Is owning a home mostly a bad thing?

[Ghost of Cutten]

Quote from 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...

Owning your home is not an investment. It is a living expense and a necessity, an asset with useful and necessary attributes that also happens to have some financial aspects. You have a requirement for shelter, and probably a requirement for a certain amount of space, certain level of decor, and locational factors like low crime, nice amenities, ok neighbours etc, or seclusion, nice countryside, decent weather and so on.

This is not about real estate investing, being a landlord, making money etc. It's about having to pay for a roof over your head, and chosing a location to live, and whether it is better to do that by purchasing a home or renting it.

There are far more considerations than merely the financial angle. If it was all about finances then you would simply buy a trailer or a log cabin in the middle of nowhere for peanuts, and invest the surplus cash in the markets.

 

[peilthetraveler]

Quote from Vinny1:

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.

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Hahaha....the exact same thing happened to me. I had an old lady living downstairs and she LOVED to use that broom handle to bang on the ceiling. She must have had superman hearing because any little sound and she was banging that broom. I still remember one time I was watching TV at a very very quiet level. It was so quiet I could barely understand what the people were saying on tv (I kept it quiet because it was 2am) Well the old woman with superman hearing thought the sound was too loud for her and started banging her broom which at 2am scared the shit out of me because her broom banging was so loud. After a while I learned to start jumping up and down on the floor so she could know what real noise was. When I started doing that, I didnt hear the broom banging so much as she knew i was goingto make so much more noise if she harrased me.

 

[Bolts]

Quote from Ghost of Cutten:

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"?

Because you can save 1k without borrowing and without paying the interest. Unless you blow your 1k on cheap consumer products, then you might need to "trick" yourself into having the self-control to save the 1k instead. The value isn't "materializing", LOL. For most people, its the hard-earned money they make at their job.

 

[kashking]

I keep hearing the argument not to buy because of all the extra costs. Costs like property taxes, interest and maintenance.

The truth is when you rent you don't get out of these! The costs are simply passed to you by your landlord who is a business owner. A landlord will charge you all their costs+ the profit they want to make.

For example, your AC breaks. Your Landlord will need to buy the parts to fix it. Then a salaried employee of a property management company comes out to fix the unit. So the property management company has to pay someone and pay for parts. You think they eat that? no way. It's factored into your rent. Renters think " hey, I get free repairs". They aren't free.

My dad used to rent an apartment. He got a note from the landlord regretting to inform him that the rent was going up due to an increase in property taxes. Those taxes were being passed along to him all along.

This idea (which I see a lot) that renters are getting free stuff while their landlord is the sucker paying all the bills is false!

 

[Trader666]

So you think that paying down the landlord's mortgage with rent money you'll never see a dime of again is a better idea?

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.

 

[JustDoingIt]

Now we see how so many traders can have the same system and get totally different results. There is a big difference between a primary residence and investment property. I clearly stated that a primary residence is not an asset nor should it be viewed as such. I wouldn't even consider a primary residence when calculating net worth...especially in the USA. When we have these types of broad reaching, all encompassing debates we are speaking purely from the law of averages. Hell I owned rental property in South Carolina while I was renting a condo in Georgia. The average family moves every 7 yrs, the average family will never own a home free and clear, and the average person doesn't realize that he is just average. Nothing is as common as the desire to be remarkable. Bubbles will exist until the ratio of wolves to sheep gets out of proportion. That is the real reason that Congress started their home ownership initiatives for the poor and the minorities.

 

[peilthetraveler]

Quote from Bolts:

Because you can save 1k without borrowing and without paying the interest. Unless you blow your 1k on cheap consumer products, then you might need to "trick" yourself into having the self-control to save the 1k instead. The value isn't "materializing", LOL. For most people, its the hard-earned money they make at their job.

No you cant save 1k without borrowing. You still need $1k to pay your rent. How can you save that if you have to pay it to your landlord every month...meanwhile the homeowner who has a $1k payment its broken down like this (assuming you have a pretty new mortgage) $250 for principal, $500 for interest, $250 for taxes/insurance.

So to break it down...the renter loses $1000 every month that he will never see again. The homeowner loses $750 every month that he will never see again. (and of course over time, that interest payment will be less and less) In 15 years, perhaps the homeowner is only paying $300 per month in interest and getting $450 per month paying towards the principal. Meanwhile the renter has had 15 yearly rent increases and is likely paying $2k per month now. Homeowner is really only losing $550 per month that he will never see again, while the renter is losing $2,000 per month that he will never see again. Homeowner now can save $1,450 per month 15 years later to invest, or pay down the house. Renter can only invest what he can save AFTER he pays $2,000 in rent.

 

[newguy05]

Quote from Ghost of Cutten:

Owning your home is not an investment. It is a living expense and a necessity, an asset with useful and necessary attributes that also happens to have some financial aspects. You have a requirement for shelter, and probably a requirement for a certain amount of space, certain level of decor, and locational factors like low crime, nice amenities, ok neighbours etc, or seclusion, nice countryside, decent weather and so on.

This is not about real estate investing, being a landlord, making money etc. It's about having to pay for a roof over your head, and chosing a location to live, and whether it is better to do that by purchasing a home or renting it.

There are far more considerations than merely the financial angle. If it was all about finances then you would simply buy a trailer or a log cabin in the middle of nowhere for peanuts, and invest the surplus cash in the markets.

what are you talking about, of course it's an investment, or are you "emotionally attached" to your house and give it names?

shelter is a basic need, but what does that have to do with anything. You could easily rent a place. By buying you are making an investment.

Tell me this, if you know a house will drop 20% over the next 5 years, but you really like it, will you still buy? If the answer is no then congrats you are treating it as an investment, if the answer is yes then i guess you are just stupid or got money to burn.

 

[Ghost of Cutten]

Quote from Bolts:

Because you can save 1k without borrowing and without paying the interest. Unless you blow your 1k on cheap consumer products, then you might need to "trick" yourself into having the self-control to save the 1k instead. The value isn't "materializing", LOL. For most people, its the hard-earned money they make at their job.

But 1k in the bank won't get you a roof over your head. Let's say in 30 years you save up 300k. Someone else got a house and a mortgage in year 1, and over 30 years spent 300k to pay it all off. At year 30 they own a house free and clear by paying off the debt. At year 30 you own a couple of items of furniture and a one-way ticket to palookaville, while your landlord has laughed all the way to the bank.

 

[Ghost of Cutten]

Quote from newguy05:

what are you talking about, of course it's an investment, or are you "emotionally attached" to your house and give it names?

shelter is a basic need, but what does that have to do with anything. You could easily rent a place. By buying you are making an investment.

Tell me this, if you know a house will drop 20% over the next 5 years, but you really like it, will you still buy? If the answer is no then congrats you are treating it as an investment, if the answer is yes then i guess you are just stupid or got money to burn.

An investment is something that you acquire purely to turn X amount of dollars into >X. It has no lifestyle value or use value apart from its financial return.

Ownership of your residence has considerable use value, as I explained, for example being able to do it up how you want, make alterations, decorate, know you won't get evicted by a landlord, being able to keep who you want on the property (e.g. pets, sharers etc). So it is not an investment in the same way that a stock, bond, gold etc are investments.

A house is a mixture of necessity (shelter), luxury (customising and enjoying your residence to your desires), and investment. Thinking of it purely in investment terms is naive.

If I knew a house was going to fall 20% in value, but I would get sufficient benefit from ownership over those years to justify that loss, then yes of course I would buy it. Just like I would buy a new car that will fall 30% in the first year. There is nothing "stupid" about spending money to improve your quality of life, only an idiot or a broke loser would think that.

Having to answer to a landlord, put up with his shitty taste in furniture and decorations, and to have the risk of having to move in a hurry, is undesirable to me and to most people who aren't financially hard up. Many people are willing to pay a premium to avoid those downsides, and to have more freedom and control over their homes.