That $5,000 in Berkshire Hathaway shares would have made him a multi-millionaire 40 years later and that $240k in rent would have been chump change for him. :winkwink:

Yes, if only we had all had a crystal ball 40 years ago :thumbsup

how can anyone say that real estate is not a win/win? A very ilogical answer to an obvious question, yes, there is money in real estate, but be WISE. It is really simple, be realistic, weigh up where you are financially and where the marketplace is. Have as big a deposit as you can, and budget for rate rises and maintanance. You will be a winner if you choose the most run-down house in a good street, a sign of immediate capital gains, and if you notice certain trends in social movements, ie. an area may be bringing itself out of "Bronx" status, and not only value for money, but a true investment. There are so many things to take into account, and I couldn't be bothered typing any further.

No offense but most of the people posting in this thread are clueless. Your home should be your most prized investment. Perhaps not your most profitable one, but still.

Breaking news: Neither your TGP or your PS3 are considered a serious long term investment.

Bought a brand new home 5 years ago, spent about 5k in appliance and blinds, sold it 3 years later for 85k more than I paid for it, bought a much bigger brand new house 2 1/2 years ago, spent about 15k in apliances, blinds and shit, it's about 100k up now.. am thinking I can now sell this and move an hour drive from the city buy a nice house for about 300k and still have 450in my pocket with 165 total profit rest savings, however, I won't do that instead prolly go for a custom house on a bigger lot this time twice the price of current home. But the thingie is, it's mental peace knowing that I could do it plus that I am not wasting any money renting a place to live in :2 cents: Montreal housing market ain't so great, move to real Canada and you'll start to think differently :winkwink:

I spend a LOT of time on real estate sites. I track properties in my area on how much they've sold for, if they sell again, how much for then, how long they were on the market, etc. I started doing this when I planned to move out of state and was looking for condos in the ATL area as a 2nd home 7 or so years ago - it's easy if it's something I can do :winkwink: .

Just blindly walking out the door and putting 5% down on the first house you like and doing something crazy like getting an ARM and unless you're VERY lucky, you're not going to do well.

Houses are the biggest purchases most of us will ever make - but I'm amazed at how little research so many people put into it when buying.

The montreal market may not be that great but in some area, prices have tripled in the last 10 years and doubled in many many other boroughs. :winkwink:

With todays low mortgage rate, why wouldn't you put in downpayment the minimum you can get away with, and invest the rest of your money elsewhere!

My wife and I plan on buying some rental properties this year in our small college town. Close to the college, and 2-3 bedrooms do well in our area. Research your area, get good inspections. Become friends with the local realitors and banks and you can do just fine. Be smart and do your research though!

from a person who was accomplished in the industry, you are dead right.:thumbsup

Most people don't account for inflation and the cost of your mortgage (assuming you have one)

If you buy a house (sorry, Peaches) and:

Get a mortgage at 6%
Your home appreciates at 5%
and there is inflation of 3% per year

You have lost real spending power even though your house is worth more money in the end. When the average person has a mortgage rate of 6% and goes against inflation of 3% they have a decent hurdle to beat in actual home appreciation. I do agree with Peaches you should consider what you would have spent on rent.

In the end, some of those people will do well and some won't. Robert Shiller did a study that considered the REAL (accounting for inflation) change in home prices for the entire 20th century. Basically, you would have broke even purchasing a house in an average US market in 1950 and selling in 1995. Your house would be worth a lot more but you'd end up with the same purchasing power. In some markets (California) you would have done great. In others you would have lost purchasing power.

I would say a home is a much better hedge against inflation than, say, gold. Gold has lost tons of purchasing power the past 25 years. Houses just kept pace with inflation from 1950-1995 or so.

Is a house (or RE in general) a "great" investment? I think it is a fair investment and like most things your mileage may vary. Buying in overheated markets right now entails mor erisk than if you bought in 1994. Is porn a great business? Is for some. Sure isn't for others.

YMMV.

I honestly have to say that I have never seen a thread with more idiotic posts than this one.

Someone should get an xbox.

Correct, RE is way less of a gamble than almost anything else. Many ppl could have been millionaires if they had invested in Microsoft in the early 80's but that comes with the crystal ball, hindsight, 20/20, pure luck factor.

A home may not be the "best" investment if we focus strictly on money, but not everything is about maximizing your dollar. It's still an investment that can be financially rewarding in the long run, but it is the peace of mind, comfort, pride of ownership, that is half of the benefit. You want to be able to enjoy life while living it. You may make slightly less than you theoretically could if you 1) gambled in stocks or 2) were so financially savvy/responsible that while renting you invested that extra money you had (that would otherwise be spent on utilities, mortgage interest, property taxes) most wisely over the course of 40 years. It's not worth it IMO and it's so unlikely.

It reminds me of those compound interest calculations where you have something like $10k in your bank account and every day you put in $10 and after 40 years you have a million dollars in the account. How many people do you suppose have or will do this? None. People just don't live like that. We eventually spend that $10 on other things throughout our lives, lose sight, are irresponsible, lack the will, etc etc.

I don't even think of my home as an investment. I think of it as a small percentage of my net worth that will hopefully keep pace with my mortgage and if I'm lucky will beat inflation too. Will it's nominal value increase at more than, say, 9%? Well, that is the long term appreciation in this area (about 10%) but we also just had a few 30% years so IF that now represents a misalignment between price and intrinsic value then probably not.

Why should my home be my "most prized" investment? I am much more confident in my stock portfolio in the next 10 years and that is larger than what I have in my home anyway.

"enjoy life". I agree with this and that.

buying a house is only an investment if you plan on renting it out or reselling it for a profit.

Owning a house offers you some of the greatest simple pleasures in life. Like being able to light up your barbecue in the privacy of your own backyard and being able to shout at the neighborhood kids to "get the fuck off MY property!" or your in-laws to "get the fuck outta MY house!" or your own kids to be obedient because "MY house, MY rules!"

add up all your taxes, insurance, and interest and i bet you wont make much of a profit if any. and remember a house is only worth as much as people are willing to pay, not the state equalized value or what its appraised at.

Buying a house is an investment because 90%+ of people who do not buy a house do not invest properly so when they are 50-60 years old they have nothing (or not enough). If they had bought a house it would be paid off and they'd at least have that.

Sad fact is most people spend what they make and save very little. A house for some i sat a least a guarantee of "saving".

If you are single or have no kids then rent saving $500 a month compared to owning with taxes and everything and invest that $500/month and in 25 years it will be worth a hell of a lot more if invested properly than any home would have been.

Most people only remember the price they paid for the house and how much they resold it years later, they suffer from alzheimer when it comes to adding up all the other expenses....:1orglaugh

People talk about any increase in the value of their homes as if it were profit. But unless you have died or are otherwise leaving the property market, it isn't: you will usually be paying a similar %age increase in the price of your next home. And since most people (prior to retirement) move up the housing ladder, translated into dollars, that percentage increase often more than wipes out any nominal "profit".

The reality is that house purchase sets most people on the credit treadmill more surely that anything else in their lives. Particularly when people see prices rising and are tempted to take the maximum loan they can afford, they can end up with nothing if anything goes wrong. Many suffer less dramatically, but are forced to use other, more expensive forms of credit, to get by.

In Long-Term Perspectives on the Current Boom in Home Prices Robert Shiller of Yale University points out that US house prices - in real terms - were almost unchanged between 1900 and 2000. From that perspective it is almost impossible to see the astonishing leap in prices since 2000 (which seems to have blinded people to that longer term reality), as anything other than a bubble waiting to burst in a very big way.

Owning a home is not only about its investment value (or otherwise). You can, for example, personalize a home you are buying in ways which you may not be allowed to do if you live in a rented home. But there are also practical downsides, such as once you "own" a home, you will likely be less willing to pursue opportunities if they involve a move.

As this article in the Denver Post a couple of days ago suggests, home ownership is becoming a nightmare for many people. "Fed officials heard stories from Denver, Cleveland, Philadelphia and New York, where neighborhoods are deteriorating as borrowers struggle to pay loans or abandon their homes in foreclosure". "Some 1.2 million foreclosures were reported nationwide last year, up 42 percent from 2005, according to Irvine, Calif.-based RealtyTrac".

And what's with the stock = gambling!

Yeah, some of us are just too stupid to keep up with that stuff......I know every dime I've spent on maintenance and upgrades. It's not rocket science. Not to mention many upgrades get more than their cost back at resell. IIRC, a kitchen remodel can bring around 20% more in what it cost.

Bottom line - if you think a house is a poor way to spend your money, don't buy one.

Colin - talk to me about gold. Several people have mentioned it to me lately - enough people to get my interest up.

Nah. A poor way of spending your money would be to buy a brand new car:winkwink: Buying a house is better than spending it on things. It just IMO not as good an investment most people portray it to be.

Be careful with gold. It is not usually a traditional investment device, but a kind of insurance when people are nervous. About 5 years ago when gold was around $250 an ounce I recall recommending it on a couple of boards and the price is now $650 an ounce or so.

But that advice was predicated (and still is) on doubts about the US economy (and hence about the dollar), which I believe will worsen for another 5 years at least. I think we are in for a rough ride for perhaps the next 15 years and if so, the price of gold should easily go over $1,000.

However, if something unexpected is pulled out of the hat and turns things around sooner, gold prices will decline again. So do be aware of the risk.

Yes you should consider what you would have spent in rent.

Rents go up every year to keep pace with inflation (or more)
Once you buy a house and lock in your mortgage rate it's set for the duration. Renters will have to spend more each year for rent (or possible the same percentage of their income on rent) while the person with the mortgage pays the same amount, or a lower percentage of their income each year (making the standard assumption that wages will rise with inflation)
So the person with the mortgage actually has more disposable income, or more money to invest elsewhere than the renter does.

This conversation is so ridiculous I can't believe we're actually having it. People who think renting is a better long term financial decision than buying really need a course in remedial math.

PS: remodelling a kitchen holds its value better than other ways of improving a house prior to resale, but on average it is still not profitable: http://www.remodeling.hw.net/industr...&sectionID=173

The figures for 2005 are rather better - http://www.remodeling.hw.net/content...&sectionID=256 - but probably distorted by rising prices generally.

Yeah, I wouldn't put down a huge amount into it - maybe $10K or so. But I know nothing about where to buy. This is a link a friend gave me: https://online.kitco.com/sellprice/completelist.html

Good place or are there others?

Putting all your money in a house is a bad move definitly.

But putting your money into a house instead of paying rent every month is definitly better on the long run...

Putting all your money in ANY one thing is a bad move! (unless you want to give it to me :thumbsup )

Excellent point

No doubt about it

Oh, I just mentioned it at as a comparison. I have ZERO interest in gold myself. I don't know a damned thing about how to value commodities. I have some Conoco stock. Closest I come.

I have some investments that I don't consider great investments. Bonds, for example. It just makes sense to diversify like that.

I think a house is a great thing to spend money on. I just don't consider it a GREAT investment (see thread title). Like Alex, I also like to spend money at strip clubs. I don't consider that an investment but I get great value from it.

If you look at the the ratio of rent to home price in many market, you'll clearly see the "premium price you need to pay to own a house.

For example, In Boston, you can rent a two bedroom in a nice area for $1,200 per month; to purchase it, it would cost roughly $400,000 with and a monthly expense of roughly $3,000. You feel me now!

Also a currently rents are currently at their lowest price ever compared with home prices...

Buying gold is a complex topic, not least because the market is full of crooks. There are also different ways to buy gold (and indeed silver or other precious metals). The options run from physical gold (jewellery, coins, bullion) through gold certificates, to mining shares. But if for example, you decide to buy "real" gold, you have to decide where to store it and if your view of the future is on a par with that of a survivalist, you obviously would not use a bank vault :)

If you opt for coins, stick with American Gold Eagles, 1oz coins kept in a safe deposit box if you are only afraid of a weak US economy, 1/10oz coins under your mattress if you fear apocalypse and think you may one day need to use them. Gold Eagles are sold at a minimal premium, which is what makes them a better buy. Don't be tempted to buy old or foreign coins: they are strictly for coin collectors despite the number on offer to gold investors.

Generally the easiest and safest way to buy "gold" is to buy shares in gold mines. The biggest, still-producing mines are the safest investments and their share price will generally track the price of gold itself. Although choosing to buy gold is somewhat anti-establishment, if you go this route, you can get the advice and help of any reputable broker, if you don't feel able to do your own research and purchasing through people like TD Ameritrade

Not correct. What you get for $1200 in boston is a half-decent apartment which would cost you about $50,000 to buy therefore $300 per month.

Where can you get a $50K property in Boston that then could be leased at $1,200 per month?

Even here in Montreal, I'm paying more than $1,800 per month in expenses for something I'm leasing at about $1,300 per month. That's right I'm losing about $500 per month on it.

Thanks Jayeff - that's pretty much verbatim the info I've gotten from others - makes me feel better :)

Scotia bank just came out with a study that showed in vancouver the average mortgage right now for a 2 bedroom house costs you $2800 a month but to rent a 2 bedroom house curerntly you will pay on average $1050.

So it really depends on your current market.