nah thats not the "real" truth. its what you got out of the video. I will add that a person or couple can buy a house they actually CAN afford and still not get what they want out of life or that house (purchase or investment, intention and so on). particularly when we live in a world where people can't even conceptualize what being able to afford something constitutes. most people believe that being to afford something means they can come up with the necessary amount. where as some more savvy folks understand that being able to afford something means you can purchase said item without interrupting any current systems in place and without taking financial lost from the decision down the road
@@333pinkelephant333Here in Canada (especially in the west coast where I live) it is over $1million for even a shitty house. No way can I afford to buy.
My landlord came to me this year and said he is 90 years old, and either I need to buy the house or he was going to sell it to an investor. The first thing the investor was going to do was raise our rent. So I went to chase bank, asked to apply for a mortgage to get the home. Keep in mind at the time I was Landscaping for chump change, and I hadn’t even been doing it for 2 years like most banks want you to be at least 2 years in the field. Long story short I bought a 4 bedroom, 2 bath, basement, 2 car garage, for $80,000…. The house was already on Zillow for $120,000. Thank you Paul, you allowed me to buy a home at 23 years old and BLESSED ME with easily over $30,000 of equity. The house needs some touch ups but nothing serious. I wasn’t even looking to buy a house, but it was thrown onto my lap and I sure ain’t complaining!
@@cutthechicken194 I live in Michigan, more specifically Pontiac, MI. That’s why the price of the house is so low haha, but I can’t complain for the price and I have a ton of space to work with between the house and garage. Wish me luck hopefully in the next 10 years I have this thing paid off and flowing cash
I bought my first house in 1998 for $120k at 8% interest. My total house payment with mortgage, property taxes, and rent was just under $1100. When the rates got low I refinanced at 15 years and now it’s paid off. Rent in my area is now $2000-$2500/month for a two bedroom with no garage. Buying was definitely the right choice for me
@@AnakinSkywalkerrrop Rent has almost doubled in the UK since 2020. Landlords are getting rich while you get poorer. Buy a house. Ramit can afford to buy anywhere, anytime. You can't!
@@AnakinSkywalkerrrop maybe so but we were a single income family and I was making 42k/year. It’s was rough but it was doable. How much stuff do people buy that they don’t really need?
@@silvafox7719 buy a house now and you are at least a million in debt. If you have a family where will you live if you rent?? Housing prices increases have SLOWED so reselling will cost you just in fees alone. Emigration is now the best choice for many...
@@AnakinSkywalkerrrop he said, "have you ever in your life?" I bought my first house in similar circumstance. Made $46k/ yr, house cost $85k. Same house now cost over $200k. I sold it 9 yrs ago for $105k. Something has gone haywire in the last decade-plus!
I'm tired of people thinking of housing as an investment. Housing is meant to shelter people. Its a necessity, not an investment. You dont get rich from buying a house. You want to get rich? Own a business, create something new, sell your genius idea, invest in other people/companies that do well.
You're wrong. It's not about being rich. It's creating wealth. I have done and still do everything your saying to have. I then take my earings and place them into a solid investment such as realeste. I have created wealth from it. Solid wealth that can't be taken away from anyone
that is soooooooo counter intuitive to the entire point of this video lol. "Why I Don’t Own A House as a Multi-Millionaire…" - in other words he's happy to rent and invest any surplus into other things... so who owns the house that he rents it off? oh wait, an investor! you do know that some people PREFER to rent right? just like some people PREFER to own. there is a balance.
Famous words of warren buffet. The worst investment I have ever made was my house due to poor appreciation, but it was also the best one because of the memories I made in it
I love this guy... love the idea of questioning buying a house just to buy a house. Judging from the comments, no one actually listened to the video. He literally said he is not telling you to dont buy a house... he said to run the numbers and figure out if buying the house is a good idea for you and your situation... and it's absolutely valid. I bought a house.. made a lot of money off it.. but I was absolutely miserable owning. The maintenance, repairs, harrasment from HOA, irresponsible homeowners making loud noises or leaving dog poop on my yard... no one talks about the mental toll owning a home takes on you. I like renting and yes I crunched a number on a spreadsheet and its better for ME to rent. But ultimately, I hated owning a house.
I know what you mean. I built my own house. It took me a lot of money, energy, and I couldn’t travel, do whatever I wanted, and I still had a lot of things to do. I got fed up, sold the house, took that money used for some investments, and started doing the trips I wanted my entire life. Now renting and living the best of my life.
Common rule never to violate. If you are moving every 1-5 years never ever buy. I was in the military and always rented. My friends who bought were always getting close to 10% transaction cost every time they moved
I've rented all my life, we bought a home 6 years ago and it's one of the best thing I've done for my family. We bought in a nice neighborhood and the value has gone up over 90k in that short time. I'm not saying it's for everyone, but the freedom from landlords feels great to us.
I totally agree, our current home of 23 years, our equity is a 250-300k, we are planning on selling even with a 3.12% rate. Our current mortgage has always been lower than rent. We will move, downsize, then either outright pay for our next house, or have very little mortgage loan that will be at least $500 less than our current mortgage right now. We will have lower utilities, and in a place with year round 4 season mild climate conditions, (no tornados, or hurricanes either). The next interest rate we get on our next home is not an issue.
@jonny_laguna I don't think so. Had my understanding of investing been 10 years ago what it is now, I would've never bought a house and I'd be enjoying my retirement
I'm 26 and recently lost my dad about six months ago. I'll be receiving some money soon and I'm considering investing it. Should I dive directly into stocks or rental properties to grow my wealth, or would it be wiser to explore other investment avenues first?
I believe the safest approach is to diversify investments. By allocating funds across various asset classes such as bonds, real estate, and stocks, you can minimize the risk of a market downturn.
Agreed, investing with the help of an advisor set me up for life. Retired with about $1.6m in stock portfolio only. I worked hard everyday as a teacher for 32 years, and my salary was over 100k annually. Supplementing my income with stocks and alternative investments helped me by far beat the retirement age before 65.
I've worked in real estate for over 25 years and have neglected a major stock portfolio. This served me well when I was flipping and renting houses, however I need a different plan now.. mind if I look up the professional guiding you please?
The advisor am currently working with is Judith Lynn Staufer. I came across her in a Bloomberg interview for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look her up.
I'll say this: it depends on where you are located. I'm in Indiana. Bought my house in 2017 for 150k. It's worth 300k now. My rate is 2.25%. Monthly payment is $1080. 3bd 2.5 bath 2000sq ft. Combined household income is around 150k currently. I'll just say I'm happy I have a house. I know its hard for many, many people in other states.
I live in Indiana as well. I bought a house too in 2020 for $168K for an interest rate of 2.8%, and it’s worth now $235K. I will say buying that house was the best decision I’ve made for investment.
@@davidphones7290 Yeah its in Indiana. But do you want a house or not? If you don't want to sacrifice a bit, then stay in wherever overpriced market that you live.
Homes don’t always appreciate like they are now. So, if you bought a home within the last 3 years, you’ll definitely benefit from it if you sale now. It’s similar to the run that the stock market had since the 2010s, and those returns shouldn’t be your expected returns because the market isn’t always like that
Mortgage free and I love my house. As a multimillionaire, Ramit doesn’t have to put up with noisy neighbors, cigarette smoke seeping through the walls, etc. Most of us can’t afford bougie rental properties. I’d rather own a home I can call my own.
Lifestyle definitely matters. Keep in mind that it's currently cheaper to rent than to own in nearly every city in America (not an exaggeration -- look that exact phrase up). If you want to move further away, great! But if we compare apples to apples, owning is often more expensive, and right now almost universally more expensive. Therefore: run the numbers.
Do you think that's because Americans are so brainwashed to buy? In a renter culture where people think like ramit I imagine that's the other day around.
You never own your home. It can be taken at any point. This is why you always pay taxes on it... it's never yours. Research it and check the history. People have had property taken all throughout history, for various reasons, even with being consistent and timely with paying taxes
@@cegecej That is extremely rare. My brother had the house he was renting sold out from under him twice. Two times in 3 years. He had to pack up a family of five and move.
I purchased a townhome in 2021 for $156k and it is worth over $200k now. To me, the peace of mind of owning something where I can stay in as long as I want, do whatever I want to it and not worry about increasing rent is huge. My mortgage (and taxes/insurance) is the same as my previous one bedroom apartment. I do live in Ohio, but I think renting only makes more sense in incredibly high priced areas. Plus being 28, I feel like I am setting myself up for a better financial future than my peers that are still renting high priced apartments and have not yet built up an equity cushion.
That sounds like a great outcome. I'm happy for you! Now consider the following, which is what I want everyone to think about in their analysis before spending $$$: - What if you'd invested your down payment and rented instead? What would you have after 10, 20, and 30 years? - What if you get a higher-paying/better job elsewhere? What then? - What if you hadn't experienced a generational price increase due to COVID? (What happens if prices decline for the next X years?) - What if you'd rented and rent stayed stagnant, increased, or even decreased? - What are the other options for equity growth besides owning a house? How much does it cost?
@@ramitsethiu can't value the emotions, memories he had with family in the same home, comfortness etc and u said what if x year price goes down, same can be apply to stock what if price goes down, what if company goes bankrupt so measuring something value on what if is not good idea
I told u again, with 200 yrs of best investment return, the best return is stock index s&p, $1 INVESTED INTO STOCKS 200 YRS AGO, TODAY (200YRS LATER) IT BECOMES $1M, do the math it said STOCKS GIVES about 7%-10%/yr (1+r)^200, compound annually turn $1 INVESTMENT 200YRS AGO BECOME $1M TODAY using 200 yrs of LONG-TERM 200YRS HISTORY AS TRACK RECORDS, THAT'S WHY WARREN BUFFET LOVES STOCK INVESTMENT AND HATE R.E. (LL=LANDLORDING - imagine invest $2B=buy 2,000 apartment units each building cost $1M and hire teams of lawyers try to collect rents from ALL KINDS OF LGBTQ/SMART/POOR/RACIST/CRIMINALS/DRUGGIES/MENTAL PROBLEMS/ILLEGAL BF-GF-FAMILY FROM ALL CROSS PATH, U CANNOT GUARANTEE FILTER OUT 99% OF THESE 2,000 FAMILIES EACH LIVE IN YOUR 2K UNITS ARE ALL GOOD TENANTS and mental health/druggies/Zombies or future kids bring in NEW ILLEGAL/CRAZY/CRIMINALS BF/GF POP OUT crazy kids rewire electric to grow WEEDS then burn-your-house or SF famous Oakland Ghost-ship turn warehouse into party then killed over 36 then drag u in court fight n yrs=no fun and RETURN OF INVESTMENT IS SO LOW compare to STOCKS. Again, MATH AND IRS/RENTAL LAWS ARE EVERYTHING, nobody is above the LAWS. Invest JUST 1 DOLLAR into STOCK EARNS 7.15%-10%/YR then the math tell u (u need to pay me to make video edu u make u smart b/c u r bad in math, logic, science and know A-Z IRS/RENTAL LAWS ARE ALL ARE WRITTEN AGAINST LL except 1031 Exchange law which Biden wants to change this law; and President TRUMP KNOWS WHAT I EDU U HERE, HE OWNS MANY R.E. AND THE R.E. KING HIM STILL TAKES 2+ GENERATIONS & 75+ yrs to DARN SLOW TO BECOME A $BILLION while FB, AMAZON, TESLA, NVIDA, AMD THOSE BECOME 5X OR 10X MORE $B RICHER THAN TRUMP ALL WITHIN LAST 20+ YRS NOT 75 YRS slow R.E like Trump; and President Trump knows what I edu u in his head ask 'why all laws against R.E.? WHY R.E. takes 27.5-39yrs to DEPRECIATE TOO SLOW OFFSET OTHER INCOME MEANS IRS TAX LAW PUNISH LL PAY MORE TAX while ALL OTHER BUSINESS TAKES 1-5YRS with 100% FAST DEPRECIATION vs 27.5-39 yrs TOO SLOW=pay more tax. i.e. BUY a heavy 6k lb heavy car/plane, u WRITE OFF 100% IN 1 YR=PAY LESS/NO TAX=FAST DEPRECIATION OFFSET MORE INCOME SO PAY LESS TAX vs RE only LET Improvement part (say 40% is LAND Value=UNABLE TO DEPRECIATE=SO U LOSS 40% OF VALUE UNABLE TO OFFSET INCOME RIGHT OUT OF BET COMPARE TO ALL OTHER BUSINESS TAKES 100% WRITE OFF IN 1-5YR SO RE. IS 1 OF THE WORST BIZ=DON'T WATCH YT RE GURUS LIE TO U/STUPEFY U = just sudden last 5-15yrs R.E goes up crazily does NOT mean 100yrs or next 30yrs will ALSO GO UP=I USE 100-200YRS HISTORY RECORD PROVE TO U, Nobel Prize Econ Case Chiller said 100yrs R.E. only goes up just a bigt BETTER THAN 2.X% inflation or 0.6%/YR BETTER, U WON'T LISTEN 1)GENIUS INVSETOR WARREN BUFFETT HATE R.E./LL; 2)NOBEL prize Econ edu u Shiller RE INDEX; 3) I edu u... TRUMP THINKS "WHY ALL IRS LAWS AGAINST LL/RE, I'm the president now so let me INTRO NEW LAWS, BONUS DEPRECIATION FOR temp only ~5 yrs ONLY=SOON RETURN TO SLOW 27.5-39 YRS; THAT BONUS DEPR IS ONLY FOR ~5YRS after I left office then we keep the law or not! ALL RE GURUS GONE SO EXCITED ABOUT BONUS DEPR LAW WHILE ALL SMART BIZ OWNERS KNOWS ALL OTHER BIZ ALREADY HAVE 1-5 YRS fast depr ALWAYS DECADES AGO, only Trump makes u happy for 5 yrs BONUS DEPR law b/c it benefits LL him who owns many RE=takes 75yrs to get rich SLOW $B vs TESLA/GOOGLE/NVIDIA 3X OR 10X STOCK IN 5-10 YRS, CAN YOUR $300K HOUSE GO UP 5-10X become $3m or your $3K/MO RENT BECOME $4*3=12K/MO IN 5-10 YRS so it drives your R.E. VALUE UP 500% or so? NO WAY LOL, told u DON'T LISTEN TO YT RE GURU BS b/c BIGGERPOCKET, MEET KEVIN, GRAHAM STEPHEN,. ETC ALWAYS TELL U THE GOOD SIDE OF R.E. but NEVER tell u downside of R.E.=tenants STOP PAY RENT 3YRS=NO INCOME 3 YRS WHILE TESLA/AMD/NVIDA STOCK INVEST UP 200% 3 YRS, WHO MAKES MORE $ & WORRYLESS? No need to hire teams of lawyers evict them in COSTLY TIME CONSUME COURT. Back to point1: $1 invest 200yrs earn 1.0715^200=$1M today, LET'S USE LOGIC/MATH LOOK IN REVERSE (I'LL MAKE VIDEO EDU U WHEN I'M FREE BUT U CAN BUY my friend's "world's best mouse trap kills 400 rats" invention lol)... let's say R.E your house goes up at 5%/yr, then 1.05^200=17,292X; let's assume today's media USA house is $450k, that means 450/17,292=$26/house, meaning if R.E. GOES UP 5%/yr then U CAN BUY A HOUSE FOR $26 back in 200yrs ago but CAN YOU REALLY BUY A TYPICAL MEDIA HOUSE IN US FOR MERELY $26 back then? or better yet, 450k/10^6=$0.45 per house if R.E. goes up at same return like stock index at 7.15%/yr, yeah, let's do the math in reverse: say u buy a house for $0.45 in 200yrs ago, then 0.45*(1+7.15%)^200 ~=450k, but the logic proof R.E. CAN'T GET 7%/YR RETURN ON AVG b/c YOU CANNOT BUY AVG HOUSE FOR 45-CENT IN 200YRS AGO LET ALONE those upkeep in 200yrs & repair & roof (every 20yrs OR LESS replace, TORNADO/SNOW/WIND/FLOOD DESTROY YOUR HOME COST 2 MUCH vs TENANTS JUST HAPPILY FIND 2ND HOME CHEAP & WATCH $1 INVEST EARN 7%-10%/YR vs R.E. ONLY GETS under 2.7%/yr or 3% max while inflation is about 2.x%/yr). MATH IS POWERFUL. U go ask Asians b/c most Asians are very good in math, science, logic and using IRS TAX LAW & RENTAL LAWS ALL WRITTEN AGAINST LL/R.E., that's why BUFFETT LOL AT U STUPIDITY DIDN'T PAY ME EDU U AND ONLY WATCH YT RE GURUS ONLY TELL U HOW MUCH $ THEY MADE FROM R.E, but history prove EVEN THE KING OF R.E PRESIDENT TRUMP STILL TAKES 75YRS 2+ GENERATIONS TO EARN HIS $9B or less (if NOT w/o BK 2+ times) while STOCKS makes AMD, GOOGLE, TESLA, AMAZON, NVDIA ALL BECOME WORLD RICHEST WITHIN 25 YRS vs 75yrs TOO SLOW & protesters said "why rent is darn high all b/c GREEDY LL u charge 2 much, f u #@#", that's why TRUMP/BUFFETT DONT WANT ME EDU U ESP buffett HATES R.E./LL=collect rent from jobless 3yrs & there's no LAWS HELP LL STOP PAY MORTGAGE OR PROPERTY TAX 3YRS but only all laws HELP THE TENANTS DON'T PAY RENT OR CANNOT EVICT THEM 3+ YRS LOL. Nobody is above MR. LAWS and math=the language of GOD b/c PPL speak English/Chinese/Spanish all will lie but God/science languge=math won't lie lol. U need to pay me edu u:)!
It's really much more dependent on where and when you're buying. And how much you're willing to sacrifice and wait. For the most part, you don't buy a single family, a condo or coop for the investment but it can be one. I bought a townhouse condo in NJ for 80K in '87. Sold it for 80K 12 years later. Bought a multifamily in Brooklyn in '99. The value increased 70K in 9 months. That building went from 440K to over 3M in 20 years and bought me 2 more! And market rents are 5-7x higher than at purchase. Location, location, location...and timing. I was investing for growth and future comfort.
wow Ramit - I am 52 and am starting again financially, and I just finished your Netflix series and bought your book, it is at the post office as we speak, and I wanted to state or say that I so grateful for you doing your UA-cam channel, your books and your other knowledge-sharing-endeavours, because looking at everything in my life, without shame or bashing, and now seeing it clearly (esp. after the Netflix series) and now starting to make a plan of what I need to do, where I really need to improve and then do the work. Ramit ... I am super grateful for you and greetings from Reykjavik.
I don't know about being lied to. I live in the Bay Area and I purchased my home at 650k, now it's worth 3x that. My mortgage is 2400 a month that includes insurance & property tax. 2400 in the Bay Area today is only a studio apartment. My home gives my child leverage when she will be the sole owner after im gone, along with my investments, cars, etc...
You don’t own it until your mortgage is paid off so you’ve actually made no money. Also over the mortgage term you’re paying more than £169k. If you miss out on mortgage payments then the house will be repossessed.
@@sanjayd7 This statement is wrong. You don't make money until you sell, however, you actual value, ie. your total assets still increase. Also who gives a rats ass if you don't own it til you pay it off, if you sell those are YOUR proceeds and of course you pay off the mortgage (and you don't have to pay interest at that point either) and walk home with the rest - taxes for gains.
I am a single mom with two children. The security of owning my own home became VITAL after going through the trauma of landlords when I was retrenched twice. 1st time was due to the Canadian gvt (Harper gvt) retrenchments and the 2nd time due to covid. Landlords can treat you like trash when you're down and out and have nowhere to turn. I have also lived in rentals where landlords do not maintain their properties and you must either take it or leave it. I am the kind of tenant who will create a beautiful garden (my passion) and keep the home in as good a condition as possible because I live there and my friends and family visit however, a lot of landlords don't believe in investing in maintainance because they say the next tenant will destroy the property. Renting when you don't have millions to back you can be the most toxic, traumatising, soul destroying lifestyle for you and your children. Definitely not for the faint hearted.
Do you save and invest your money or just spend it all in a month with no savings?. If you spend all your monthly salary in month with no savings left for the next month, then there is no point owning just a home. Learn how to spend money, learn how to save money and learn how to invest your money from your savings, is the key to making a million dollar in 14 to 15 years, because the value of inflation in the currency increases the value of your investments profit every 1 to 3 years substantially, that you end up making a million, if you save 1500 to 3000 dollars every month from your income and invest it after learning to invest in mutual funds, stocks and bonds.
@@alcubierre-drive Dude don't be "super simp" trying to "save the day". The Reality is NOBODY is relying on someone else. Two people households struggle as much as single households. What about the husband that works and the wife is home with the kids? Sounds like you need to take your own advice. Don't be so quick to judge. Those are decisions that she made for whatever reason. Now if she is a widow I can understand but even then "the world doesn't owe anyone any understanding". Yes Purchasing a home is probably the best decision for her. If she is having problems with bad landlords that is because of the quality of places.and people she was dealing with. Maybe dealing with individual landlords wasn't a good idea. Great that you thinking of perspective of a single parent but life is hard for two family homes as well .
@@adam7349 Everything. The stressfullness of a crappy situation is amplified massively if you have dependents, and especially if you're alone in being the provider.
You might have a point. I'm 10 years into home ownership and starting to discover that everything is starting to fall apart, leaking second floor bathrooms, sinking tiles, collapsing deck, rotting fence, chimney cap, etc … and the cost of skilled / proper repair gotta be outpacing inflation. But I don't regretting owning a home obviously here in the PNW.
We worked overseas for 40 years so we never had the need to buy a house anywhere. Listening to all our friends complain about everything you just mentioned in this video made us realize that we unintentionally dodged a bullet. As we get ready to retire, we have the money and the luxury to live anywhere in the world, for as long as we want and to choose how much rent we are willing to pay.
For people reading that comment above and thinking "oh yeah I will try that too now!". I will just leave something not many might know since its quite recent: AEOI is a global standard for the exchange of financial account information between governments, aimed at combating tax evasion. It was developed by the Organisation for Economic Co-operation and Development (OECD). Under AEOI, countries collect financial information from their financial institutions and automatically exchange it with other participating jurisdictions on an annual basis.This system ensures that taxpayers are unable to hide assets and income abroad, as the information on their financial accounts is reported to their home tax authorities. The implementation of AEOI enhances transparency in the international financial system and promotes fair taxation.
I don’t like the idea of being tied down with a mortgage for 30 years. It’s Like a marriage from hell. I like the freedom to just get up and move anytime, anywhere.
Have rented most of my life, invested heavily in markets, lived in 8 countries, never been tied down until more recently. Could buy a house with cash but choose not to. The life experiences enjoyed to date would never have happened had I tied myself to property ownership from the get go. If you know you're going to stay in the same place until you retire / die, probably makes sense to buy. Otherwise...
@@jade-oh5wn Have both. I assume you make the comment because one cannot live the lifestyle I've chosen with dependants? I'm afraid to tell you, it is entirely possible. We don't need to accept the 9-5 work till you're 65 and dying lifestyle bequeathed to us by our parents. That time has long past, let it go.
I am not into living the nomad life so that would not work for me. Working a 9 to 5 has worked for me. Got my first $100k by working for a start-up company. That was an easy $100k. My two homes are paid for. I have investments and multiple retirement plans. It's good to have options. One makes do what is best or most comfortable for one. I couldn't imagine moving frequently with my family & we still manage to enjoy life experiences. Again, it's great to have options.
@@jade-oh5wn Was an option that was opened and encouraged to me by my parents, but it never rubbed off. There is nothing that I would change to trade money and property for the experiences I've had, they are beyond price. Change is key. My children now enjoy an appreciation for other cultures and knowledge their peers know little about but perhaps that they read in a library book. But you have two properties bought and paid for, and multiple retirement plans. Why wait to enjoy life when your body is less able than in the present, I could never understand this choice so many make.
I live the same travel lifestyle with properties and a family..the problem isn't being tied to properties, those can easily become passive income. The problem is a 9-5 working to build someone else's dream. Working for yourself is they key. And it's not as difficult as it's made out to be.
Totally see the validity in this message. Big fan of Ramit. Something we've found from buying our home is that with a growing family we were able to secure FAR more LAND and HOME to enjoy than if we rented. (We're not minimalists FYI 😅) That being said, we don't tout our home being an "investment". Simply a vessel for living, raising a family and creating lifelong memories for the next 10-20 years.
@@briantomory8399 becuase most of us dont agree with the video. Over 5 years of rent I paid 140k. I bought my home for 110k. with property taxes over 10 years I barely hit 140k in expenses including yard work etc. and taxes with expenses will continue to be cheaper for me over the next 50 years as rent goes up nearly 10% a year but my taxes have been 2-3% a year where I will teach you got 6k a month compared to the 3k. I have no idea. my expenses are NO WHERE THAT HIGH.
Curious, how do you secure "FAR more LAND and HOME" if you did not take on huge debt from purchasing your home. Are you a first time home buyer or have people who can support you financially??
I bought a 3 family home in NY with a 3% down payment FHA loan, it was $925K, my mortgage, tax, ins is $4600/mo, I make $12-15K a month conservatively the house has gone up $100K. The house was newly renovated so minimal repairs if at all over the last 4 yrs. I am a high income earning so I save a ton on taxes via depreciation. I negotiated my closing costs down, got best price for ins, and have my real estate license so I can maximize tax deductions. I take the money it makes and invest in market and also bought my dream condo in South Beach Miami, which I also rent out and make a great return. When and if I sell this house in 20yrs I will get more than my money back and if I decide to pass it down to future children they can restart the depreciation cycle and will make a killing on the rents without a mortgage. No complaints here. To each their own.
So your solution is to rent forever? I bought a house in 2020 for $295K with $30K down and 3% interest. My mortgage is a manageable $1,585, and my house is now valued at $410K. It was one of the best decisions I ever made.
That same home at current interest rates is 2k a month. You locked in at a great time, covid era policy, those of us who didn't buy a few years ago will regret it, we may never see those sort of low rates again.
Yeah thats an example of getting near perfect timing with buying a property. Right now we almost couldnt be farther from the ideal time to buy a property... and besides if you compare buying a house at the ideal time to a stock at the ideal time i can obliterate your return from your property acquirement
Your home is only worth whatever someone else is willing to pay for it. Also, you forgot to add in taxes and insurance; both will never stop going up;)
The reason you don't own a house is because you can buy a house anytime you want since you are rich, thats all. If you depended on a job, or how the economy was doing, your mentality would be different. It is 2 different levels of purchasing power, hence, the outlook on things will be different. No matter how high prices go, you have the money today or next year regardless of the price because you have the cash.
actually...if you're worried about losing your job, then you definitely should NOT buy a house. A house is a liability and could prevent you from moving across the country to a better job in a better cost of living area. A home ties you down and reduces your ability to be flexible.
@@toptechhawaii8156 Not worried about loosing a job, but these millionaires want to make you think like them when they are clearly loaded and the variables in their life's equation and yours are different. What makes sense for them might not work for a poor person. Watch out listening to these people!.
@@toptechhawaii8156 Also, it is becoming more expensive to rent than to own. Rent is about the same for a 3 bed house than a 1 bedroom, in some states and they are making you pay for everyting, even the sewer. The reason people dont get into more houses is because they dont have a downpayment money.
I rented for 25 years. Then I had kids. The stability of not having to switch homes, keep consistent schools, build a steady community, etc., was worth spending the extra money. In 18 years my youngest will be out of the house and we are going to sell our 3700 sqft monstrosity and go back to renting a 1 bedroom. Owning a home is a pain in the ass.
@@robi6317 Owning a home is a pain in the ass, and renting is a pain in the ass. If you own a home you might have the roof leak, if you rent you might get a shitty landlord (or a roof leak that he wont fix!) its tough to say which is easier, just different.
@@TonyCox1351but this isnt about "easy" this is about the best USE OF YOUR MONEY. and thats almost always buy vs rent. oh and ive had a roof leak for 20 yrs... hasnt been a pain so far ha ha just some buckets in the attic
@@robi6317 I cant speak for anything else but for me, making my life easy is a big part of my decision making. Some things arent worth the hassle even if they make you money.
Your contribution is Confusing : “ Owning a Home is a pain in the ass " yet you admit that you and your family BENEFITED from the Home Owner status. You Highlighted Stability, Not having a move the family etc. That doesn't sound like “ Pain " ...that sounds more like “ Pros outweighing the Cons " .
Financial decisions are never about money but how money/purchases makes you FEEL. If you feel happy renting - do it. If you feel happy buying (and you can...) do it. One millionaire may give an opinion that other millionaires may disagree with and vice versa - these Internets are littered with opinions and "facts" - don't replicate someone else's views - listen, learn, examine your life and make your own decisions.
I think the reason a lot of our parents aspired to buy homes is so that they had a place to live rent free after retirement. The thought of paying rent when I no longer work is scary to me.
@@tango4ever244 no because taxes and repairs is going to be lower then the market rent in my area. So I'm still going to be living cheaper then the same people renting in my neighborhood. by more then 50 percent.
Your comment is true. I agree! But housing is more complex for senior citizens. Every older adult is different. Because conversely, a lot of senior citizens sell their house and rent in a 65+ community/or apartment because they can’t manage upkeep of a home. Or there is fear of falling down steps, loss of autonomy to repair things due to health issues, etc. Many seniors citizens prefer to spend their ss check, pension, retirement on their climbing health care costs instead of thousands on home repairs. Or they want to spend their golden years traveling.
I agree this was/is a generally held plan. Sadly I don't think it's as good as many seem to think it is. As the video mentions - it's about doing the math. If you could rent for 20-40 years at a savings of $3000+ a month - that you are then investing ON TOP OF what you are saving for retirement - then you'll likely be just fine renting during your retirement as well. Of course if rent is similar to buying, and you can keep the other house induced costs down, it could be worthwhile to own.
Wish more young kids would hear this message. They are so worried about "never being able to buy a house"! I'm 64, have significant retirement accounts (two 401k accounts + roth IRA + public employee pension + generous SS) and am renting a 3BR/3BA home in a "resort" town, well-under market. In my many years I have owned, I have rented and I have been a landlord. Right now, I just rent. I have a ton of freedom and am continuing to put over 25% of my income into my employer sponsored 401k. Since 2018 I have lived in Marin County, Maui County and now live in Bend, OR. I'm looking to spend my retirement years in Italy. Or perhaps Mexico. Or maybe both!?! I lost a ton of money in the 2008 downturn due to bad advice from a real estate broker. Never again.
That's great to hear my only concern is if rent prices and house prices go up, aren't you susceptible to the market like people were from 2020 to 2023 meaning rent goes up but mortgage would stay comfy if you bought beforehand? That is my only worry I guess at the moment and verge of buying a house
Owning my own home(s) is the best thing ever. I couldn't care less about marketing, the National Association of Realtors, investment, etc. There is no way that living in a rented home would give me the same feeling, satisfaction or pleasure. My home is my castle.
I agree. Also, in most cases, mortgage payments don’t fluctuate much and there is an end to them. Rent, on the other hand, can go up every year and sometimes quite significantly. To some degree , your ability to stay in your home is in the hands of someone else. I like the feeling of control that owning gives me.
@@BeautybytracileiSo does property taxes. An fix mortgages can change as well. Seen it happen plenty of times. Hope you realize you don't own you're home in this country. It's an illusion. If you're still paying mortgage? You're still renting. Then you have to worry about keeping you're Job on the deal you wrote off. Higher Insurance as well. How many years are you In a lock lease ? In other countries you actually own a home. But like everything else ? It can be taken from you. But not as common as U.S. Technology is driving everything to mobile. An so will everyone else. Agenda 2030. You won't own anything. People are the commodity. Black Rock, Vanguard? Other firms are buying property left an right. The boomer day generation is ending. Prepare !!
I enjoy renting and not being tied down to a single home and all the issues that come along with it. So many people in the comments are complaining about landlords. I’ve never had any issue with a landlord in 20+ years, but if I had it would’ve been easy enough to move. I think it’s much more likely that you have a problematic neighbor that you have to deal with as a homeowner and/or a number of maintenance issues that cost money (and time) to repair. Happy that I don’t have to deal with that annoyance.
This is very complex and I have a lot to say, but I’m going to limit my comment to one thing…..make sure when you’re making this decision you think of your life after retirement and what housing costs you can afford when you’re old. If you own, housing costs go down drastically when you’re old.
Definitely. And be sure to factor in that a large portfolio can also pay your housing costs in perpetuity...and also what you'll do if you own a house but have very little in retirement saved up. In other words, run the numbers.
@@ramitsethi Some of us have the financial discipline to live exactly how you describe. But please understand that so many Americans do not. Sad, but true. So the home equity which is pushed upon us works as sort of a forced savings account.
I’ve been a fan of Ramit’s work since he first popped up on UA-cam with Tim Ferriss maybe a decade ago. The podcast he does is something my wife and I started to enjoy in the last couple weeks, and I think this type of format will help spread this message to more people. Great job to the team!
The point is: PLAN to buy a home and KNOW what you're truly paying instead of jumping into a bad financial situation because of expectations, age, marriage, kids, etc.. My wife and I rent a single family home 3 bed/2 bath for under $2000. We're expecting our first child in January and while the pressure is coming from both sides of our family to buy a house, we have so much more opportunity by renting. If we bought a similar property, it would be well over double what we pay currently. And with the money that we would be spending on a mortgage, we can continue to save for our newborn, pay off student loans, invest in our 401ks and max out our roth IRAs and still have GUILT FREE spending every month.
@@zuzanazuscinova5209they probably live in a less expensive area. I’m from N Texas and I could rent a house with the same specs for that price or less. For $2k, it might even be renovated/up to current aesthetic standards. Less than $2k it’ll probably look like something from a 90s sitcom, but it’s still a house instead of an apartment.
@@TCL_808 Sounds like your current situation is ideal, and I'm sure you're aware that it could change at any time. Biggest downside to renting. If you have a contingency plan in case the landlord decides to sell/move in/die/etc, then it's all good. In any case, best of luck as new parents!
This has removed so much anxiety from my life. Felt like a failure for not owning a home. This gives me hope that I’ll be alright. I just have to keep investing.
Play don't forget to pay your property taxes every year which keep going up no matter what you paid for the house initially that's why a lot of people lose their houses they forget or they can't afford it because they're having a hard time finding work
I purchased a Brownstone in 2006 for $700,000 right before the 2008 market crash. Everyone said it was crazy especially in Bed Stuy, NYC. It is now worth $2.5 million.
I believe you but like he says, times are different now, thre are so many new green lwas compared to 2006, If you make 50k or less, buying a home might be a financial nightmare, depends on the situation.
Maybe dumb. When I was across the river in NJ in the 90s taxes were 4% of value PER YEAR. What would that be on a $2.5million house if you aren’t homesteaded. Not interested in those kind of taxes that’s why I pay 0.1% per year down south
I agree with all of these points. My husband and I have always treated our home as a purchase, not an investment. For us, owning was the only way to go. We have enjoyed customizing our home to suit our needs, interests, and taste. We never look at these decisions as contributing to the value of the home, although some of our renovations have certainly increased the desirability of our home. But we never intend to sell. We have over-improved our home. We’re okay with that. However, I know too many people who don’t enjoy maintaining their home and put off critical maintenance that will lead to expensive repairs down the road. They would be so much better off renting-and with a lot fewer headaches. But they have bought into the myth that home ownership is the only smart decision.
@@BeautybytracileiI believe you missed his whole point, that even Included actual numbers. Buying a house Is not "Only" smart decision, Its actually a "dumb" decision die to the actual overall cost of ownership vs renting. Doesn't matter how you want to look at It, or how much you enjoy It...... Its still dumb costly. Owning a home Is a liability, not a asset.
@@frankiegunnz8066 I think you missed the point. Never did he say it was always a stupid decision-he even admitted that he would probably buy a home himself one day. He said you shouldn’t do it with the idea that it is always the best financial and investment decision. Which I agree with. I’ve lived in my home for 20 years. When we bought it, it was expensive and we could have rented more comfortably. However, now, rent for a comparable place would far exceed what we pay for our mortgage and associated costs of home owning. Plus, we wouldn’t have had the opportunity to customize our home. Buying a home can make sense if you plan to stay in the home long term and depending on the market, interest rates, etc., but it is not the only path to financial stability.
@@Beautybytracilei I Just saw the video again and I still believe In what I said. At the start of the video he saids, "I'm a multimillionaire and I don't own my house AND I don't Invest In any property". Then the part where he saids, "I might buy a house one day", well..... "might" and "one day" doesn't convince me that he will, then Immediately he follows that with "I know It will be a terrible financial decision". I don't know about you..... But none of those statements makes me want to think that Buying a house Is smart In any way forms or fashion. Just saying. Oh and I'm In Georgia too.
@@frankiegunnz8066I'm a multimillionaire. I own 10 houses and 12 apartments. I make 25k a month. I have a retired couple that I pay 1k a month and free rent. To collect rent and minor maintenance. We're all very happy.
I went semi-viral on Tiktok for talking about why I live in an apt as a millionaire (for most of the reasons Ramit listed in this video) and the real estate warriors tried to eat me up in the comments 😅 What I didn't have time to explain in that video is that my husband and I actually DO still own a house and it has been a HEADACHE. Every single year for the past 5 years, we've had to do a 4-figure repair on the house... the water heater went out....the next year, it was the AC unit... then a pipe burst...this year we replaced all of the flooring throughout the house. (For reference, the home is about 20 years old. Everything was fine right up until year 15 of the house. We've owned it for about 10 years) These are things people don't account for when they give blanket advice to buy a home. Anyway, we live in a luxury apartment now and rent out our house... I have a concierge, floor to ceiling windows, and I literally just called maintenance 3 days ago to fix our garbage disposal 😂 I MUCH PREFER being a renter and building my portfolio in other ways.
Owning a home is a headache for shure. A large family would probably be better off in a house but small families can be fine renting just the space you need not want😅
Was that house in a development? Builders with tract homes cut corners and get low end stuff. Not surprising a water heater went out after 20 years, nor an AC unit or low end flooring. But the burst pipe, yikes. And @rafaelw8115, I think @RobertHasty meant that tenants ultimately pay for repairs with their rent. People pay rent to cover such costs, not just mortgage/insurance/taxes/opportunity/holding costs, but also repairs and maintenance. That's where the landlord gets the money to pay the repair person.
@TheMidasTouch11 If the rent you are charging for the house covers the cost of your apartment as well as continued maintenance on the house, then you have a good deal. If not, you're throwing money away.
As a homeowner who never had a mortgage - paid cash - I can attest that I haven't made a net dime from my house "investment". This is after accounting for the more than doubling of it's market value. You have to add in all the costs of ownership including the taxes, insurance, and maintenance. House ownership is often a pure luxury, not a wise financial move.
@philmarsh7723 You don't seem to be acknowledging that if you hadn't purchased your house then you would have been renting, and you would have thrown all of that money away and had nothing in the end.
everytime I hear about all the hassles and cost my homeowner friends deal with all the time it makes me less and less enthusiastic about home ownership. the main issues with renting however is yearly increases in rent, and sometimes scummy/shady landlords. It's often hard to find nice places to rent as well depending on where you live. but since you're renting you can just leave and try to find something better!
Ramit is correct. Owning a home is not always better. I was a Realtor and would tell people this. Especially if you don’t have great credit. Remember then you’re paying the highest rates for everything. It also depends on what kind of market you’re in. I was a dedicated renter after my divorce. I only bought after I was 10 years out from retirement with excellent credit and I purchased BELOW MY MEANS - I didn’t max out what they said I could afford- and bought a new condo (less maintenance fees and time-which I appreciated the most about renting) after running the numbers and was sure it would cost me less to purchase over that time span. I’m glad I did. The renters market is absolutely insane right now. I definitely made the right decision. But it still wasn’t by a mile. RUN THE NUMBERS.
@@user-gz4ve8mw9l Now that government backed loans. FHA.. FANNIE MAE.. has decided not only use Experian/Equifax credit score will be higher..Transunion is being ignored.
That was a typo experian and Equifax are the only credit bureau's scores that will be considered when looking at a government-backed mortgage loan TransUnion. Will be deleted?
Anyone saying they bought their house in "199x-20xx" and it's worth "X" amount is simply missing the point. You cannot do that like you could back then. In some areas yes, but most, no. I am in the Bay Area so im bias on the home buying debate lol if anything I want to buy/repair/flip, yet that comes with much risk as well. To each their own when it comes down to this amount of money and what/how to provide for one's self or especially, family. Good luck to all during this difficult time
There's something to be said about owning your own home versus renting. It's not just about money. There's a connection with the place you do life in. For some including myself, having my own space means more than just the financial bottom line. At the end of the day, you have one life to live. What you find valuable may differ from someone else. I value having my own place, and choose to make this a part of my life experience.
Yes there is, and I think he kinda mentions that at the end of the video. The only good reason to buy a house at current market is because you actually care about owning it and being able to do what you want with it.
Totally agreed! This guy might be owning hundreds of rentals lol. How in the world is paying someone else mortgage better than paying your own mortgage 🤷🏽♀️these you tubers honestly I have no words
Yeah i think i got lucky, as at first it didn't seem that way. Bought a house with now my Ex-Wife, she got a good paying job and let me have it. It ended up better for me as i have a 4bdrm, 3.5baths, 3k sq ft two car garage for my upcoming Porche Macan GTS lol, single life baby for me and my furries.
Here is a perspective from a European city (Prague): A nice 3 bedroom apartment (90m2) with a balcony in a nice central neighbourhood costs around 1400 USD to rent (including utilities and everything). An equivalent apartment to buy is roughly 500k USD. That means after putting 100k down, the mortgage payment (for 30 years, 5 years fixed interest rate) comes up to around 2300 USD + 300 USD or so for utilities, repair fund, etc. Even without considering most of the phanton costs mentioned in the video, it's currently close to 2x more expensive to buy than to rent.
Not necessarily. My country has a legal limit of 15% per year. The landlord can't just increase the rent, because their costs are going up. The standard increase is 2-3% a year. Additionally, the rent increase basis must be specified in the contract or the increase is illegal. There's three options: X euros, x % or tied to x index. If there is no mention of rent increase basis on the rent contract, it's illegal to raise the rent. The standard contract is valid for an unspecified time, but the minimum period is 12 months. America needs regulation to combat rent increases.
@@Lumpia_In_Texas Rent is definitely not going up by 10% per year over the long term. Based on Eurostat data, in Europe, rent prices have increased by 20% over the past decade (link to source below), that’s 2% per year. In the US, it’s between 30-40% per decade depending on the decade (source below). So, on average, rent is going up by something like 2-4% per year. So, it would take like 23 years for the rent to catch up to the mortgage payment. So, for 23 years you would be able to invest the difference between rent and mortgage + the initial 100k into SP500 and appreciate those assets by something like 7% per year. That comes up to roughly 450k USD after 23 years. In my oppinion, there are way more significant questions to consider than the 2-4% increase in rent. Buying makes you unable to move for roughly 10 years, unless you want to risk losing money. Someone can commit to 10+ years, someone may not be ready. Also, doubling housing prices by going from renting to owning may squeeze the budget for some people to the extent that they have to significantly reduce their lifestyle or even be forced to sell, again risking losing money. So, I think that renting can be a very competitive option in terms of the financials (if you invest the difference) while offering you more flexibility. Having said that I also belive buying can be the right call, if you run the numbers, you can truly afford the doubling of your housing costs and can commit to 10+ years. And it also has perks like being able to do more home improvements. So, the point is that both options should be considered, neither is always worse. ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20230705-3 ipropertymanagement.com/research/average-rent-by-year
@@bluebirdtravelco Over the long term yes. If you can afford to pay 2600 USD for housing instead of 1400 USD and you stay in that flat for 30 years, the financials are leaning in favor of buying. But short term, the price of the flat can go up or down, and things like taxes, realtor fees will significantly cut into your profit, or even make you lose money.
After reading these comments, I’m confident half of y’all didn’t watch the entire video lol. This is great advice for anyone in any location and of any income that is considering purchasing a home.
You don't have to watch the entire video to hear him start off the video by saying we're all lied to, and that if you run the numbers it's often the case renting is better lol. It's quite clear that it depends on your financial situation and many variables, and the way he started off the video is dishonest.
My house was 30,000 40 years ago and it’s been paid off for 25 years! It’s valued at $200,000 today. I love not having a house payment. We’ve made updates through the years but my husband does them all himself I wouldn’t have a rent payment if my life depended on it. I’ve been investing 600 a month since my home has been paid off.
Has anyone noticed that price of homes have doubled and tripled in the last 5 years? Coupled with higher interest rates, this is the worst time to buy.
I agree worst time to buy. Take this time and get debt free. Try and focus on only necessary needs and at some point houses will have to go down because otherwise we will have a crisis on our hands.
Most advices online are: "THIS is bad" and " THIS is good". Saying to look at your own situation and goals is just refreshing to me. Thank you. ( my boyfriend and I bought our house 13 years ago, way under what the bank was willing to give us. It was not a dream house, small, old and needed A LOT of love.)
I know about a dozen multi-millionaires on a personal level and every single one of them owns their own home AND they have massive portfolios of income producing properties. I have never met a rich renter. Sorry Ramit, but I don't agree with you on this. Also when you own your home you don't have to deal with crazy landlords entering when you are not there and going through your stuff like I had to experience.
Multi-millionaires also own more cashmere sweaters and eat more caviar. Correlation is not causation, otherwise you would simply buy a jet and be wealthy.
I've moved around a lot over the last 25 years in the military. I rented at the first few bases, then I had a male landlord walk in on me (female) unannounced. He lived over an hour away. He had time to call. I bought at my next two duty stations and I am so ready to rent again. I hate that that landlord ruined it for me, but I will never rent from a small mom/pop type again. Gimme a management company as a buffer and sign me up.
@@AK-47ISTHEWAYHow did pointing out that multi millionaires also rent go to me worshipping someone? I definitely don’t worship your doctor. He has you on the wrong meds.
Something Ramit failed to mention is that, although property taxes and insurance go up, mortgage payments on fixed mortgages do not. My parent’s house is worth $400k but they bought it 20+ years ago for between $100 and $150k. So their payment is ridiculously low, even lower than my tiny 720 sq. ft house I bought in 2022 for $175k. And since property taxes are reassessed at sale, if a house is not sold for a long period of time, the property taxes might be very low. I pay more taxes on my house than my parents do on theirs. This can make home owning a lot better deal in the long run but maybe not so great in the short run if you only keep your house a few years. If you rent, rent will typically go up every year unless you have found a really good rent control deal. So in your comparison of rent vs. buying, keep in mind that the first year of home ownership is the worst that the home owning scenario will look. Every year that rent and inflation increases while your mortgage stays the same, owning the house will be a better deal. Also, Ramit was selective with his year range for home appreciations. The average increase in the last 30 years has been closer to 5.5%. We can’t really expect prices to increase like they did in the past few years but I don’t think a 3% increase per year going forward is unreasonable to expect. But keep in mind that due to leverage, the return is even higher. If you have 20% equity and your house appreciates 3%, that’s actually a 15% rate of return (3% * 5 = 15% as 20% is 1/5), much better than you can expect from the S&Ps average. My house is now assessed by Zillow to be worth $220k which seems reasonable based on the market. That’s a 25% increase from my $175k purchase price , which is at least a 125% return on my $35k down payment (I now owe less than $140k on a house worth $220k, so my equity went from $35k to more than $80k). I’d say that’s a pretty good deal. What Ramit is right about is that we should be making the comparison. There are advantages to both renting and owning both financially and non-financially. I personally just love the idea of having my own place that I can do anything I want with and not having to share walls with neighbors in an apartment building. Non-financial factors like this should also be considered.
Can you explain your calculation of the 15% rate of return on a 20% equity that appreciates at 3%? Maybe I'm wrong but my calculations show that if your house is worth $100, and you have a $20 equity (1/5) and it appreciates by 3% to $103, your equity (1/5) will now be $103/5 = $20.6. Now using rate of change formula, ((new value - old value) / (old value)) x 100; we get: ((20.6 - 20)/20) x 100 = 3%. How in the world is your return on equity = 15% I'm fairly confident of my calculations, but I may be wrong. I'm happy to see you challenge this explanation and convince me about your.
Just did the calculation again. The guy is right. The increase in equity belongs completely to the homeowner, and it's not shared with the lender. When the house increases from $100 to $103, that $3 belongs solely to the owner of the house. He would have used $20 to make $23 which is a 15% increase. Sorry, my bad.
My house is my luxury. I love it much better than renting. In my last apartment my landlord did not renew my lease. Having a house protects you from this situation.
@@rafaelw8115 I was a good tenant. Paid on time with no problems. I mentioned it in my post to say that owning a home (which I now do) protects a person from a situation of lease non renewal and scrambling to find a place to live. Being a homeowner is hands down a better situation.
The psychological benefit of living in a paid off house that is renovated exactly to your taste is immesurable. I can loose my job, no problem. If I get sick, just chill. You can't live in an ETF or a stock.
@@gerritroe5 True, but that's not entirely accurate. Can you really lose your job no problem and still pay for taxes, insurance, routine and major unplanned maintenance? Also, that "psychological benefit" will quickly go away as you age. Once you're a certain age, your paid-off house can easily become a psychological burden. My father got to the point where he lost the ability to do and oversee maintenance, understand how expensive things were, and could not understand why his children could not immediately drop everything to run over and complete major repairs. My 85-year-old widowed sister has lost the ability to make an intelligent decision about anything regarding maintenance or insurance, and is totally dependent on others to make those decisions for her. For both of them, living in their own home caused them far far more stress and anxiety that simply living n a senior apartment.
00:00 🏠 The American dream of owning a home is heavily marketed but might not align with financial reality; it's important to question its financial feasibility. 02:44 📈 Four myths about owning a home: Home prices don't always increase, house values doubling every decade is a misconception, leveraging a house can work for or against you, and tax deductions may not offset the true costs. 06:16 💰 Always run the numbers before buying: Consider the true cost of owning a house versus renting, including taxes, maintenance, and opportunity costs. Investing the difference might be more financially prudent in some cases. 09:30 🏡 Buying property as an investment requires careful planning, understanding numbers, and treating it as a business; housing costs can significantly impact financial stability. 11:33 🤔 Considerations before buying: Ask if living in the house for over a decade, managing housing costs below 28% of gross income, saving 20% for a down payment, being prepared for fluctuations in house value, and personal excitement about buying.
I bought a condo in Silicon Valley in 2010, when it was cheap. I put down 25%, and I was paying around $1400 in mortgage, HOA and taxes after all the deductions for it. The rent for similar property was $2500+. After 10 years the price went up by 2.5 times. I sold it and bought 3 houses in another state. I now own 5 houses in another state with no mortgage. I live in one of them, and rent 4 others. I don't work anymore.
to each their own at the end of the day. one can rent and never own and money still leaving pockets monthly....one can buy and pay mortgage till its paid off then still pay taxes and insurance. money still leaving pockets monthly. so either way no1 is better off....UNLESS after the house is paid off it becomes a rental property earning good income then that beats renting. so in that regard a house purchase is better.
I've noticed a lot of people are resistant to his message because they've already bought property and have to justify in their mind that they made a good decision. He's not wrong that there is a lot of propaganda around purchasing homes. The number one best piece of advice he gave was to always run the numbers before making a financial decision
He’s not wrong but he’s not right either. Yes always run the numbers, but it’s not always about the numbers. Take his example of eating out. The true costs of eating out far outweigh getting your groceries and cooking. And then investing the cost savings. But we all know, everyone doesn’t want to have to cool. While there will always be opportunity costs, sometimes the cost of “eating out” is worth it because it’s an experience and memory as well.
Run the numbers and then run by the numbers. Many people pretend to make good choices by doing the math but then disregarding the result of their calculations.
Two points: For tax deductions, one also needs to forgo standard deduction (29k for filing jointly), so the net tax savings may be even smaller. Secondly, the biggest reason is flexibility. I can move out for a new job, or invest my time on my career or hobbies rather than spending my weekends on maintaining the home. Investing in yourself beats everything when one is young.
This is the biggest item in our current world with short-term jobs and two parent working households. Locking yourself down to a specific location severely limits your ability to change jobs, and selling a house and buying a new one burns 10% of the value of the house in transfer costs. Buy a house because you really want to settle there, and really want to make it your own place. That's the only reason to buy. You're not saving money or putting your money in an "investment." It's a place to live and call your own- which is awesome in its own right.
@@CliftonHamilton I think you hit on an important perspective. Do you focus your life around maximizing your earning potential, or put down roots in a community where you have family ties, friends, overall the kind of support systems that can make your life easier and more enjoyable?
@abcd108923 Like another commenter you imply that you can just pick up and go from a rental. But most landlords require a 1 year lease and you either cannot break the lease early or you are penalized heavily for doing so. So unless you time things right you don't really have the flexibility you imply.
I am in CA, and typically for lease break the penalty is 2 months rent. Let say, your rent is 3k, so 6k as penalty. Companies pay a considerable relocation bonus to account for that (in the order of 20k or similar, though taxable), which is more than enough to compensate for penalties. Some landlords are also lenient enough for a lease transfer (with less charges) if I can supply a new tenant. However, I am talking about tech industry, which is considerably good paying in US.
Great advice! So many people get caught up in these myths and don’t run the numbers. Both times when I was selling condos that I had lived in, people were saying that I was crazy for not holding onto them and renting them out. I told them “Did you run the math on this, cause I did, and selling and investing the proceeds in index funds is more financially advantageous than holding the property and renting it.” Also, many novice landlords completely underestimate the phantom costs of being a landlord (vacancies, repairs, hiring a property manager to deal with tenants once you tire of it). They just imagine all the equity 25 years in the future but forget about the opportunity cost of having it tied up in one illiquid asset.
If you don't own a property , The landlord can decide to raise rent $ 500 or more . If you paid rent for 20 years , you own nothing , but if you paid your Mortgage in 20 years , you''ll feel a lot better.
I don't find the "20 years" argument very convincing. The average homebuyer doesn't stay nearly that long. And why is it that you only hear people talking about 20-30 years in the future with their money when it comes to a house (not investing in the market)?
If you paid rent for 20 years and own nothing you are the problem, not renting. By investing your down payment and the difference between the mortgage cost and rent every month into an index fund, you will have more cash in 20 years than what the paid property is worth. So by spending the same money you greatly reduce your financial risk by diversifying your investment, you get the convenience of being able to move freely and you can just text your landlord if there is a problem. Buying is an expensive lifestyle choice you definitely can do but it’s certainly not the best decision from a purely financial point of view.
@saske822 not true, index fund is unpredictable, say you're down the road of 20 years, and you have market crash when youre 70 years old and itll take long years to recover, you end up with nothing at the end, and you invested all 20 years, this high reliance on market investment is a ridiculous idea, market always fluctuates, can crash and take years to go up, you own 1 property, but its yours and u wont live on streets, or you owe 10,000 shares that became worthless when you hit 70 because of bad economy. You dont want to become a homeless at the end of your years. Do not place your faith into stock market
Always run the numbers for everything. When you buy a house, get the total of all the monthly payments and you’ll be surprised how much more expensive it is. Run the numbers for every loan, everything you finance, or every recurring payment…
For my area and time, purchasing my home was cheaper than renting it. In 2014, the purchase price boiled down to $56 per sq ft for an all brick home on over 2 acres. By putting a little extra toward the mortgage each month, it will be paid off in about 3 more years. I subscribe to debt free living. Even a relatively maintenance free home needs big money over time. New roof $20k, new HVAC $5k, regravel driveway $3k, lawn maintenance $2k/yr, etc.
Buying a house was the best thing. I was renting and the owners sent me a notice they going up $100 and I immediately bought a house when my lease ended. It's more stable to buy a house so you don't have to worry about landlords and evictions. Still taxes and insurance can increase the mortgage, however I feel more content knowing I own my home.
Because you are a woman.The main reason men end up with mortgages is because of thier wives. Women need to have fabulous lifestyles and show off to other women.
During the first half of the mortgage, renting is immensely cheaper on the avg home (~$1000 per month in savings). However, if you can survive paying down the first 50%, it flips and rent will likely be more expensive (can refinance mortgage). That first decade is just insane! Arguably investing the savings by renting each month for a decade will give you the OPTION to buy a house almost cash… the mortgage interest eats all the appreciation, but taxes on investments don’t eat all you’re interest income. Owning only pays off if you can afford the first half of the amortization and the cost of owning per month because less than the cost of renting per month.
As a minimalist with no clutter, I bought an RV with cash, and I rent a lot in a campground for $600 a month in a nature setting. I love it. I can go anywhere I want. My car is paid for, and I have no debt. I'm retired and live on SS and interest from savings. ALL IS WELL. What I liked about home ownership was not being under anyone else's rules.
@@mariakapwell9123she literall said in the first line of her comment that she is a minimalist. I doubt a minimalist is concerned about having "more space". They wouldn't be called a minimalist if that were the case. Minimalists make use of the little space they have.
Yeah, my HOA never tells me what to do. That’s why I can’t park my boat in the driveway to do some small repairs. I can’t park my car in the street, I can have a shed. I have a rental and my tenants can do all those things.
I bought my home in April 2009 as a first time home buyer for $73,500 and just paid it off this past April 2023 (14 years) at the age of 41 and now it’s worth $240k. There is nothing like paying off and owning a home (an asset) and now being mortgage free! I have so much freedom now to save more and continue to live in it, use that money saved and buy a bigger house cash or close to and cash cow this home by renting it out and it’s all profit, etc…so personally for me buying was it, but I do understand timing is everything. I bought a home at a time they were giving them away after the 2008 crash so I benefited off of that heavily. It is a different time now so yes crunch the numbers because everything is circumstantial. I remember being a renter and I hated the fact that they go up on rent dramatically every year. I personally like having control so owning a home is for me bc the mortgage stays the same after you buy. Sure the taxes go up but so what. You will eventually own the home and you can use the extra money to put more towards the home to pay it off sooner like I did. you can’t own a rental, that’s for life! So you always have to worry about paying someone else for your housing
I love owning my own home. My friend bought 10 houses for his retirement income in 2007. I have had rentals for 20 years. He paid around 200k for each putting 10% down. In 2009 he told me he was letting them go back to the bank. I told him I wouldn't do it as there all rented who cares what there worth. Today there all worth more than 500k. No one knows the top or bottom of the market.
You did not listen and look at chiller’s economist done extensive research to show you prove to u real estate one hundred years from 1915 to 2015 only goes up 0.6% (after about 2.x% per year inflation so RE is only slightly better than this a bit) and you need to pay me another multimillionaire using mathematics prove to you with 200 years history as a track record to prove to you that S&P stock market gives the best return from 7 to 10% a year, way better than real estate, gold, silver oil, us treasuries and anything else, this is why the wood smartest richest investor genius Warren Buffett hates real estate and look at his action. He only invest more than 30 billion dollars to happy business like Coca-Cola, Dairy Queen fast food happy meal happy drink, banks and apple stocks Billy never invest more than $2 billion buy 2000 pound units if each worth 1 million with San Francisco, California rent control and all the law against you landlords, and during pandemic politician, make rent moratorium laws always help tenants to attack landlord so tenants do not have to pay rent three years and make eviction moratorium so you have to hire teams of lawyers babysit the tenants and suit them in court to evict them and get three years rent back that is waste of n yrs court is slow and painful time, this is not happy business so Warren buffer hates RE invest , again you need to pay me to educate you to make you smart and Warren Buffett real world investing genius why you do not listen to the genius in the world is Mr. Warren Buffett why you pay too much attention listen to too many UA-cam real estate agent get rich broker, bullshit scammer get rich ask you to subscribe only tell you the good side about real estate but it’s down all about mathematics science logic, and 100 to 200 years in America best return investment history always show you real estate is very slow growth and stock. Market is the best return better than oil, gold silver everything else you need to pay me to educate you or at search my rich friends video “ random teach sand floor RE scammer fake guru”! And don’t forget the most important in the world is laws, you got to know the real estate law and IRS tax law are all written against real estate, investors or landlords look at California, Oregon, New York State, or have a rent control laws and as I said above three years they make the rent moratorium and eviction moratorium loss always help the tenant never help the property, owner or landlord or investor. Do not have to pay three years property tax or insurance or mortgage three years so now you know who make those laws help whom now you need to pay me to educate you to make you smack and do not listen to too many suddenly get rich real estate UA-camr bullshit always tell you how to use real estate get rich in those couple years you look at 100 years as a track records! Because she is the basic housing. Everybody needs some politician always make loss to ensure help the tenants. Make sure everybody able to afford to a shelter that means your rents cannot go up tons of law against you as a landlord or investor. That’s why you have to pay million dollar to lunch with Warren Buffett to pick your brain and he said stop looking at the beautiful girls or big TALL HANDSOME (f u stupid liberals brainwashed the girl become stupid or stupefy the girls told them the best quality man to look for Mary or day is the tour. The height is most important. Why the conservative always asked to go always look at the power home soft problem or money, making skills like Mary ugly short alien, like poor back then Jack Ma with him then you later you become the first lady in the business field in China after he become richest man in China then everybody or don’t laughing at you in the beginning they said, how can you marry a ugly short alien with ugly short, alien, poor man what a shame but she doesn’t care she always believe always marry someone with the top ring and top money making or leadership skills always go with the brains don’t care about tall and handsome and big tall because those are the liberal control the media want girls to focus on the tall handsome big man lol stupefy them😂) or enjoy the crazy rich luxury expensive food bc all of these don’t matter, not worth $1 million you pay me, you pay me to lunch with me because you want to ask. Tough question how do you invest your hundred million dollar earned 10% a year so you earn $10 million in return so you spend $1 million lunch with me and get $10 million per year. Return is worth that investment lunch with me or hang out or be friends with the genius or better yet for a beautiful young virgin girls you can marry the rich, smart, honest the best quality man provide you so much that is smart, conservative, superwoman, smart girl, best choice in life that is the opposite of the liberal want to fight the girls ask them empowering woman families you can do whatever men can do so focus on Korea make your living do not reach and you do not meet a man so you become me old woman without baby no marriage all along by yourself even you make Mandala you don’t have any family or kids or husband to share. Life is so boring or your first egg. Suddenly PG&E lose power. Your egg will become bad so you crying and looking around even liberal top woman, Nancy Pelosi, Hillary, Clinton, and vice president Kamala, they all Mary rich man, smart man they never said feminist do not need men and focus on career do not get married have no children now you see they all marry, they becoming rich because they’re married to smart rich man that’s why every smart people hate liberal liars only follow the conservative they live in God the God give all the power to the man and created the first man name Adam and let the man control the universe, but God one man control the earth all can be boring, so God create woman using men’s body parts and told her that her job is to support. Their men is the main character female is a supporting actor only you be a good girl be a young virgin, with all other man only sleep with your future husband and help work with him, making him be successful, powerful and then your husband will give you all the power to you so you have to be a good girl not slipping around obey or at least cooperate with your man walk with your man make your man successful and then he will give you all the power, so God give all the power to men and men give the power to the beloved wife, or family woman only if she contribute so much help the man success,! Look at Nancy Pelosi, vice president Kamala Harris, Dianne Feinstein almost all this powerful woman do not work, hard, make their money and power by themselves. Mostly they marry the rich, smart man, and they love and respect their men, and they have children instead of feminists said we do not need men, we hate men ha ha you listen to those liberals doctrines you become stupid. I teach you more than how to become rich, and also teach you about invest A2Z including family, or how do universe works and make sure you must know the rental law and the IRS tax law are written against the investor because IRS tax law said it takes 27 1/2 to 39 years to slow to depreciate only part of the real estate total value that is the improvement part only the land value cannot depreciate so you lose about 25% to 40% begin with in real estate! Nobody is above the law, so you got to pay me to teach you the real estate, rental law, and IRS tax law has many secrets written against landlord only the wisdom man can see! Other dumb people cannot see😅
@@tango4ever244 You'll have plenty of opportunities if you're house is free and clear. I am not as liquid as I'd like to be. But because of my rentals I have very good monthly income.
Friends said their NVDA, AMD, TESLA, AAPL, ETC GOOD STOCKS GO UP 3X OR 4X within last 3 yrs, YOUR TENANTS DID NOT PAY RENT 3+ YRS and how much your RENTAL INCOME EARN (if pay NO RENTS 3 YRS PLUS all RENTAL LAWS/EVICTION/RENT MORATORIUM LAWS ALL ARE WRITTEN AGAINST LL/RE INVESTORS, NOBODY IS ABOVE MR. LAWS, DID U WATCH "Random Teach, sand floor, RE FAKE GURU/CROOKS LIE TO STUPEFY YOU" video? b/c the REAL RICH SMART, HONEST PEOPLE USUALLY DO NOT WASTE TIME TO MAKE VIDEO TEACH OTHERS HOW TO GET RICH=why teach others be also rich/smart like THEMSELVES=U CREATE MORE COMPETITORS, only the FAKE RICH GURUS TEACH U HOW TO GET RICH THEN MILLIONS OF STUPID PPL SUBS AND THEY MAKE $M FROM YT ADVERTISE $... SO IT'S A WONDERFUL TO BORN TO BE A a)young, b)pretty, c)virgin; d)submissive/at least COOPERATIVE/SUPPORTIVE girl then u can marry the RICH, SMART, HONEST, FUNNY, KIND, THE BEST QUALITY HIGH VALUE MAN (H.V.M) b/c Asians 5k yrs Chinese wisdom men always TEACH THE H.V.M ALWAYS ONLY LOVE TO MARRY A)-d) esp virgin=nobody f her=so purify=give u no FAMILY SHAME so your kids also carry the purity saint-like virgin-Mary (Jesus's mom) bloodline... the worst is the girl u marry is sl*t or hoe 304 then ppl laugh at u behind said "u grad from MIT/YALE/STANFORD/UCB with PhD, the society TOP ELITE 10% smartest, richest, best H.V.M, we think u r on top class but sh*t, u give her best mansion/house, cars, best everything in life but she GIVES U A USED 100K ABUSED ENGINE with many big, tall, handsome ex-ex-ex bf f her 100k miles piston-action, many bf f her never have to buy a house/cars/gold, we don't want to marry that b*tch hoe, u knee down beg her marry u, your kids will also carry the sl*tty 304 hoe bloodline, what a SHAME, ppl are laughing behind you're so stupid marry someone many ex-bf f her for free that they do not WANT, that's why v girl is so important like BRUCE LEE'S MOVIE 'ENTER the dragon', his sister would even COMMIT SUICIDE (use glass cut herself) to keep her virginity instead of let white men try to rape her; Asian 5k yrs teaching the value of H.V.W is virginity top quality=v means SHE REJECTS ALL OTHER MEN & only sleep with future husband make him feel SO PROUD achieve the best other men CANNOT!"... Warren Buffett always admire life is WONDERFUL BORN TO BE A VIRGIN,YOUNG, BEAUTIFUL & also COOPERATIVE/SUBMISSIVE/SUPPORTIVE GAL (b/c most men esp American men now sings "American girls stay away from me from "American Beauty" movie, they marry OVERSEA gals w/ SUBMISSIVE/COOPERATIVE/OBEDIENT good v gal not f around like the USA gals or even worst today NEWS REPORTS ANOTHER USA WOMAN SUE NYC MAYOR 30 yrs ago sexual bs harassment like Donald Trump or Supreme court judge Kevinaugh 36 yrs LATER STILL RUIN MAN'S CAREER + life=USA has HATE-MAN CULTURE, it costs NOTHING FOR WOMAN RANDOMLY SUE MAN look at Johnny Deep or Bill Gates loss $100B when wife only say 1 sentence like "I file divorce #@!", U CANNOT 1)tell WIFE STOP BECOME FAT LIKE A BLOON LOL; 2)STAY V DON'T F AROUND UNTIL MARRY U; 3)THERE'S NO INSURANCE FOR MARRIAGE=80% of divorce was INITIATED 1ST BY WOMAN means 80% OF YOUR LIFE IS CONTROLLED BY WIFE so only STUPID, POOR, useless or low-self esteem SIMP MEN WOULD MARRY & forgive she-is-not-a-v u still ok & marry her?! Andrew Tate edu ppl that BIBLE SAID God Created 1st man Adam put all power in MAN TO CONTROL THE EARTH, NOT WOMAN, so man is the boss, why can u let woman boss around u stupid sims, no wonder gals don't look u up when u don't reject bad 304. So it's wonderful born to be a girl, pretty, young, virgin, cooperative so she can marry the rich, smart, honest, funny best H.V.M, but we're man & cannot marry rich, smart, HVM, so he has to SPEND $30B BUY APPLE STOCK BE PART OF GREAT MAN'S CO. when 2 co. merged or buy part of the superman's co. is similar to MARRIAGE=we've to SPEND $30B JUST BUY/OWN 10% OR so of superman's APPLE/BANKS/COKE STOCKS LIKE MARRY SUPERMAN GET RICH TOGETHER HAVE FOREVER LIFETIME DIVIDENDS AND PAY 0%-20% TAX vs R.E ALL RENTAL INCOME IS TAXED 2ND HIGHEST TAX like ordinary income=IRS TAX LAW SAID SO=U NEED TO PAY ME EDU U... THE REAL RICH DON'T TEACH OTHERS GET RICH FOR FREE, so either 1)BE A YOUNG, PRETTY, V, SUBMISSIVE/SUPPORTIVE/OBEDIENT/CONTRIBUTING good girl that ALMOST EVERY SMART RICH HONEST H.V.M wants=it's FREE TO MARRY THE RICH, marry rich or poor, smart or stupid it ALL COSTS THE SAME, so it's wonderful born to be a)-d) gals marry superman get his BEST DNA & superman pass LIFELONG LESSONS MENTORING & PASS HIS EMPIRE TO OFFSPRING=U CANNOT TAX SUPERMAN'S EDUCATION & BRAIN POWER (cannot tax BEST DNA GENES & SMART IQ ideas/mentor substances)... or 2)spend $30B or big $ buy portion of superman's biz=merger like marriage but it will cost u $big$ to JOIN SUPERMAN vs marry him FOR NEARLY FREE; 3)the REAL RICH ONLY TEACH THEIR OWN KIDS/WIFE or 4)PAID STUDENTS that's why u need to pay $ let the rich edu u or marry him so he only teaches his bloodline kids how to make $, pay LESS TAX=KEEP MORE $; invest in STOCKS IS BETTER THAN IN GOLD, SILVER, REAL ESTATE, BOND, A-Z with 200 yrs history superman mentor u change your stupid life... DO NOT LISTEN TO MANY 99% OF YT SCAMMERS TELL U RE ALWAYS GO UP OR LAST 15 YRS MAKE U RICH=WHATEVER GOES UP MUST COME DOWN (Wall street quote), later u loss $ become HOMELESS then REALIZE R.E. IS 1 OF THE WORST B/C ALL OTHER BIZ IS 100% DEPRECIATE 1-5 yrs vs 27.5-39 yrs TOO SLOW=PUNISH U PAY MORE TAX; 1yr write off=offset ALL INCOME=PAY LESS TAX, takes 39yrs DEPR means U CANNOT OFFSET MORE INCOME=U PAY MORE TAX=IRS TAX LAW PUNISH U INVEST IN R.E., u need to watch "random teach sand floor' or pay $ lunch w/ Buffett/we the real RICH,SMART HONEST IS RARE to find; In short: TENANTS DIDN'T PAY RENT 3+ YRS, THERE IS NO LAW help LL stop pay mortgage, property tax 3 yrs=so HOW MUCH YOUR RENTAL INCOME MAKE OR R.E. GOES UP 200% IF LOSS 3YRS OF RENT & NEED TO HIRE COSTLY LAWYER TO EVICT THEM IN COURT DRAG U 1-2 YRS? vs. invest in AMD, TESLA, NVIDA,FB 3 yrs go up to 400% without ANY WORK & sell stock pays only 0%-20% tax (most is 0% tax) so the IRS TAX LAW FAVORS THE STOCK INVESTOR as Buffett said He only pays 17% tax lower than LL b/c all RENTAL INCOME IS TAX AS ORDINARY INCOME=1 of HIGHEST tax! KNOW MR. LAWS=NOBODY IS ABOVE THE LAWS, even IRS TAX LAW & RENTAL LAWS ARE AGAINST LL. SUMMARY: R.E EVERY 19 YRS REPLACE NEW ROOF cost big$; every 8 yrs RE-PAINT house; every n yrs replace toilet, pipe leak, TORNADOR, FLOOD, SNOW DESTROY homes, bye stupid only look at last 5-15 yrs RE make u rich but ZOOM OUT 200 YRS RE ONLY GOES UP 2-3%/yr. STUPID CANNOT BE TAUGHT, WISDOM IS MORE IMPORTANT THAN MIT/YALE/HARVARD phD as Einstein said so "Imagination/WISDOM is more important than EDUCATION". U need to pay $ lunch w/ superman. History always REPEAT b/c stupid ppl won't listen & watch 2008 RE NINJA LOAN=SOME PPL SHOULDN'T BE R.E vs now EVERYBODY YT BS SAID BUY R.E., look at the KING OF R.E WOULD BE DONALD TRUMP BUT STILL TAKES 75 yrs to earn his $5B or so vs AMZON/TESLA/FB/GOOGLE/NVDA earn their world richest $100B within 15-25yrs & STOCK LTCG cap tain
I live in a city that is dealing with huge housing and rental property shortages. I am so thankful my husband pushed me into buying our house (and we got lucky with it happening right before the pandemic and skyrocketing prices). With a child, I would never want to deal with the stress of housing insecurity, renovictions, etc, that I hear about today. However, I completely agree with the math and I used to be a huge proponent for the freedom of renting over owning. I simply see it now as paying for peace of mind. Property as investment, as speculation, should be stopped by governments. It’s leading to so much hardship for families and individuals. Housing is a necessity, not a luxury to make money off of…
I totally agree with you, specially the last part. I know that free market exist and so on.. But for the human being having a place to call home give so much security that I consider people who just speculate with properties and prices like criminals
These are all good points, and I think you minimized the impact homeowners spend on their house when they own it. Everyone I know (including us) spends much more on repainting, furniture, decorations, holiday lights, kitchen appliances, etc. If people were genuinely being honest with themselves on their frivolous home purchases, the lack of an ROI would be insane. However, I also believe getting someone to truly take all the saved money from rent vs. own and put it into stock/investments is hard to do. In other words, the $ 6k total payment when the house is owned vs $ 3k for rent should mean someone is putting $ 3k per month into investments, but most people end up not doing this and spending that money on extra vacations, nicer cars, restaurants, etc.
$3k/mo of my paychecks direct deposit into brokerage accounts that I've set to auto-invest or DCA (dollar cost average) daily into assets of my choice. It's become very easy and effortless with today's financial tech.
I'm a real estate investor and I think one thing you left out was a house's ability to be converted to an investment. My general rule is I will only buy a house for myself if it would cashflow when I decide to move out. That way I don't have to ask myself if I plan on staying there for a decade.
Good when it's good. Bad when it's really bad. I met a couple that are millionaires in Cali in LA. They hated owning rental homes. Told me about the costs of fixing everything when it goes wrong. Now they work side jobs in their retirement age because mortgage
I was living in a house that I paid off, but after my divorce the ex got the paid off house. I then lived in an apartment $1625/month for 2.5 years until I saved enough and paid cash for my new home. I was going crazy with the loud neighbors upstairs. Sorry Ramit, I had to get back to living in a home again since my mental health is a priority.
Lol and I feel the opposite... my home I could hear everything the neighbors were doing. Now that I'm in an apt again, its actually much quieter and less stress. Mentally renting has been life saving.
@@discoveringhealthandfinanc8328and can’t forget about the high cost of fixing things at a house on the other hand when you rent they will fix it all. At no cost 😃
If you have lousy neighbors in a house, you're stuck with them FOREVER. In an apartment, you can just move when you're lease it up, or maybe even legally terminate your lease early since your landlord violated the terms of the lease by not maintaining quiet on his property.
If you do the math, owning a house is almost always a good idea if you plan on living in a city more than five years. Reason being, if you rent and then buy another home and use it as a rental, you end up paying extra management costs, whereas you do not incur these costs if you own a house.
Well for one, this doesn’t account for a vacant house. And two, most people don’t want to deal with management in the first place. A guaranteed way to make more money every year is to….work more hours. That doesn’t mean it’s worth it for a lot of people
Lol it’s all fun to rent a property until you get americas worst tenants then your investment will become a money pit. In my opinion it’s a riskier investment than investing in dividend growth stocks while dividend creates an immediate passive income depending on how much is invested.
@@el_chilango2953 you're right, being a landlord can be a pretty wild experience. There are certainly far less stressful ways to make investment income.
You act like housing is a commodity. It SHOULDNT be. It's a place to live. It's your home. This is the crucial aspect making the comparison pretty much void for the majority of the middle class.
🌹I will forever be indebt to you(Alvarez Harry Flectcher) I will continue to preach about your name to whole world to know you have saved me from a very huge financial debt which just little investment. You're a life changer
Including myself , I have seen any of his clients complaint about losing money, she’s amazing financial analyst. His service are trustworthy and straightforward
Love Ramit but this isn't one of his better takes. Ramit can afford housing insecurity at the end of his lease, not everyone can afford that luxury. Moving costs and rising rents are "phantom costs"of renting that he never talks about.... Renting means your landlord controls where you live and for how long.
What if it costs more to own than to rent (as in almost every city in America right now)? If we're talking about low incomes, why would you encourage them to pay more for something they obviously cannot afford?
Moving costs and rent increases are not phantom costs. They are at the forefront of a renter’s mind. And these costs today still pale in comparison to how much money you will spend buying a house, especially if you’re really weighing the cost of moving vs the amount your rent is increasing.
I’m blessed to buy a house for $269k and now valued for 1.8million plus. I have renters which give me additional income. I work full time and make good money yet I live below my means. I’m thankful to God and count my blessings always. I spend for shelter and food, not unnecessary material things or expensive vacations via credit card. It’s about priorities and a house is a priority for me.
I live in New Zealand. A middle income earner but own CB my own home. Owning a home has sentimental value in it, it’s not only a house. I feel safe to live in my own house, keep improving it - not big spending so that the value is going up and up. I don’t have the knowledge to invest in shares and feel great when my property value is on the rise
I have temporarily signed up for renting for 6 months after I sold my home and wanted to upsize. Hard to get in to a good area, later got one and very expensive for a basic house, moved in for 2 mths, paid shifting costs, arranged for Skytv and gas supply, then the landlord wants to sell the house! I have to shift all furniture out to a storage , costing more money and effort. Later I rushed and bought another house, shifting again, I had enough of shifting😂
Yeah if there is an issue with my home I fix it and not sit around and wait for someone else to. I look at owning a home as an investment as well. I couldn't stand giving $1,200-$1,500 to an apt or landlord every month, then in a year or two I have nothing to show for it but increasing costs or having to go through the hassle of moving. I think it is a choice of whatever fits your lifestyle and your goals.
There is no greater feelings than owing a house that's paid off. Nothing can give you that freedom knowing that you are living without a mortgage or rent and the taxes is so little. It's also appreciated in value. Nice. Now that's a rich life. Freedom and house security.
I live in Spain and we have lots of property here that we paid cash for, the taxes are incredibly low and the rental yields are roughly 30% a year for us as we were buying when they were very cheap. I personally wouldn't feel very secure not owning my home especially as I have a wife, 2 kids and a 3rd on the way, I will state however that our strategy is to buy, hold, rent and never sell.
It's a good strategy because you can afford it, which is basically all that Ramit is saying. Here in the US, people out down 5%, make the minimum payment, and are locked in that property for 30, sometimes now 40 years!! And of top of that they're broke because they have no money left after paying for all the house expenses. But they own a home ¯\_ʘ‿ʘ_/¯ Buying a home as an investment (and actually using it as an investment as you are doing) is very different than buying a home to live in thinking it's an investment that'll pay off in 30 years.
@@ttiller3744 there's a different between feeling obliged to buy real estate wherever you just happen to be based, and diligently searching for real estate opportunities across the world.
We happily own our home and raised our 6 children here. We’ve lived here 30 years and are going to live here even though we are now empty nesters! Our happy place.
What about your children, do they own their own homes? My parents own their own home, but my siblings and I have found it impossible to buy a home reasonably priced (no such thing in this era) let alone be approved by the bank for a home loan. There's a lot stacked against us, which is keeping us stuck in rentals. And .... NO, we will not buy a property together. We all have different tastes and lifestyles.
@@teeeteee000 Did you mean to write 'no such thing in this ERA', or AREA? I get that the new higher interest rates have greatly impacted US housing affordability. And overall the US has been under building housing in relation to demand. Are you in a high cost area?
@harlanjackson6112 Definitely "Era." This era or period in time for house affordability is astronomical in comparison to house prices back in the 1980s. I live in Auckland City in New Zealand, the most expensive city in this country. We were born and raised here in this city. I currently pay $2,920.00 a month on rent. My tenancy is coming up a year, and rent is increasing by $20, I'll be paying $3K a month from next month. We are saving aggressively towards our first home, but I feel in my heart we will be settling in Australia instead as the salaries there are much higher than what I get paid currently in NZ for my profession. I just can't fathom the house prices here. It's a shocker!
@@teeeteee000 You're a Kiwi? Would love to hear your thoughts on Jacinda Ardern. I learned about her from her appearances on US talk shows, but of course that may be skewed reality (much of US media is skewed either to the left or to the right, an unfortunate attempt to divide us citizens against one another along political party lines).
@harlanjackson6112 Yes, I'm a Kiwi. I can agree that US Media is heavily skewed, biased, and fake. I'm not sure what you want me to say because Jacinda Ardern is irrelevant now, she stepped down as Prime Minister in January this year. I had no issues with her. She ran the country the best she could in her 6 years. However, she was ridiculed and hated by many kiwis for her decisions during Covid, among many other things. We kiwis are quick to vote anyone out in the next elections if we don't see change. I guess Jacinda made the dash for the door because she knew the people of NZ lost faith in her. We have recently elected a new Prime Minister - Christopher Luxon. We will wait and see how well he does in his term, it's still early days.
My rent-controlled apartment costs $1,099 a month in an area where the median home cost is one *million.* It's amazing to me that for many years I bought the lie that paying rent was "throwing away money." Run the numbers indeed.
Key word, “Rent controlled” that is fake since without that rent control you would be paying 2-3 times that other people must pay with higher paying jobs.
@@jameswiggs9655 You're incorrectly assuming rent control is always income based. There are many places---including where I live---that it's city-wide. By choosing a less prestigious zip code literally one block from multi-million dollar homes I've gotten the best of both worlds and can let someone else deal with things like plumbing issues and roof repair. I've had colleagues who commuted 2 to 3 hours every day so they could "own" a home with a massive mortgage, while I was able to put extra money into my employer's generous retirement matching program and enjoy biking to work, having money for interesting vacations, and TIME for family, friends, classes, cultural events, etc. It doesn't mean they were wrong to buy houses in the suburbs if that's what makes them happy. But I'm glad in retrospect I made the choices I did and also stopped believing the lie that rent is "throwing money away." I've gotten MASSIVE value from renting.
I bought my townhome in 2017. I rent it out and live at home so I can save money. But when I decide to move back, my mortgage 2br 2bath home would still be cheaper than a 1 bedroom apartment in the same city.
Well, I guess we got lucky! We bought our house for LESS than our total annual gross income, we had 20% down, and the mortgage payment is about 13% of our net income. Our house doubled in value over 8 years and we've only needed to make minor repairs. It's not a house that many people would consider glamorous and we could have qualified for A LOT more house. But we love it and we don't need to bend over backwards to make ends meet!
I bought an apartment in 2007. Lost my job in 2009. Rented my apartment and moved to a different state. Few years my cash flow was negative by few hundred, but after refinancing in 2014, the cash flow is positive by few hundred. My mortgage is paid by tenants. If I calculate all the phantom cost, the apartment still generates 5% ROI. One of my friends was not lucky enough though. After losing his job, he had to hand the keys to banker.
I’m single and even I believe buying a house is the BEST decision I have ever made. I have ultimate freedom! to travel and rent the house out and make $1500 a month PROFIT even after the mortgage. I am also free to rent out rooms or convert to ADU. My location is in extremely high demand, I can do what I want to my place no upstairs neighbors etc. I pay less than what rents are here because rent goes up 300 dolllars every year. My mortgage does not. I have stability!!! I pay $1000 less than a small apartment per month. Also I may adopt one day. I have the beach the mountains an airport and everything within walking distance or a short drive of my house. Location location location. And how did I get here? I was homeless 4x saved my ass off I bought a house flipped a house and now this is my permanent place of residence. Great decision.
Months ago I felt like I needed to reimagine the “American Dream.” We are a family of 3 living on my spouse’s family property. It’s an older home and smaller than I would like but it’s nice and comfortable. We have no mortgage/rent. Seeing all that’s going on in the housing market it makes it extremely difficult to give this up and get a new home for more space that we honestly don’t need.
Key words for me were '...no mortgage/rent'! I have had a similar experience living without that MAJOR expense. How freeing that feels financially. The amount of money I have saved as well. Make it count!🙏🏾💯
1000% agree. I’ve sold homes and sold repairs for them… it’s a huge money pit (endless) and people make all types of excuses to continue to buy - staring with pride and laziness
good points, but rent can go up every year where a fixed mortgage can look like a steal especially near the end of the life of the loan. What you think someone that bought their house in 1994 is paying on a 30 year at the end of their loan in 2023? Probably a helluva lot less than anyone renting in 2023.
I agree with your perspective. I also have to add that I find it weird that people consider their primary residence an "investment" it's not an investment, because even if you sell it and make a profit, you still need to find a place to stay and presumably housing in general would be up if you sold at a profit. I do have a question, which is, if renting is cheaper than owning, why do landlords exist and how do they make a profit? Does it work on the idea that they will be holding onto the home for a long time and therefore are able to take a loss for the first 10 years? I haven't heard anyone in real estate talk about this - I only hear discussions about outright profit (even if it is small). I am very curious to hear your perspective Ramit.
Rents is cheaper. Renting doesn't have a property tax. Something major goes out as heating,roofing, or plumbing. The owner is responsible for repairs. Renters insurance is awhole lot cheaper than home owners insurance.
And just where does the landlord get the money to pay all the cost? From the money tree in the backyard. Next time you rent you should go back there and pick a few dollars.
@@dueymiller3762or we can pick from our own money tree that may not be in the ground, maybe a pot, that grows from our business or other investments. You guys hate paying landlords but will buy groceries, clothes, cars, you name it from someone else who will use your money to pay their housing 😂 money has to flow for it to flow to you.
I think owning is more expensive than you make it out to be in this video. In the Phantom Cost section one other thing people don't really think about is interest. If you are in a house for < 10 years as you mentioned, not only are the large one time costs not amortized over a long period of time, but you've barely paid down any principle on the mortgage. And then when you sell 6% goes to the corrupt National Association of Realtors.
I purchased my home early 2020 and currently have an estimated $160k in equity in the property. 2020 was also the first time in my life my salary moved north of six figures, so I invested a good chunk of my money in my roth ira, 401k and brokerage. Timing in the market definitely had a lot to do with the outcome, but the amount of equity I have gained in my home vs the amount ive put in is much much higher when compared to the ROI percentage for my retirement/brokerage accounts. Im happy I bought into the housing market when I did.
Congrats on your market timing. Most people don't realize that a personal home is really just an inflation adjusted retirement savings account with hefty maintenance fees, and therefore a net loss to your net worth. The banks sold people on the idea that a personal home is an investment, but it's not given you pay 2-3X the value over the term of the loan not to mention total cost of ownership. You can make significant money in real estate as an investor, but as an owner (if you keep your house long enough) it's value will adjust and align with long-term inflation.
I’ve always said that there’s benefits to both. But in my experience I don’t regret it. I rent my old home out and rent the two bed rooms in my condo and live mostly for free while others are paying my mortgage while building equity.
Honestly I believe it’s a good opportunity for people to see and know both sides of renting and owning. Ultimately it is up to that person to know which one fits right for them. Neither are bad, so I believe both options should always be encouraged then just one. We need flexibility vs having a one sided mindset that one is better than the other. Thank you Ramit ❤
I already know all of this, but it is a great summary video to send to the next person that tells me I should buy a house so my rent doesn't go to waste.
We have 2 apts. A very cheap one in New York City and very expensive one just north of the city where kids go to school. Unmentioned part is how taxes (that in US influence quality of schools for kids) are killing long-term house ownership. The average tax rate for a modest house in the town upstate is around $20k. This means that when kids are college age (in our case in around 10 years), living in "high-tax but good school" area will get prohibitively expensive (kids will be out of local school so why pay the big taxes?) and you will be, in essence, forced to sell. In 10 years, on a $500k house, you've put in half a million dollars to closing, down-payment, taxes and interest on the mortgage, while only around $50k (!!!) to pay off your principal. So selling the house to move to lower tax area, will bring in only modest return. I think the only drawback to "invest in the market instead of own house" model is people's (including mine) laziness about savings/investments vs forced to pay the mortgage every day. If not for this "little" caveat, in 10 years i would have 2x the money from investing in the market vs selling the house.
I'm sure everyone's situation is different but real estate has done very well for me bought my first house at 23 years old in the early 2000s now I have several multi-family properties that I purchased for mid $200,000 and are now upwards of $900,000 each and 45 years old now still work full time. First time coming across this channel unfortunately doesn't sound like something I could subscribe. Thank God there was no internet back when I was purchasing real estate because a video like this would have deterred me from investing in the one thing that's actually going to give me an early retirement.
Owning a house near me (outside the city, even 1-2 hour on train out of the city) is 600k-800k + stamp effing duty. RENTING is actually CHEAPER than morgage payments when you put a 30% deposit down. Honestly. Its so crazy. It's cheaper to rent and put the rest of the money in the market. Unfortunately thats the reality for London and the commuter towns around here. It doesn't help that most companies are based in London and require working from office 5x a week post-pandemic (Banks and Pharma). There's no way we can move FURTHER away and still work. Jobs outside London, also pays substantially less to the point that you're still better off paying HIGH in/around London and having a London salary. We'd love to buy, but with our low-6 figure salary and how we do NOT want to be living a shitty life and feeling like we're just above water with morgage payments (we have friends like that and they're on a mid-6 figure salary). It's no life, so we choose to rent until everything aligns for us somehow (being able to WFH? Better transport links created? Higher salary + moving to outskirts). It's not an investment since we will be living in it.
The real truth is that don’t buy a house that you can’t afford.
You gotta take the hidden costs into consideration. You pay double the rent for half the return.
You're tying up all your money for a little return.
nah thats not the "real" truth. its what you got out of the video. I will add that a person or couple can buy a house they actually CAN afford and still not get what they want out of life or that house (purchase or investment, intention and so on). particularly when we live in a world where people can't even conceptualize what being able to afford something constitutes. most people believe that being to afford something means they can come up with the necessary amount. where as some more savvy folks understand that being able to afford something means you can purchase said item without interrupting any current systems in place and without taking financial lost from the decision down the road
Which is all houses right now. Only house I can afford is a decently nice looking dog house
@@333pinkelephant333Here in Canada (especially in the west coast where I live) it is over $1million for even a shitty house. No way can I afford to buy.
Absolutely. Live within or below your means. Don't always have to have the latest phone, computer, gadgets, car, or fashions.
My landlord came to me this year and said he is 90 years old, and either I need to buy the house or he was going to sell it to an investor. The first thing the investor was going to do was raise our rent. So I went to chase bank, asked to apply for a mortgage to get the home. Keep in mind at the time I was Landscaping for chump change, and I hadn’t even been doing it for 2 years like most banks want you to be at least 2 years in the field. Long story short I bought a 4 bedroom, 2 bath, basement, 2 car garage, for $80,000…. The house was already on Zillow for $120,000. Thank you Paul, you allowed me to buy a home at 23 years old and BLESSED ME with easily over $30,000 of equity. The house needs some touch ups but nothing serious. I wasn’t even looking to buy a house, but it was thrown onto my lap and I sure ain’t complaining!
You are truly blessed! 😇
That is wonderful!
Where do your live?
Taxes🎉🎉🎉🎉
@@cutthechicken194 I live in Michigan, more specifically Pontiac, MI. That’s why the price of the house is so low haha, but I can’t complain for the price and I have a ton of space to work with between the house and garage. Wish me luck hopefully in the next 10 years I have this thing paid off and flowing cash
I bought my first house in 1998 for $120k at 8% interest. My total house payment with mortgage, property taxes, and rent was just under $1100. When the rates got low I refinanced at 15 years and now it’s paid off. Rent in my area is now $2000-$2500/month for a two bedroom with no garage. Buying was definitely the right choice for me
It was then but he's talking about now.
@@AnakinSkywalkerrrop Rent has almost doubled in the UK since 2020. Landlords are getting rich while you get poorer. Buy a house.
Ramit can afford to buy anywhere, anytime. You can't!
@@AnakinSkywalkerrrop maybe so but we were a single income family and I was making 42k/year. It’s was rough but it was doable. How much stuff do people buy that they don’t really need?
@@silvafox7719 buy a house now and you are at least a million in debt. If you have a family where will you live if you rent?? Housing prices increases have SLOWED so reselling will cost you just in fees alone. Emigration is now the best choice for many...
@@AnakinSkywalkerrrop he said, "have you ever in your life?" I bought my first house in similar circumstance. Made $46k/ yr, house cost $85k. Same house now cost over $200k. I sold it 9 yrs ago for $105k. Something has gone haywire in the last decade-plus!
I'm tired of people thinking of housing as an investment. Housing is meant to shelter people. Its a necessity, not an investment. You dont get rich from buying a house. You want to get rich? Own a business, create something new, sell your genius idea, invest in other people/companies that do well.
You're wrong. It's not about being rich. It's creating wealth. I have done and still do everything your saying to have. I then take my earings and place them into a solid investment such as realeste. I have created wealth from it. Solid wealth that can't be taken away from anyone
that is soooooooo counter intuitive to the entire point of this video lol. "Why I Don’t Own A House as a Multi-Millionaire…" - in other words he's happy to rent and invest any surplus into other things... so who owns the house that he rents it off? oh wait, an investor! you do know that some people PREFER to rent right? just like some people PREFER to own. there is a balance.
It's people like you who rent and pay my mortgage, while my property appreciates in San Diego California
@@ryanj5328 you are welcome sir. I hope you are as good a landlord as the ones I've previously had.
Famous words of warren buffet. The worst investment I have ever made was my house due to poor appreciation, but it was also the best one because of the memories I made in it
I love this guy... love the idea of questioning buying a house just to buy a house. Judging from the comments, no one actually listened to the video. He literally said he is not telling you to dont buy a house... he said to run the numbers and figure out if buying the house is a good idea for you and your situation... and it's absolutely valid. I bought a house.. made a lot of money off it.. but I was absolutely miserable owning. The maintenance, repairs, harrasment from HOA, irresponsible homeowners making loud noises or leaving dog poop on my yard... no one talks about the mental toll owning a home takes on you. I like renting and yes I crunched a number on a spreadsheet and its better for ME to rent. But ultimately, I hated owning a house.
I know what you mean. I built my own house. It took me a lot of money, energy, and I couldn’t travel, do whatever I wanted, and I still had a lot of things to do. I got fed up, sold the house, took that money used for some investments, and started doing the trips I wanted my entire life. Now renting and living the best of my life.
No one runs the numbers unfortunately lol
Common rule never to violate. If you are moving every 1-5 years never ever buy. I was in the military and always rented. My friends who bought were always getting close to 10% transaction cost every time they moved
Dont buy in an HOA
@@hugoglenn9741 How much appreciation did they realize? More than 10 percent?
I've rented all my life, we bought a home 6 years ago and it's one of the best thing I've done for my family. We bought in a nice neighborhood and the value has gone up over 90k in that short time. I'm not saying it's for everyone, but the freedom from landlords feels great to us.
For sure. In Toronto, we bought our house 20 years ago for 300K and now it's worth 900K. We definitely couldn't afford RENT in this area now.
Exactly. These online "gurus" just love to tell you that everyone has been lying to you. He's talking utter nonsense.
maybe he's working for the WEF...you'll own nothing and be happy!@@olddouchebag
I agree, this guy is giving out the wrong advice and I don't believe he's a multimillionaire.
I totally agree, our current home of 23 years, our equity is a 250-300k, we are planning on selling even with a 3.12% rate. Our current mortgage has always been lower than rent. We will move, downsize, then either outright pay for our next house, or have very little mortgage loan that will be at least $500 less than our current mortgage right now. We will have lower utilities, and in a place with year round 4 season mild climate conditions, (no tornados, or hurricanes either). The next interest rate we get on our next home is not an issue.
He left out one thing. As a home owner, you don't have to deal with a landlord.
But if you’re in an HOA…
@@Suki0428 HOA: Then every board member is your landlord. :))
@@terry_willis 💯. Will never do it again.
and to add, its generational wealth, his kids might not be able generate as much income as he does
@jonny_laguna I don't think so. Had my understanding of investing been 10 years ago what it is now, I would've never bought a house and I'd be enjoying my retirement
I'm 26 and recently lost my dad about six months ago. I'll be receiving some money soon and I'm considering investing it. Should I dive directly into stocks or rental properties to grow my wealth, or would it be wiser to explore other investment avenues first?
I believe the safest approach is to diversify investments. By allocating funds across various asset classes such as bonds, real estate, and stocks, you can minimize the risk of a market downturn.
Agreed, investing with the help of an advisor set me up for life. Retired with about $1.6m in stock portfolio only. I worked hard everyday as a teacher for 32 years, and my salary was over 100k annually. Supplementing my income with stocks and alternative investments helped me by far beat the retirement age before 65.
I've worked in real estate for over 25 years and have neglected a major stock portfolio. This served me well when I was flipping and renting houses, however I need a different plan now.. mind if I look up the professional guiding you please?
The advisor am currently working with is Judith Lynn Staufer. I came across her in a Bloomberg interview for about five years now, and her performance has been consistently impressive.She’s quite known in her field, look her up.
I found her profile online and reviewed her credentials. She has impressive experience. Thanks for sharing! I've already sent her an email.
I'll say this: it depends on where you are located. I'm in Indiana. Bought my house in 2017 for 150k. It's worth 300k now. My rate is 2.25%. Monthly payment is $1080. 3bd 2.5 bath 2000sq ft. Combined household income is around 150k currently. I'll just say I'm happy I have a house. I know its hard for many, many people in other states.
Yeah but you have a house… in INDIANA! 😬
I live in Indiana as well. I bought a house too in 2020 for $168K for an interest rate of 2.8%, and it’s worth now $235K. I will say buying that house was the best decision I’ve made for investment.
@@davidphones7290 Yeah its in Indiana. But do you want a house or not? If you don't want to sacrifice a bit, then stay in wherever overpriced market that you live.
Homes don’t always appreciate like they are now. So, if you bought a home within the last 3 years, you’ll definitely benefit from it if you sale now. It’s similar to the run that the stock market had since the 2010s, and those returns shouldn’t be your expected returns because the market isn’t always like that
@@rafaelw8115+ closing costs paid during acquisition, - 6% of selling costs if you decide to sell it.
Mortgage free and I love my house. As a multimillionaire, Ramit doesn’t have to put up with noisy neighbors, cigarette smoke seeping through the walls, etc. Most of us can’t afford bougie rental properties. I’d rather own a home I can call my own.
Lifestyle definitely matters. Keep in mind that it's currently cheaper to rent than to own in nearly every city in America (not an exaggeration -- look that exact phrase up). If you want to move further away, great! But if we compare apples to apples, owning is often more expensive, and right now almost universally more expensive. Therefore: run the numbers.
Do you think that's because Americans are so brainwashed to buy? In a renter culture where people think like ramit I imagine that's the other day around.
You never own your home. It can be taken at any point. This is why you always pay taxes on it... it's never yours. Research it and check the history. People have had property taken all throughout history, for various reasons, even with being consistent and timely with paying taxes
@@cegecej That is extremely rare. My brother had the house he was renting sold out from under him twice. Two times in 3 years. He had to pack up a family of five and move.
Home ownership is a fallacy. You never own it. Like everything in life it’s rented.
I purchased a townhome in 2021 for $156k and it is worth over $200k now. To me, the peace of mind of owning something where I can stay in as long as I want, do whatever I want to it and not worry about increasing rent is huge. My mortgage (and taxes/insurance) is the same as my previous one bedroom apartment. I do live in Ohio, but I think renting only makes more sense in incredibly high priced areas. Plus being 28, I feel like I am setting myself up for a better financial future than my peers that are still renting high priced apartments and have not yet built up an equity cushion.
That sounds like a great outcome. I'm happy for you!
Now consider the following, which is what I want everyone to think about in their analysis before spending $$$:
- What if you'd invested your down payment and rented instead? What would you have after 10, 20, and 30 years?
- What if you get a higher-paying/better job elsewhere? What then?
- What if you hadn't experienced a generational price increase due to COVID? (What happens if prices decline for the next X years?)
- What if you'd rented and rent stayed stagnant, increased, or even decreased?
- What are the other options for equity growth besides owning a house? How much does it cost?
@@ramitsethiyeah stock market went up 40% in the same period!
@@ramitsethiu can't value the emotions, memories he had with family in the same home, comfortness etc and u said what if x year price goes down, same can be apply to stock what if price goes down, what if company goes bankrupt so measuring something value on what if is not good idea
I told u again, with 200 yrs of best investment return, the best return is stock index s&p, $1 INVESTED INTO STOCKS 200 YRS AGO, TODAY (200YRS LATER) IT BECOMES $1M, do the math it said STOCKS GIVES about 7%-10%/yr (1+r)^200, compound annually turn $1 INVESTMENT 200YRS AGO BECOME $1M TODAY using 200 yrs of LONG-TERM 200YRS HISTORY AS TRACK RECORDS, THAT'S WHY WARREN BUFFET LOVES STOCK INVESTMENT AND HATE R.E. (LL=LANDLORDING - imagine invest $2B=buy 2,000 apartment units each building cost $1M and hire teams of lawyers try to collect rents from ALL KINDS OF LGBTQ/SMART/POOR/RACIST/CRIMINALS/DRUGGIES/MENTAL PROBLEMS/ILLEGAL BF-GF-FAMILY FROM ALL CROSS PATH, U CANNOT GUARANTEE FILTER OUT 99% OF THESE 2,000 FAMILIES EACH LIVE IN YOUR 2K UNITS ARE ALL GOOD TENANTS and mental health/druggies/Zombies or future kids bring in NEW ILLEGAL/CRAZY/CRIMINALS BF/GF POP OUT crazy kids rewire electric to grow WEEDS then burn-your-house or SF famous Oakland Ghost-ship turn warehouse into party then killed over 36 then drag u in court fight n yrs=no fun and RETURN OF INVESTMENT IS SO LOW compare to STOCKS. Again, MATH AND IRS/RENTAL LAWS ARE EVERYTHING, nobody is above the LAWS. Invest JUST 1 DOLLAR into STOCK EARNS 7.15%-10%/YR then the math tell u (u need to pay me to make video edu u make u smart b/c u r bad in math, logic, science and know A-Z IRS/RENTAL LAWS ARE ALL ARE WRITTEN AGAINST LL except 1031 Exchange law which Biden wants to change this law; and President TRUMP KNOWS WHAT I EDU U HERE, HE OWNS MANY R.E. AND THE R.E. KING HIM STILL TAKES 2+ GENERATIONS & 75+ yrs to DARN SLOW TO BECOME A $BILLION while FB, AMAZON, TESLA, NVIDA, AMD THOSE BECOME 5X OR 10X MORE $B RICHER THAN TRUMP ALL WITHIN LAST 20+ YRS NOT 75 YRS slow R.E like Trump; and President Trump knows what I edu u in his head ask 'why all laws against R.E.? WHY R.E. takes 27.5-39yrs to DEPRECIATE TOO SLOW OFFSET OTHER INCOME MEANS IRS TAX LAW PUNISH LL PAY MORE TAX while ALL OTHER BUSINESS TAKES 1-5YRS with 100% FAST DEPRECIATION vs 27.5-39 yrs TOO SLOW=pay more tax. i.e. BUY a heavy 6k lb heavy car/plane, u WRITE OFF 100% IN 1 YR=PAY LESS/NO TAX=FAST DEPRECIATION OFFSET MORE INCOME SO PAY LESS TAX vs RE only LET Improvement part (say 40% is LAND Value=UNABLE TO DEPRECIATE=SO U LOSS 40% OF VALUE UNABLE TO OFFSET INCOME RIGHT OUT OF BET COMPARE TO ALL OTHER BUSINESS TAKES 100% WRITE OFF IN 1-5YR SO RE. IS 1 OF THE WORST BIZ=DON'T WATCH YT RE GURUS LIE TO U/STUPEFY U = just sudden last 5-15yrs R.E goes up crazily does NOT mean 100yrs or next 30yrs will ALSO GO UP=I USE 100-200YRS HISTORY RECORD PROVE TO U, Nobel Prize Econ Case Chiller said 100yrs R.E. only goes up just a bigt BETTER THAN 2.X% inflation or 0.6%/YR BETTER, U WON'T LISTEN 1)GENIUS INVSETOR WARREN BUFFETT HATE R.E./LL; 2)NOBEL prize Econ edu u Shiller RE INDEX; 3) I edu u... TRUMP THINKS "WHY ALL IRS LAWS AGAINST LL/RE, I'm the president now so let me INTRO NEW LAWS, BONUS DEPRECIATION FOR temp only ~5 yrs ONLY=SOON RETURN TO SLOW 27.5-39 YRS; THAT BONUS DEPR IS ONLY FOR ~5YRS after I left office then we keep the law or not! ALL RE GURUS GONE SO EXCITED ABOUT BONUS DEPR LAW WHILE ALL SMART BIZ OWNERS KNOWS ALL OTHER BIZ ALREADY HAVE 1-5 YRS fast depr ALWAYS DECADES AGO, only Trump makes u happy for 5 yrs BONUS DEPR law b/c it benefits LL him who owns many RE=takes 75yrs to get rich SLOW $B vs TESLA/GOOGLE/NVIDIA 3X OR 10X STOCK IN 5-10 YRS, CAN YOUR $300K HOUSE GO UP 5-10X become $3m or your $3K/MO RENT BECOME $4*3=12K/MO IN 5-10 YRS so it drives your R.E. VALUE UP 500% or so? NO WAY LOL, told u DON'T LISTEN TO YT RE GURU BS b/c BIGGERPOCKET, MEET KEVIN, GRAHAM STEPHEN,. ETC ALWAYS TELL U THE GOOD SIDE OF R.E. but NEVER tell u downside of R.E.=tenants STOP PAY RENT 3YRS=NO INCOME 3 YRS WHILE TESLA/AMD/NVIDA STOCK INVEST UP 200% 3 YRS, WHO MAKES MORE $ & WORRYLESS? No need to hire teams of lawyers evict them in COSTLY TIME CONSUME COURT. Back to point1: $1 invest 200yrs earn 1.0715^200=$1M today, LET'S USE LOGIC/MATH LOOK IN REVERSE (I'LL MAKE VIDEO EDU U WHEN I'M FREE BUT U CAN BUY my friend's "world's best mouse trap kills 400 rats" invention lol)... let's say R.E your house goes up at 5%/yr, then 1.05^200=17,292X; let's assume today's media USA house is $450k, that means 450/17,292=$26/house, meaning if R.E. GOES UP 5%/yr then U CAN BUY A HOUSE FOR $26 back in 200yrs ago but CAN YOU REALLY BUY A TYPICAL MEDIA HOUSE IN US FOR MERELY $26 back then? or better yet, 450k/10^6=$0.45 per house if R.E. goes up at same return like stock index at 7.15%/yr, yeah, let's do the math in reverse: say u buy a house for $0.45 in 200yrs ago, then 0.45*(1+7.15%)^200 ~=450k, but the logic proof R.E. CAN'T GET 7%/YR RETURN ON AVG b/c YOU CANNOT BUY AVG HOUSE FOR 45-CENT IN 200YRS AGO LET ALONE those upkeep in 200yrs & repair & roof (every 20yrs OR LESS replace, TORNADO/SNOW/WIND/FLOOD DESTROY YOUR HOME COST 2 MUCH vs TENANTS JUST HAPPILY FIND 2ND HOME CHEAP & WATCH $1 INVEST EARN 7%-10%/YR vs R.E. ONLY GETS under 2.7%/yr or 3% max while inflation is about 2.x%/yr). MATH IS POWERFUL. U go ask Asians b/c most Asians are very good in math, science, logic and using IRS TAX LAW & RENTAL LAWS ALL WRITTEN AGAINST LL/R.E., that's why BUFFETT LOL AT U STUPIDITY DIDN'T PAY ME EDU U AND ONLY WATCH YT RE GURUS ONLY TELL U HOW MUCH $ THEY MADE FROM R.E, but history prove EVEN THE KING OF R.E PRESIDENT TRUMP STILL TAKES 75YRS 2+ GENERATIONS TO EARN HIS $9B or less (if NOT w/o BK 2+ times) while STOCKS makes AMD, GOOGLE, TESLA, AMAZON, NVDIA ALL BECOME WORLD RICHEST WITHIN 25 YRS vs 75yrs TOO SLOW & protesters said "why rent is darn high all b/c GREEDY LL u charge 2 much, f u #@#", that's why TRUMP/BUFFETT DONT WANT ME EDU U ESP buffett HATES R.E./LL=collect rent from jobless 3yrs & there's no LAWS HELP LL STOP PAY MORTGAGE OR PROPERTY TAX 3YRS but only all laws HELP THE TENANTS DON'T PAY RENT OR CANNOT EVICT THEM 3+ YRS LOL. Nobody is above MR. LAWS and math=the language of GOD b/c PPL speak English/Chinese/Spanish all will lie but God/science languge=math won't lie lol. U need to pay me edu u:)!
It's really much more dependent on where and when you're buying. And how much you're willing to sacrifice and wait. For the most part, you don't buy a single family, a condo or coop for the investment but it can be one.
I bought a townhouse condo in NJ for 80K in '87. Sold it for 80K 12 years later. Bought a multifamily in Brooklyn in '99. The value increased 70K in 9 months. That building went from 440K to over 3M in 20 years and bought me 2 more! And market rents are 5-7x higher than at purchase.
Location, location, location...and timing. I was investing for growth and future comfort.
wow Ramit - I am 52 and am starting again financially, and I just finished your Netflix series and bought your book, it is at the post office as we speak, and I wanted to state or say that I so grateful for you doing your UA-cam channel, your books and your other knowledge-sharing-endeavours, because looking at everything in my life, without shame or bashing, and now seeing it clearly (esp. after the Netflix series) and now starting to make a plan of what I need to do, where I really need to improve and then do the work. Ramit ... I am super grateful for you and greetings from Reykjavik.
Thank you for watching!
I don't know about being lied to. I live in the Bay Area and I purchased my home at 650k, now it's worth 3x that. My mortgage is 2400 a month that includes insurance & property tax. 2400 in the Bay Area today is only a studio apartment. My home gives my child leverage when she will be the sole owner after im gone, along with my investments, cars, etc...
Where in the bay ?
@@vanessacazares2615 Manila by the bay lol
Hey when did you buy at 650k? Great deal tbh
@@Happymejoyus during the mortgage crash
Unfortunately you underperformed. Because with dividends reinvested the stock market is up over 5X.@@TheLegendaryLinx
Bought my house in 2017 for 169k worth 350k now. Mortgage is $1100 per month. Anything similar in my area is about $2500 to rent.
Bought mine in 2018 for $395k, it's worth $750-$800 now.
Best investment I've ever made.
You don’t own it until your mortgage is paid off so you’ve actually made no money. Also over the mortgage term you’re paying more than £169k. If you miss out on mortgage payments then the house will be repossessed.
That is ridiculous. You have made money because the house has increased in value over the years. Jeez. @@sanjayd7
@@sanjayd7
This statement is wrong. You don't make money until you sell, however, you actual value, ie. your total assets still increase. Also who gives a rats ass if you don't own it til you pay it off, if you sell those are YOUR proceeds and of course you pay off the mortgage (and you don't have to pay interest at that point either) and walk home with the rest - taxes for gains.
@@sanjayd7 He's building equity every month that he pays on it. Still better than renting.
I am a single mom with two children. The security of owning my own home became VITAL after going through the trauma of landlords when I was retrenched twice. 1st time was due to the Canadian gvt (Harper gvt) retrenchments and the 2nd time due to covid. Landlords can treat you like trash when you're down and out and have nowhere to turn. I have also lived in rentals where landlords do not maintain their properties and you must either take it or leave it. I am the kind of tenant who will create a beautiful garden (my passion) and keep the home in as good a condition as possible because I live there and my friends and family visit however, a lot of landlords don't believe in investing in maintainance because they say the next tenant will destroy the property. Renting when you don't have millions to back you can be the most toxic, traumatising, soul destroying lifestyle for you and your children. Definitely not for the faint hearted.
What does you being a single mom with two kids have to do with this topic?
Do you save and invest your money or just spend it all in a month with no savings?. If you spend all your monthly salary in month with no savings left for the next month, then there is no point owning just a home. Learn how to spend money, learn how to save money and learn how to invest your money from your savings, is the key to making a million dollar in 14 to 15 years, because the value of inflation in the currency increases the value of your investments profit every 1 to 3 years substantially, that you end up making a million, if you save 1500 to 3000 dollars every month from your income and invest it after learning to invest in mutual funds, stocks and bonds.
@@alcubierre-drive Dude don't be "super simp" trying to "save the day". The Reality is NOBODY is relying on someone else. Two people households struggle as much as single households. What about the husband that works and the wife is home with the kids? Sounds like you need to take your own advice. Don't be so quick to judge. Those are decisions that she made for whatever reason. Now if she is a widow I can understand but even then "the world doesn't owe anyone any understanding". Yes Purchasing a home is probably the best decision for her. If she is having problems with bad landlords that is because of the quality of places.and people she was dealing with. Maybe dealing with individual landlords wasn't a good idea. Great that you thinking of perspective of a single parent but life is hard for two family homes as well .
@@adam7349
@@adam7349 Everything.
The stressfullness of a crappy situation is amplified massively if you have dependents, and especially if you're alone in being the provider.
You might have a point. I'm 10 years into home ownership and starting to discover that everything is starting to fall apart, leaking second floor bathrooms, sinking tiles, collapsing deck, rotting fence, chimney cap, etc … and the cost of skilled / proper repair gotta be outpacing inflation. But I don't regretting owning a home obviously here in the PNW.
Are you sure you're not talking about a wife instead of property?! 🤨😬🫢
@@BloodMoonComix bad boomer humor
@@mtns340
Considering I'm early Gen-X (1966) where do you think I got it from!? 🫵😜
@@BloodMoonComix Depends on the marriage.
@@mtns340
Well it's a good thing there are no Boomers in this conversation
We worked overseas for 40 years so we never had the need to buy a house anywhere. Listening to all our friends complain about everything you just mentioned in this video made us realize that we unintentionally dodged a bullet. As we get ready to retire, we have the money and the luxury to live anywhere in the world, for as long as we want and to choose how much rent we are willing to pay.
And, I'm guessing you have no bossy landlords to deal with?
For people reading that comment above and thinking "oh yeah I will try that too now!". I will just leave something not many might know since its quite recent:
AEOI is a global standard for the exchange of financial account information between governments, aimed at combating tax evasion. It was developed by the Organisation for Economic Co-operation and Development (OECD). Under AEOI, countries collect financial information from their financial institutions and automatically exchange it with other participating jurisdictions on an annual basis.This system ensures that taxpayers are unable to hide assets and income abroad, as the information on their financial accounts is reported to their home tax authorities. The implementation of AEOI enhances transparency in the international financial system and promotes fair taxation.
I don’t like the idea of being tied down with a mortgage for 30 years. It’s Like a marriage from hell. I like the freedom to just get up and move anytime, anywhere.
Have rented most of my life, invested heavily in markets, lived in 8 countries, never been tied down until more recently. Could buy a house with cash but choose not to. The life experiences enjoyed to date would never have happened had I tied myself to property ownership from the get go. If you know you're going to stay in the same place until you retire / die, probably makes sense to buy. Otherwise...
Does not sound like you have a spouse nor kids.
@@jade-oh5wn Have both. I assume you make the comment because one cannot live the lifestyle I've chosen with dependants? I'm afraid to tell you, it is entirely possible. We don't need to accept the 9-5 work till you're 65 and dying lifestyle bequeathed to us by our parents. That time has long past, let it go.
I am not into living the nomad life so that would not work for me. Working a 9 to 5 has worked for me. Got my first $100k by working for a start-up company. That was an easy $100k. My two homes are paid for. I have investments and multiple retirement plans. It's good to have options. One makes do what is best or most comfortable for one. I couldn't imagine moving frequently with my family & we still manage to enjoy life experiences. Again, it's great to have options.
@@jade-oh5wn Was an option that was opened and encouraged to me by my parents, but it never rubbed off. There is nothing that I would change to trade money and property for the experiences I've had, they are beyond price. Change is key. My children now enjoy an appreciation for other cultures and knowledge their peers know little about but perhaps that they read in a library book. But you have two properties bought and paid for, and multiple retirement plans. Why wait to enjoy life when your body is less able than in the present, I could never understand this choice so many make.
I live the same travel lifestyle with properties and a family..the problem isn't being tied to properties, those can easily become passive income. The problem is a 9-5 working to build someone else's dream. Working for yourself is they key. And it's not as difficult as it's made out to be.
Totally see the validity in this message. Big fan of Ramit. Something we've found from buying our home is that with a growing family we were able to secure FAR more LAND and HOME to enjoy than if we rented. (We're not minimalists FYI 😅)
That being said, we don't tout our home being an "investment". Simply a vessel for living, raising a family and creating lifelong memories for the next 10-20 years.
And that my friend is the true value of homeownership.
how did this comment get 450 likes? Your third sentence contradicts the first sentence. The guy is arguing AGAINST buying a home!
@@briantomory8399 becuase most of us dont agree with the video. Over 5 years of rent I paid 140k. I bought my home for 110k. with property taxes over 10 years I barely hit 140k in expenses including yard work etc. and taxes with expenses will continue to be cheaper for me over the next 50 years as rent goes up nearly 10% a year but my taxes have been 2-3% a year
where I will teach you got 6k a month compared to the 3k. I have no idea. my expenses are NO WHERE THAT HIGH.
Curious, how do you secure "FAR more LAND and HOME" if you did not take on huge debt from purchasing your home. Are you a first time home buyer or have people who can support you financially??
Do we need to buy a house if we don't have kids?
I bought a 3 family home in NY with a 3% down payment FHA loan, it was $925K, my mortgage, tax, ins is $4600/mo, I make $12-15K a month conservatively the house has gone up $100K. The house was newly renovated so minimal repairs if at all over the last 4 yrs. I am a high income earning so I save a ton on taxes via depreciation. I negotiated my closing costs down, got best price for ins, and have my real estate license so I can maximize tax deductions. I take the money it makes and invest in market and also bought my dream condo in South Beach Miami, which I also rent out and make a great return. When and if I sell this house in 20yrs I will get more than my money back and if I decide to pass it down to future children they can restart the depreciation cycle and will make a killing on the rents without a mortgage. No complaints here. To each their own.
I doubt your numbers.
$925k with FHA 3.5% down payment, your monthly payment will be over $7k. FACT!!!
So your solution is to rent forever? I bought a house in 2020 for $295K with $30K down and 3% interest. My mortgage is a manageable $1,585, and my house is now valued at $410K. It was one of the best decisions I ever made.
After running the numbers, and accounting for time value of money, what is your annualized ROR?
That same home at current interest rates is 2k a month. You locked in at a great time, covid era policy, those of us who didn't buy a few years ago will regret it, we may never see those sort of low rates again.
Yeah thats an example of getting near perfect timing with buying a property. Right now we almost couldnt be farther from the ideal time to buy a property... and besides if you compare buying a house at the ideal time to a stock at the ideal time i can obliterate your return from your property acquirement
Your home is only worth whatever someone else is willing to pay for it. Also, you forgot to add in taxes and insurance; both will never stop going up;)
@@rdw1968as with rent, and alll the limitations that comes with renting someone else's space.
The reason you don't own a house is because you can buy a house anytime you want since you are rich, thats all. If you depended on a job, or how the economy was doing, your mentality would be different. It is 2 different levels of purchasing power, hence, the outlook on things will be different. No matter how high prices go, you have the money today or next year regardless of the price because you have the cash.
I will! Really cool seeing all the positive comments here
actually...if you're worried about losing your job, then you definitely should NOT buy a house. A house is a liability and could prevent you from moving across the country to a better job in a better cost of living area. A home ties you down and reduces your ability to be flexible.
@@toptechhawaii8156 Not worried about loosing a job, but these millionaires want to make you think like them when they are clearly loaded and the variables in their life's equation and yours are different. What makes sense for them might not work for a poor person. Watch out listening to these people!.
@@toptechhawaii8156 Also, it is becoming more expensive to rent than to own. Rent is about the same for a 3 bed house than a 1 bedroom, in some states and they are making you pay for everyting, even the sewer. The reason people dont get into more houses is because they dont have a downpayment money.
@@toptechhawaii8156 A house is not a liability unless you owe more than it's worth.
I rented for 25 years. Then I had kids. The stability of not having to switch homes, keep consistent schools, build a steady community, etc., was worth spending the extra money. In 18 years my youngest will be out of the house and we are going to sell our 3700 sqft monstrosity and go back to renting a 1 bedroom. Owning a home is a pain in the ass.
yeah but you're making his point for him. its a pain in the ass... but you built equity
@@robi6317 Owning a home is a pain in the ass, and renting is a pain in the ass. If you own a home you might have the roof leak, if you rent you might get a shitty landlord (or a roof leak that he wont fix!) its tough to say which is easier, just different.
@@TonyCox1351but this isnt about "easy" this is about the best USE OF YOUR MONEY. and thats almost always buy vs rent. oh and ive had a roof leak for 20 yrs... hasnt been a pain so far ha ha just some buckets in the attic
@@robi6317 I cant speak for anything else but for me, making my life easy is a big part of my decision making. Some things arent worth the hassle even if they make you money.
Your contribution is Confusing : “ Owning a Home is a pain in the ass " yet you admit that you and your family BENEFITED from the Home Owner status. You Highlighted Stability, Not having a move the family etc. That doesn't sound like “ Pain " ...that sounds more like “ Pros outweighing the Cons " .
Financial decisions are never about money but how money/purchases makes you FEEL. If you feel happy renting - do it. If you feel happy buying (and you can...) do it. One millionaire may give an opinion that other millionaires may disagree with and vice versa - these Internets are littered with opinions and "facts" - don't replicate someone else's views - listen, learn, examine your life and make your own decisions.
Never Make Financial Decisions on Feelings!!!!
@@mamajojo2300 well put. Simple and effective
I think the reason a lot of our parents aspired to buy homes is so that they had a place to live rent free after retirement. The thought of paying rent when I no longer work is scary to me.
And how about the risk of paying real estate taxes, repairs etc..does that scare you?
@@tango4ever244 no because taxes and repairs is going to be lower then the market rent in my area. So I'm still going to be living cheaper then the same people renting in my neighborhood. by more then 50 percent.
Your comment is true. I agree! But housing is more complex for senior citizens. Every older adult is different.
Because conversely, a lot of senior citizens sell their house and rent in a 65+ community/or apartment because they can’t manage upkeep of a home. Or there is fear of falling down steps, loss of autonomy to repair things due to health issues, etc.
Many seniors citizens prefer to spend their ss check, pension, retirement on their climbing health care costs instead of thousands on home repairs. Or they want to spend their golden years traveling.
Thank. You!
I agree this was/is a generally held plan. Sadly I don't think it's as good as many seem to think it is. As the video mentions - it's about doing the math. If you could rent for 20-40 years at a savings of $3000+ a month - that you are then investing ON TOP OF what you are saving for retirement - then you'll likely be just fine renting during your retirement as well.
Of course if rent is similar to buying, and you can keep the other house induced costs down, it could be worthwhile to own.
Wish more young kids would hear this message. They are so worried about "never being able to buy a house"! I'm 64, have significant retirement accounts (two 401k accounts + roth IRA + public employee pension + generous SS) and am renting a 3BR/3BA home in a "resort" town, well-under market. In my many years I have owned, I have rented and I have been a landlord. Right now, I just rent. I have a ton of freedom and am continuing to put over 25% of my income into my employer sponsored 401k. Since 2018 I have lived in Marin County, Maui County and now live in Bend, OR. I'm looking to spend my retirement years in Italy. Or perhaps Mexico. Or maybe both!?! I lost a ton of money in the 2008 downturn due to bad advice from a real estate broker. Never again.
Beautiful job creating your Rich Life! Whether it's renting or owning, I simply want people to think carefully about these decisions
That's great to hear my only concern is if rent prices and house prices go up, aren't you susceptible to the market like people were from 2020 to 2023 meaning rent goes up but mortgage would stay comfy if you bought beforehand? That is my only worry I guess at the moment and verge of buying a house
retirement savings are not a guarantee either, that can go down just like real estate.
You don't know shit. Back in 2012. All 401k investors lost almost all their retirement money.
You don't understand the basics of owning a home, hold onto it through the bad times..
Owning my own home(s) is the best thing ever. I couldn't care less about marketing, the National Association of Realtors, investment, etc. There is no way that living in a rented home would give me the same feeling, satisfaction or pleasure. My home is my castle.
I completely agree with you.
I agree. Also, in most cases, mortgage payments don’t fluctuate much and there is an end to them. Rent, on the other hand, can go up every year and sometimes quite significantly. To some degree , your ability to stay in your home is in the hands of someone else. I like the feeling of control that owning gives me.
@@BeautybytracileiSo does property taxes. An fix mortgages can change as well. Seen it happen plenty of times. Hope you realize you don't own you're home in this country. It's an illusion. If you're still paying mortgage? You're still renting. Then you have to worry about keeping you're Job on the deal you wrote off. Higher Insurance as well. How many years are you In a lock lease ?
In other countries you actually own a home. But like everything else ? It can be taken from you. But not as common as U.S. Technology is driving everything to mobile. An so will everyone else. Agenda 2030. You won't own anything. People are the commodity. Black Rock, Vanguard? Other firms are buying property left an right. The boomer day generation is ending. Prepare !!
Amen
Totally agree, not to mention all rules we have to follow when renting a property.
I enjoy renting and not being tied down to a single home and all the issues that come along with it. So many people in the comments are complaining about landlords. I’ve never had any issue with a landlord in 20+ years, but if I had it would’ve been easy enough to move. I think it’s much more likely that you have a problematic neighbor that you have to deal with as a homeowner and/or a number of maintenance issues that cost money (and time) to repair. Happy that I don’t have to deal with that annoyance.
This is very complex and I have a lot to say, but I’m going to limit my comment to one thing…..make sure when you’re making this decision you think of your life after retirement and what housing costs you can afford when you’re old. If you own, housing costs go down drastically when you’re old.
Definitely. And be sure to factor in that a large portfolio can also pay your housing costs in perpetuity...and also what you'll do if you own a house but have very little in retirement saved up. In other words, run the numbers.
@@ramitsethiat what level of security?
@@TamunoOpuboCooksCookeyGam enough to buy a small place for the "level of security"
If one does not plan to move around traveling the world, the paid off house should still be quite alright. @@ramitsethi
@@ramitsethi Some of us have the financial discipline to live exactly how you describe. But please understand that so many Americans do not. Sad, but true. So the home equity which is pushed upon us works as sort of a forced savings account.
I’ve been a fan of Ramit’s work since he first popped up on UA-cam with Tim Ferriss maybe a decade ago. The podcast he does is something my wife and I started to enjoy in the last couple weeks, and I think this type of format will help spread this message to more people. Great job to the team!
Thank you
@@ramitsethi your a good guy Ramit although we differ on owning or renting.
How does becoming renters, help people?
The point is: PLAN to buy a home and KNOW what you're truly paying instead of jumping into a bad financial situation because of expectations, age, marriage, kids, etc.. My wife and I rent a single family home 3 bed/2 bath for under $2000. We're expecting our first child in January and while the pressure is coming from both sides of our family to buy a house, we have so much more opportunity by renting. If we bought a similar property, it would be well over double what we pay currently. And with the money that we would be spending on a mortgage, we can continue to save for our newborn, pay off student loans, invest in our 401ks and max out our roth IRAs and still have GUILT FREE spending every month.
That doesn't make sense, why would the owner rent it so cheaply?
@@zuzanazuscinova5209 not all landlords are greedy. Thats typical for this rural area, and the homes are older.
Great work. I love how conscious you're being.
@@zuzanazuscinova5209they probably live in a less expensive area. I’m from N Texas and I could rent a house with the same specs for that price or less. For $2k, it might even be renovated/up to current aesthetic standards. Less than $2k it’ll probably look like something from a 90s sitcom, but it’s still a house instead of an apartment.
@@TCL_808 Sounds like your current situation is ideal, and I'm sure you're aware that it could change at any time. Biggest downside to renting. If you have a contingency plan in case the landlord decides to sell/move in/die/etc, then it's all good. In any case, best of luck as new parents!
This has removed so much anxiety from my life. Felt like a failure for not owning a home. This gives me hope that I’ll be alright. I just have to keep investing.
Play don't forget to pay your property taxes every year which keep going up no matter what you paid for the house initially that's why a lot of people lose their houses they forget or they can't afford it because they're having a hard time finding work
I purchased a Brownstone in 2006 for $700,000 right before the 2008 market crash. Everyone said it was crazy especially in Bed Stuy, NYC. It is now worth $2.5 million.
TMI
I believe you but like he says, times are different now, thre are so many new green lwas compared to 2006, If you make 50k or less, buying a home might be a financial nightmare, depends on the situation.
Maybe dumb. When I was across the river in NJ in the 90s taxes were 4% of value PER YEAR. What would that be on a $2.5million house if you aren’t homesteaded. Not interested in those kind of taxes that’s why I pay 0.1% per year down south
I guess that makes you still crazy
taxes in nyc work different, not sure how they calculate but tax is less than 10k on the property, despite market value of 2.5 million @@hugoglenn9741
I agree with all of these points. My husband and I have always treated our home as a purchase, not an investment. For us, owning was the only way to go. We have enjoyed customizing our home to suit our needs, interests, and taste. We never look at these decisions as contributing to the value of the home, although some of our renovations have certainly increased the desirability of our home. But we never intend to sell. We have over-improved our home. We’re okay with that. However, I know too many people who don’t enjoy maintaining their home and put off critical maintenance that will lead to expensive repairs down the road. They would be so much better off renting-and with a lot fewer headaches. But they have bought into the myth that home ownership is the only smart decision.
@@rafaelw8115 We live in Georgia in the US.
@@BeautybytracileiI believe you missed his whole point, that even Included actual numbers. Buying a house Is not "Only" smart decision, Its actually a "dumb" decision die to the actual overall cost of ownership vs renting. Doesn't matter how you want to look at It, or how much you enjoy It...... Its still dumb costly. Owning a home Is a liability, not a asset.
@@frankiegunnz8066 I think you missed the point. Never did he say it was always a stupid decision-he even admitted that he would probably buy a home himself one day. He said you shouldn’t do it with the idea that it is always the best financial and investment decision. Which I agree with. I’ve lived in my home for 20 years. When we bought it, it was expensive and we could have rented more comfortably. However, now, rent for a comparable place would far exceed what we pay for our mortgage and associated costs of home owning. Plus, we wouldn’t have had the opportunity to customize our home. Buying a home can make sense if you plan to stay in the home long term and depending on the market, interest rates, etc., but it is not the only path to financial stability.
@@Beautybytracilei I Just saw the video again and I still believe In what I said. At the start of the video he saids, "I'm a multimillionaire and I don't own my house AND I don't Invest In any property". Then the part where he saids, "I might buy a house one day", well..... "might" and "one day" doesn't convince me that he will, then Immediately he follows that with "I know It will be a terrible financial decision". I don't know about you..... But none of those statements makes me want to think that Buying a house Is smart In any way forms or fashion. Just saying. Oh and I'm In Georgia too.
@@frankiegunnz8066I'm a multimillionaire. I own 10 houses and 12 apartments. I make 25k a month. I have a retired couple that I pay 1k a month and free rent. To collect rent and minor maintenance. We're all very happy.
I went semi-viral on Tiktok for talking about why I live in an apt as a millionaire (for most of the reasons Ramit listed in this video) and the real estate warriors tried to eat me up in the comments 😅 What I didn't have time to explain in that video is that my husband and I actually DO still own a house and it has been a HEADACHE.
Every single year for the past 5 years, we've had to do a 4-figure repair on the house... the water heater went out....the next year, it was the AC unit... then a pipe burst...this year we replaced all of the flooring throughout the house. (For reference, the home is about 20 years old. Everything was fine right up until year 15 of the house. We've owned it for about 10 years) These are things people don't account for when they give blanket advice to buy a home.
Anyway, we live in a luxury apartment now and rent out our house... I have a concierge, floor to ceiling windows, and I literally just called maintenance 3 days ago to fix our garbage disposal 😂 I MUCH PREFER being a renter and building my portfolio in other ways.
I think main advantage is the leverage in a house, but most people don’t really understand that they are leveraged
Owning a home is a headache for shure. A large family would probably be better off in a house but small families can be fine renting just the space you need not want😅
This is what depreciation is for, cash flow and a war chest. The tenants pay for all the repairs. Personal home it's on you.
Was that house in a development? Builders with tract homes cut corners and get low end stuff. Not surprising a water heater went out after 20 years, nor an AC unit or low end flooring. But the burst pipe, yikes. And @rafaelw8115, I think @RobertHasty meant that tenants ultimately pay for repairs with their rent. People pay rent to cover such costs, not just mortgage/insurance/taxes/opportunity/holding costs, but also repairs and maintenance. That's where the landlord gets the money to pay the repair person.
@TheMidasTouch11 If the rent you are charging for the house covers the cost of your apartment as well as continued maintenance on the house, then you have a good deal. If not, you're throwing money away.
Owning my own house outright was the single best financial decision i ever made.Peace of mind is priceless.
Not been answerable to someone else is worth the extra cost
As a homeowner who never had a mortgage - paid cash - I can attest that I haven't made a net dime from my house "investment". This is after accounting for the more than doubling of it's market value. You have to add in all the costs of ownership including the taxes, insurance, and maintenance. House ownership is often a pure luxury, not a wise financial move.
And if you're a smart single man, you'll consider renting my basement as a roommate and investing your money in the stock market.
Finally...wisdom
Seriously, how much is your tax and insurance??
Ain’t no way. Stop it.
@philmarsh7723 You don't seem to be acknowledging that if you hadn't purchased your house then you would have been renting, and you would have thrown all of that money away and had nothing in the end.
everytime I hear about all the hassles and cost my homeowner friends deal with all the time it makes me less and less enthusiastic about home ownership. the main issues with renting however is yearly increases in rent, and sometimes scummy/shady landlords. It's often hard to find nice places to rent as well depending on where you live. but since you're renting you can just leave and try to find something better!
It’s been my experience that scummy renters outpace scummy landlords 10 fold.
There are also a boat load of scummy/shady renters that can cost you many thousands of dollars. Its a two way street
good points buddy that is why I am looking to buy a cheap house (outside of the big cities) which solves some of the problems you mention.
Ramit is correct. Owning a home is not always better. I was a Realtor and would tell people this. Especially if you don’t have great credit. Remember then you’re paying the highest rates for everything. It also depends on what kind of market you’re in. I was a dedicated renter after my divorce. I only bought after I was 10 years out from retirement with excellent credit and I purchased BELOW MY MEANS - I didn’t max out what they said I could afford- and bought a new condo (less maintenance fees and time-which I appreciated the most about renting) after running the numbers and was sure it would cost me less to purchase over that time span. I’m glad I did. The renters market is absolutely insane right now. I definitely made the right decision. But it still wasn’t by a mile. RUN THE NUMBERS.
People with no credit history should NOT be punished by the system.
@@user-gz4ve8mw9lget a credit score improvement SELF gives you credit for on time rent/utilities
@@user-gz4ve8mw9l Now that government backed loans. FHA.. FANNIE MAE.. has decided not only use Experian/Equifax credit score will be higher..Transunion is being ignored.
That was a typo experian and Equifax are the only credit bureau's scores that will be considered when looking at a government-backed mortgage loan TransUnion. Will be deleted?
The property taxes will go up and so will insurance and SO will the rent.!!
Anyone saying they bought their house in "199x-20xx" and it's worth "X" amount is simply missing the point. You cannot do that like you could back then. In some areas yes, but most, no. I am in the Bay Area so im bias on the home buying debate lol if anything I want to buy/repair/flip, yet that comes with much risk as well. To each their own when it comes down to this amount of money and what/how to provide for one's self or especially, family. Good luck to all during this difficult time
There's something to be said about owning your own home versus renting. It's not just about money. There's a connection with the place you do life in. For some including myself, having my own space means more than just the financial bottom line. At the end of the day, you have one life to live. What you find valuable may differ from someone else. I value having my own place, and choose to make this a part of my life experience.
agreed
Yes there is, and I think he kinda mentions that at the end of the video. The only good reason to buy a house at current market is because you actually care about owning it and being able to do what you want with it.
Thats pretty well put into words, thank you.
Totally agreed! This guy might be owning hundreds of rentals lol. How in the world is paying someone else mortgage better than paying your own mortgage 🤷🏽♀️these you tubers honestly I have no words
Yeah i think i got lucky, as at first it didn't seem that way. Bought a house with now my Ex-Wife, she got a good paying job and let me have it. It ended up better for me as i have a 4bdrm, 3.5baths, 3k sq ft two car garage for my upcoming Porche Macan GTS lol, single life baby for me and my furries.
Here is a perspective from a European city (Prague): A nice 3 bedroom apartment (90m2) with a balcony in a nice central neighbourhood costs around 1400 USD to rent (including utilities and everything). An equivalent apartment to buy is roughly 500k USD. That means after putting 100k down, the mortgage payment (for 30 years, 5 years fixed interest rate) comes up to around 2300 USD + 300 USD or so for utilities, repair fund, etc. Even without considering most of the phanton costs mentioned in the video, it's currently close to 2x more expensive to buy than to rent.
Yes but a mortgage is locked for 30 years whereas rent goes up 10% every year. The more you know...
Not necessarily. My country has a legal limit of 15% per year. The landlord can't just increase the rent, because their costs are going up. The standard increase is 2-3% a year.
Additionally, the rent increase basis must be specified in the contract or the increase is illegal. There's three options: X euros, x % or tied to x index. If there is no mention of rent increase basis on the rent contract, it's illegal to raise the rent.
The standard contract is valid for an unspecified time, but the minimum period is 12 months.
America needs regulation to combat rent increases.
@@Lumpia_In_Texas Rent is definitely not going up by 10% per year over the long term. Based on Eurostat data, in Europe, rent prices have increased by 20% over the past decade (link to source below), that’s 2% per year. In the US, it’s between 30-40% per decade depending on the decade (source below). So, on average, rent is going up by something like 2-4% per year. So, it would take like 23 years for the rent to catch up to the mortgage payment.
So, for 23 years you would be able to invest the difference between rent and mortgage + the initial 100k into SP500 and appreciate those assets by something like 7% per year. That comes up to roughly 450k USD after 23 years.
In my oppinion, there are way more significant questions to consider than the 2-4% increase in rent. Buying makes you unable to move for roughly 10 years, unless you want to risk losing money. Someone can commit to 10+ years, someone may not be ready. Also, doubling housing prices by going from renting to owning may squeeze the budget for some people to the extent that they have to significantly reduce their lifestyle or even be forced to sell, again risking losing money.
So, I think that renting can be a very competitive option in terms of the financials (if you invest the difference) while offering you more flexibility. Having said that I also belive buying can be the right call, if you run the numbers, you can truly afford the doubling of your housing costs and can commit to 10+ years. And it also has perks like being able to do more home improvements.
So, the point is that both options should be considered, neither is always worse.
ec.europa.eu/eurostat/web/products-eurostat-news/w/ddn-20230705-3
ipropertymanagement.com/research/average-rent-by-year
But won’t the value of the apartment go up? I bought my house 3 years ago and it has already increased in value by 26%.
@@bluebirdtravelco Over the long term yes. If you can afford to pay 2600 USD for housing instead of 1400 USD and you stay in that flat for 30 years, the financials are leaning in favor of buying.
But short term, the price of the flat can go up or down, and things like taxes, realtor fees will significantly cut into your profit, or even make you lose money.
After reading these comments, I’m confident half of y’all didn’t watch the entire video lol. This is great advice for anyone in any location and of any income that is considering purchasing a home.
You don't have to watch the entire video to hear him start off the video by saying we're all lied to, and that if you run the numbers it's often the case renting is better lol. It's quite clear that it depends on your financial situation and many variables, and the way he started off the video is dishonest.
My house was 30,000 40 years ago and it’s been paid off for 25 years! It’s valued at $200,000 today. I love not having a house payment. We’ve made updates through the years but my husband does them all himself I wouldn’t have a rent payment if my life depended on it. I’ve been investing 600 a month since my home has been paid off.
Has anyone noticed that price of homes have doubled and tripled in the last 5 years? Coupled with higher interest rates, this is the worst time to buy.
I agree worst time to buy. Take this time and get debt free. Try and focus on only necessary needs and at some point houses will have to go down because otherwise we will have a crisis on our hands.
Most advices online are: "THIS is bad" and " THIS is good". Saying to look at your own situation and goals is just refreshing to me. Thank you.
( my boyfriend and I bought our house 13 years ago, way under what the bank was willing to give us. It was not a dream house, small, old and needed A LOT of love.)
I know about a dozen multi-millionaires on a personal level and every single one of them owns their own home AND they have massive portfolios of income producing properties. I have never met a rich renter. Sorry Ramit, but I don't agree with you on this. Also when you own your home you don't have to deal with crazy landlords entering when you are not there and going through your stuff like I had to experience.
Multi-millionaires also own more cashmere sweaters and eat more caviar. Correlation is not causation, otherwise you would simply buy a jet and be wealthy.
I've moved around a lot over the last 25 years in the military. I rented at the first few bases, then I had a male landlord walk in on me (female) unannounced. He lived over an hour away. He had time to call.
I bought at my next two duty stations and I am so ready to rent again. I hate that that landlord ruined it for me, but I will never rent from a small mom/pop type again. Gimme a management company as a buffer and sign me up.
There are plenty of multi-millionaires that rent. You probably haven’t met any because you’re too busy envying the dozen multi millionaires you know.
Lol I have toe hair that concerns me more than if someone on UA-cam thinks I'm rich
@@AK-47ISTHEWAYHow did pointing out that multi millionaires also rent go to me worshipping someone? I definitely don’t worship your doctor. He has you on the wrong meds.
Something Ramit failed to mention is that, although property taxes and insurance go up, mortgage payments on fixed mortgages do not. My parent’s house is worth $400k but they bought it 20+ years ago for between $100 and $150k. So their payment is ridiculously low, even lower than my tiny 720 sq. ft house I bought in 2022 for $175k. And since property taxes are reassessed at sale, if a house is not sold for a long period of time, the property taxes might be very low. I pay more taxes on my house than my parents do on theirs. This can make home owning a lot better deal in the long run but maybe not so great in the short run if you only keep your house a few years.
If you rent, rent will typically go up every year unless you have found a really good rent control deal. So in your comparison of rent vs. buying, keep in mind that the first year of home ownership is the worst that the home owning scenario will look. Every year that rent and inflation increases while your mortgage stays the same, owning the house will be a better deal.
Also, Ramit was selective with his year range for home appreciations. The average increase in the last 30 years has been closer to 5.5%. We can’t really expect prices to increase like they did in the past few years but I don’t think a 3% increase per year going forward is unreasonable to expect. But keep in mind that due to leverage, the return is even higher. If you have 20% equity and your house appreciates 3%, that’s actually a 15% rate of return (3% * 5 = 15% as 20% is 1/5), much better than you can expect from the S&Ps average.
My house is now assessed by Zillow to be worth $220k which seems reasonable based on the market. That’s a 25% increase from my $175k purchase price , which is at least a 125% return on my $35k down payment (I now owe less than $140k on a house worth $220k, so my equity went from $35k to more than $80k). I’d say that’s a pretty good deal.
What Ramit is right about is that we should be making the comparison. There are advantages to both renting and owning both financially and non-financially. I personally just love the idea of having my own place that I can do anything I want with and not having to share walls with neighbors in an apartment building. Non-financial factors like this should also be considered.
You forgot to factor in the hidden costs, closing costs, costs of repairs ECT.
Even in rent control zones, rent still goes up every year.
Great job explaining the alternative in detail so that people can see the benefits of owning a home financially.
@@d1e2l3r4a5y6 you will never own the house, it belongs to the government, you'll only be temporarily.
Can you explain your calculation of the 15% rate of return on a 20% equity that appreciates at 3%?
Maybe I'm wrong but my calculations show that if your house is worth $100, and you have a $20 equity (1/5) and it appreciates by 3% to $103, your equity (1/5) will now be $103/5 = $20.6. Now using rate of change formula, ((new value - old value) / (old value)) x 100; we get: ((20.6 - 20)/20) x 100 = 3%.
How in the world is your return on equity = 15%
I'm fairly confident of my calculations, but I may be wrong. I'm happy to see you challenge this explanation and convince me about your.
Just did the calculation again. The guy is right. The increase in equity belongs completely to the homeowner, and it's not shared with the lender.
When the house increases from $100 to $103, that $3 belongs solely to the owner of the house. He would have used $20 to make $23 which is a 15% increase.
Sorry, my bad.
My house is my luxury. I love it much better than renting. In my last apartment my landlord did not renew my lease. Having a house protects you from this situation.
@@AK-47ISTHEWAY whoa. That’s creepy. Did you confront him or her with the video of them doing this???
I mean it's called foreclosure if you don't make your payment so it technically the same
@@rafaelw8115 I was a good tenant. Paid on time with no problems. I mentioned it in my post to say that owning a home (which I now do) protects a person from a situation of lease non renewal and scrambling to find a place to live. Being a homeowner is hands down a better situation.
The psychological benefit of living in a paid off house that is renovated exactly to your taste is immesurable. I can loose my job, no problem. If I get sick, just chill. You can't live in an ETF or a stock.
@@gerritroe5 True, but that's not entirely accurate. Can you really lose your job no problem and still pay for taxes, insurance, routine and major unplanned maintenance? Also, that "psychological benefit" will quickly go away as you age. Once you're a certain age, your paid-off house can easily become a psychological burden. My father got to the point where he lost the ability to do and oversee maintenance, understand how expensive things were, and could not understand why his children could not immediately drop everything to run over and complete major repairs. My 85-year-old widowed sister has lost the ability to make an intelligent decision about anything regarding maintenance or insurance, and is totally dependent on others to make those decisions for her. For both of them, living in their own home caused them far far more stress and anxiety that simply living n a senior apartment.
You’re not wrong, but this is very dependent on the person’s: income, location, and how long they plan on staying in the home.
00:00 🏠 The American dream of owning a home is heavily marketed but might not align with financial reality; it's important to question its financial feasibility.
02:44 📈 Four myths about owning a home: Home prices don't always increase, house values doubling every decade is a misconception, leveraging a house can work for or against you, and tax deductions may not offset the true costs.
06:16 💰 Always run the numbers before buying: Consider the true cost of owning a house versus renting, including taxes, maintenance, and opportunity costs. Investing the difference might be more financially prudent in some cases.
09:30 🏡 Buying property as an investment requires careful planning, understanding numbers, and treating it as a business; housing costs can significantly impact financial stability.
11:33 🤔 Considerations before buying: Ask if living in the house for over a decade, managing housing costs below 28% of gross income, saving 20% for a down payment, being prepared for fluctuations in house value, and personal excitement about buying.
All good points and a lot of it can parallel stock market etc.
I bought a condo in Silicon Valley in 2010, when it was cheap. I put down 25%, and I was paying around $1400 in mortgage, HOA and taxes after all the deductions for it. The rent for similar property was $2500+. After 10 years the price went up by 2.5 times. I sold it and bought 3 houses in another state. I now own 5 houses in another state with no mortgage. I live in one of them, and rent 4 others. I don't work anymore.
Will be sharing this video instead of answering people's questions about why I don't want to buy from now on 💁🏾♀️🎉
Glad you enjoyed it! Thank you for watching and sharing
to each their own at the end of the day. one can rent and never own and money still leaving pockets monthly....one can buy and pay mortgage till its paid off then still pay taxes and insurance. money still leaving pockets monthly. so either way no1 is better off....UNLESS after the house is paid off it becomes a rental property earning good income then that beats renting. so in that regard a house purchase is better.
I've noticed a lot of people are resistant to his message because they've already bought property and have to justify in their mind that they made a good decision. He's not wrong that there is a lot of propaganda around purchasing homes. The number one best piece of advice he gave was to always run the numbers before making a financial decision
Exactly. The irrational resistance to simply running a few calculations on a $500,000+ purchase is hilarious (and revealing)
He’s not wrong but he’s not right either. Yes always run the numbers, but it’s not always about the numbers.
Take his example of eating out. The true costs of eating out far outweigh getting your groceries and cooking. And then investing the cost savings.
But we all know, everyone doesn’t want to have to cool. While there will always be opportunity costs, sometimes the cost of “eating out” is worth it because it’s an experience and memory as well.
Spot on.
@@Iamjoeycross That's analogous to what he said about buying a house though
Run the numbers and then run by the numbers. Many people pretend to make good choices by doing the math but then disregarding the result of their calculations.
Two points: For tax deductions, one also needs to forgo standard deduction (29k for filing jointly), so the net tax savings may be even smaller. Secondly, the biggest reason is flexibility. I can move out for a new job, or invest my time on my career or hobbies rather than spending my weekends on maintaining the home. Investing in yourself beats everything when one is young.
This is the biggest item in our current world with short-term jobs and two parent working households. Locking yourself down to a specific location severely limits your ability to change jobs, and selling a house and buying a new one burns 10% of the value of the house in transfer costs.
Buy a house because you really want to settle there, and really want to make it your own place. That's the only reason to buy. You're not saving money or putting your money in an "investment." It's a place to live and call your own- which is awesome in its own right.
@@CliftonHamilton I think you hit on an important perspective. Do you focus your life around maximizing your earning potential, or put down roots in a community where you have family ties, friends, overall the kind of support systems that can make your life easier and more enjoyable?
@abcd108923 Like another commenter you imply that you can just pick up and go from a rental. But most landlords require a 1 year lease and you either cannot break the lease early or you are penalized heavily for doing so. So unless you time things right you don't really have the flexibility you imply.
I am in CA, and typically for lease break the penalty is 2 months rent. Let say, your rent is 3k, so 6k as penalty. Companies pay a considerable relocation bonus to account for that (in the order of 20k or similar, though taxable), which is more than enough to compensate for penalties. Some landlords are also lenient enough for a lease transfer (with less charges) if I can supply a new tenant. However, I am talking about tech industry, which is considerably good paying in US.
if you might not want to stay in a house then sure dont buy yet, but thats not apples to oranges.
Great advice! So many people get caught up in these myths and don’t run the numbers. Both times when I was selling condos that I had lived in, people were saying that I was crazy for not holding onto them and renting them out. I told them “Did you run the math on this, cause I did, and selling and investing the proceeds in index funds is more financially advantageous than holding the property and renting it.” Also, many novice landlords completely underestimate the phantom costs of being a landlord (vacancies, repairs, hiring a property manager to deal with tenants once you tire of it). They just imagine all the equity 25 years in the future but forget about the opportunity cost of having it tied up in one illiquid asset.
If you don't own a property , The landlord can decide to raise rent $ 500 or more . If you paid rent for 20 years , you own nothing , but if you paid your Mortgage in 20 years , you''ll feel a lot better.
I don't find the "20 years" argument very convincing. The average homebuyer doesn't stay nearly that long. And why is it that you only hear people talking about 20-30 years in the future with their money when it comes to a house (not investing in the market)?
If you paid rent for 20 years and own nothing you are the problem, not renting. By investing your down payment and the difference between the mortgage cost and rent every month into an index fund, you will have more cash in 20 years than what the paid property is worth. So by spending the same money you greatly reduce your financial risk by diversifying your investment, you get the convenience of being able to move freely and you can just text your landlord if there is a problem. Buying is an expensive lifestyle choice you definitely can do but it’s certainly not the best decision from a purely financial point of view.
And you can move. Without any commissions. Without any mortgage recording tax. Without any closing fees.
@saske822 not true, index fund is unpredictable, say you're down the road of 20 years, and you have market crash when youre 70 years old and itll take long years to recover, you end up with nothing at the end, and you invested all 20 years, this high reliance on market investment is a ridiculous idea, market always fluctuates, can crash and take years to go up, you own 1 property, but its yours and u wont live on streets, or you owe 10,000 shares that became worthless when you hit 70 because of bad economy. You dont want to become a homeless at the end of your years. Do not place your faith into stock market
Always run the numbers for everything. When you buy a house, get the total of all the monthly payments and you’ll be surprised how much more expensive it is. Run the numbers for every loan, everything you finance, or every recurring payment…
For my area and time, purchasing my home was cheaper than renting it. In 2014, the purchase price boiled down to $56 per sq ft for an all brick home on over 2 acres. By putting a little extra toward the mortgage each month, it will be paid off in about 3 more years. I subscribe to debt free living.
Even a relatively maintenance free home needs big money over time. New roof $20k, new HVAC $5k, regravel driveway $3k, lawn maintenance $2k/yr, etc.
I'm a fan of renting because I like the flexibility to move for new job opportunities. But I think buying a home is best in the long run
The maintenance and repair costs of owning a home are a major concern for me
Also what about market fluctuations and depreciation if I buy a home.
Buying a house was the best thing. I was renting and the owners sent me a notice they going up $100 and I immediately bought a house when my lease ended. It's more stable to buy a house so you don't have to worry about landlords and evictions. Still taxes and insurance can increase the mortgage, however I feel more content knowing I own my home.
Because you are a woman.The main reason men end up with mortgages is because of thier wives. Women need to have fabulous lifestyles and show off to other women.
You are worried about $100 in rent. Taxes and insurance go up by 200-300 a month a year right now. Haha
Probably better to just buy some land or rent a condo at this point.
You can't get a mortgage to buy land as it is considered as non collateral.
During the first half of the mortgage, renting is immensely cheaper on the avg home (~$1000 per month in savings). However, if you can survive paying down the first 50%, it flips and rent will likely be more expensive (can refinance mortgage). That first decade is just insane! Arguably investing the savings by renting each month for a decade will give you the OPTION to buy a house almost cash… the mortgage interest eats all the appreciation, but taxes on investments don’t eat all you’re interest income. Owning only pays off if you can afford the first half of the amortization and the cost of owning per month because less than the cost of renting per month.
As a minimalist with no clutter, I bought an RV with cash, and I rent a lot in a campground for $600 a month in a nature setting. I love it. I can go anywhere I want. My car is paid for, and I have no debt. I'm retired and live on SS and interest from savings. ALL IS WELL. What I liked about home ownership was not being under anyone else's rules.
But the RV is small. Uncomfortable for someone who like spacious area.
the keyword "minimalist", learn to read and comprehend before jumping to comment @@mariakapwell9123
@@mariakapwell9123she literall said in the first line of her comment that she is a minimalist. I doubt a minimalist is concerned about having "more space". They wouldn't be called a minimalist if that were the case. Minimalists make use of the little space they have.
Yeah, my HOA never tells me what to do. That’s why I can’t park my boat in the driveway to do some small repairs. I can’t park my car in the street, I can have a shed. I have a rental and my tenants can do all those things.
That lifestyle isn’t for everyone though
I bought my home in April 2009 as a first time home buyer for $73,500 and just paid it off this past April 2023 (14 years) at the age of 41 and now it’s worth $240k. There is nothing like paying off and owning a home (an asset) and now being mortgage free! I have so much freedom now to save more and continue to live in it, use that money saved and buy a bigger house cash or close to and cash cow this home by renting it out and it’s all profit, etc…so personally for me buying was it, but I do understand timing is everything. I bought a home at a time they were giving them away after the 2008 crash so I benefited off of that heavily. It is a different time now so yes crunch the numbers because everything is circumstantial. I remember being a renter and I hated the fact that they go up on rent dramatically every year. I personally like having control so owning a home is for me bc the mortgage stays the same after you buy. Sure the taxes go up but so what. You will eventually own the home and you can use the extra money to put more towards the home to pay it off sooner like I did. you can’t own a rental, that’s for life! So you always have to worry about paying someone else for your housing
I love owning my own home. My friend bought 10 houses for his retirement income in 2007. I have had rentals for 20 years. He paid around 200k for each putting 10% down. In 2009 he told me he was letting them go back to the bank. I told him I wouldn't do it as there all rented who cares what there worth. Today there all worth more than 500k. No one knows the top or bottom of the market.
You did not listen and look at chiller’s economist done extensive research to show you prove to u real estate one hundred years from 1915 to 2015 only goes up 0.6% (after about 2.x% per year inflation so RE is only slightly better than this a bit) and you need to pay me another multimillionaire using mathematics prove to you with 200 years history as a track record to prove to you that S&P stock market gives the best return from 7 to 10% a year, way better than real estate, gold, silver oil, us treasuries and anything else, this is why the wood smartest richest investor genius Warren Buffett hates real estate and look at his action. He only invest more than 30 billion dollars to happy business like Coca-Cola, Dairy Queen fast food happy meal happy drink, banks and apple stocks Billy never invest more than $2 billion buy 2000 pound units if each worth 1 million with San Francisco, California rent control and all the law against you landlords, and during pandemic politician, make rent moratorium laws always help tenants to attack landlord so tenants do not have to pay rent three years and make eviction moratorium so you have to hire teams of lawyers babysit the tenants and suit them in court to evict them and get three years rent back that is waste of n yrs court is slow and painful time, this is not happy business so Warren buffer hates RE invest , again you need to pay me to educate you to make you smart and Warren Buffett real world investing genius why you do not listen to the genius in the world is Mr. Warren Buffett why you pay too much attention listen to too many UA-cam real estate agent get rich broker, bullshit scammer get rich ask you to subscribe only tell you the good side about real estate but it’s down all about mathematics science logic, and 100 to 200 years in America best return investment history always show you real estate is very slow growth and stock. Market is the best return better than oil, gold silver everything else you need to pay me to educate you or at search my rich friends video “ random teach sand floor RE scammer fake guru”! And don’t forget the most important in the world is laws, you got to know the real estate law and IRS tax law are all written against real estate, investors or landlords look at California, Oregon, New York State, or have a rent control laws and as I said above three years they make the rent moratorium and eviction moratorium loss always help the tenant never help the property, owner or landlord or investor. Do not have to pay three years property tax or insurance or mortgage three years so now you know who make those laws help whom now you need to pay me to educate you to make you smack and do not listen to too many suddenly get rich real estate UA-camr bullshit always tell you how to use real estate get rich in those couple years you look at 100 years as a track records! Because she is the basic housing. Everybody needs some politician always make loss to ensure help the tenants. Make sure everybody able to afford to a shelter that means your rents cannot go up tons of law against you as a landlord or investor. That’s why you have to pay million dollar to lunch with Warren Buffett to pick your brain and he said stop looking at the beautiful girls or big TALL HANDSOME (f u stupid liberals brainwashed the girl become stupid or stupefy the girls told them the best quality man to look for Mary or day is the tour. The height is most important. Why the conservative always asked to go always look at the power home soft problem or money, making skills like Mary ugly short alien, like poor back then Jack Ma with him then you later you become the first lady in the business field in China after he become richest man in China then everybody or don’t laughing at you in the beginning they said, how can you marry a ugly short alien with ugly short, alien, poor man what a shame but she doesn’t care she always believe always marry someone with the top ring and top money making or leadership skills always go with the brains don’t care about tall and handsome and big tall because those are the liberal control the media want girls to focus on the tall handsome big man lol stupefy them😂) or enjoy the crazy rich luxury expensive food bc all of these don’t matter, not worth $1 million you pay me, you pay me to lunch with me because you want to ask. Tough question how do you invest your hundred million dollar earned 10% a year so you earn $10 million in return so you spend $1 million lunch with me and get $10 million per year. Return is worth that investment lunch with me or hang out or be friends with the genius or better yet for a beautiful young virgin girls you can marry the rich, smart, honest the best quality man provide you so much that is smart, conservative, superwoman, smart girl, best choice in life that is the opposite of the liberal want to fight the girls ask them empowering woman families you can do whatever men can do so focus on Korea make your living do not reach and you do not meet a man so you become me old woman without baby no marriage all along by yourself even you make Mandala you don’t have any family or kids or husband to share. Life is so boring or your first egg. Suddenly PG&E lose power. Your egg will become bad so you crying and looking around even liberal top woman, Nancy Pelosi, Hillary, Clinton, and vice president Kamala, they all Mary rich man, smart man they never said feminist do not need men and focus on career do not get married have no children now you see they all marry, they becoming rich because they’re married to smart rich man that’s why every smart people hate liberal liars only follow the conservative they live in God the God give all the power to the man and created the first man name Adam and let the man control the universe, but God one man control the earth all can be boring, so God create woman using men’s body parts and told her that her job is to support. Their men is the main character female is a supporting actor only you be a good girl be a young virgin, with all other man only sleep with your future husband and help work with him, making him be successful, powerful and then your husband will give you all the power to you so you have to be a good girl not slipping around obey or at least cooperate with your man walk with your man make your man successful and then he will give you all the power, so God give all the power to men and men give the power to the beloved wife, or family woman only if she contribute so much help the man success,! Look at Nancy Pelosi, vice president Kamala Harris, Dianne Feinstein almost all this powerful woman do not work, hard, make their money and power by themselves. Mostly they marry the rich, smart man, and they love and respect their men, and they have children instead of feminists said we do not need men, we hate men ha ha you listen to those liberals doctrines you become stupid. I teach you more than how to become rich, and also teach you about invest A2Z including family, or how do universe works and make sure you must know the rental law and the IRS tax law are written against the investor because IRS tax law said it takes 27 1/2 to 39 years to slow to depreciate only part of the real estate total value that is the improvement part only the land value cannot depreciate so you lose about 25% to 40% begin with in real estate! Nobody is above the law, so you got to pay me to teach you the real estate, rental law, and IRS tax law has many secrets written against landlord only the wisdom man can see! Other dumb people cannot see😅
Remember, your mortgage free, but not tax free or opportunity cost free
@@tango4ever244 You'll have plenty of opportunities if you're house is free and clear. I am not as liquid as I'd like to be. But because of my rentals I have very good monthly income.
Friends said their NVDA, AMD, TESLA, AAPL, ETC GOOD STOCKS GO UP 3X OR 4X within last 3 yrs, YOUR TENANTS DID NOT PAY RENT 3+ YRS and how much your RENTAL INCOME EARN (if pay NO RENTS 3 YRS PLUS all RENTAL LAWS/EVICTION/RENT MORATORIUM LAWS ALL ARE WRITTEN AGAINST LL/RE INVESTORS, NOBODY IS ABOVE MR. LAWS, DID U WATCH "Random Teach, sand floor, RE FAKE GURU/CROOKS LIE TO STUPEFY YOU" video? b/c the REAL RICH SMART, HONEST PEOPLE USUALLY DO NOT WASTE TIME TO MAKE VIDEO TEACH OTHERS HOW TO GET RICH=why teach others be also rich/smart like THEMSELVES=U CREATE MORE COMPETITORS, only the FAKE RICH GURUS TEACH U HOW TO GET RICH THEN MILLIONS OF STUPID PPL SUBS AND THEY MAKE $M FROM YT ADVERTISE $... SO IT'S A WONDERFUL TO BORN TO BE A a)young, b)pretty, c)virgin; d)submissive/at least COOPERATIVE/SUPPORTIVE girl then u can marry the RICH, SMART, HONEST, FUNNY, KIND, THE BEST QUALITY HIGH VALUE MAN (H.V.M) b/c Asians 5k yrs Chinese wisdom men always TEACH THE H.V.M ALWAYS ONLY LOVE TO MARRY A)-d) esp virgin=nobody f her=so purify=give u no FAMILY SHAME so your kids also carry the purity saint-like virgin-Mary (Jesus's mom) bloodline... the worst is the girl u marry is sl*t or hoe 304 then ppl laugh at u behind said "u grad from MIT/YALE/STANFORD/UCB with PhD, the society TOP ELITE 10% smartest, richest, best H.V.M, we think u r on top class but sh*t, u give her best mansion/house, cars, best everything in life but she GIVES U A USED 100K ABUSED ENGINE with many big, tall, handsome ex-ex-ex bf f her 100k miles piston-action, many bf f her never have to buy a house/cars/gold, we don't want to marry that b*tch hoe, u knee down beg her marry u, your kids will also carry the sl*tty 304 hoe bloodline, what a SHAME, ppl are laughing behind you're so stupid marry someone many ex-bf f her for free that they do not WANT, that's why v girl is so important like BRUCE LEE'S MOVIE 'ENTER the dragon', his sister would even COMMIT SUICIDE (use glass cut herself) to keep her virginity instead of let white men try to rape her; Asian 5k yrs teaching the value of H.V.W is virginity top quality=v means SHE REJECTS ALL OTHER MEN & only sleep with future husband make him feel SO PROUD achieve the best other men CANNOT!"... Warren Buffett always admire life is WONDERFUL BORN TO BE A VIRGIN,YOUNG, BEAUTIFUL & also COOPERATIVE/SUBMISSIVE/SUPPORTIVE GAL (b/c most men esp American men now sings "American girls stay away from me from "American Beauty" movie, they marry OVERSEA gals w/ SUBMISSIVE/COOPERATIVE/OBEDIENT good v gal not f around like the USA gals or even worst today NEWS REPORTS ANOTHER USA WOMAN SUE NYC MAYOR 30 yrs ago sexual bs harassment like Donald Trump or Supreme court judge Kevinaugh 36 yrs LATER STILL RUIN MAN'S CAREER + life=USA has HATE-MAN CULTURE, it costs NOTHING FOR WOMAN RANDOMLY SUE MAN look at Johnny Deep or Bill Gates loss $100B when wife only say 1 sentence like "I file divorce #@!", U CANNOT 1)tell WIFE STOP BECOME FAT LIKE A BLOON LOL; 2)STAY V DON'T F AROUND UNTIL MARRY U; 3)THERE'S NO INSURANCE FOR MARRIAGE=80% of divorce was INITIATED 1ST BY WOMAN means 80% OF YOUR LIFE IS CONTROLLED BY WIFE so only STUPID, POOR, useless or low-self esteem SIMP MEN WOULD MARRY & forgive she-is-not-a-v u still ok & marry her?! Andrew Tate edu ppl that BIBLE SAID God Created 1st man Adam put all power in MAN TO CONTROL THE EARTH, NOT WOMAN, so man is the boss, why can u let woman boss around u stupid sims, no wonder gals don't look u up when u don't reject bad 304. So it's wonderful born to be a girl, pretty, young, virgin, cooperative so she can marry the rich, smart, honest, funny best H.V.M, but we're man & cannot marry rich, smart, HVM, so he has to SPEND $30B BUY APPLE STOCK BE PART OF GREAT MAN'S CO. when 2 co. merged or buy part of the superman's co. is similar to MARRIAGE=we've to SPEND $30B JUST BUY/OWN 10% OR so of superman's APPLE/BANKS/COKE STOCKS LIKE MARRY SUPERMAN GET RICH TOGETHER HAVE FOREVER LIFETIME DIVIDENDS AND PAY 0%-20% TAX vs R.E ALL RENTAL INCOME IS TAXED 2ND HIGHEST TAX like ordinary income=IRS TAX LAW SAID SO=U NEED TO PAY ME EDU U... THE REAL RICH DON'T TEACH OTHERS GET RICH FOR FREE, so either 1)BE A YOUNG, PRETTY, V, SUBMISSIVE/SUPPORTIVE/OBEDIENT/CONTRIBUTING good girl that ALMOST EVERY SMART RICH HONEST H.V.M wants=it's FREE TO MARRY THE RICH, marry rich or poor, smart or stupid it ALL COSTS THE SAME, so it's wonderful born to be a)-d) gals marry superman get his BEST DNA & superman pass LIFELONG LESSONS MENTORING & PASS HIS EMPIRE TO OFFSPRING=U CANNOT TAX SUPERMAN'S EDUCATION & BRAIN POWER (cannot tax BEST DNA GENES & SMART IQ ideas/mentor substances)... or 2)spend $30B or big $ buy portion of superman's biz=merger like marriage but it will cost u $big$ to JOIN SUPERMAN vs marry him FOR NEARLY FREE; 3)the REAL RICH ONLY TEACH THEIR OWN KIDS/WIFE or 4)PAID STUDENTS that's why u need to pay $ let the rich edu u or marry him so he only teaches his bloodline kids how to make $, pay LESS TAX=KEEP MORE $; invest in STOCKS IS BETTER THAN IN GOLD, SILVER, REAL ESTATE, BOND, A-Z with 200 yrs history superman mentor u change your stupid life... DO NOT LISTEN TO MANY 99% OF YT SCAMMERS TELL U RE ALWAYS GO UP OR LAST 15 YRS MAKE U RICH=WHATEVER GOES UP MUST COME DOWN (Wall street quote), later u loss $ become HOMELESS then REALIZE R.E. IS 1 OF THE WORST B/C ALL OTHER BIZ IS 100% DEPRECIATE 1-5 yrs vs 27.5-39 yrs TOO SLOW=PUNISH U PAY MORE TAX; 1yr write off=offset ALL INCOME=PAY LESS TAX, takes 39yrs DEPR means U CANNOT OFFSET MORE INCOME=U PAY MORE TAX=IRS TAX LAW PUNISH U INVEST IN R.E., u need to watch "random teach sand floor' or pay $ lunch w/ Buffett/we the real RICH,SMART HONEST IS RARE to find; In short: TENANTS DIDN'T PAY RENT 3+ YRS, THERE IS NO LAW help LL stop pay mortgage, property tax 3 yrs=so HOW MUCH YOUR RENTAL INCOME MAKE OR R.E. GOES UP 200% IF LOSS 3YRS OF RENT & NEED TO HIRE COSTLY LAWYER TO EVICT THEM IN COURT DRAG U 1-2 YRS? vs. invest in AMD, TESLA, NVIDA,FB 3 yrs go up to 400% without ANY WORK & sell stock pays only 0%-20% tax (most is 0% tax) so the IRS TAX LAW FAVORS THE STOCK INVESTOR as Buffett said He only pays 17% tax lower than LL b/c all RENTAL INCOME IS TAX AS ORDINARY INCOME=1 of HIGHEST tax! KNOW MR. LAWS=NOBODY IS ABOVE THE LAWS, even IRS TAX LAW & RENTAL LAWS ARE AGAINST LL. SUMMARY: R.E EVERY 19 YRS REPLACE NEW ROOF cost big$; every 8 yrs RE-PAINT house; every n yrs replace toilet, pipe leak, TORNADOR, FLOOD, SNOW DESTROY homes, bye stupid only look at last 5-15 yrs RE make u rich but ZOOM OUT 200 YRS RE ONLY GOES UP 2-3%/yr. STUPID CANNOT BE TAUGHT, WISDOM IS MORE IMPORTANT THAN MIT/YALE/HARVARD phD as Einstein said so "Imagination/WISDOM is more important than EDUCATION". U need to pay $ lunch w/ superman. History always REPEAT b/c stupid ppl won't listen & watch 2008 RE NINJA LOAN=SOME PPL SHOULDN'T BE R.E vs now EVERYBODY YT BS SAID BUY R.E., look at the KING OF R.E WOULD BE DONALD TRUMP BUT STILL TAKES 75 yrs to earn his $5B or so vs AMZON/TESLA/FB/GOOGLE/NVDA earn their world richest $100B within 15-25yrs & STOCK LTCG cap tain
I regret buying my house. It’s just a headache of maintenance. I’d only buy a house again if I build or have kids.
I live in a city that is dealing with huge housing and rental property shortages. I am so thankful my husband pushed me into buying our house (and we got lucky with it happening right before the pandemic and skyrocketing prices). With a child, I would never want to deal with the stress of housing insecurity, renovictions, etc, that I hear about today. However, I completely agree with the math and I used to be a huge proponent for the freedom of renting over owning. I simply see it now as paying for peace of mind. Property as investment, as speculation, should be stopped by governments. It’s leading to so much hardship for families and individuals. Housing is a necessity, not a luxury to make money off of…
I totally agree with you, specially the last part. I know that free market exist and so on.. But for the human being having a place to call home give so much security that I consider people who just speculate with properties and prices like criminals
RKF has a plan to stop property as an investment.
I agree … housing is a necessity and people should do what’s best for their family
These are all good points, and I think you minimized the impact homeowners spend on their house when they own it. Everyone I know (including us) spends much more on repainting, furniture, decorations, holiday lights, kitchen appliances, etc. If people were genuinely being honest with themselves on their frivolous home purchases, the lack of an ROI would be insane. However, I also believe getting someone to truly take all the saved money from rent vs. own and put it into stock/investments is hard to do. In other words, the $ 6k total payment when the house is owned vs $ 3k for rent should mean someone is putting $ 3k per month into investments, but most people end up not doing this and spending that money on extra vacations, nicer cars, restaurants, etc.
$3k/mo of my paychecks direct deposit into brokerage accounts that I've set to auto-invest or DCA (dollar cost average) daily into assets of my choice. It's become very easy and effortless with today's financial tech.
Yeah the mental discipline to save and invest the difference end up being difficult to most people.
I'm a real estate investor and I think one thing you left out was a house's ability to be converted to an investment. My general rule is I will only buy a house for myself if it would cashflow when I decide to move out. That way I don't have to ask myself if I plan on staying there for a decade.
Yeah sounds good until the tenant stops paying
Good when it's good. Bad when it's really bad. I met a couple that are millionaires in Cali in LA. They hated owning rental homes. Told me about the costs of fixing everything when it goes wrong. Now they work side jobs in their retirement age because mortgage
Stop turning homes into income/investment machines!
@@Enronauditor get a new tenant. problem solved.
Until they destroy the place before moving out@@crowne
I don't want to be at the mercy of landlords. I'll be buying rather than renting. Also, i want a home not just a house.
I was living in a house that I paid off, but after my divorce the ex got the paid off house. I then lived in an apartment $1625/month for 2.5 years until I saved enough and paid cash for my new home. I was going crazy with the loud neighbors upstairs. Sorry Ramit, I had to get back to living in a home again since my mental health is a priority.
Lol and I feel the opposite... my home I could hear everything the neighbors were doing. Now that I'm in an apt again, its actually much quieter and less stress. Mentally renting has been life saving.
@@discoveringhealthandfinanc8328and can’t forget about the high cost of fixing things at a house on the other hand when you rent they will fix it all.
At no cost 😃
If you have lousy neighbors in a house, you're stuck with them FOREVER. In an apartment, you can just move when you're lease it up, or maybe even legally terminate your lease early since your landlord violated the terms of the lease by not maintaining quiet on his property.
@@jasonjames4254you can sell and buy new one
It’s easier to escape bad neighbors when you’re renting.
If you do the math, owning a house is almost always a good idea if you plan on living in a city more than five years. Reason being, if you rent and then buy another home and use it as a rental, you end up paying extra management costs, whereas you do not incur these costs if you own a house.
what if you manage your self
Well for one, this doesn’t account for a vacant house. And two, most people don’t want to deal with management in the first place. A guaranteed way to make more money every year is to….work more hours. That doesn’t mean it’s worth it for a lot of people
but what if you rent and invest in index funds?
Lol it’s all fun to rent a property until you get americas worst tenants then your investment will become a money pit. In my opinion it’s a riskier investment than investing in dividend growth stocks while dividend creates an immediate passive income depending on how much is invested.
@@el_chilango2953 you're right, being a landlord can be a pretty wild experience. There are certainly far less stressful ways to make investment income.
You act like housing is a commodity. It SHOULDNT be. It's a place to live. It's your home. This is the crucial aspect making the comparison pretty much void for the majority of the middle class.
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Heard about his excellent trading expertise in CNBC news. Guess he's more popular the united state
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Love Ramit but this isn't one of his better takes. Ramit can afford housing insecurity at the end of his lease, not everyone can afford that luxury. Moving costs and rising rents are "phantom costs"of renting that he never talks about.... Renting means your landlord controls where you live and for how long.
What if it costs more to own than to rent (as in almost every city in America right now)? If we're talking about low incomes, why would you encourage them to pay more for something they obviously cannot afford?
Moving costs and rent increases are not phantom costs. They are at the forefront of a renter’s mind. And these costs today still pale in comparison to how much money you will spend buying a house, especially if you’re really weighing the cost of moving vs the amount your rent is increasing.
I’m blessed to buy a house for $269k and now valued for 1.8million plus. I have renters which give me additional income. I work full time and make good money yet I live below my means. I’m thankful to God and count my blessings always. I spend for shelter and food, not unnecessary material things or expensive vacations via credit card. It’s about priorities and a house is a priority
for me.
living below your means is the real way to be wealthy period.
700% value growth is abnormal, don’t give advice on outliers
I bet you wouldn't pay 1.8 million for your 250k house would you? Desperation has caused rampant stupidity.
@@McBreath_McD_Cheeseburgers 😂😂😂😭
I live in New Zealand. A middle income earner but own CB my own home. Owning a home has sentimental value in it, it’s not only a house. I feel safe to live in my own house, keep improving it - not big spending so that the value is going up and up. I don’t have the knowledge to invest in shares and feel great when my property value is on the rise
100%...when there is 0 rentals like the current climate here in NZ, then what?
@mandycampbell9835 Exactly! Best to own your own home, then be in the swarm of 100s of desperados fighting over 1 rental. It's ridiculous!
I have temporarily signed up for renting for 6 months after I sold my home and wanted to upsize. Hard to get in to a good area, later got one and very expensive for a basic house, moved in for 2 mths, paid shifting costs, arranged for Skytv and gas supply, then the landlord wants to sell the house! I have to shift all furniture out to a storage , costing more money and effort. Later I rushed and bought another house, shifting again, I had enough of shifting😂
Yeah if there is an issue with my home I fix it and not sit around and wait for someone else to. I look at owning a home as an investment as well. I couldn't stand giving $1,200-$1,500 to an apt or landlord every month, then in a year or two I have nothing to show for it but increasing costs or having to go through the hassle of moving. I think it is a choice of whatever fits your lifestyle and your goals.
There is no greater feelings than owing a house that's paid off. Nothing can give you that freedom knowing that you are living without a mortgage or rent and the taxes is so little.
It's also appreciated in value. Nice. Now that's a rich life. Freedom and house security.
Taxes in New York, Illinois, and California...Yikes!!! 😬 NO THANKS!!! 👍😉
@@la_baby_khalil7703that's why I'm trying to leave ny
You will paying property taxes until the day you die.
Best thing I ever did was buy my house cash when the market was down. Living is not that expsinve when you own what you have.
I live in Spain and we have lots of property here that we paid cash for, the taxes are incredibly low and the rental yields are roughly 30% a year for us as we were buying when they were very cheap. I personally wouldn't feel very secure not owning my home especially as I have a wife, 2 kids and a 3rd on the way, I will state however that our strategy is to buy, hold, rent and never sell.
What areas in Spain are of interest to you?
@@zeytelaloi we are in Alicante
A good strategy. People should not listen to this guy. Buy while you can.
It's a good strategy because you can afford it, which is basically all that Ramit is saying. Here in the US, people out down 5%, make the minimum payment, and are locked in that property for 30, sometimes now 40 years!! And of top of that they're broke because they have no money left after paying for all the house expenses. But they own a home ¯\_ʘ‿ʘ_/¯
Buying a home as an investment (and actually using it as an investment as you are doing) is very different than buying a home to live in thinking it's an investment that'll pay off in 30 years.
@@ttiller3744 there's a different between feeling obliged to buy real estate wherever you just happen to be based, and diligently searching for real estate opportunities across the world.
5:55 🤣🤣🤣 What tax deductions???!??? 🤣🤣🤣 The way he said it! 🤣🤣🤣
We happily own our home and raised our 6 children here. We’ve lived here 30 years and are going to live here even though we are now empty nesters! Our happy place.
What about your children, do they own their own homes? My parents own their own home, but my siblings and I have found it impossible to buy a home reasonably priced (no such thing in this era) let alone be approved by the bank for a home loan. There's a lot stacked against us, which is keeping us stuck in rentals. And .... NO, we will not buy a property together. We all have different tastes and lifestyles.
@@teeeteee000 Did you mean to write 'no such thing in this ERA', or AREA? I get that the new higher interest rates have greatly impacted US housing affordability. And overall the US has been under building housing in relation to demand. Are you in a high cost area?
@harlanjackson6112
Definitely "Era." This era or period in time for house affordability is astronomical in comparison to house prices back in the 1980s. I live in Auckland City in New Zealand, the most expensive city in this country. We were born and raised here in this city. I currently pay $2,920.00 a month on rent. My tenancy is coming up a year, and rent is increasing by $20, I'll be paying $3K a month from next month. We are saving aggressively towards our first home, but I feel in my heart we will be settling in Australia instead as the salaries there are much higher than what I get paid currently in NZ for my profession. I just can't fathom the house prices here. It's a shocker!
@@teeeteee000 You're a Kiwi? Would love to hear your thoughts on Jacinda Ardern. I learned about her from her appearances on US talk shows, but of course that may be skewed reality (much of US media is skewed either to the left or to the right, an unfortunate attempt to divide us citizens against one another along political party lines).
@harlanjackson6112 Yes, I'm a Kiwi. I can agree that US Media is heavily skewed, biased, and fake. I'm not sure what you want me to say because Jacinda Ardern is irrelevant now, she stepped down as Prime Minister in January this year. I had no issues with her. She ran the country the best she could in her 6 years. However, she was ridiculed and hated by many kiwis for her decisions during Covid, among many other things. We kiwis are quick to vote anyone out in the next elections if we don't see change. I guess Jacinda made the dash for the door because she knew the people of NZ lost faith in her. We have recently elected a new Prime Minister - Christopher Luxon. We will wait and see how well he does in his term, it's still early days.
My rent-controlled apartment costs $1,099 a month in an area where the median home cost is one *million.* It's amazing to me that for many years I bought the lie that paying rent was "throwing away money." Run the numbers indeed.
Key word, “Rent controlled” that is fake since without that rent control you would be paying 2-3 times that other people must pay with higher paying jobs.
@@jameswiggs9655 You're incorrectly assuming rent control is always income based. There are many places---including where I live---that it's city-wide. By choosing a less prestigious zip code literally one block from multi-million dollar homes I've gotten the best of both worlds and can let someone else deal with things like plumbing issues and roof repair.
I've had colleagues who commuted 2 to 3 hours every day so they could "own" a home with a massive mortgage, while I was able to put extra money into my employer's generous retirement matching program and enjoy biking to work, having money for interesting vacations, and TIME for family, friends, classes, cultural events, etc.
It doesn't mean they were wrong to buy houses in the suburbs if that's what makes them happy. But I'm glad in retrospect I made the choices I did and also stopped believing the lie that rent is "throwing money away." I've gotten MASSIVE value from renting.
I bought my townhome in 2017. I rent it out and live at home so I can save money. But when I decide to move back, my mortgage 2br 2bath home would still be cheaper than a 1 bedroom apartment in the same city.
The main dowside of renting is that you never know when the owner is going to kick your family out of the house.
Well, I guess we got lucky! We bought our house for LESS than our total annual gross income, we had 20% down, and the mortgage payment is about 13% of our net income. Our house doubled in value over 8 years and we've only needed to make minor repairs. It's not a house that many people would consider glamorous and we could have qualified for A LOT more house. But we love it and we don't need to bend over backwards to make ends meet!
I bought an apartment in 2007. Lost my job in 2009. Rented my apartment and moved to a different state. Few years my cash flow was negative by few hundred, but after refinancing in 2014, the cash flow is positive by few hundred. My mortgage is paid by tenants. If I calculate all the phantom cost, the apartment still generates 5% ROI. One of my friends was not lucky enough though. After losing his job, he had to hand the keys to banker.
You are not talking about the money you didn't make had you invested in Apple stock after the Iphone release.
Really great points brought out here! I literally can not afford to rent anything near what I live in currently so it’s a blessing to own my home 😅
I’m single and even I believe buying a house is the BEST decision I have ever made. I have ultimate freedom! to travel and rent the house out and make $1500 a month PROFIT even after the mortgage. I am also free to rent out rooms or convert to ADU. My location is in extremely high demand, I can do what I want to my place no upstairs neighbors etc. I pay less than what rents are here because rent goes up 300 dolllars every year. My mortgage does not. I have stability!!! I pay $1000 less than a small apartment per month. Also I may adopt one day. I have the beach the mountains an airport and everything within walking distance or a short drive of my house. Location location location. And how did I get here? I was homeless 4x saved my ass off I bought a house flipped a house and now this is my permanent place of residence. Great decision.
Notice how author couldnt find an argument against your statement of why you should have a house
Months ago I felt like I needed to reimagine the “American Dream.” We are a family of 3 living on my spouse’s family property. It’s an older home and smaller than I would like but it’s nice and comfortable. We have no mortgage/rent. Seeing all that’s going on in the housing market it makes it extremely difficult to give this up and get a new home for more space that we honestly don’t need.
Key words for me were '...no mortgage/rent'! I have had a similar experience living without that MAJOR expense. How freeing that feels financially. The amount of money I have saved as well. Make it count!🙏🏾💯
Get them kids to work and open up a custodial roth ira for each of them. Pronto
Does your spouse have any sisters? Move over. We can share that older home. 😂😂😂
im glad that this works out for you.
Put a lot of money towards retirement and hunker down while you can👍
1000% agree. I’ve sold homes and sold repairs for them… it’s a huge money pit (endless) and people make all types of excuses to continue to buy - staring with pride and laziness
good points, but rent can go up every year where a fixed mortgage can look like a steal especially near the end of the life of the loan. What you think someone that bought their house in 1994 is paying on a 30 year at the end of their loan in 2023? Probably a helluva lot less than anyone renting in 2023.
@@hepwo91222 this
I agree with your perspective. I also have to add that I find it weird that people consider their primary residence an "investment" it's not an investment, because even if you sell it and make a profit, you still need to find a place to stay and presumably housing in general would be up if you sold at a profit. I do have a question, which is, if renting is cheaper than owning, why do landlords exist and how do they make a profit? Does it work on the idea that they will be holding onto the home for a long time and therefore are able to take a loss for the first 10 years? I haven't heard anyone in real estate talk about this - I only hear discussions about outright profit (even if it is small). I am very curious to hear your perspective Ramit.
@@AK-47ISTHEWAY i am refering to the vast majority of homeowners who dont do that
Rents is cheaper. Renting doesn't have a property tax. Something major goes out as heating,roofing,
or plumbing. The owner is responsible for repairs. Renters
insurance is awhole lot cheaper
than home owners insurance.
And just where does the landlord get the money to pay all the cost? From the money tree in the backyard. Next time you rent you should go back there and pick a few dollars.
@@dueymiller3762or we can pick from our own money tree that may not be in the ground, maybe a pot, that grows from our business or other investments. You guys hate paying landlords but will buy groceries, clothes, cars, you name it from someone else who will use your money to pay their housing 😂 money has to flow for it to flow to you.
I think owning is more expensive than you make it out to be in this video. In the Phantom Cost section one other thing people don't really think about is interest. If you are in a house for < 10 years as you mentioned, not only are the large one time costs not amortized over a long period of time, but you've barely paid down any principle on the mortgage. And then when you sell 6% goes to the corrupt National Association of Realtors.
Isn't that tax even going to the gov?😊
I purchased my home early 2020 and currently have an estimated $160k in equity in the property. 2020 was also the first time in my life my salary moved north of six figures, so I invested a good chunk of my money in my roth ira, 401k and brokerage. Timing in the market definitely had a lot to do with the outcome, but the amount of equity I have gained in my home vs the amount ive put in is much much higher when compared to the ROI percentage for my retirement/brokerage accounts. Im happy I bought into the housing market when I did.
Congrats on your market timing. Most people don't realize that a personal home is really just an inflation adjusted retirement savings account with hefty maintenance fees, and therefore a net loss to your net worth. The banks sold people on the idea that a personal home is an investment, but it's not given you pay 2-3X the value over the term of the loan not to mention total cost of ownership.
You can make significant money in real estate as an investor, but as an owner (if you keep your house long enough) it's value will adjust and align with long-term inflation.
It's no different in savings! A penny you saved is just a penny at the end of the day!@@makeyourmark00
Fact owning a home and the stock market are neck and neck in profitability and have been for many many decades@@makeyourmark00
Is toop you can't have equity in a home you don't own
You cannot own equity in a home you don't own
I’ve always said that there’s benefits to both.
But in my experience I don’t regret it. I rent my old home out and rent the two bed rooms in my condo and live mostly for free while others are paying my mortgage while building equity.
Thief
Honestly I believe it’s a good opportunity for people to see and know both sides of renting and owning. Ultimately it is up to that person to know which one fits right for them. Neither are bad, so I believe both options should always be encouraged then just one. We need flexibility vs having a one sided mindset that one is better than the other. Thank you Ramit ❤
I already know all of this, but it is a great summary video to send to the next person that tells me I should buy a house so my rent doesn't go to waste.
We have 2 apts. A very cheap one in New York City and very expensive one just north of the city where kids go to school. Unmentioned part is how taxes (that in US influence quality of schools for kids) are killing long-term house ownership. The average tax rate for a modest house in the town upstate is around $20k. This means that when kids are college age (in our case in around 10 years), living in "high-tax but good school" area will get prohibitively expensive (kids will be out of local school so why pay the big taxes?) and you will be, in essence, forced to sell. In 10 years, on a $500k house, you've put in half a million dollars to closing, down-payment, taxes and interest on the mortgage, while only around $50k (!!!) to pay off your principal. So selling the house to move to lower tax area, will bring in only modest return.
I think the only drawback to "invest in the market instead of own house" model is people's (including mine) laziness about savings/investments vs forced to pay the mortgage every day.
If not for this "little" caveat, in 10 years i would have 2x the money from investing in the market vs selling the house.
I'm sure everyone's situation is different but real estate has done very well for me bought my first house at 23 years old in the early 2000s now I have several multi-family properties that I purchased for mid $200,000 and are now upwards of $900,000 each and 45 years old now still work full time. First time coming across this channel unfortunately doesn't sound like something I could subscribe. Thank God there was no internet back when I was purchasing real estate because a video like this would have deterred me from investing in the one thing that's actually going to give me an early retirement.
Owning a house near me (outside the city, even 1-2 hour on train out of the city) is 600k-800k + stamp effing duty. RENTING is actually CHEAPER than morgage payments when you put a 30% deposit down. Honestly. Its so crazy. It's cheaper to rent and put the rest of the money in the market. Unfortunately thats the reality for London and the commuter towns around here. It doesn't help that most companies are based in London and require working from office 5x a week post-pandemic (Banks and Pharma). There's no way we can move FURTHER away and still work. Jobs outside London, also pays substantially less to the point that you're still better off paying HIGH in/around London and having a London salary. We'd love to buy, but with our low-6 figure salary and how we do NOT want to be living a shitty life and feeling like we're just above water with morgage payments (we have friends like that and they're on a mid-6 figure salary). It's no life, so we choose to rent until everything aligns for us somehow (being able to WFH? Better transport links created? Higher salary + moving to outskirts). It's not an investment since we will be living in it.