Ah yes, the rent vs buy decision I’ve been trying to figure out for years. The rental income vs mortgage payment calculation never made sense to me. But this is much more logical and makes far more sense. Thank you for simplifying this!
Most people are unable to handle a fall since they are accustomed to bull markets, but if you know where to look and how to get around, you can profit handsomely. It depends on your entry and exit strategy.
People often overlook the value of financial advisors until they experience the downside of emotional decision-making. I recall a few summers ago, after a difficult divorce, when I needed help reviving my struggling business. I did some research and found a licensed advisor who worked diligently to grow my reserves, even amid inflation. As a result, my reserves grew from $315k to around $740k.
I tried looking into new strategies to profit in the current market because my portfolio has been in the dumps for the entire year, but everything I tried just seemed to miss the point. Please let us know who your asset manager is by name.
Finding financial advisors like Lisa Grace Myer ” who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Inflation (dollar devaluation) averaged 4.25% annually for the past 50 years. (I'm 73 years old and lived it.) That means the price of commodities doubles every 16 years including shelter. I own 4 modest paid-for rentals which net us about $1200 a week and I have $1,200,000 equity in my properties. My properties appreciate $50,000 a year. My stepson (48) rents and has no equity. Is there an upside to renting? NO! Not today, or tomorrow, or 50 years ago.
Even if, in your example, your $400,000 home purchase today was guaranteed to be worth $600,000 and 10 years, at 7% interest you will pay $250,000 in interest in those 10 years, plus $50,000 in taxes and $50,000 in insurance (to be generous) much more in some areas. Plus maybe $50,000 in maintenance and repairs over 10 years. So yes renting is costing you $25,000 per year, but buying that house is costing you $400,000 over the first 10 years, and you get 200,000 of that back in appreciation. Buying a house at 3% interest was a slam dunk, at 7%. It doesn’t make sense AT THESE PRICES. SHUTUP BOOMERS WHO SAY “MY RATE WAS 10%”. YOUR PRICE WAS ON 3x income
The real estate industry is too often tone deaf. Most have a MASSIVE motivation to say X or Y is going to happen and are often therefore, majorly lacking in self awareness and connection to reality. Wages are not rising anywhere *near* as fast as home values have been. There is no sustainable path for average home values to continue to rise if wages continue to not keep pace. The market will be reduced to buyers who can play the financial markets and the rest will be left behind. @ken the reason you're overlooking for why the average home prices will fall is found the in debt markets. Something you're so deeply in bed with, its possible you're blind to the realities of as you have every motivation for said market to continue to function as its at the very center of how your entire operation works. When the debt markets fundamentally re-price debt and / or debt goes bidless on a larger scale but its worth is evaporating rapidly, assets will fall. There won't be a choice.
Real Estate from an economy perspective will come down with 3 historic level bubbles starting to pop now. RE is one of the bubbles. Keep preparing. Your patience will pay off in the next 18 months. First signal is Foreclosures and notices are at 25 percent right now, a big indicator of unwinding. These are mortgage holders that bought at the peak and notified their lender of default, trying to sell or are in foreclosure.
this is me and I assume I'm a small minority. whether prices come down or not, I just moved my career from travel consulting to a corporate gig, but they haven't finalized decision on which office I'll work from (opposite sides of a major metro). Doesn't make sense for me to buy until a) I've been at this gig for 2 years, and b) have a final decision on what part of town my office will be. In the mean time I'm socking away funds for that purchase.
You can secure your mortgage for 30 years, but you still have to account for ongoing expenses such as maintenance, insurance, and taxes. A mortgage represents just the minimum cost of homeownership. For me, the prospect of retiring outside of the United States increasingly seems like the only viable option.
@@poonekar My rent is $2500 per month. A mortgage on this same house with 20% down would cost me at minimum $1300 per month more. Plus on top of that I’d have insurance and maintenance. While I’ve been renting out A/C went out. I paid zero. Owner of the home paid $7500’to replace it. Had I owned I’d have had to pay that so renting is cheaper by far to me.
If you were one of my tenants who pays me $2500/mo, my response would be - I bought the unit at a much lower price and rate than today, so my mortgage is $1300. After all other expenses, it costs me $2000, so my cash flow is $500/mo. I used that to fill up my reserves a while back to pay for surprises like the HVAC going out. My insurance increased this year by $100/mo, so I will increase @lacofdfireman's rent to $2750 once this lease ends. What choice does he have? Go buy his own place and pay over a thousand a month more?
What about people who bought houses then get forced out because the now taxes are higher than they can afford? Even if you pay off your house the taxes end up being a rent payment ?!
It's real basic math. If your average home increases in value by 5% and your mortgage is 7% then you are losing 2% of your home value every year. This is before property tax, insurance, repairs etc. If the interest on your loan is more than the annual appreciation on your home then you are losing money.
The most important take away from this video “”””Real estate is local””””. As a very old single family home rental investor (some flips some buy and holds) that has touched a hundred of my own homes and thousands as a contractor for private equity firms is know ur market. For buy and holds I have a list of must haves. Employment diversity is huge for me. It limits me but has served me well.
Thank you for this video. While I do think it's wise to buy where you are living for most people, places like LA where the rent is significantly less than the requirements to buy a 1.5M house, i think the strategy is to rent in LA, and use the resources (downpayment) that would have been used to buy the 1.5M house and buy somewhere else with better returns. California is also a tenant friendly state. So if someone were to be based in LA, just rent where you live, and then buy a house in Phoenix, Vegas or Austin with the down payment originally set for a 1.5m house in LA... have that out of state house rented to a tenant, and still enjoy equity buildup and appreciation. Another reason to rent in places like LA is because for less than half the mortgage payment, you can live in a rental much nicer with superior amenities to what you can get for 1.5m. Also renting does not expose ones self to issues with insurers and calamities. 🙏. Would love to buy in LA but it just seems far better returns are available in landlord friendly states.... and the quality of life of a rental is much higher vs the equivalent cost in mortgage payment with down.
Great, great update!! Nice details. I like that you encourage people to do the math and buy if they can, while showing the advantages to the potential initial sacrifice.
Folks whining about paying insurance and taxes if you buy, are very naive IF they think they are not paying insurance and taxes when they rent. Do they actually believe landlords are NOT passing those expenses onto the renters? The only advantage of renting over ownership is it is cheaper to rent than buy at this point in time.
1 thing to always remember if you buy a home you need equity or savings to eventually pay for a new roof hvac appliance etc. so many get into deep debt not realizing that
My stepson (48) rents, and I own (4) paid-for rentals worth about $900,000 that provides about $1,200 net (after all costs) cash flow weekly. Guess which one of us is set for life. I keep my properties in good repair and profit from it. My properties appreciate about $50,000 annually. There is no upside in renting. My portfolio suggests I know what I'm doing.
@@1Skeptik1what's the inheritance plan? If you don't have one the lawyers will or the gov usually to take it from you too. May pay the home fees but why them rather than you family or stepson?
@@1Skeptik1wow so good for you... To bad half the world can't own property an live the debt free life while everyone else gives all there money to a landlord for rent. Yeah.. American dream now is a landlord owner.
IF YOU can afford to. (1)Simply divide the home price by 3 [the minimum your income should be] (2) Downpayment of 8% - 20% (3) Pay closing costs out of pocket [request appraiser complete a reserve schedule] (4) If PITI is more than 30% of your income. 💀 (5) Have 6 - 12 months of emergency funds to cover total living expenses
Exactly!!!!! Buying isnt worth it right now. Sellers asking for 200k more than the value is ridiculous and greedy! This lady stuck on buying is out of touch with reality. Lower interest rates and housing prices to current market wages need to happen.
@victoriamorales8221 theres a strong chance that housing prices dont necessarily go down in high inflow areas as prime interest rates stay higher for longer than what people are thinking. When people realize that, people waiting on sidelines will start buying up again and apply demand pressures. I bought during the april 23' dip in a high demand area when mortgage rates were 6.25% and im already up 10%. Now it's 7% but demand is still stable
Annual maintenance is usually about 1% of home value. Property insurance is now .5%-1% of the value of a home. Property tax is about 1%. Your home needs to average 3% growth per year just to break even.
I live in Las Vegas and bought a 2 bed, 2 bath townhome in 2023. At the time rent would have cost me more so I decided to take a chance and buy. Time will tell if I made the right decsion.
Depends on when you entered the real estate market. I purchased houses in 2007 for as low as 13700$ have sold some for 130000$ after renting them for 16 years. It’s all about timing markets. Housing or stock markets!
As an operator of 15 units, unfortunately you will have to decrease your expectations with tenant quality . Just do your pre screening before showings and choose the best candidates to select from the list. Credits are bad because of poor habits created during Covid 19 period, the people with A1 credit will want serious concessions, to live in anything but A+ property, if you don’t want to loose income just decrease your credit score expectations and have more conversations about why there credit is low.
I have an idea, lets convince a whole generation to get a college degree, get a loan on said "education", After graduation and jobless, convince them that van life is the way to go, marriage is a terrible idea, owe and the world is overpopulated, get a dog. Years later and 1000 of flea bites later, you look in the mirror and realize you're almost 30, the van mattress has hurt your back, with no medical insurance, you become addicted to pain pills. You bury your parents at 40, at that point it dawns on you....you're all alone. If you wish to know the way stop by ... my comment is a general one, and not about the video great production quality!
The buy vs rent calculation is fairly simple. I'll have to whip out an excel spreadsheet one of these days and report back based on different markets and scenarios. Still need to do it on the house that I did buy back in 2021 and factoring in all the deferred maintenance. Not sure even with low rates which was better
4-5 % annual increases completely ignoe tthe carrying costs of interest, taxes and insurance. Add these in and renting is a no Brainer. Those charts were a crystal clear clarification.
The only thing I don't like about this video so far (7 mins in) is there are still very tight markets in the country particularly the mid-Atlantic and northeast, where I don't think independent home sellers are having that hard of a time when looking at the data. I can see how Ken is stating insightful information in his local market though.
People need to understand that you don't save money when you buy and not rent. If you rent, you pay the landlord. If you buy you pay your "rent" as interest to the bank. If you buy all cash you pay opportunity costs (just look at what the Nasdaq or gold did in the last 10 years). I could easily buy a house cash, but love renting the house I live in and will continue to do so. All that saved cash goes into other assets, including stocks paying out dividends that pay a significant portion of my rent. Neighbor gets on your nerves or suddenly has babies crying all night? The neighborhood turns to s...? Great job offer somewhere further away? Suddenly a significant maintenance issue in that house? Insurance costs go up like nuts? It's all fine and dandy when you rent. You remain super flexible, and this is what you need in today's world. Liquidity is king. Finally. Has anybody recently looked at the numbers of new born babies, juxtaposed to the elderly retiring? That should tell you something about the level increasing demand - or lack thereof - in the long term.
Renting and buying both have their pros and cons. It's not like renting is always better than buying. I own a townhome and have no one living above or below me which alone makes it worth it. 😂
As someone who has been paying 3.5 X someone's mortgage year after year, getting booted out every 2 years to find rent go up $200; every year housing instability, rent hikes, lousy landlords its only gotten worse. At 48 I need more stability of my own. I want a place that I never have to get booted out of and have a hike every year. Its a no brainer for me
Two things would bring down prices and bring more inventory: 1-an increase in unemployed that need to sell thus more inventory from Distress Sellers AND 2- lenders stopping forebearance and pursuing on defaults, and putting those on the market also (there is still a large amount of homeowners being worked with in default).
%49 appreciation over the last 10 years is basically the compounded inflation rate. that'll be a fun puzzle to figure out who comes out ahead in the end of renter or a buyer in the end. I would hope people could make more than 4% a year on their excess funds. or say 8% before capital gains tax.
One question: where is this inflation you speak of going to come from? I have not heard a compelling argument for that yet. Fiscal spending and the supply shock are done. Bank lending is at a record low (true money creation), m2 has shrunk for the first time since the Great Depression. The Fed is hawkish if anything and cautious to lower rates. I just don’t get the inflation narrative.
I have been thinking of buying a house in WV for 40-60K cash and renting it out? It's possible to get a fully livable and rentable 2 bedroom house in many parts of WV for that price if the house has been for sale for a while and the seller is willing to deal with a CASH offer. I bought one a few years ago for 33K 970 sq ft. that was a listed for $42,500.00, it needed some areas externally refreshed so i spent about 8K then held it for maybe a year, listed for 75K and it sold in 5 days. I was very leery of renting as i was and still am living out of State [NC] a 3 hour drive.
After 18 years of owning I currently rent the money used for its purchase 370 per month plus retax 150 plus ins 170, where comparable 3/2 houses rent for 2700. What's the rent going to be in 15 20 years
My son is selling his house and the new owner is putting down 5%. The new owner's mortgage payment with PMI and current rates should be $3,200 per month (my son's payment is $1,200). The most his house would rent for is $2,200 per month. Also the home is 11 years old and houses of this age usually average an additional $350 per month above and beyond your mortgage payment to maintain the house. So if you include the maintenance fees, all in, the mortgage payment, plus repairs will average $3,550 per month for a 3/2.5 home for first time home buyers. (Four bedrooms in this neighborhood are renting for $2,300/$2,400.) He lives in one of the desirable areas in NORTHERN Metro Atlanta. My sons home DOUBLED IN VALUE in five years which is not affordable and unsustainable. I suspect this home will be a foreclosure in four years.
It is never always better to do one or the other. Many older adults are stuck on using old advice. The big fact is simple. No one should buy a home at all, if they do not need it and plan to stay in the area for a decent amount of time. Everything he said at the beginning about Austin was bull. The decreased rents and discounts are not even reflected in the numbers that were shown. He said rental rates are not going to rise. He said rents are falling. Earlier he said buying is the way to go. Why pay double to buy when rent costs more than 50% less without overhead? It makes no sense.
depends on what you do, I make around 80k at a job I'm planning on relocating to Lubbock TX the homes I am looking at are 100-140k at most putting 30k down on a 15-year loan the house note is less than half of my current rent in Sparks NV at 1800 a month for a 2 star 1+1 . tell me how buying is not cheaper than renting? Sure I can buy more home price wise but I dont want higher property taxes etc...
In Texas and Florida the single family homes are falling. All these houses that sold with no home inspections over the past 4 years sight unseen. All these short-term rentals they're all coming on the market. And it's like yeah this one bathroom house from the 1960s that hasn't been updated since the 1990s isn't going to sell for $275,000. Seeing price cuts of $15,000 at a time how's it sitting on market for 60 plus days. There's actually homes for sale in Plano Texas East Plano over homes but for below 250. A year and a half ago there was nothing below 350 in this whole city.
I"m probably in the very small minority where renting (for now) makes sense. I've been doing consultant work where gigs can last anywhere from 6 months to 2 years. Didn't make sense to own when I was moving locales over the last 10 years. I just took a corporate role but there are 2 locations on opposite sides of a major metro area where my office might end up in. Until I know that bit, makes no sense to sink money into a home. Its a short term concern, but given I didn't know where my life was going to be I've just rented a 'home base' townhome near my parents that keeps my total home expenses below 15% of my net monthly income. I've also considered renting until retirement (investing vs. home ownership) and then buying a home in cash (15-20yr timeline) when i do retire
I'm waiting bc I own the place I live and I'm fixing the door issues and I want to paint before I decide to rent and move somewhere else. I'm not rushing to move from here bc it's beautiful here and a very nice neighborhood. I need more time to decide if I want to move or not. I need more help with what to do next.....
The 30 year fix is the trap. The first 10 years is 90-80% interest....you still renting from the bank. Except you're stuck. Most move or refinance before 10 years...30 year fix is the bank scam.
@_m_K_. I may not be acurate but most are still stuck with such a low interst. Think about what you said...50% losing money? What about all the escalating over head? The times to "hold" homes are over...sorry. imo. Inflation is stuck. If it goes up, we're all screwed. We need rates to come down. But not good either. I'm gonna move to a south Pacific beach with a drink in my hand soon...bye bye rat race
Danille you should think about advertising in Pacific Palisades California Granted thats a bit of a stretch but the Pacific Palisades population has high net worth..and the people who lost their homes to fire want a nearby place to rent while their mansion on the Pacific Ocean gets rebuilt Just Sayin'
@@RivIrie 1 year min for permits and glad-handing public officials to get your permit "Fast-Tracked" 2 years+ Minimum by the time the last nail goes in
Homes in my area are up 200k from two years ago. The expectation of values versus wage stagnation is ridiculous. Renting is cheaper than investing in a new or used home. Inflation is killing the American dream.
If I buy a house, with PITI more than double my rent, (in the Denver market), I will not have any money left to invest and I will be in a hurt locker if a catastrophe occurs.
in today's market, if as you response to the other reviewer's question e.g.break even no buy as the criteria, then nothing you can buy at 20% down or less.
Even people that bought a house in 2006 at the peak of the market still benefited if they sat on it for 20 years. The key in real estate is to buy in a desirable area and simply sit on your investment for years. You can either pull out your equity or sale it in 20 years.
Prices will come down because they are too expensive. What solves high prices? High prices. There are very few couples that can qualify for a mortgage. We could go nowhere for 10 years or it could crash and then it can rebuild like in 2012. I know the circumstances are way different, but it doesn't change the unaffordable prices. And you didn't mention insane property taxes and insane insurance. So Danille is right, something has to give.
Or what's the chances banks will keep on increasing the salary multiple? I doubt it! Already way too high and that's on them. I just won't do it out of logic for myself to begin with. I still wanna have a little beer money!
Things don’t just magically go up forever. There are always corrections and this video simplifies too much that real estate will magically just keep going up.
but expansion of the US money supply is built in which means the purchasing power of USD will continue to decrease the same as it has for decades (e.g. targeted inflation) So while assets may not increase in "value" they will increase in the number of USD required to purchase them. The real problem is that the dollars we hold and earn just buy less and less
I think an important consideration in home price increases over the last 10 years is the Covid epidemic and the increase in money supply. I think that was a one off leading to Price spikes, not one that anyone can expect to be duplicated over the next 10 years. it wouldn’t surprise me at all to see home prices remain relatively static over the next few years. If there are significance savings by renting, I don’t think it would be a bad strategy to save the Delta in a very disciplined way, keep it in t bills etc, and probably have six figures saved after four or five years.
I appreciate your show Ken and Danielle. I hear what you’re saying that people should buy instead of rent. Over 10 years 10 years span it’s going to appreciate yada yada yada. But what about today.? Aren’t people renting because they cannot actually afford to buy? High prices on homes, higher interest, rates, ridiculous property, tax rates, skyrocketing insurance costs in many areas. I’m assuming a home can be rented cheap in comparison is because that home was purchased for much less and the interest rate was less etc. etc. Isn’t this what the average Joe and Jane is facing?
Buying only makes sense if you use a 15yr term or less on your loan If the growth rate is 4-5% and interest is 5-7% you will stay flat or lose value over time. A 30yr fixed 6% loan on 400k will cost 463k in interest over a 30yr term you will pay 863k for a 400k home with a 15yr term you pay 503k in total saving you over 350k in interest
It will take you over 10 years to pay off $100k principal on a $500k home with a 30-year fixed mortgage at today's rates (because of front-loaded interest), so renting and waiting for a crash (defined as 20% or more price depreciation) may be a good long-term strategy.
I bought a condo on the west coast at the height of the market before the 2008 crash, I put 50% down, later when interest rates went down, I tried to refinance and was told, "you don't have any equity"
Giving free rents the type of tenants you can get is not really good . Normally tenants destroy your houses and giving free rent increases the chances of getting even worse people.,,
In today's economy , not yesterday's , but today's and in the near future, if your projections show that the property is going to appreciate 5% a year you are 1) not adding in maintenance and repair costs and 2) property taxes that you must pay and 3) homeowners Insurance costs . In the case of 1,3 renters don't have maintenance costs or homeowners ins. ( just renters ins.) And with 2- renters pay no property taxes. When you take these costs into consideration, you're you rate of return is less than 5% a year. Invest in the stock market and earn greater than 5% a year or if lazy buy an annuity with a guaranteed return of 10%.
Not here in Atlanta ga I'm in canton ga and rentals are as much as homes. Had a 4500 sq foot home paid $2000 month w/4%. Just trying to rent apartment or house here best deal I can find is $2105 month rent. Maybe lesser quality for $1989. Rental homes are 2100 - 2600 here in north ga. If Iyou say they are cheaper....well not here in north georgia avg house in north ga starts at $600000
Is that really true? Not to nitpick, but if i buy a home for 100K while anticipating market conditions resulting in the home appraising for 200K over 10 years, then sell it, wasn't that an investment with a 100K return, irrespective of whether I live in the home or not?
@@INTERNETVID Real Estate does not typically double every 10 yrs., but let's say it did....what would you pay in taxes, insurance, maintenance and transaction costs in total? I'd say ~50K.
renting should cost more because it's better than in ownership in terms of flexibility, sunk costs, maintenance, risk, mobility in life in general in terms of location, and list goes on. I'm an owner and real estate pro but people should do the math. if you are not able to force saving and investment, then ownership may be better. Capital gains long term exemption is one of the best wealth producers if you can create value and live in the property for 2/5 years
I am betting on bigger inflation. Fed can do something simple stop issuing 10s go to 2 s and 5s. Not against 30 year mortgage but its stupid to pay more for government financing.
If you are in big metros like San Jose or San Francisco, buying is a luxury. Renting is way way lower than mortgage payment. But if you ambitious enough to own a home, there's a solution to that. Buy the ugliest house fix it up slowly, rent the rooms and stay at the garage. This is cheaper than renting and may even offset all your morgage payment.
Aw shucks, the rental market is flat in some areas. Too bad for (corporate) landlords, my heart bleeds for you after loosing one rental home after another due to an unregulated market in the major metro area where I lived that saw rent increases of 50-100%. I would also add that I was spending 75-85% of my income on rent BEFORE the rent was jacked up, AND I was employed full time in a "professional" job that had me working 60-80 hours a week. Yes, it would have been smarter to purchase a home, but I simply could not save for a down payment that equaled 10x my annual salary. Do the math! Buying a house is unaffordable! So is renting! I hope the housing market flat lines then drops precipitously (even though I'm now a homeowner and this would definitely impact my equity) so people can keep a roof over their heads without the anxiety of being caught in a system that keeps them trapped while corporation landlords fail to make "expansive" ROI.
You'll never be able to eventually live off of a nest egg buying a home in this kind of environment especially wasting that down payment + the difference between rent and mortgage over how long these unaffordable prices are going to last. Renting is the best way right now. Unfortunately housing needs a 40-50% haircut before it would be worth it when it comes to the difference between current rent vs housing mortgage. Close to $3,000 average Mortgage currently vs. $1300 average rent. It's a no brainer. Where you going to create liquidity to live off that nest egg creator faster?
Inflation (dollar devaluation) averaged 4.25% annually for the past 50 years. (I'm 73 years old and lived it.) That means the price of commodities doubles every 16 years including shelter. I own 4 modest paid-for rentals which net us about $1200 a week and I have $1,200,000 equity in my properties. My properties appreciate $50,000 a year. My stepson (48) rents and has no equity. Is there an upside to renting? NO! Not today, or tomorrow, or 50 years ago.
But it's people like you that still have a big expensive place who doesn't need that amount of space is cutting out young people's ability to have a future right now. We're all interconnected!
1:07 in... I'm glad Ken thinks it's funny that so many are forced to rent, in this post Covid, Biden nightmare economy, hahahahaha...I guess as long as you and the people you care about are doing well, right Ken, because that's the feeling I'm gettin 'here. I bought one of your books Mr. McElroy, maybe I'll throw it in the trash now, hahahahaha...
If you have purchased a house in a subdivision with an HOA 👀 unfortunately you are not in a good predicament long term. HOA is the biggest rip off of all time 😆
Great video, but disagree about now being a good time to buy.. house prices are definitely going down the next few years. After 2008 the market bottomed in 2011. And 2008 crash happened 17 months after the last rate hike in 2006... flash forward to today, we are at 17 months after the last rate hike in Summer of 2023. So, based on historical trends, we'll see a big correction in 2025 and the bottom will actually be in 2028.
@ That’s a hard question , but if Trump doesn’t deport the immigrants that are construction workers and are to help America supply, I could predict Home prices drop significantly if inventory is high. But if Trump deport the construction workers. Expect price increase when rates lower for sure
Prices are going to tank. Now is the absolute worst time to buy. You two are offering awful advice. It Used to amazes me how shocked people are every time there is a housing bubble. Advising on huge financial decisions should not be offered from real estate folk. Home prices cannot rise forever. It is not sustainable with millions of old people heading g for the Pearly Gates in the near future.
Ah yes, the rent vs buy decision I’ve been trying to figure out for years. The rental income vs mortgage payment calculation never made sense to me. But this is much more logical and makes far more sense. Thank you for simplifying this!
Most people are unable to handle a fall since they are accustomed to bull markets, but if you know where to look and how to get around, you can profit handsomely. It depends on your entry and exit strategy.
People often overlook the value of financial advisors until they experience the downside of emotional decision-making. I recall a few summers ago, after a difficult divorce, when I needed help reviving my struggling business. I did some research and found a licensed advisor who worked diligently to grow my reserves, even amid inflation. As a result, my reserves grew from $315k to around $740k.
I tried looking into new strategies to profit in the current market because my portfolio has been in the dumps for the entire year, but everything I tried just seemed to miss the point. Please let us know who your asset manager is by name.
Finding financial advisors like Lisa Grace Myer ” who can assist you shape your portfolio would be a very creative option. There will be difficult times ahead, and prudent personal money management will be essential to navigating them.
Inflation (dollar devaluation) averaged 4.25% annually for the past 50 years. (I'm 73 years old and lived it.) That means the price of commodities doubles every 16 years including shelter. I own 4 modest paid-for rentals which net us about $1200 a week and I have $1,200,000 equity in my properties. My properties appreciate $50,000 a year. My stepson (48) rents and has no equity. Is there an upside to renting? NO! Not today, or tomorrow, or 50 years ago.
Good thing we all have money trees in the backyard and can afford these prices.
I keep mine watered at all times
Even if, in your example, your $400,000 home purchase today was guaranteed to be worth $600,000 and 10 years, at 7% interest you will pay $250,000 in interest in those 10 years, plus $50,000 in taxes and $50,000 in insurance (to be generous) much more in some areas. Plus maybe $50,000 in maintenance and repairs over 10 years. So yes renting is costing you $25,000 per year, but buying that house is costing you $400,000 over the first 10 years, and you get 200,000 of that back in appreciation. Buying a house at 3% interest was a slam dunk, at 7%. It doesn’t make sense AT THESE PRICES. SHUTUP BOOMERS WHO SAY “MY RATE WAS 10%”. YOUR PRICE WAS ON 3x income
The real estate industry is too often tone deaf. Most have a MASSIVE motivation to say X or Y is going to happen and are often therefore, majorly lacking in self awareness and connection to reality.
Wages are not rising anywhere *near* as fast as home values have been. There is no sustainable path for average home values to continue to rise if wages continue to not keep pace. The market will be reduced to buyers who can play the financial markets and the rest will be left behind.
@ken the reason you're overlooking for why the average home prices will fall is found the in debt markets. Something you're so deeply in bed with, its possible you're blind to the realities of as you have every motivation for said market to continue to function as its at the very center of how your entire operation works. When the debt markets fundamentally re-price debt and / or debt goes bidless on a larger scale but its worth is evaporating rapidly, assets will fall. There won't be a choice.
Word. The down payment $$ can be invested elsewhere.
Real Estate from an economy perspective will come down with 3 historic level bubbles starting to pop now. RE is one of the bubbles. Keep preparing. Your patience will pay off in the next 18 months. First signal is Foreclosures and notices are at 25 percent right now, a big indicator of unwinding. These are mortgage holders that bought at the peak and notified their lender of default, trying to sell or are in foreclosure.
And houses appreciated in price when rates were 3%. It was a good deal for those who already owned a home and were able to refinance.
this is me and I assume I'm a small minority. whether prices come down or not, I just moved my career from travel consulting to a corporate gig, but they haven't finalized decision on which office I'll work from (opposite sides of a major metro). Doesn't make sense for me to buy until a) I've been at this gig for 2 years, and b) have a final decision on what part of town my office will be. In the mean time I'm socking away funds for that purchase.
You can secure your mortgage for 30 years, but you still have to account for ongoing expenses such as maintenance, insurance, and taxes. A mortgage represents just the minimum cost of homeownership.
For me, the prospect of retiring outside of the United States increasingly seems like the only viable option.
Please avoid coastal areas and single climate countries. Global warming is and will speed up.
You are paying for maintenance, insurance and taxes for the landlord when you are renting.
@@lucreciaapplewhaite3350
Global Warming. 🤣
@@poonekar
My rent is $2500 per month. A mortgage on this same house with 20% down would cost me at minimum $1300 per month more. Plus on top of that I’d have insurance and maintenance. While I’ve been renting out A/C went out. I paid zero. Owner of the home paid $7500’to replace it. Had I owned I’d have had to pay that so renting is cheaper by far to me.
If you were one of my tenants who pays me $2500/mo, my response would be - I bought the unit at a much lower price and rate than today, so my mortgage is $1300. After all other expenses, it costs me $2000, so my cash flow is $500/mo. I used that to fill up my reserves a while back to pay for surprises like the HVAC going out.
My insurance increased this year by $100/mo, so I will increase @lacofdfireman's rent to $2750 once this lease ends. What choice does he have? Go buy his own place and pay over a thousand a month more?
For the short term (2-3 years), renting is the obvious choice. For 10+ years, buying becomes the clear winner.
What about people who bought houses then get forced out because the now taxes are higher than they can afford? Even if you pay off your house the taxes end up being a rent payment ?!
It's real basic math. If your average home increases in value by 5% and your mortgage is 7% then you are losing 2% of your home value every year. This is before property tax, insurance, repairs etc. If the interest on your loan is more than the annual appreciation on your home then you are losing money.
😅
This was so so good. I work for a property owner and the last two questions and answers were so great and helpful.
Another issue is wages did not go up anywhere near the rate of the value of homes and othet costs of living, bills etc.
The most important take away from this video “”””Real estate is local””””. As a very old single family home rental investor (some flips some buy and holds) that has touched a hundred of my own homes and thousands as a contractor for private equity firms is know ur market. For buy and holds I have a list of must haves. Employment diversity is huge for me. It limits me but has served me well.
Thank you for this video. While I do think it's wise to buy where you are living for most people, places like LA where the rent is significantly less than the requirements to buy a 1.5M house, i think the strategy is to rent in LA, and use the resources (downpayment) that would have been used to buy the 1.5M house and buy somewhere else with better returns. California is also a tenant friendly state. So if someone were to be based in LA, just rent where you live, and then buy a house in Phoenix, Vegas or Austin with the down payment originally set for a 1.5m house in LA... have that out of state house rented to a tenant, and still enjoy equity buildup and appreciation.
Another reason to rent in places like LA is because for less than half the mortgage payment, you can live in a rental much nicer with superior amenities to what you can get for 1.5m. Also renting does not expose ones self to issues with insurers and calamities. 🙏.
Would love to buy in LA but it just seems far better returns are available in landlord friendly states.... and the quality of life of a rental is much higher vs the equivalent cost in mortgage payment with down.
LA is now under mcc toxic rain
Great, great update!! Nice details. I like that you encourage people to do the math and buy if they can, while showing the advantages to the potential initial sacrifice.
Folks whining about paying insurance and taxes if you buy, are very naive IF they think they are not paying insurance and taxes when they rent. Do they actually believe landlords are NOT passing those expenses onto the renters? The only advantage of renting over ownership is it is cheaper to rent than buy at this point in time.
1 thing to always remember if you buy a home you need equity or savings to eventually pay for a new roof hvac appliance etc. so many get into deep debt not realizing that
My stepson (48) rents, and I own (4) paid-for rentals worth about $900,000 that provides about $1,200 net (after all costs) cash flow weekly. Guess which one of us is set for life. I keep my properties in good repair and profit from it. My properties appreciate about $50,000 annually. There is no upside in renting. My portfolio suggests I know what I'm doing.
That is why you always buy below your means
@@1Skeptik1what's the inheritance plan? If you don't have one the lawyers will or the gov usually to take it from you too. May pay the home fees but why them rather than you family or stepson?
@@1Skeptik1wow so good for you... To bad half the world can't own property an live the debt free life while everyone else gives all there money to a landlord for rent. Yeah.. American dream now is a landlord owner.
Why try to convince people to buy in an economy where wages are stagnant. What's better or worse doesn't matter if there's no livable income
IF YOU can afford to.
(1)Simply divide the home price by 3 [the minimum your income should be]
(2) Downpayment of 8% - 20%
(3) Pay closing costs out of pocket [request appraiser complete a reserve schedule]
(4) If PITI is more than 30% of your income. 💀
(5) Have 6 - 12 months of emergency funds to cover total living expenses
Within the first 40 seconds he acknowledges that people can't buy right now
Over time, real estate values will increase with inflation. Paying rent doesn't do anything for you plus, you need to live somewhere.
Exactly!!!!! Buying isnt worth it right now. Sellers asking for 200k more than the value is ridiculous and greedy! This lady stuck on buying is out of touch with reality. Lower interest rates and housing prices to current market wages need to happen.
@victoriamorales8221 theres a strong chance that housing prices dont necessarily go down in high inflow areas as prime interest rates stay higher for longer than what people are thinking. When people realize that, people waiting on sidelines will start buying up again and apply demand pressures. I bought during the april 23' dip in a high demand area when mortgage rates were 6.25% and im already up 10%. Now it's 7% but demand is still stable
Annual maintenance is usually about 1% of home value. Property insurance is now .5%-1% of the value of a home. Property tax is about 1%. Your home needs to average 3% growth per year just to break even.
On that note, I literally got my 2025
Assessed value from my city and it went up 10% YOY. The prior year is went up 20% !
I live in Las Vegas and bought a 2 bed, 2 bath townhome in 2023. At the time rent would have cost me more so I decided to take a chance and buy. Time will tell if I made the right decsion.
Rent an old apartment with a dirty carpet = "a classic" ... Love It!
Depends on when you entered the real estate market. I purchased houses in 2007 for as low as 13700$ have sold some for 130000$ after renting them for 16 years. It’s all about timing markets. Housing or stock markets!
Here in eastern PA, rent is far more expensive than a 30 year mortgage. Great video.
I'm in Ontario Canada, with the crazy inflation and rent increases, tenants has taken advantage of their squatters rights like crazy...
As an operator of 15 units, unfortunately you will have to decrease your expectations with tenant quality . Just do your pre screening before showings and choose the best candidates to select from the list. Credits are bad because of poor habits created during Covid 19 period, the people with A1 credit will want serious concessions, to live in anything but A+ property, if you don’t want to loose income just decrease your credit score expectations and have more conversations about why there credit is low.
This has been my experience exactly.
Institutional should be forced to divest their holdings in SFH
I have an idea, lets convince a whole generation to get a college degree, get a loan on said "education", After graduation and jobless, convince them that van life is the way to go, marriage is a terrible idea, owe and the world is overpopulated, get a dog. Years later and 1000 of flea bites later, you look in the mirror and realize you're almost 30, the van mattress has hurt your back, with no medical insurance, you become addicted to pain pills. You bury your parents at 40, at that point it dawns on you....you're all alone.
If you wish to know the way stop by ... my comment is a general one, and not about the video great production quality!
Midwest here! My last 2 tenants have moved here from CA. 😊
The job mkt isn't stable. Who is going to buy ?
💯
I gambled and bought a townhome in 2023. I've been at my current job for nearly ten years.
The inflated home prices are what has to give
The buy vs rent calculation is fairly simple. I'll have to whip out an excel spreadsheet one of these days and report back based on different markets and scenarios. Still need to do it on the house that I did buy back in 2021 and factoring in all the deferred maintenance. Not sure even with low rates which was better
4-5 % annual increases completely ignoe tthe carrying costs of interest, taxes and insurance. Add these in and renting is a no Brainer. Those charts were a crystal clear clarification.
The only thing I don't like about this video so far (7 mins in) is there are still very tight markets in the country particularly the mid-Atlantic and northeast, where I don't think independent home sellers are having that hard of a time when looking at the data. I can see how Ken is stating insightful information in his local market though.
People need to understand that you don't save money when you buy and not rent. If you rent, you pay the landlord. If you buy you pay your "rent" as interest to the bank. If you buy all cash you pay opportunity costs (just look at what the Nasdaq or gold did in the last 10 years). I could easily buy a house cash, but love renting the house I live in and will continue to do so. All that saved cash goes into other assets, including stocks paying out dividends that pay a significant portion of my rent. Neighbor gets on your nerves or suddenly has babies crying all night? The neighborhood turns to s...? Great job offer somewhere further away? Suddenly a significant maintenance issue in that house? Insurance costs go up like nuts? It's all fine and dandy when you rent. You remain super flexible, and this is what you need in today's world. Liquidity is king. Finally. Has anybody recently looked at the numbers of new born babies, juxtaposed to the elderly retiring? That should tell you something about the level increasing demand - or lack thereof - in the long term.
Renting and buying both have their pros and cons. It's not like renting is always better than buying. I own a townhome and have no one living above or below me which alone makes it worth it. 😂
As someone who has been paying 3.5 X someone's mortgage year after year, getting booted out every 2 years to find rent go up $200; every year housing instability, rent hikes, lousy landlords its only gotten worse. At 48 I need more stability of my own. I want a place that I never have to get booted out of and have a hike every year. Its a no brainer for me
Thanks for sharing today. Sharing your video immediately so others will know...from the Ozarks
Two things would bring down prices and bring more inventory: 1-an increase in unemployed that need to sell thus more inventory from Distress Sellers AND 2- lenders stopping forebearance and pursuing on defaults, and putting those on the market also (there is still a large amount of homeowners being worked with in default).
%49 appreciation over the last 10 years is basically the compounded inflation rate. that'll be a fun puzzle to figure out who comes out ahead in the end of renter or a buyer in the end. I would hope people could make more than 4% a year on their excess funds. or say 8% before capital gains tax.
Thank you very much
What’s with the spaces?
Baltimore seems to be a good market to buy vs renting if you can fill what you need and listings are currently up.
The time to buy is when everyone else is selling of course depends on cash flow and projected life span
One question: where is this inflation you speak of going to come from? I have not heard a compelling argument for that yet. Fiscal spending and the supply shock are done. Bank lending is at a record low (true money creation), m2 has shrunk for the first time since the Great Depression. The Fed is hawkish if anything and cautious to lower rates. I just don’t get the inflation narrative.
Have you heard of the Federal Reserve, Dept of Treasury or the federal budget?
Dallas is not on the list? I am surprised. In place like Frisco, the % is more like 200%+
I have been thinking of buying a house in WV for 40-60K cash and renting it out? It's possible to get a fully livable and rentable 2 bedroom house in many parts of WV for that price if the house has been for sale for a while and the seller is willing to deal with a CASH offer. I bought one a few years ago for 33K 970 sq ft. that was a listed for $42,500.00, it needed some areas externally refreshed so i spent about 8K then held it for maybe a year, listed for 75K and it sold in 5 days. I was very leery of renting as i was and still am living out of State [NC] a 3 hour drive.
Why? Clearly don't get debt if you're throwing your own cash on the table! Let the bank put it up! Max 5-10%. Makes no sense
After 18 years of owning I currently rent the money used for its purchase 370 per month plus retax 150 plus ins 170, where comparable 3/2 houses rent for 2700. What's the rent going to be in 15 20 years
Value add can make things more affordable for both parties. For example make a 4b 2b into a 8b 3b 3 kitchens
My son is selling his house and the new owner is putting down 5%. The new owner's mortgage payment with PMI and current rates should be $3,200 per month (my son's payment is $1,200). The most his house would rent for is $2,200 per month. Also the home is 11 years old and houses of this age usually average an additional $350 per month above and beyond your mortgage payment to maintain the house. So if you include the maintenance fees, all in, the mortgage payment, plus repairs will average $3,550 per month for a 3/2.5 home for first time home buyers. (Four bedrooms in this neighborhood are renting for $2,300/$2,400.) He lives in one of the desirable areas in NORTHERN Metro Atlanta. My sons home DOUBLED IN VALUE in five years which is not affordable and unsustainable. I suspect this home will be a foreclosure in four years.
If the new buyer plans on sitting on the house for 10 years it’ll be a good investment.
Great discussion you two👍
Is it even possible for supply to ever catch up at this point?
It is never always better to do one or the other. Many older adults are stuck on using old advice. The big fact is simple. No one should buy a home at all, if they do not need it and plan to stay in the area for a decent amount of time. Everything he said at the beginning about Austin was bull. The decreased rents and discounts are not even reflected in the numbers that were shown.
He said rental rates are not going to rise. He said rents are falling. Earlier he said buying is the way to go. Why pay double to buy when rent costs more than 50% less without overhead? It makes no sense.
depends on what you do, I make around 80k at a job I'm planning on relocating to Lubbock TX the homes I am looking at are 100-140k at most putting 30k down on a 15-year loan the house note is less than half of my current rent in Sparks NV at 1800 a month for a 2 star 1+1 . tell me how buying is not cheaper than renting? Sure I can buy more home price wise but I dont want higher property taxes etc...
Very helpful Thank you for sharing this
Minute 1:05, do you have any east coast data to this effect?
Was this video recorded before the la fire?
In Texas and Florida the single family homes are falling. All these houses that sold with no home inspections over the past 4 years sight unseen. All these short-term rentals they're all coming on the market. And it's like yeah this one bathroom house from the 1960s that hasn't been updated since the 1990s isn't going to sell for $275,000. Seeing price cuts of $15,000 at a time how's it sitting on market for 60 plus days.
There's actually homes for sale in Plano Texas East Plano over homes but for below 250. A year and a half ago there was nothing below 350 in this whole city.
If you have no buyers at this level because it is so expensive how can you say in the next ten years 800g will be the new average.
I"m probably in the very small minority where renting (for now) makes sense. I've been doing consultant work where gigs can last anywhere from 6 months to 2 years. Didn't make sense to own when I was moving locales over the last 10 years. I just took a corporate role but there are 2 locations on opposite sides of a major metro area where my office might end up in. Until I know that bit, makes no sense to sink money into a home. Its a short term concern, but given I didn't know where my life was going to be I've just rented a 'home base' townhome near my parents that keeps my total home expenses below 15% of my net monthly income. I've also considered renting until retirement (investing vs. home ownership) and then buying a home in cash (15-20yr timeline) when i do retire
I'm waiting bc I own the place I live and I'm fixing the door issues and I want to paint before I decide to rent and move somewhere else. I'm not rushing to move from here bc it's beautiful here and a very nice neighborhood. I need more time to decide if I want to move or not. I need more help with what to do next.....
The 30 year fix is the trap. The first 10 years is 90-80% interest....you still renting from the bank. Except you're stuck. Most move or refinance before 10 years...30 year fix is the bank scam.
I have a 30 year fixed mortgage at a 4.25 interest rate, thoughts?
@713houstontx4 you'll become a landlord when you move...nice rate! Make sure it cash flows.
@@713houstontx4My interest rare is 6.875%. Ouch.
I have 2.65% interest rate. 4 years into mortgage and the monthly payment is more than 50% of payment applied to principal.
@_m_K_. I may not be acurate but most are still stuck with such a low interst. Think about what you said...50% losing money? What about all the escalating over head? The times to "hold" homes are over...sorry. imo. Inflation is stuck. If it goes up, we're all screwed. We need rates to come down. But not good either. I'm gonna move to a south Pacific beach with a drink in my hand soon...bye bye rat race
But what do you do when your landlord and other rents in the area keep rising to the point its the same AS a mortgage payment??
Exactly. That's why I bought a townhome in 2023.
Danille you should think about advertising in Pacific Palisades California
Granted thats a bit of a stretch but the Pacific Palisades population has high net worth..and the people who lost their homes to fire want a nearby place to rent while their mansion on the Pacific Ocean gets rebuilt
Just Sayin'
How many of those people are going to wait 2 years just for permits? I think almost everyone in that area will be displaced
@@RivIrie 1 year min for permits and glad-handing public officials to get your permit "Fast-Tracked"
2 years+ Minimum by the time the last nail goes in
Homes in my area are up 200k from two years ago. The expectation of values versus wage stagnation is ridiculous. Renting is cheaper than investing in a new or used home. Inflation is killing the American dream.
Shoot you can get new build's in Arkansas for $189k
Who wants to live in Arkansas though
I’m checking for duck hunting areas there. Beautiful state!
The 3 Ds could be the 4 Ds: death, divorce, debt, disability
Only one of them applies to me. 😂
If I buy a house, with PITI more than double my rent, (in the Denver market), I will not have any money left to invest and I will be in a hurt locker if a catastrophe occurs.
in today's market, if as you response to the other reviewer's question e.g.break even no buy as the criteria, then nothing you can buy at 20% down or less.
Property tax growth wipes out savings from rent inflation. Period. The only benefit is hoping you can sell your home down the road at a huge profit.
Even people that bought a house in 2006 at the peak of the market still benefited if they sat on it for 20 years. The key in real estate is to buy in a desirable area and simply sit on your investment for years. You can either pull out your equity or sale it in 20 years.
Prices will come down because they are too expensive. What solves high prices? High prices. There are very few couples that can qualify for a mortgage. We could go nowhere for 10 years or it could crash and then it can rebuild like in 2012. I know the circumstances are way different, but it doesn't change the unaffordable prices. And you didn't mention insane property taxes and insane insurance. So Danille is right, something has to give.
Or what's the chances banks will keep on increasing the salary multiple? I doubt it! Already way too high and that's on them. I just won't do it out of logic for myself to begin with. I still wanna have a little beer money!
Things don’t just magically go up forever. There are always corrections and this video simplifies too much that real estate will magically just keep going up.
but expansion of the US money supply is built in which means the purchasing power of USD will continue to decrease the same as it has for decades (e.g. targeted inflation) So while assets may not increase in "value" they will increase in the number of USD required to purchase them. The real problem is that the dollars we hold and earn just buy less and less
the dollar value keep going down and house value is constant. In short, house is hedge to inflation.
Exactly. Trees don't grow to the sky.
As long as there is inflation, home prices will continue to go up. For the foreseeable future, we will have some sort of inflation in the US
It’s only gone up almost each year for like 2k yrs…
Also what if taxes on the home keeps going up?
I think an important consideration in home price increases over the last 10 years is the Covid epidemic and the increase in money supply. I think that was a one off leading to Price spikes, not one that anyone can expect to be duplicated over the next 10 years. it wouldn’t surprise me at all to see home prices remain relatively static over the next few years. If there are significance savings by renting, I don’t think it would be a bad strategy to save the Delta in a very disciplined way, keep it in t bills etc, and probably have six figures saved after four or five years.
I appreciate your show Ken and Danielle. I hear what you’re saying that people should buy instead of rent. Over 10 years 10 years span it’s going to appreciate yada yada yada. But what about today.? Aren’t people renting because they cannot actually afford to buy? High prices on homes, higher interest, rates, ridiculous property, tax rates, skyrocketing insurance costs in many areas.
I’m assuming a home can be rented cheap in comparison is because that home was purchased for much less and the interest rate was less etc. etc. Isn’t this what the average Joe and Jane is facing?
This topic is subjective to the difference between people who buy homes as investments for profit and people who buy homes to just live in them.
Buying only makes sense if you use a 15yr term or less on your loan
If the growth rate is 4-5% and interest is 5-7% you will stay flat or lose value over time. A 30yr fixed 6% loan on 400k will cost 463k in interest over a 30yr term you will pay 863k for a 400k home with a 15yr term you pay 503k in total saving you over 350k in interest
It will take you over 10 years to pay off $100k principal on a $500k home with a 30-year fixed mortgage at today's rates (because of front-loaded interest), so renting and waiting for a crash (defined as 20% or more price depreciation) may be a good long-term strategy.
I bought a condo on the west coast at the height of the market before the 2008 crash, I put 50% down, later when interest rates went down, I tried to refinance and was told, "you don't have any equity"
You put 50% down and had no equity? Where did it go to?
@@rokyericksonroksthe market crashed. They said that.
Ridiculous national average is 350-400k. WTH!!! Wages can’t keep up to afford.
This show could have been talking about buying in 2008 and we all know how that turned out.
Or in 1987 when I bought during the 80s bubble. My house in CT was worth less than I paid for it 13 years after I bought it!
Giving free rents the type of tenants you can get is not really good . Normally tenants destroy your houses and giving free rent increases the chances of getting even worse people.,,
Good job
NJ late fees are capped at 15% of rent amount per month by law.
In today's economy , not yesterday's , but today's and in the near future, if your projections show that the property is going to appreciate 5% a year you are 1) not adding in maintenance and repair costs and 2) property taxes that you must pay and 3) homeowners Insurance costs .
In the case of 1,3 renters don't have maintenance costs or homeowners ins. ( just renters ins.) And with 2- renters pay no property taxes. When you take these costs into consideration, you're you rate of return is less than 5% a year.
Invest in the stock market and earn greater than 5% a year or if lazy buy an annuity with a guaranteed return of 10%.
Not here in Atlanta ga I'm in canton ga and rentals are as much as homes. Had a 4500 sq foot home paid $2000 month w/4%. Just trying to rent apartment or house here best deal I can find is $2105 month rent. Maybe lesser quality for $1989. Rental homes are 2100 - 2600 here in north ga. If Iyou say they are cheaper....well not here in north georgia avg house in north ga starts at $600000
I thought Ken was always saying there a supply shortage?
]It sounds like people have plenty of money to pay the house since the price would go up form 410k to 600k.
A home is not an investment unless you rent it.
Is that really true? Not to nitpick, but if i buy a home for 100K while anticipating market conditions resulting in the home appraising for 200K over 10 years, then sell it, wasn't that an investment with a 100K return, irrespective of whether I live in the home or not?
@@INTERNETVID Real Estate does not typically double every 10 yrs., but let's say it did....what would you pay in taxes, insurance, maintenance and transaction costs in total? I'd say ~50K.
I'm not renting out my townhome. Where am I supposed to live if I do that? 😂
For a profit! Not much of an investment for less, unless you wanna be poor quick
renting should cost more because it's better than in ownership in terms of flexibility, sunk costs, maintenance, risk, mobility in life in general in terms of location, and list goes on. I'm an owner and real estate pro but people should do the math. if you are not able to force saving and investment, then ownership may be better. Capital gains long term exemption is one of the best wealth producers if you can create value and live in the property for 2/5 years
I am betting on bigger inflation. Fed can do something simple stop issuing 10s go to 2 s and 5s. Not against 30 year mortgage but its stupid to pay more for government financing.
The thumbnail is misspelled
Van > rent
Don’t pay rich people’s mortgages
If you are in big metros like San Jose or San Francisco, buying is a luxury. Renting is way way lower than mortgage payment. But if you ambitious enough to own a home, there's a solution to that. Buy the ugliest house fix it up slowly, rent the rooms and stay at the garage. This is cheaper than renting and may even offset all your morgage payment.
Rising insurance, HOA, and utilities....
Aw shucks, the rental market is flat in some areas. Too bad for (corporate) landlords, my heart bleeds for you after loosing one rental home after another due to an unregulated market in the major metro area where I lived that saw rent increases of 50-100%. I would also add that I was spending 75-85% of my income on rent BEFORE the rent was jacked up, AND I was employed full time in a "professional" job that had me working 60-80 hours a week.
Yes, it would have been smarter to purchase a home, but I simply could not save for a down payment that equaled 10x my annual salary. Do the math! Buying a house is unaffordable! So is renting! I hope the housing market flat lines then drops precipitously (even though I'm now a homeowner and this would definitely impact my equity) so people can keep a roof over their heads without the anxiety of being caught in a system that keeps them trapped while corporation landlords fail to make "expansive" ROI.
Apparently it's cheaper to build in Austin than buy.
You'll never be able to eventually live off of a nest egg buying a home in this kind of environment especially wasting that down payment + the difference between rent and mortgage over how long these unaffordable prices are going to last. Renting is the best way right now. Unfortunately housing needs a 40-50% haircut before it would be worth it when it comes to the difference between current rent vs housing mortgage. Close to $3,000 average Mortgage currently vs. $1300 average rent. It's a no brainer. Where you going to create liquidity to live off that nest egg creator faster?
Inflation (dollar devaluation) averaged 4.25% annually for the past 50 years. (I'm 73 years old and lived it.) That means the price of commodities doubles every 16 years including shelter. I own 4 modest paid-for rentals which net us about $1200 a week and I have $1,200,000 equity in my properties. My properties appreciate $50,000 a year. My stepson (48) rents and has no equity. Is there an upside to renting? NO! Not today, or tomorrow, or 50 years ago.
But it's people like you that still have a big expensive place who doesn't need that amount of space is cutting out young people's ability to have a future right now. We're all interconnected!
Seems like rents keep going higher in Chicago
1:07 in...
I'm glad Ken thinks it's funny that so many are forced to rent, in this post Covid, Biden nightmare economy, hahahahaha...I guess as long as you and the people you care about are doing well, right Ken, because that's the feeling I'm gettin 'here. I bought one of your books Mr. McElroy, maybe I'll throw it in the trash now, hahahahaha...
If you have purchased a house in a subdivision with an HOA 👀 unfortunately you are not in a good predicament long term. HOA is the biggest rip off of all time 😆
people with good income can barely afford to rent, and people still saying prices will keep going up forever
It will because of inflation.
@ ok, you do understand that if inflation increases, and salaries don’t, people will stop buying
Great video, but disagree about now being a good time to buy.. house prices are definitely going down the next few years. After 2008 the market bottomed in 2011. And 2008 crash happened 17 months after the last rate hike in 2006... flash forward to today, we are at 17 months after the last rate hike in Summer of 2023. So, based on historical trends, we'll see a big correction in 2025 and the bottom will actually be in 2028.
Interest rate go down. Prices go up
but 2008 huge amounts of inventory came on the market. What if large amounts of inventory dont come on the market this time..
@ That’s a hard question , but if Trump doesn’t deport the immigrants that are construction workers and are to help America supply, I could predict Home prices drop significantly if inventory is high. But if Trump deport the construction workers. Expect price increase when rates lower for sure
Prices are going to tank. Now is the absolute worst time to buy. You two are offering awful advice. It Used to amazes me how shocked people are every time there is a housing bubble.
Advising on huge financial decisions should not be offered from real estate folk. Home prices cannot rise forever. It is not sustainable with millions of old people heading g for the Pearly Gates in the near future.
Prices are going to come down. Mark my words