Why You Should Never Buy a Home Again

The conditions of Detroit actually make it one of the most attractive areas for Real Estate investment in the country.

High & mid-rise buildings Downtown are being purchased (Dan Gilbert is one such buyer) for 6 figure sums.

http://detnews.com/article/20110127/BIZ/101270352/Quicken-Lo...

Not really. I know the US has exceptionally low interest rates, but in every other country I've ever lived interest rates are almost always higher than rental yields. Properties that are yielding higher than the current interest rate are the exception rather than the rule. On that basis, you're paying a premium to "own" your home.

The only benefit of owning in such a market is that purchasing means you draw a line in the sand, "A" is now more in control if their monthly rent. But they're not in complete control, interest rates rise, the building needs to get repaired, there's those not insignificant legal and other costs associated with purchasing in the first place. That adds up to quite an expense. Meanwhile "B" doesn't have those concerns, and a great deal of flexibility and liquidity.

I'll personally stay "B", and my investment properties will be limited to those rare gems that are cash-flow positive within a year or two.

I think his post is a bit extreme. It depends on a lot of factors on whether to buy a house or not. I think most of his reasons aren't really valid for not owning a home.

I'll make some comments on his financial arguments:

A) If you pay off your home fast, you won't have anymore mortgage payments. And you actually own something that you might be able to sell later, getting some money back. If you rent, you won't see that money ever again. So technically your cash is good as gone if you rent. If you own, you can get something back at least.

This depends on the house you buy and the market. For example, I rented a lot until I found a good deal on a house. Now I pay less on my mortgage than on my apartment I rented.

The rent may increase every year too. At every place I stayed, they always raised the rent every year. At least with the home, you don't have to worry about that since you have the same mortgage payment every month.

B) Usually the seller pays the closing costs, especially at the current market. If not, negotiate so the seller pays. You don't usually have to worry about this if you're buying a home.

C) He's right on this one. The comfort of calling the maintenance person at my apt was one of the benefits over owning.

D) This is simliar to A). It depends on the market and the home you get. For me, the taxes + mortgage turned out to be simliar to what I paid in rent. Plus I now get a huge refund because of my deductions. So I paid around the same amount as my rent, and I got a bigger refund on my taxes.

E) I agree with the author. This is probably one of the disadvantages of owning a house.

F) I don't consider my home an investment. It's a place I bought to live in. I don't expect to make a profit from it. I have my stocks and mutual funds that I consider to be investments.

Now my comments on his personal reasons on not owning a home:

A) I agree with the author. This is same as E) above. I don't know why he put it twice.

B) I don't see how this is a reason not to own a home. The benefits of owning a home is that you can do whatever you want with it without worrying about the landlord looking over your shoulder.

C) I don't understand this argument as a reason for not buying a home.

D-F). Not everyone is same. Some people's hobbies are gardening and maintaining the home. They actually enjoy doing it. Some people like the sense of stability. But if you're like the author and like to change things up a lot and be mobile, a house is probably not good for you.

G) I got stressed when I rented because the landlord needed to raise the rent every year. Then I had to go through the stress of negotiating the rent increase. If I wasn't successful, I had the stress of budgeting for the higher rent or had the stress of packing all my junk up, finding a new place, and moving. So renting isn't always stress free.

H) This is true. But if you plan wisely, you should still have a lot of cash available for emergencies, even after buying your home.

Mortgages are an excellent inflation hedge. Consider it--you borrow a large pool of dollars to buy the home. The value of the dollar drops through the floor. Now you are paying back the loan which was for a fixed amount and doesn't change with dollars worth half as much.

He has a place to live and $100,000 in cash. If you buy a house, you don't have the $100,000 in cash.