BeExcellent
Master Don Juan
- Joined
- Dec 16, 2015
- Messages
- 4,705
- Reaction score
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- Age
- 55
Hmmmmmm. Interesting debate on this topic. Yes we all need shelter and shelter costs $$$. I own houses where renters live, and I rent where I personally reside. Why?
Well I am in the area I live in is for the sake of the best high school in my metro. The average house in that school district is over the 1M mark to purchase. I cannot justify dumping a big down payment into such a house, worrying about if the roof leaks or the HVAC fails and the high cost of debt service. Two summers ago the roof leaked AND the AC went out, total out of pocket cost to the owner? Around 30K. Glad the law requires the owner to fix those items and also glad it didn't come out of my pocket.
I only need this school district 3 more years. Then I'm an empty nester. I'd rather rent and then once my youngest graduates HS I'm free to go where ever my husband and I please. We also won't need a big house at that point, so to me purchasing a primary residence is unwise.
Unless.....I might consider manufactured housing in an over 55 community. Manufactured housing depreciates. You own the structure but you pay lot rent. I could buy into a place like that in several places, particularly near my favorite ski mountain, pay cash for the structure & lot rent forever but come out ahead AND be able to enjoy skiing daily or weekly. No brainer for me. And keep building wealth with the income I earn and the net worth I have. That is a perk being old has that is pretty cool actually. An inexpensive home base in that case & I could do that in a couple different areas that I like to frequent.
Warren Buffet has famously said that his home in Omaha, NE has been a horrendous investment even though he's been free & clear for years and the house is worth over 1M. Why does he hold that view?
Because had he invested that money he put into that house he'd have made at least 15M in the markets.
Primary residences are lousy investments. When renting is cheaper (as it is BY FAR in my metro)? You are better advised to rent & save/invest your money elsewhere.
As a renter you get the advantage of lower rent because the landlord bought under more favorable conditions and in the interest of getting a great tenant will pass those savings onto the well qualified renter.
Everybody wins. The renter gets a good place in an area where purchase is either cost prohibative or out of reach altogether; the landlord gets solid income, reduces vacancy loss and has the property occupied and performing.
I know a couple who live the good life in Orange County. They own 7 homes there free and clear, live in the smallest one and rent the others out at an average of 4K per month per house. Their monthly gross income is therefore 24K. Annual income is 288K or so. They bought those homes in the 1960s and early 70s and keep them up. Each home is worth over 1M. They are not billionaires but they do very well with that kind of passive income.
Real estate is a good inflation hedge and you can do well if you are willing to assume issues most homeowners looking for a primary residence will not.
To me a house is a glorified storage unit for your possessions that you happen to live in. Very different attitude than thinking a residence is a great investment. It actually is horrid as an imvestment vehicle. Just awful.
Rental real estate is a far better investment.
Well I am in the area I live in is for the sake of the best high school in my metro. The average house in that school district is over the 1M mark to purchase. I cannot justify dumping a big down payment into such a house, worrying about if the roof leaks or the HVAC fails and the high cost of debt service. Two summers ago the roof leaked AND the AC went out, total out of pocket cost to the owner? Around 30K. Glad the law requires the owner to fix those items and also glad it didn't come out of my pocket.
I only need this school district 3 more years. Then I'm an empty nester. I'd rather rent and then once my youngest graduates HS I'm free to go where ever my husband and I please. We also won't need a big house at that point, so to me purchasing a primary residence is unwise.
Unless.....I might consider manufactured housing in an over 55 community. Manufactured housing depreciates. You own the structure but you pay lot rent. I could buy into a place like that in several places, particularly near my favorite ski mountain, pay cash for the structure & lot rent forever but come out ahead AND be able to enjoy skiing daily or weekly. No brainer for me. And keep building wealth with the income I earn and the net worth I have. That is a perk being old has that is pretty cool actually. An inexpensive home base in that case & I could do that in a couple different areas that I like to frequent.
Warren Buffet has famously said that his home in Omaha, NE has been a horrendous investment even though he's been free & clear for years and the house is worth over 1M. Why does he hold that view?
Because had he invested that money he put into that house he'd have made at least 15M in the markets.
Primary residences are lousy investments. When renting is cheaper (as it is BY FAR in my metro)? You are better advised to rent & save/invest your money elsewhere.
As a renter you get the advantage of lower rent because the landlord bought under more favorable conditions and in the interest of getting a great tenant will pass those savings onto the well qualified renter.
Everybody wins. The renter gets a good place in an area where purchase is either cost prohibative or out of reach altogether; the landlord gets solid income, reduces vacancy loss and has the property occupied and performing.
I know a couple who live the good life in Orange County. They own 7 homes there free and clear, live in the smallest one and rent the others out at an average of 4K per month per house. Their monthly gross income is therefore 24K. Annual income is 288K or so. They bought those homes in the 1960s and early 70s and keep them up. Each home is worth over 1M. They are not billionaires but they do very well with that kind of passive income.
Real estate is a good inflation hedge and you can do well if you are willing to assume issues most homeowners looking for a primary residence will not.
To me a house is a glorified storage unit for your possessions that you happen to live in. Very different attitude than thinking a residence is a great investment. It actually is horrid as an imvestment vehicle. Just awful.
Rental real estate is a far better investment.