they're not throwing it out. Someone else uses it afterwards.

I'm a little skeptical of this - I know for car leases this is true, but is there really a market for 2 year old ex-rental sofas?

Re: Owning nothing is now a luxury, thanks to a number of subscription startups

#129

Post by maccard »

jijji wrote: post #57
mherdeg wrote: post #2

If the business model for CaaStle does not work out, but I can accurately predict when they will go out of business, should I sign up to rent a bunch of stuff that month and hope I get to keep it after the shutdown?

i was evicting some tenants who had a brand new bed from rent-a-center, and the guys came to pick it up.... one of them forgot his hex screw driver, and called into the manager to say he "saw bed bugs" and then they gave the guy the bed for free -- actually i wound up taking it, but i think if u say "bed bugs" when it comes to those beds, all of a sudden they dont want it back (no it didnt have bed bugs)

I returned a mattress under one of those 90 day "no questions asked" return policies, and when they came to pick it up they said because it wasn't in the plastic wrapping that they wouldn't lift it, but they'd deliver my new mattress and mark the old one as disposed.

Re: Owning nothing is now a luxury, thanks to a number of subscription startups

#130

Post by majewsky »

JMTQp8lwXL wrote: post #80
baroffoos wrote: post #71

Earlier quoted context omitted.

Maybe this is why they are moving to subscription furniture. You may be quick to cut your movie subscription but not your bed or fridge subscription.

I'm sure businesses will experiment with renting all sort of things and see what sticks. The market for less serious rentals (such as entertainment) is probably much bigger than furniture. Knowing I'm renting a sofa, and that if I spill something on it, I'd be responsible sounds far too stressful (maybe I'm not, but I'd have to find the answer to that). Also, do they deliver and pick up the furniture when I'm done wi…

> Consumers tend to steer away from things they can't understand.

Then why did/do we have a ton of financial non-experts buying financial products that they don't understand?

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