Is owning a home mostly a bad thing?

[trefoil]

Taxes make the diff, if you make a lot of money. We were renting a house, but decided to buy when the landlady wanted to raise it by 10%. You let the owner start getting away with stuff like that, and if you know about compounding, you know you're going to get killed.
So, we bought.
Just based on what I was paying in rent at the time, once you take out the tax deductions, my monthly payment is less than what it was at that time, which was more than 10 years ago. What's missing here is one simple truth: your monthly payment doesn't go up much, assuming of course that property taxes and home insurance are only a small part of the monthly bill. Obviously, if you refi at a good time you can make the payment even smaller.
The extra expenses? Obviously, those can get paid for out of the savings on what would have gone for increased rent. The key here is to buy something that's solid in the first place, so that you can keep the expenses down during the first 5 or 10 years. We didn't have to do anything really major like replace the roof or redo the plumbing during that period since the house was sound. If you can manage that, and you make enough money to make the tax deductions worthwhile, it's a good deal. If not, not.

 

[Vinny1]

Nothing beats owning a home. I couldn't stand living in an apartment years ago, piled on top of one another. The freedom that a home provides is priceless. You can blast the music if you want, you can enjoy your yard, have your own pool, park in your own driveway, and have so much more space.

When I lived in an apartment 6 years ago, you couldn't blast the music at 2am, because you would disturb your neighbors. There was this big fat girl that lived below us and she would always complain that we were making too much noise just because we were walking and the floors squeaked. Did she expect us to fly around the apartment. She once banged her broom on our floor (her ceiling) because I turned over on the bed, the bed squeaked, and she heard the bed squeak, and that was too much noise for her. She was insane.

Once, this drunk guy who we didn't even know started knocking on our door at 2am asking if we want to smoke weed with him.

Also, our across the hall neighbors had their door kicked in by their roommate, because they didn't want to let him in for some reason.

It was definitely great to move into a home.

 

[Buzzed]

To me, it all comes down to taxes. If I can keep my property taxes below $1,000 a year, owning a home would be worth it.

For that reason, I think my dream home would be one out in the middle of nowhere. A pot hole and weed filled driveway. The ugliest siding in existence. The outside paint job patches of random colors, making sure to "accidently" get paint on the windows. Install some fake panels of installation over the siding to make it look like the house is not completed. Scaffalding. Paint fake cracks and rust stains into the foundation. Throw some bleach on the front lawn. Get a rusted out pos junker, remove the wheels and place it on cinderblocks. Smear a mixture of soot, gravel, and woodchips on my roof to make it look like it is rotting.

A valuable home to me is one that is worth less. That should keep the taxes low.

 

[jack8031]

I own 14 houses and collect over 110k in rent .Are you guys getting out of your mind,owning property is the best thing I did in my life.If you do not know how to buy a house is diffrent story.

 

[Went Fishing]

Great thread, addresses the whole meaning of life; trying to find the most PROFITABLE and ECONOMICAL place to keep my stuff.

http://www.youtube.com/watch?v=MvgN5gCuLac

<*)))><

 

[Ghost of Cutten]

The vast majority of most people's net worth comes from appreciation on their homes over the years. So if renting costs equal owning costs then you basically get free CPI appreciation over the long-term. 3-4% returns per annum on 3-4 fold leverage, tax-free, is very nice. Whereas if you are a renter than in 20 years you'll be paying double, triple what you pay now. If you are an owner you will be almost paid off in 20 years.

You don't have security as a renter, a landlord can throw you out with 1-2 month's notice and you have all the hassle of moving, paying for furniture to be transported, redirecting mail, updating all official records etc, hoping your new landlord is good and not an asshole etc.

You cannot make property improvements or customisation as a renter, even owning furniture is difficult.

Basically, there are downsides to both and upsides to both. Which makes sense depends on the relative costs and benefits on either side. At a certain price, renting becomes clearly better (e.g. when you can rent for 800 what you would be paying 2k to own), and at another price, owning is clearly better (e.g. if cost to own is 1k and cost to rent is 1200). In between those prices, it is down to individual circumstances. If you are going to move every 2-3 years then owning is a bad idea (unless you are talking about owning a rental, which is a good plan for serial relocaters).

Altucher is telling us owning is bad, after a huge real estate bust. Talk about closing the stable door after the horse has bolted. Where was he in 2005-2007?

 

[Larson]

Quote from Vinny1:

Nothing beats owning a home. I couldn't stand living in an apartment years ago, piled on top of one another. The freedom that a home provides is priceless. You can blast the music if you want, you can enjoy your yard, have your own pool, park in your own driveway, and have so much more space.

When I lived in an apartment 6 years ago, you couldn't blast the music at 2am, because you would disturb your neighbors. There was this big fat girl that lived below us and she would always complain that we were making too much noise just because we were walking and the floors squeaked. Did she expect us to fly around the apartment. She once banged her broom on our floor (her ceiling) because I turned over on the bed, the bed squeaked, and she heard the bed squeak, and that was too much noise for her. She was insane.

Once, this drunk guy who we didn't even know started knocking on our door at 2am asking if we want to smoke weed with him.

Also, our across the hall neighbors had their door kicked in by their roommate, because they didn't want to let him in for some reason.

It was definitely great to move into a home.

Yes, it represents freedom as you have no landlord rules. You still have to pay the mortgage though, and if it is paid for, taxes still must be paid. So an individual never really owns his home free and clear.

 

[newguy05]

What a stupid thread, real estate ownership is just like any other investment, if you are good you make money if you are a retard you lose money.

It all depends on WHAT and WHEN you buy, just like stocks, bonds, anything...

There are advantages real estate has over others though, for example leverage: show me any other investment (other than shady currency) that let you use 1:10 leverage AND you dont get liquidated still paying your fixed 4% interest even if the underlying takes a 20% nosedive. On top of tax savings if primary residence.

But it still all depends on what you buy, if you buy a million dollar mansion in the middle of arizona desert, nothing can save you...

 

[Ghost of Cutten]

Quote from Bolts:

I've always thought it was funny how home owners talk about "building equity" as though the value was materializing out of thin air. LOL. I guess it's sort of a way to trick themselves into saving. Some people need that I suppose.

Paying off debt is building equity, clearly. Pretty basic financial concept. Earn 1k, pay off 1k debt, save yourself the interest payment. Do that enough times and you own a home free and clear. The value is materializing out of paying down debt, and eventually having no repayment and no rental costs. How is that a "trick"?

 

[Ghost of Cutten]

Quote from Chicago_CTA:

Your home is a LIABILITY, not an asset.
An asset provides a positive income stream; a liability provides a negative income stream.

I sold my condo in 2007 because it seemed very expensive and have rented units in luxury condos every since. I am CERTAIN my rent payments DO NOT cover hte mortgage, $400 monthly HOA, taxes, etc....especially here in Chicago.

Real estate is an asset in almost all cases. If you buy a 250k house with cash, you get an income stream from rents net of ownership costs; and you can resell the house, it is worth something. Assets are worth something, liabilities have negative worth. Yes you might not get what you paid, but the same is true of all assets that fluctuate in price. That doesn't make it a liability. Unless you can find a house with toxic waste or some other true liability that exceeds the value of the building and the land, then a home is an asset not a liability.

You are confusing negative *cashflow* due to your aggressive financing, with negative yield from the asset. A negative yield condo would be one where maintenance, HOA and taxes were higher than the market rent. Your personal financial position or mortgage is irrelevant to assessing the market value or rental income from a property.

For luxury real estate, renting is often cheap relative to buying, that is true. That is because richer people are prepared to pay a premium for the prestige and wealth-preservation/inflation-hedging properties of blue chip prime real estate. That means you can enjoy the luxuries of good location and condition at a relatively low cost as a high-end renter. Just don't forget that as a renter you are net short real estate, which is a necessity. Perhaps pick up a good value, decent middle-class area house somewhere nice and rent it out, so in 20 years it's paid off and you can retire there free and clear.