61–70 of 497 posts
Which is true for a lot of renters; but they will lose everything if the place burns down. The landlord's policy will not cover the belongings of the renters.
Comparing insured versus uninsured is stupid.
When the goal is to have a roof over your head, between renting or buying, the better option is to buy. If the goal is to invest wisely, of course buying a house is worse than say something like an index fund. But the problem is: I can't sleep in an index fund. A house isn't a depreciating asset. Renting is not an asset at all. Mortgages are fixed. Rent tends to frequently increase, skyrocketing at worse. This articl…
False. Land isn't a depreciating asset, but according to U.S. tax law a house is indeed a depreciating asset.
EDIT: I'll rephrase and say "It's complicated". You can deduct depreciation on a house under some situations because structures are assumed to be depreciating. But a house can still appreciate and when you sell you may be on the hook for gains because of deducted depreciation.
These articles always ignore leverage. Generally, with 20% down you are leveraged 5:1. So even if your home is just keeping pace with inflation of 3%, you actually experience 15% growth on your investment. To use the example in the article, if your investment doubled between 2009 and now, your $200k in a $1M home just became 1.2M. 6x growth beats out 3x growth in stocks in the same period. Sure, you can be leveraged…
But if inflation is 3%, you're probably paying 3% (or more) interest on your loan.
So suppose your home costs X. You pay 0.2X downpayment and borrow 0.8X through your mortgage. The first year your home appreciates to 1.03X but you also pay around 3% of 0.8X = 0.024X in interest. So your gain is 0.03X appreciation - 0.024X interest = 0.006X: which is exactly 3% of your 0.2X downpayment! Looks like the leverage didn't help in this scenario at all.
Of course if you bought in the Bay Area a few years ago you made bank, but that's because the growth here happened to be much faster than inflation, even without leverage.
> Sure, you can be leveraged in other investments but (1) your interest won't be tax deductible, (2) your interest rates won't be nearly as low, and most importantly (3) you won't be able to borrow with no recourse
(3) is true, but you can buy stocks on margin, the interest is deductible as a business expense, and interest rates are often lower than mortgage rates.
i would say that buying a remote home is where its at. with solar power, electric cars, self driving (even in its current state), and the soon-to-be mesh of satellites that will provide decent internet to every corner of the globe, along with a whole lot of other things, remote land and home ownership is a very exciting prospect indeed.
most of the cost of a house in a city or heavily populated area is in the land (location) and in paying for the profit margin of all the buyers who came before you. so building your own house on remote land is extremely affordable because there were few previous owners and its not close to anything -- you dont need financing like with a regular house.
i saw a story, i believe it was here actually, about a woman who bought a cheap house somewhere remote but good, and just did a four hour commute on the train. you can make just about anything work. and from my perspective, having your own land and a place to sleep that is truly your own is so fundamental and vital that extreme measures feel justified.
i currently share an apartment with a bunch of people. our complex holds at least 200 or 300 units. at an average of two thousand dollars for each unit, all 200 of them. the people who own this complex bring in almost half a million dollars every month before taxes. a while ago, a pipe broke in our kitchen -- a pipe behind a wall, underground that carries sewage. our entire kitchen and dining area were flooded with foul water. it took them almost a month to even get someone to look at it, even though i visited the office every day to remind them that half of my home was flooded with foul water. their response was that getting a plumber to do a job like this is very expensive, so they had to go though a bidding process instead of just hiring someone asap. i dont have a lot of money or free time so i was powerless in this situation. eventually, the pipe was fixed. when you rent, you are powerless. the power dynamic is obvious both in principle and in experience. why then are so many people eager to enter into this demented arrangement in which they are essentially a modern peasant?
i think everyone should own some kind of house somewhere because there is absolutely nothing worse than getting stuck without somewhere to stay. life is chaotic, rent is very expensive in many areas and housing can be difficult to come by and there have been times when i almost wasnt able to find housing. definitely one of the worst feelings ive ever experienced. unlike some people, i have no nets to catch me. if i had a remote home, not finding housing in the city would transform from a ulcer-inducing nightmare into a short vacation back to the country while keeping an eye out for good housing on craigslist.
> You hold a 5 percent fixed-rate 30-year mortgage. Is that really so? I've read that the mortgage interest rates are around 2-3% in Europe (by the way, in Russia they start from 9%-11% and can be as high as 15%). > A house in 1897 cost the same as a house in 1997, adjusted for inflation. It is hard to believe, given new technologies that are supposed to make it cheaper. Also what the author didn't take into account…
This is assuming you payed off the mortgage, no? Otherwise, at least by the 10 year example given on the article, you’re busted since you can’t make mortgage payments...
There's another intangible benefit to owning if you know you're going to stay in the area long term -- you can't be forced out of your home. I was forced out of one home I rented due to owner move-in, which led to a stressful 30 days of trying to find a new apartment in a tight housing market. We managed to find a place outside of the city, but close enough to transit for a manageable commute. And rent was about the…
There's another intangible benefit to owning if you know you're going to stay in the area long term -- you can't be forced out of your home. Well, you can. The city decides to put in a new subway line and your house is where they want to build a station. Or (depending on your local laws) the other members of your strata corporation vote to sell the building to a developer who wants to tear it down and build a tower.…
Home buyers often overlook the cost of selling their home when considering if renting is cheaper. That is 6% in realtors fees and another 2-3% in closing costs. Renting is a great deal if you are not going to live somewhere for 5+ years before moving
As a commitment averse 30-something perpetual renter I've always felt like I was "throwing money away" by renting - but having breakages, plumping, electricity, etc be someone else's problem was how I often justified it to myself. While I'm sure, like anything, the decision to rent or own is highly situational this article still gives me some hope that I haven't made every wrong decision when it comes to "build or bu…
I'm your age living in the NYC metro area and had the same feelings. I opted for a renovated co-op which only cost a few hundred K and has a maintenance charge under $1000/mo. that includes all utilities. By getting a co-op or condo you limit your responsibility to what's within the walls. Sure you'll have the occasional plumbing/electrical issue but for that you can hire a maintenance guy or neighbor. No need to wor…
Earlier quoted context omitted.
There's another intangible benefit to owning if you know you're going to stay in the area long term -- you can't be forced out of your home. Well, you can. The city decides to put in a new subway line and your house is where they want to build a station. Or (depending on your local laws) the other members of your strata corporation vote to sell the building to a developer who wants to tear it down and build a tower.…
Well, in that very obscure case, you are generally legally obligated to something like 110% of market value, so you can't really compare that to e.g. being thrown out because tony said so..
These articles always ignore leverage. Generally, with 20% down you are leveraged 5:1. So even if your home is just keeping pace with inflation of 3%, you actually experience 15% growth on your investment. To use the example in the article, if your investment doubled between 2009 and now, your $200k in a $1M home just became 1.2M. 6x growth beats out 3x growth in stocks in the same period. Sure, you can be leveraged…
> Generally, with 20% down you are leveraged 5:1. So even if your home is just keeping pace with inflation of 3%, you actually experience 15% growth on your investment. But if inflation is 3%, you're probably paying 3% (or more) interest on your loan. So suppose your home costs X. You pay 0.2X downpayment and borrow 0.8X through your mortgage. The first year your home appreciates to 1.03X but you also pay around 3% o…
I'd love to see some analysis (perhaps a monte carlo sim) on how the "no recourse" angle plays out. I can only assume that a floor on losses skews the expected outcome significantly.