> Then Irving would either walk back home to his wife and two children
What the... he'd leave his wife at home with the kids while he hung out all day at the pool with "magnificent-looking young women, full of theatrical drive" and eat all his meals at the hotel?
The article mentions that he'd go home for dinner, up until his wife died. The hotel pool was apparently also where he did his "job": being a deal-making middleman for a 2% cut, per a later description in the article.
His job, or at least his former jobs, paid well enough to have a home in Beverly Hills, drive a gold lexus, and wear beautiful suits every day.
So they weren't necessarily estranged - he just worked long days every day that afforded a very nice lifestyle.
Owning a home is always good no matter what the finance influencers tell you. In fact, earlier the better. Its not even the buying vs renting thing, renting is bad, you don't get to own anything at the end of the journey, and often the kind of things you have to put up with to save rent, or avoid getting homeless in case of of a job loss or other life crisis is just worth your mental health. Most of your life is spent paying up for the landlords ownership.
People often arrive at the scene when most of the options are gone years back, and they wish they bought at the price that existed back then. Get disappointed and lawyer through the arguments to justify renting a home.
Assuming fixed rate mortgage, in most places the rate at which rent can grow is faster than rate of property taxes+insurance can grow. So the cost of ownership will generally be cheaper than renting. Not to mention increasing equity in an asset with time
Not in the US, but I live in a CoL place in Europe and when I bought my first apartment I was baffled by the amount of money I was saving every month. My previous rent was about the same as my mortgage, but 40% of my mortgage was going down to reduce the principal. And I only had 15% downpayment.
Bought the apartment in 2018, sold in 2024 (close to the bottom of the local-market slump). Still profited ~10% (before fees) compared to buying price. All that principal amortization payed for the downpayment (and some) of my much bigger current apartment.
Ye it is strange. I mean to some extent the lesser service you get explains it. But shady land lords does not provide the required services and still charge a premium for rent.
To some extent the apartment board might be to optimistic on future maintenance costs too.
No, it is just the messed up rental market in Stockholm. Government and HOA controls don't let people be landlords for more than 2 years of a time and require you to ask permission from the HOA and to have a reason.
The actual apartment I was renting was pretty well kept though, proper cleaning, air ventilation inspections, very good laundry room, fully renovated less than 10 years before I moved in. The apartment I bought however was similar conditions.
It is possible to get a first-hand rental contract but it takes years upon years and you can never get something in the location you want.
Yes for first-hand contracts, which are impossible to get. So your options if you are not born into the first-hand contract queue (people put their 5 year old children on the queue) is to rent second-hand which was what I was doing.
The HOAs don't let you be a landlord and rent out your apartment for more than 2 years at a time, and you need to have a reason like you are moving to another country for studies.
Technically when you buy an apartment in Sweden you are (almost always) not actually buying the apartment, but rather just a stake in the HOA corporation with the attached right to live in the apartment. So the HOA has last say about who can live in the apartment (and what renovations you can do).
It is all very complicated and specific to Sweden, but this HOA corporation thing avoids a lot of fees/taxes when selling/buying the apartment (which is a BIG deal, stamp tax alone is 4% of the asset last I heard). But you get these downsides as well.
Detached houses usually don't have HOAs, those you can rent out more freely. However they are not exactly affordable housing, especially considering heating costs of detached houses triple during winter (maybe they only double _if_ you have modern heat pumps). Banks won't lend you money to buy real state with the intent to rent out either.
Renting second-hand means 'subletting'? Or something else?
> It is all very complicated and specific to Sweden, but this HOA corporation thing avoids a lot of fees/taxes when selling/buying the apartment (which is a BIG deal, stamp tax alone is 4% of the asset last I heard). But you get these downsides as well.
Yes, routing around regulation and taxes often gets pretty complicated.
Here in Singapore we don't have rent control, but stamp duty can also be really high (especially for foreigners). Fortunately, we don't have capital gains taxes, so if you aren't particularly tied to owner-occupied housing, you can instead invest in the stock market and use the returns to pay rent.
> Renting second-hand means 'subletting'? Or something else?
Renting second-hand means renting outside of the rent-controlled system. Either from someone who owns the apartment (or rather a stake in the HOA corporation) or someone who has a first-hand (rent-controlled) contract.
The HOA corporation thing is actually really nice most of the time, the two big downsides is that you can't do major renovations or renting your apartment without asking permission.
The paperwork to buy/sell real estate is really minimal if you buy through a HOA, also makes mortgages paperwork a lot easier. HOAs are regulated by the government so banks only need minimal information to authorize loans for HOA-property. Also the banks won't loan to buy property in mismanaged HOAs (HOAs with too much loans) so you don't need to do a lot of due diligence yourself.
So for real state ownership the government kinda handed over control to HOAs and decided to regulate the HOAs instead of doing it all themselves.
Note that HOA is the equivalent term in english, in Sweden the name is BRF (bostadsrättsförening) which means the same thing.
Oof - it cuts both ways. Its near impossible to own a home in London when everything is on land-lease. You're just buying the house for a while...so...renting. Because some generations old family owns the land.
If you stay long enough, buying is cheaper. But if you move after just a few years, you'll have mostly paid interests on your mortgage, you had closing tax, your house may even have lost value... So there are many cases it would have been cheaper to rent.
How long you need to stay to make your purchase worthwhile depends where you live.
Agreed. Over a decade ago, to try to overcome my fear to make such a large purchase, I did the math and decided to bake very conservative assumptions into my decision-making. My rent then was $1800 a month, so 5 years of that is $108k. If I kept a similar mortgage payment as my rent (in reality, my payment was actually more like $1450), I realized that all I had to do was stay there 5 years while having it lose ($108k minus property taxes paid) in value and I'd break even in terms of cash flow, whereas the upside, if it stayed flat or appreciated, was that I'd have built up substantial equity.
(In the end, the gamble paid off great - the condo appreciated by about 300k in those 5 years)
Japan would like have a word with you. Houses in Japan are like cars. The moment you buy it it's now "used" and worth less and it keeps doing down in value.
That's actually not (much) less true in other places. It's just that in eg the US the land is typically a lot more valuable, and people tend to mix up the value of the land (which doesn't really deprecate) and the value of the structure on top.
>> the value of the land (which doesn't really deprecate)
Maybe in urban centers. But go out into the hills and you will find many towns where land prices tanked once the local resource industry moved on. It isn't just 18th century gold rush stuff. There are towns from the 80s that just emptied when the local industry moved on.
And I assume houses in these places aren't exactly holding up well as investments?
EDIT: Oh, I think you were talking about deprecation? Even in the downtrodden areas, land values going down isn't technically deprecation. It's just like a bar of gold sitting in your garage: its market price might fluctuate, but that has nothing to do with deprecation.
Many markets don't have many individually owned apartments. In my area, many hundreds (maybe even thousands?) of apartment units have been constructed. Practically none of them are individually owned, they're all large apartment complexes owned entirely by corporations. There are some condos and townhomes that come on the market from time to time but generally speaking if one wants apartment life you're renting.
I'm curious, what area is this? That sounds strange to me.
Some people in your boat would choose to buy an investment property in one place and rent in another in order to still get exposure to the real estate appreciation that is so common, while not having to buy a condo in a difficult area like yours. But it would probably be so much easier to just to invest in a few good residential property REITs.
Probably lower return than the best case scenario of owning a rental, but with all the costs diluted across a large portfolio (instead of 'surprise, you need a new roof!')
Richardson specifically, but honestly most of DFW. Pretty much any apartment complex built in this area in the past 20 years is corporate owned. These days even a lot of the townhouses around are corporate owned rental units.
In fact, this area (and other places in Texas) has given rise to a new kind of apartment architecture called the "Texas Doughnut", which is a 5-over-1 apartment complex wrapping a central parking garage and often other courtyards in the middle. These things are everywhere in DFW. Just take a peek on Google Maps.
But it is not just DFW. A lot of other cities in the US have similar things going on. It seems like most cities I'm in often have most new apartments I see be corporate owned units, not a lot of individual ownership.
Thanks! That's an interesting trend. I wonder if that is mainly due to high rates, making condo purchase less attractive to non-wealthy people than it was 5 years ago.
How does that even apply here? Assuming you aren't living with family it's fair to assume you have to spend money on housing. So the question is, do you want to keep some of that money in the form of equity or give all of it to your landlord?
I am doing no such thing. Down payment goes straight to principal, so that's equity banked from day one. And you're going to have to define "relevant time scale" because property demonstrably appreciates over time.
That's a good reason to sell an extra home when you need/want cash, not to rent where you live. Even if you don't have children to inherit, it's nice to own a home, but I guess it depends on ones lifestyle.
its not renting vs owning that's the problem, its renting vs mortgage where mortgage is improperly considered synonymous with ownership. but that's because its so rare to be able to own the home near the places you can rent.
so sure, renting vs buying a home in cash will give the cash ownership a leg up. but then it shifts over to people that would love to espouse about the 'time value of money' and leverage, where putting all the cash down is suboptimal vs a mortgage. the % increase of the home value isn't amplified when using cash up front either.
so lets optimize this further, renting vs mortgage with the option to pay it off at any moment is always better. but nobody has that cash, so we're back at square one.
if you HAVE to do a mortgage, then its likely that renting will be a better deal for you for over 10 years straight, before the mortgage pays dividends.
From where I come(South Indian Muslim), there is a saying that how quickly you own a home, get married and have kids decide the overall affluence you have in life.
If eat that frog is a think for daily schedule, there is also such a thing for life itself. You just have to get a few things done as early in life as you can. Or you end up living for other people.
It's only as one ages that we begin to realize how much wisdom there is in 'traditional' ways of life. It's almost like over millennia of humanity, we gradually found ways to maximize overall outcomes, even if they might come with aspects that aren't as ideologically ideal. At least this is something I can pass on to my own children.
There is a saying in Kannada language ವೇದ ಸುಳ್ಳಾದರೂ ಗಾದೆ ಸುಳ್ಳಾಗದು which means the vedas can go wrong, but a saying never turns out wrong.
There is a wisdom in this. Most of the sayings in any culture are largely a distillation of a kind of civilisation darwinism. All it took people to survive big problems in life, distilled in neat statements.
Most 'traditional' ways of life often aren't all that old. Definitely not millennia.
(However they might still be a good idea. I don't know.)
It also depends on how you translate the 'traditional way'. For example, on the one hand, for most of history people had about one surviving descendant per person, ie two kids that made it into adulthood to have their own kids. [0] On the other hand, they gave birth to many, many more kids. Which of the two perspectives do you want to preserve?
Similarly, during most of the last few millennia most people used to have kids really late in life: they typically only had about perhaps 20 years or less left to live when their first child was born. Should we emulate that? Viewed through a different lens, people used to have kids really early in life: the distance in years between your own birth and the birth of your children was much shorter, too.
Of course, the above paragraph is just a long winded way to say that people live longer these days. But still: how do you want to translate past behaviour? It's a choice that's up to you.
[0] I'm basing that purely on the mathematical observation that population numbers have only gone up substantially in the last few hundred years. Thus replacement level fertility used to be the norm.
You're relying on a typical misunderstanding of the past. The increases in life expectancy in modern times are owed almost exclusively to reductions in childhood mortality, not actual extensions of life. In the past it's not like people just hit 40 years old and keeled over.
So for instance the Founding Fathers died at an average age of 72 including things like Hamilton being killed in a duel at 47 years old. Only 2 of them died before 60 - Hamilton and Hancock (who had health problems throughout most of his life). John Adams lived to 90, and Sam Adams/John Jay/Ben Franklin/Jefferson/Madison died in their 80s. In fact this mortality age of ~70 expands all the way back to at least the Ancient Greeks. [1] The Bible also references this in Psalm 90:10: "As for the days of our life, they contain seventy years, Or if due to strength, eighty years, Yet their pride is but labor and sorrow; For soon it is gone and we fly away."
All the advances in medicine over the past millennia have dramatically reduced childhood mortality, but its impact on people who would have already made it into adulthood has been relatively small - perhaps 5-10 more years of very limited quality.
Your 'Founding Fathers' only lived a few hundred years ago, not thousands of years ago, and were elites in one of the richest societies in the world at the time. I wouldn't use the bible as evidence; from what I heard they also talk about people living hundreds of years in that book, don't they?
I agree that most of medicine itself hasn't necessarily made much of a dent in average adult life expectancy at, say, age 30.
In any case, feel free to ignore that part of my comment. And concentrate on the part about the number of children.
Or you can replace the now missing part with: how much should you spend on clothing? Should you spend the same in inflation adjusted terms as your ancestors? Or should you spend the same in terms of proportion of overall income (or time, in case of home production)?
Germ theory didn't exist, or at least wasn't accepted, until the late 19th century. In fact even things like handwashing before surgery weren't accepted until a similar timeline. Prior to that it would have been insulting to insinuate that a surgeons hand's might be 'unclean.' All the money in the world couldn't change this lack of knowledge. And indeed one of the Founding Fathers, George Washington, was likely killed more by the bleeding edge treatment of the day, than the disease that was being treated. In response to a throat infection he was bled for nearly 5 pints in order to remove 'bad blood.' His deathbed portraits showed him as white as a ghost.
You're right we don't need to have as many children per person thanks to reduced infant mortality. Each and every woman having an average of 2.1 children is all that's required for a stable population. So each family that can/does have children should probably have somewhere between 2 and 5 to compensate for those who will not or cannot.
And indeed we do need to start relatively early. By the time a woman reaches her 40s her fertility (assuming a perfectly timed effort) is going to be around 5-10% per month. When she's younger that can be > 30%. And in between each child you really want at least 9 months before starting on the next, a bit more is even better. And then you need to actually succeed at pregnancy. Contrary to popular conception things like IVF are not just guaranteed pregnancy. They're an extremely expensive roll of the dice. The dice are more weighted in your favor, but the odds of success can still be quite low for older parents. So perhaps 2-3 years per child, increasing with age, multiplied by 2-5 children. That's a lot of years and you want to finish this all up before your 40s if possible.
And most importantly of all - this isn't an option. Societies that fail to maintain themselves will simply die off and end up being replaced. Much of what I'm saying here runs face first into contemporary ideological ideals, but the reality of what I'm saying will win simply because contemporary ideals are not self sustaining.
> And most importantly of all - this isn't an option. Societies that fail to maintain themselves will simply die off and end up being replaced. Much of what I'm saying here runs face first into contemporary ideological ideals, but the reality of what I'm saying will win simply because contemporary ideals are not self sustaining.
You are right to an extent.
First, if the inclination to have more or fewer children is at all hereditary, there is a strong natural selection effect over time. Evolution in action.
Second, (sub-) societies don't have maintain themselves via their _own_ children. Priests in the Catholic church were famously barred from having children for at least a few hundred years by now. Yet, the Catholic church persists. Similarly, throughout most of history cities had below replacement level fertility, just because we didn't have the hygiene and medicine necessary to keep the diseases at bay. Yet, cities persisted.
You can say that they have been 'replaced', but so are families every generation. Drawing a strict line is only possible, if you put an undue emphasis on genes only.
You are right however, that for a culture or 'ideology' to persist, you need to replenish the pool of people in some way, either with children or converts/immigrants. (Or, I guess, you can figure out immortality for your members?)
Almost by definition, migration/conversion can only be an option for the most appealing of societies: those migrants have to come from somewhere; they are other people's kids.
The Catholic Church persists because of followers of the religion, not Priests. That those followers have healthy fertility rates is the main reason it, and quite a number of other religions, are growing to rapidly growing - in spite of the perception many in the West would have about the global increase of secularism. In fact we're likely to become a far more religious species in the future thanks to secular individuals removing themselves from the gene pool with a disproportionately high frequency.
And replacement is not about genes, but about culture. Europe experimented with mass migration with peoples of very different cultures. The idea is that they would nonetheless be assimilated, integrated into the culture, and everybody would grow all the richer for it. It instead just led to the emergence of countries within countries, increasing violence, extreme social divides and extremism, and is arguably playing a significant role in the ongoing decline of Europe. Migration is, in general, a good thing - but if it ever goes beyond a rather small scale, you're just setting the stage for your own downfall. Migration was even one of the major causes of the fall of the Roman Empire!
> The Catholic Church persists because of followers of the religion, not Priests. That those followers have healthy fertility rates is the main reason it, and quite a number of other religions, are growing to rapidly growing [...]
The same logic can apply to western culture. People already living in the west are the 'priests'.
What you're arguing here is largely ahistorical. Immigration to the US was relatively small scale and almost entirely from highly compatible cultures. There's a decent write up here [1]. Some datums: Immigrants today (including illegal) are about 14.3% of the population - that's about the same level as it was following the great migration of the late 19th century shortly before it started to become an issue leading to immigration being clamped down on hard, reaching a low of 4.7% in 1970. [1]
Fertility, when shared amongst a population, has an easy to model effect on population. It's a population scalar of fertility_rate/2 per ~20 years. So a fertility rate of 1 would mean your population is dropping by 50% every 20 years. That is compounding/exponential and never ends until you go extinct or start having more babies. Compensating for this by immigration is basically impossible, and at that scale you will quickly become the country of origin of immigrants in any case. Of course we're not even especially close to a fertility rate of 1 yet, but that is the trendline and really the same argument even applies to rather higher levels of fertility.
> if you HAVE to do a mortgage, then its likely that renting will be a better deal for you for over 10 years straight, before the mortgage pays dividends.
How do mortgages pay dividends?
In any case, it's all about opportunity costs, and yields.
To give an extreme example: if the house costs 100x the yearly rent, you are probably better off putting your money in the stock market instead of buying the property, and paying your rent from the returns on the stocks.
Where I live, rents are about equal to the cost of mortgage + property tax, if not slightly more. This means you don't save money in the short term by renting.
Mortgage is temporary though, rent is eternal and usually increasing over time. This means you don't save money in the long term, either.
When i paid off my house and calculated my total payments, it came out to 6.8 years of the rent we had been paying when we bought it, (which was of course going up annually so it's probably better than 6x)
100x was a bit extreme for the sake of a simple example, but rental yields in eg Singapore are around 2-4% apparently. And they don't have capital gains tax. So investing in stocks or bonds and using the returns to pay rent really does look more realistic in that part of the world.
Having to pay rent likely makes retiring early, or even retiring itself impossible.
Somethings like marriage, kids, buying home just have be done in life as early as you can.
Note money is just a number at the end. The idea is not to have max($money), rather max($free_time, $health). Optimise for $free_time and $health, and then you have a very different life strategy to work towards.
If you have $x, you can buy a house and save on $y rent. But you could also buy eg bonds, and make $z return per year. If z > y, going for the bonds is better.
Free time and health don't even come into the picture here. [0]
(Of course, taxes and regulations can make this more complicated. And there are systematic and idiosyncratic risks to take into account.)
It's not automatic that buying owner-occupied property is always the best way to invest your wealth.
[0] Well, I assume renting is better for your health: I was significantly less stressed about all the water damage that we had about two years ago, because I knew it was ultimately my landlord's problem, not mine. But the overall effect is likely to be rather minor, and it can go either way, as some people get a mental health benefit out of knowing that they own their home.
Im guessing different people have different life priorities. So in some way its not correct to argue a point derived from an assumption/axiom other person doesn't believe in.
>>Well, I assume renting is better for your health: I was significantly less stressed about all the water damage that we had about two years ago, because I knew it was ultimately my landlord's problem, not mine.
Paid by your money.
>> But the overall effect is likely to be rather minor, and it can go either way, as some people get a mental health benefit out of knowing that they own their home.
I get a feeling if one is fairly rich they don't have to worry about money. When you are that rich, it doesn't matter whether you rent or own.
> Im guessing different people have different life priorities. So in some way its not correct to argue a point derived from an assumption/axiom other person doesn't believe in.
Yes, definitely. That's why I am saying that whether it's better to invest in owner occupied housing or in something else and using the returns to pay rent, depends on yields and prices and personal preferences. It's not automatic that buying a house to live in is better.
> Paid by your money.
Yes, definitely. Just like when I go to a restaurant, all the ingredients and the chef's labour is paid for by my own money.
Owning a house is a bit like having an extra part-time job with all the things you have to worry about and work on.
Around here, houses appreciate in value. Quite significantly, actually. A house can gain 100k in value in just a few years.
If you bought it, you're paying off the old price. If you're renting, rent increases every year to keep more or less in line with the accruing value. So while renters and buyers may both start out paying (eg) 20% of their income on housing, for buyers, this will typically go down (due to inflation --> higher wages), while for renters, it will stay the same and might even increase.
You're right about considering opportunity costs, but around here, it just turns out far, far worse for renters.
For a proper comparison, you need to pay up the guy paying off the mortgage with someone who eg invests similar amounts in an index fund.
To be even more proper, you'd need to allow the stock market investor to use leverage, just like the guy with the mortgage does.
Or, if you want to avoid the mortgage/leverage complication, we can compare someone buying a house outright with someone investing the same amount in stocks, and uses the returns to pay rent.
> Around here, houses appreciate in value. Quite significantly, actually. A house can gain 100k in value in just a few years.
Total returns on eg the S&P500 over the last few decades have been pretty good, too. And it's a much more diversified and liquid investment than a single house in a single location.
For some people in some places, buying a house might be better than buying stocks, for some others it might be worse. Results also depend on taxes and jurisdiction and personal preferences. But it's not automatic that buying a house is better than renting.
An important thing to consider is not just average return, but risk factors, and worst case scenarios.
If you buy a home instead of investing, you've got a locked in, controlled rate for your housing expenses. (Yes, there's some variability with property tax and insurance). In difficult times, you can still plan very carefully around your housing costs and wait for better times.
If you rent and invest, your housing costs can be highly variable and uncontrollable over time. Your investments may not cover increases in housing costs.
A critical factor is that housing is more or less a _required_ cost of existence - just like feeding oneself. It is not something where one can necessarily "invest in other areas" instead. There are extreme cases (living out of an RV or in a tent on the side of the road), but for the most part those extremes are not representative of how someone wants to live. One can only downsize so much, and downsizing your housing investment comes with very real changes to quality of life (storage space, commute time, access to grocery stores, etc).
And are you considering the risk factors and worst case scenarios when it comes to housing?
Housing is not as liquid, and prices can also go down as well as up. Often there are large transaction costs associated with buying/selling property.
What if an event happens that is not covered by insurance? Subsistence, large-scale repairs required etc. Changes in housing regulations c.f. the fallout from Grenfell in the UK.
There are risks in both, and risks from housing can also be large. The leverage offered by banks works in your favour in good times but can work against you in bad.
If things were different, then the results would be different; but, being as they are, for most people in most Western jurisdictions the rules favor homeowners.
> [...] but, being as they are, for most people in most Western jurisdictions the rules favor homeowners.
Alas, no, not necessarily. There are feedback effects. The rules favouring owner-occupied housing mostly drive up the demand for that, and if you don't allow supply, then all you get is higher prices, that those would-be homeowners have to pay.
But in any case: my point is that it's down to circumstances which path is better. It's not an automatic 'home-ownership is always better'.
"Households living in poverty are spending a significantly larger proportion of their net income on housing costs than households not living in poverty. This is true both in London and in the rest of England.
London households in poverty are estimated, on average, to spend 54% of their total net income on housing costs. In comparison, those living in households which are not in poverty spend just 11% on average.
The trend is similar in the rest of England with households in poverty spending 32% of their income on housing compared to 8% for those not in poverty"
(a lot of that is numerator/denominator issues - of course if you have more income you're spending a lesser fraction on housing - but it does show just how dominant housing costs are in people's lives)
[0] is so unbelievably true having lived through a major natural disaster. People don't realize how much, in general, you're on your own you are after something like that. Really life and perspective changing. BUT I think you're also misunderstanding his point about buying - it's not about maximizing your wealth which in the end doesn't even matter, but rather about minimizing the things you need to worry about. Even bonds can be stressful because they're not guaranteed money as they might seem due to 'guaranteed returns.' If rates/inflation go up you're left with money losing pieces of paper. See Silicon Valley Bank [1] for the obvious example. Even if your house depreciates, it's still a house! There's even an upside - your rent to the government decreases.
The one case where I think buying doesn't really make sense is for people who enjoy traveling long-term. You can still theoretically rent or sell the place, but now you're back to increasing life stresses especially in the rental cases because you have a lot of obligations there that would require employees if you're remote and so on. And then moving money internationally, especially between currencies, and all of this stuff. Just ugh, no no no.
But also: an owner occupied house is a single lumpy, undiversified asset. And in many cases it's bought on so much leverage, that its value is bigger than the buyer's entire net-worth.
> Even if your house depreciates, it's still a house! There's even an upside - your rent to the government decreases.
Yes. Though depending on government policies, you can also lose use of your house (or even lose your house). Depending on where you live and how you set up your holdings, investing in international stocks and bond can be more stable.
To summarise: owner occupied housing does make sense for a lot of people. But it's far from being automatically always being the best choice.
For starters, people don't buy a house to live in solely because of the financials around it. They also buy the house because they want it.
When it comes to mortgage vs. buying outright, it just depends. I managed to get a very low interest rate for my primary home; the money I didn't put into the house is busy making quite a bit more than that very low interest rate for me yearly. If I were to rent out the house, I could probably get more for it than what I'm paying in mortgage interest + property taxes, so renting isn't really better (and then I'd be subject to the rent-jacking whims of my landlord). But even if I couldn't, I still just... want this house to be mine. There's value in that to me.
> if you HAVE to do a mortgage, then its likely that renting will be a better deal for you
This is very regionally-dependent. There are places where rents are significantly more expensive than mortgage payments, and places where homes cost so much that most people rent at a fairly reasonable rate in comparison.
>its not even the buying vs renting thing, renting is bad, you don't get to own anything at the end of the journey
let's say you are an investor (crypto and day trading, living at home rent free in your parents' basement: "more tendies mom!")
but alongside your crypto and day trading, you scrape together enough cash to buy a house as an investment. it's an investment, you rent it out and earn rental income. What's rent? let's say it's $10,000 a month. Great! so, in addition to the appreciation of the property over time, you also get $120,000+ a year (the + is because you get some of the money at the beginning and middle of the year and you can pour it into lucrative day trading and crypto)
with me so far? nothing up my sleeve.
now you're feeling flush and you figure with your success, you don't have to live in mom's basement any more. Heck! you own a house, you can live there! and eat your cheetos in the the living room instead of the basement! So, you move in.
If you live in the investment house you own, you no longer get the $120,000+ a year. Why...why...why, wait, it's just like you are paying $10,000 a month rent!
Moral to the story: owning does not save you from paying rent, you are still paying rent, forgoing that income on your investment. Yes, that "it's so obvious everbody knows it" personal finance advice you read in major publications is complete and utter garbage.
don't thank me [tips cap] glad to help. And now you know how i feel sharing the planet with people, "experts" even, who don't have a clue what they are talking about.
Is this sarcasm? Because this entire story is predicated on the fact that while you’re renting the home you bought you’re living somewhere else and that somewhere else is either something you’re renting or something someone else has bought and you’re living in there rent free.
I don't think it's sarcasm, just poorly explained. Owning a house serves two distinct purposes - as a home or as an investment. Despite what a lot of people think, it can't be both at once.
As an investment, you forego some upfront capital (downpayment), have some monthly costs (mortgage payment) and a monthly income (rent) and at the end you have an asset (current value) and maybe an obligation to pay another lump sum (principal - downpayment if interest only mortgage).
In the UK at least, for buy-to-let properties, the interest-only mortgage is common, so at the end of the mortgage term you have to repay the principal, and the profit comes from the different between the current value and the principal. In most situations, the rental income is almost entirely used to cover the mortgage payments, maintenance, costs, and paying tax, so during the mortgage period most landlords actually make very little income. It's essentially a bet on whether over the term (maybe 20 years), the difference in value will be better than the lost opportunity cost of not investing the downpayment elsewhere and the risk of periods of having to cover the mortgage and expenses without income during periods when the house is unoccupied, or tenants refuse to pay, etc. Particularly in the early years, the rental income may be substantially lower than the costs to the landlord, but over time, inflation will allow rental prices to increase but the mortgage costs will remain level. A smart landlord will invest the monthly profit at that point, to reduce the impact of the principal at the end of the mortgage.
In some ways, a house bought as a home is very similar, but in others very different. Typically bought as a home, a mortgage will be higher because the aim is usually to pay off all the principal as well as interest, and the simplistic view is that obviously having a mortgage for your home is better because you're always paying off the capital and end up with an asset at the end, the GP's point is that it isn't actually that simple.
Let's say you lived in the house. You're paying for the mortgage directly, let's assume that on average the mortgage costs are the same as the rent for an equivalent house, but actually at the start, the mortgage is probably going to be a significantly bigger chunk of your monthly expenses. On top of that, you have all the maintenance costs - some will be urgent and necessary, others can be deferred for later (although financially, perhaps not the best option because inflation will make the cost more or less the same now as later).
If you had the same house as a buy-to-rent property, you'd have the same maintenance costs and the same mortgage costs (whether it's interest only or capital repayment, the main difference is just when you pay it), so really the only difference is that you are receiving a rental income and losing the ability to live in the house.
As such, there is actually an equivalence between having a mortgage on a house that you live in and paying rent for that house instead - and the equivalent amount is the amount that you would have received as rent (minus taxes and costs from renting). If you could have rented that property out at £1000 per month, by choosing to live there, you are effectively paying that £1000 a month rent yourself.
In truth, the main factor in choosing whether to rent or get a mortgage is a mixture of availability and cost of credit (which varies depending on your financial situation) and how much you have available to spend on accommodation each month. Having a mortgage front-loads the payments - having a much higher payments initially, but fixed so that as inflation reduces the monthly cost in real terms, much cheaper later on, compared to renting where there is effectively a constant monthly cost in real terms once inflation is applied to it (probably annually, every time the price is renegotiated).
Personally, I'd chose a mortgage, because I was chose a cheap house compared to the area so that I was able to afford the monthly payment (the base mortgage was approximately 50% more than the equivalent rent would have been), and then used every bit of spare money I had each month to overpay, which meant that I paid off the house before the end of the mortgage term.
You might think that paying off the mortgage is an obvious success - I now own a house I can live in rent-free, but the alternative - paying much less each month and investing the rest, with compounding gains would probably be returning me an income that's equivalent to the rent that I would be continuing to pay if I didn't have a house.
Which one is better is down to personal preference, and also quite heavily influenced by societal norms - in the UK and USA, we're very strong believers in owning property, but in much of Europe, the vast majority of people rent and see no problem with that.
it's not poorly explained, it's poorly understood (to paraphrase Mr Miyagi, "no bad teacher, only bad students") This is like the Monty Hall problem and I am Vos Savant. Just listen and learn.
Part of the value of a house is the value of living in it, the rent. It costs to live in a house, and the amount it costs is the rent. And this is true whether you own the house or if somebody else owns the house.
Living in a house you own vs renting out the house you own decreases your net inbound cash flow by the amount of the rent; rent is paid, even if it is your house.
this is very basic economics, very basic finance, but, as understood by somebody smarter than all of you, who has kindly taken the time to explain it. You are welcome.
(Consider living in a house that you do not own, and paying the rent. Now, marry your landlord. What has changed? Answer: nothing, the rent you now save is also income the couple has now lost.
(you will need to make adjustments for depreciation allowance for investment property, tax deductibility of expenses, etc. but that's details, not conceptual. Do you suspect that these line items actually could make the difference between this being a wash vs a no-brainer money machine? they don't. If tax deductions make landlordship more (or less) advantageous, then the market will shift landlords⇔tenants till a new equilibrium is achieved where the rents and deductions balance out, with people living in all the same places. no value was created or destroyed, except less govt interference in markets is better, dead weight losses and all that))
Equity isn't relevant to the argument, that's why.
The argument is simply that by living in a house yourself, you are effectively paying rent on that property at the same rate that the house could be rented out if you were not living on it.
Any equity gain in the property itself isn't relevant to the rental value discussion, rather the separate transaction between you and the bank, whereby they lend you money up front to buy an asset and the terms by which you repay that money and the capital gains on that asset in the mean time.
The potential rental income of a property may be similar to the value of the mortgage payments, but generally won't be over the lifetime of the mortgage. As I stated 2 posts up, the cost of a mortgage is front loaded, so the price you pay on a mortgage at the start is generally more than the equivalent rental price would be for the same house, and towards the latter stages of the mortgage it will be much lower, because the monthly mortgage payments are still the same but the real-world cost of those payments has decreased due to inflation.
The simple point is that any time you choose to live in a property, you are either paying rent for the privilege of doing so, or you are missing out on the rental income from someone else who could be paying you to live there instead.
Quite limited view thats valid in certain times in certain cases, in certain countries etc.
What about drawbacks of owning a house? You will spend non-trivial amount of your time, energy and money just to keep it up, keep fixing all things that deteriorate. And everything deteriorates. I mean really non-trivial, count how much your hourly rate is and how much you will waste instead of making some fun good activities, getting more healthy, enjoying life, resting, traveling and so on. Is that really how you want to spend some part of your me-time?
You are also locking yourself down at very specific place which may be a craphole in a decade, without good jobs around etc.
Also it will in normal cases vacuum your savings, degrading quality and fun in life in (at least) initial years after purchase - those are often the best years of one's remaining life.
People tend to look back with rosy glasses on the past, highlighting positives and shrinking negatives, thats basic psychology of each of us. Looking back at period of ownership people mostly look at money made, not all that stress and time with just keeping some property in same state.
Middle grounds are apartments, very little maintenance compared to house&land, much lower costs, but also less privacy and less feeling of 'in my own'.
There is room for each approach, ie right out school locking oneself in specific place may not be the smartest idea. Maybe you will earn some money on sell but maybe also some much better opportunities and better life will be missed due to inflexibility. Freedom is invaluable, properties ownership tends to take some of it away.
>>You will spend non-trivial amount of your time, energy and money just to keep it up
To up keep your home! You also pretty much up keep your rented home too. And at the end you spend to maintain other people's home.
>>Is that really how you want to spend some part of your me-time?
Most of the times its not that bad, you talk like you are on-call 24x7 throughout the year.
>>You are also locking yourself down at very specific place which may be a craphole in a decade, without good jobs around etc.
That's called stability, and that brings wealth and happiness. Honestly people look down upon these things, people use wrong words(lifer, coaster etc) to put down stability. In reality stability, with a predictable schedule is one of the best things that you do to your health, and overall life stability/happiness.
>>Also it will in normal cases vacuum your savings, degrading quality and fun in life in (at least) initial years after purchase - those are often the best years of one's remaining life.
This is mostly an assumption, in my experience the exact opposite is true.
>>People tend to look back with rosy glasses on the past, highlighting positives and shrinking negatives, thats basic psychology of each of us. Looking back at period of ownership people mostly look at money made, not all that stress and time with just keeping some property in same state.
Its always a bad idea to make any investment today, and you feel deep regret to have not made an investment 20 years back. Im not talking about real estate in specific, but even things like education, or exercise, look pointless and something you can do without today, but you wish you had done more or atleast started decades back.
>>Middle grounds are apartments, very little maintenance compared to house&land, much lower costs, but also less privacy and less feeling of 'in my own'.
You don't even own walls in a apartment, its like the worst of all the worlds.
You're ice-skating uphill trying to convince someone who's perfectly happy to spend their money on their landlord's retirement that there's a better way. The giveaway here is when someone makes home maintenance sound like residential construction is made of cheese. They don't have any idea what goes into maintaining a home, don't have the skills, and don't want to learn. The first time I encountered this particular flavor of willful ignorance I was absolutely certain that I was being subjected to some kind of elaborate practical joke. It took me a solid six months to come to terms with the fact that an otherwise educated and intelligent grown-ass man would keep his family stuck in an apartment for the rest of their lives for no other reason than a comprehensive misunderstanding of the financials and time requirements of home ownership.
Typically by people that don't own their own home and never have. Most everyone else uses the term to describe renovation projects the owners lack the skills to complete (contractors are expensive) or boats. Seriously, how often do y'all think a house needs major repairs or renovation work in the course of 20 years?
It depends on how well the owner maintains the house.
My dad spent some time nearly every weekend doing something around the house.
He did nearly everything himself: painting interior and exterior, plumbing, appliance repair and installation, window frame adjustments.
He even rolled out fiberglass installation in the attic,
and in the process accidentally slipped off a joist and put his foot through the ceiling,
but he fixed the drywall himself.
About the only thing he didn't do himself was re-roof.
I'm sure he saved a ton of money not paying contractors to do all that.
For someone who doesn't do upkeep,
or can't afford competent contractors to do it,
major repairs can happen any time,
without warning.
> For someone who doesn't do upkeep, or can't afford competent contractors to do it, major repairs can happen any time, without warning.
We're in violent agreement here. Home ownership is unforgiving if you lack all ability and the willingness to learn. I'd like to believe that this level of learned helplessness is rare enough in the adult population that it shouldn't factor meaningfully into a discussion of major investment decisions like owning property.
So you're saying there's a mass of helpless financial illiterates walking around unsure of which end of a screwdriver does the work? Depressing if true.
lol lets just say we disagree on practically everything :) to each their own
Just one point - there is no way ownership of some home brings actual happiness, you overload the term massively. Not only some theory, I simply never met such a person so that this would be actually valid. I've lived in 3 different cultures and talk about 100s of folks knowing well personally.
Although I've met quite a few folks that, by chasing the dream of some home in suburbs 'to have their own place' ruined their marriage often beyond repair, including happy childhood of their kids.
>>Just one point - there is no way ownership of some home brings actual happiness, you overload the term massively.
There was this stock broking platform owner here in India who was going on Youtube for years and telling people to rent instead of buying.
Last year, his landlord showed him the door, and he had to vacate.
Even for the rich. Not being to able to continuously associate with a place. Not being able to modify the premises, not being able to keep the beautification they would have done to the premises or just being asked to leave without having any control over the place is grounds enough to own a place.
>>Although I've met quite a few folks that, by chasing the dream of some home in suburbs 'to have their own place' ruined their marriage often beyond repair, including happy childhood of their kids.
Their wife and kids will likely hate homelessness more. Some times you have to experience worse to value to these things.
Everytime food gets bland at home, I go fasting for a while. Suddenly the blandest salad tastes good.
You can talk to the sages modern or ancient. They will give you this one advice- Avoid the big problems, and things that can kill you. You can only go upwards from here.
Sure there's a way owning a home brings happiness . . . when you're ready to retire, you've paid off your mortgage, and then you can actually, you know, retire. As opposed to funding your landlord's retirement paying rent for the rest of your life.
You have described London. There are no taxes on owning a property at all, the growth rate has slowed somewhat since the 00s heyday but it's still going up.
>>he just worked long days every day that afforded a very nice lifestyle.
Some people do work jobs where affluence and a nice lifestyle are kind of baked into it.
I do know quite a few people who travel for work often, they stay in luxury hotels, business class travel, great food and fun opportunities at a often basis.
Many do today, but in those days nearly everyone did.
These days we realize that two unhappily-married parents can often be worse for the children than if they get divorced and continue to be active parents.
A woman I dated about 15 years ago came from a household where her parents clearly did not like each other.
She treated our relationship as being adversarial. She felt like she had to "win" every conversation, and one time even admitted to choosing to take a side that she knew was factually wrong just to stir things up. I think she truly believed that love was constant bickering.
Within a year of her and her sister's moving out, her parents divorced. They stuck together "for the kids", and as a result, the kids got a terrible impression of what a loving relationship is supposed to look like.
I have no doubt this is a widespread behavior, but I do have doubts as to whether or not this benefits children. Children seem to benefit primarily from watching relationships that genuinely make both parents happy. There's very little evidence to support that faking it yields results of children reacting as if you weren't faking it. You might as well divorce.
> Children seem to benefit primarily from watching relationships that genuinely make both parents happy.
I think you'll find the data supports chidren benefiting from a happy loving home. Not from the concern of the parents relationships with others.
My childhood friends were mostly from divorced parents and it very much impacted them all in negative ways. Parents are security blankets for children. It's who they run to when scared and need love. They are dependent on them survival. Ripping that apart causes harm.
> I think you'll find the data supports chidren benefiting from a happy loving home. Not from the concern of the parents relationships with others.
I don't know how you'd exclude the influence of parents relationships from impacting the happiness of a home. If a kid is aware of a relationship, they're absorbing.
I don't think anybody will disagree that watching parents divorce is harmful to children.
But I think parents sticking together for the kids is worse. Kids can see the contempt between their parents and might get the wrong impression that that's what a normal relationship looks like.
I know people with kids that have divorced for the most stupid reasons.
In many cases I feel the problem could have fundamentally been solved by being better at dividing household work such that someone can rest one or two days and then switch.
For many divorce seems to be a way to divide labour, which they could have done without one.
It is undeniable that it seems that way for us as outside observers at least. It seems more like both are stubborn and would rather burn everything than take responsibility. It would have to be pretty bad on the inside for that external appearance of the divorce to be justified at all
It's not all just about the relationship, but about the father and mother. Both offer very different aspects of life that help children develop in a way they'd never get from something like a 'visiting' parent, let alone the Big Brothers/Sisters program. Those latter things are of course much better than nothing, but the ideal is an ever present father and mother. For but one example, the most obvious is that a father understands what a 13 year old boy is going through in a way a mother never could, yet that mother will do a far better job with that same boy in his early years than the father ever could.
Statistically children from two parent households just do dramatically better by just about every single measurable metric, with 0 control for the quality of that household/relationship.
My friend in high school suffered from depression in part because he was well aware of that fact that his parents were only staying together until he graduated. Despite any attempt to put a rational face on it, he believed his existence was the source of his parents' unhappiness.
Another friend of mine is doing this with his wife right now. He's utterly miserable, but the racial stereotype of the missing black father weighs so heavily in his mind that he's resigned to just counting down the years (despite my own attempt to convey the above story).
I think that staying together for the kids is essential for the very early age, but if someone goes it must be the dad. My mum left when I was 1 and a half and that is obviously horrifically painful
At a certain age though the parents should split if it isn't working. It's definitely far easier to deal with your dad or mum leaving if you're 10 years old than if you're 1 year old
"As Link tells it, Nan’s attention from their births went to son Rand and daughter Gale. There was no time for his work, his life and love. Despite separating ways, Link says, they stayed married for the sake of the children. Because that’s what parents used to do."
Was looking to buy an apartment which had had a single owner for decades, likely since it was built in the 70s.
At the viewing I noticed how it looked quite distinctly worn.
Like, the ceiling above the stove was full of grease from frying and the interior of the oven had clear signs of only being used for frozen pizzas. Looked like he'd only ever made like pork chops or frozen pizzas.
The floor in the main bedroom was very well preserved, except for a noticeable worn path leading to the bed and a small oval next to the bed. Similar things in the living room.
I mentioned this to the agent, which replied: *Oh yeah, the guy bought the place so he could stay here when he needed a break from his wife. Apparently he'd come here every few weeks or so and stay for a couple of days."
What the... he'd leave his wife at home with the kids while he hung out all day at the pool with "magnificent-looking young women, full of theatrical drive" and eat all his meals at the hotel?