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You know you can also use leverage in stocks, not just in real estate!
And by house, I was refering to a house you live in and not a multi-units property.:winkwink: Quote:
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Example, on a per unit basis, a condo appartment cost alot more than an apartment in a multi-units property. Here in Montreal, it's not hard to find multi-units for less than $75,000 per appartment but the same size condo will cost you more than $130,000. thus, the rent will be less in an rental appartment than the mortgage and fees in a condo appartment.
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I really don't get why you refuse to believe that paying a landlord rent is better for your financial future than paying a mortgage to a bank. The evidence for my position is overwhelming. If you found some way to live rent free and used what you would have paid in rent to invest in the stock market, then sure, stocks would make the better investment. But if you have to pay a monthly fee to live somewhere, how is it not in your interest to be paying a mortgage instead of rent? |
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It's a good investment for the real estate agent when you want them to lie about how great an investment it is when you decide you wanna sell......
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Maybe you live in a fucked up real estate market. Where I live it would cost me more to rent a house like mine than what I pay for my mortgage. The same thing goes for condos/apartments in the area. So why on earth would I pay more to live in the same place and not build any equity? Renting is for people who relocate frequently, are young and have roommates to help defray their living expenses, or who haven't yet built up enough savings to make a down payment on a home of their own. There are of course exceptions, but that's the general rule. You're delusional (or live in a very fucked up real estate market) if you think that renting for the next 30 years is a better financial decision than buying your own home. |
like somebody said above a house is a forced investment and that's good.
for the average person it's the only investment of that size they will ever be able to make. somebody making $75,000 can go to a bank and get a mortgage on a $250,000 house - go try going to the bank to borrow $200,000 to start a restaurant or retail store. and of course if you don't make the investment in a house you're going to be paying rent to somebody else. i know so many of my friends whose parents were middle class people - just normal middle management jobs, good blue collar jobs, small businesses - now those parents are dying off. the family homes they bought in the 50's and 60's for 20-40,000 dollars 40 years later are several hundred thousand dollars, some close to a million dollars in the right neighborhoods. my best friend's parent bought theirs in the 60's for 40K and it's now worth at least 2 or 3 million - whoever buys it when my friend's mom dies or has to get out will knock it down for sure. |
real estate will always be that. Real dollars, real emotions, real people. I found it impossible to continue in a career like this after I witnessed, and was involved in, the great crumble in 2004 in Australia, where houses had dropped by 10% in some places overnight. It was to no surprize that I had resigned 6 months after due to the massive decline in demand. Yes real estate is rediculous, but if wise about what option you use in what situation, you really can call it the wise investment, and beleive me, it has related to all my rises and falls from grace.
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Even with that 10% drop, I would assume by now that those properties have picked that 10% back up... or will in the near future.
Alex one very important thing: If you are buying a house to live in yourself, and you stay there more than two years, all of the money you get when you sell it is tax free (provided it is a single family home, not a duplex or other form of revenue property). Capital gains on stocks if you were to sell 300k worth of stocks in a year would hurt. At bare minimum, make sure you own where you live, even if it is a condo or whatever. That is effectively a free investment that will pay you in the end. Most "old family wealth" comes from the asset of the family home and revenue properties. |
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absolutely, that is given, but it is a rigourous experience nevertheless... |
See Donald Trump.
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I have a place to live, a nice yearly tax write off, appreciation, no idiot neighbors that trash the apartments in which they lease, and there were no renovations which I had to make, as I bought it 2 years old and it was completely upgraded from the floors, to the paint,the upgraded cabinets, to the back yard.
Sure I pay a little more than I would if I lived in an apartment, but the perks outweigh the downfalls in my case. I love my home, and investing in the happiness of myself and my wife is good enough for me. Selling at a profit in 5-10 years is also a nice perk, and I wouldn't necessarilly have to buy up. I'd probably actually move from Vegas to a smaller city, thus making my real estate money work for me. |
very interesting thread
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actually buying a Land/house is always a win win situation. As mentioned in Superman: The return, land is more valuable than gold because its constantly shrinking. No one's manufacturing land.
I remember here in Asia before a certain volcano errupted last 1991 and the price of land in nearby area of the volcano dropped to $.10/sq meters (not sq/ft!) guess what, after only 15 yrs and commercialization, the price of land fly to around $500/sq feet. Wow. |
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Cost for me to rent, $2500 a month at $30,000 a year.
Cost for me to buy this same house, $3500 a month at $42,000 a year. For the first 5 years all of the money goes towards interest only. So while the market is stagnant or dipping I am screwed. Had I bought in 2003 my monthly would have been $1800 and the price would have appreciated 2 and 1/2 times. Which means, I would have made a lot of money on paper (or if I sold it)... So buying for me would be stupid. |
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I'm not saying you shouldn't buy a house if you can afford one. I just think it's not as good an investment as people think it is. |
No, a house is not a good investment at all. Just keep on spending your money at the strip club and eating the buffet at the tittie bar. That's the way to go!
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In the same 40 years, Berkshire Hathaway shares have been increasing annually at 24%. A stock bought at 8$ back in 1962 would be worth $96,000 per share. Imagine if they bought just 100 share instead of a house how well off their children would be today:winkwink:
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I do own a house and have other "real" and "IOU" investments (as DareRing would put it) but none of it bring me as much pleasure than spending some of my leasure time at strip clubs:winkwink:
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adding in a sarcastic remark about strip clubs and eating the buffet there. I really can't help myself. |
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The answer to the question is "it depends". It depends on a lot of things. In which market at what time? Do you have a mortgage? Will your house appreciate faster than your mortgage rate? How much would you have spent on rent elsewhere? What other opportunities do you miss?
How much SATISFACTION do you get? If I were willing to rent a smaller place and invest the money in my home elsewhere I would probably end up with greater monetary wealth in the long-run but would lose a lot of satisfaction. The cost of satisfaction with my life is not worth that. |
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I'm glad you realise you are paying a bit more in owning a house than renting, alot of people can't see that. They think that with rent they are throwing money away altho part of the expenses spend on a house is also thrown away money (i.e. closing costs, interest on mortgage, realty taxes, insurance, mortgage insurance, maintenance, etc.) and they could invested the difference in rent and house cost in other investments. |
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I bought some land in Missouri 5 years ago close to Branson and now I could get 3 times what I paid for it. To me that's a pretty good investment.
Gary |
Location, location, location.
If you're in a bad location (i.e. bad part of town or even a great part of town where the prices are inflated) you could be in trouble. The way you finance can also cause you problems, witness those in pain now with their ARMs. Over the past 25+ years I've been living on my own I've rented if I've KNOWN I was going to stay somewhere less than 3 years. I've heard the "experts" have extended that to 5 years. I do know my house just appraised for more than twice what I paid for it 6 years ago. That makes me happy :) |
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I agree with most people here. Buying your own home is not an investment as such. You'll spend a lot of your income decorating, redecorating and on bills and everything else. But its much better to buy your own house than rent from someone else. In the long run your house will eventually be paid off. Therefore the actual "house" you bought becomes worth the time and money. Everything else connected with it is just a lifestyle choice.
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I bought my place I live in now at the same time I bought my land in missouri and the value of it hasn't changed very much but over time I expect it will. My dad bought his place in 1965 for $5000 and in the 70's he spent roughly $25,000 to remodeling it and since then he's probably spent around $20,000 in upgrades and what not. Today he could get roughly $200,000 for the same property which he has lived in for over 40 years. To me that's not a bad investment at all. If he wanted to he could sell it and buy some land and build a new house on it for $200,000 that would be bought and paid for. So I would have to yes buying a house would be a long term investment. Gary |
True, the vast majority of RE is long term - that's what people have to accept. Yes, we know about the guy who bought a house, put $X into it and sold it for 100 times $X 6 months later, but that's not the norm. If you're going to move every 3 years, renting is a better bet, IMO. But at some point you have to grow up and not move every 3 years, lol.
Personally (knock on wood) I've never lost money on RE. Even the 2nd house my ex-husband and I bought that I had to sell at a bargain price to get out of when he left after 6 months of buying it in my name, I broke even on - and that's including all the work we did on it. |
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