I think another upside to renting and moving every few years is keeping ‘stuff’ from getting out of control and being intentional with future purchases. More ‘stuff’ means more to move, and no one is a fan of that.
Honesty, this was refreshing to hear. I think you guys have an opportunity to talk to an untapped audiance in talking more on personal finance beyond what has been traditional IE: not being a homeowner, DINK (duel income, no kids), singles, and those that are not making 100K+ per year which appears to be the norm for this channel. Keep up the awesome work guys!!
I'm 25 and I feel better after hearing this. I have been working at my IT career for 3 years now and, I am also a veteran so yes I am eligible for the VA home loan. I was rushing to be in a home by end of next year, but now I think I will put it back towards when I am 28 as my goal to own a home but 30 at the latest. Main reason for pushing homeownership back, is due to the interest rates which is understandable to all. Plus I am also single with no kids and wife so renting is fine for me. Instead I will go crazy on saving/investing (traditional investments like 401k), paying off my car, upscale my skills by getting certifications, and continue to do my passion of travelling. Thanks y'all for the reassurance of better days :)
I have a mortgage, and when I do my annual metworth review at the end of the year, I purposely leave out the equity for my apartment. The way that I see it, my apartment is where I sleep, not something that might go up or down in value like a stock. I wanted to hedge against out of control rent increases, and that's what i have gotten. Prior to taking out my mortgage, I lived in a rent stabilized apartment, and if it hadn't been for issues with the management of the building, I would have happily stayed there as the rent was almost $500 less than my mortgage and maintenance fee. This conversation of whether renting is an inferior option is something that needs to die ASAP. It's that same mentality of viewing a home as an investment that turbocharged what we are seeing now with investors rushing in to buy up properties and increase the rent astronomically which in turn is also contributing to rise in home prices.
I'm a life-long renter who puts money into retirement investments. I have no particular desire to live in a house, and I like not being responsible for the building.
Owning a home is a terrific hedge against inflation home costs arent fully locked in(insurance taxes ect) but your year to year cost will be typically way less inclined to take off than renting. Follow the money explains a lot there's a reason all the big companies that run th3 numbers are snapping up all the starter homes, they are pulling the drawbridge up behind them
Terrific is stretching it Home repair, insurance, taxes are not fixed. My mom purchased a home for 150k in 1999. Recently this year sold it for 600k. I’m sure if you take into account the costs I mentioned above, the improvements she made to the home, % owed to real estate agent and the opportunity cost of that money tied into the home instead of investing it, she would have better off invested all that. Or even chose a better inflation hedge like gold
“Terrific”. In today’s market, you’re better off renting if you don’t plan to live in a home you bought for at least 10-13 years. And that’s simply to break even. After that time period, homeownership makes more sense than renting and becomes more cost effective. Most homeowners don’t stay more than 5-7 years, however. Lastly, I see so many people obsess over becoming homeowners without any idea of what the actual cost of homeownership is. 100% something will break in your home that most people don’t account for. And if you live in Florida like me, the insurance cost is flat out ridiculous and disrespectful. You would make better use of your money if you invest it and let it sit(not financial advice).
Military pensions have a cost of living adjustment and it doesn’t matter where you live, your pension stays the same. He can live in a small cabin in Montana and make the exact same pension as he would in Miami. This is a very specific circumstance. He also has no family, so he has no reason to save, and no healthcare concern because that’s free forever.
That’s a very specific situation. Military pension at that age will be between 45k and 75-80k a year (depends on enlisted, warrant officer, and commissioned officer). 42 years old makes me think he’s enlisted and joined at 18, aiming for 24 years (could also be a warrant). If he doesn’t have a family and doesn’t want one, and has been saving on the side (there’s a sort of 401k for the military)… not buying is understandable. He also gets a COLA, so inflation is basically irrelevant. A single guy with no bills, no work, nothing to worry about but himself, and doesn’t need to save because there is nothing and nobody to save for? I could live on 50k forever, probably a lot less, and be very happy with my lifestyle. He also gets basically free healthcare forever. I served for 8 years and very much thought about making a career of it, but I met my wife, and family changes a lot of how you plan for things.
Owning a home is great because you get to build equity for example: I have around 300k in equity living in the Bay Area but I don’t even have 300k in my bank account. You could make your mortgage go down when you refinance. For most cases, you cannot get your rent to go down. I went from paying 1600s to 1400s in my mortgage when I refinance my interest from 3.5% to 2.25% in 2021.
The pressure to own a home feels very similar to the pressure to go to college and get a degree. And the result of both is a lot of people struggling right now.
When you rent, your rent is the maximum amount you’ll pay every month to keep a roof over your head. When you own, you’re mortgage, property, taxes, and insurance are the minimum amount amount you will have to pay every month.
You're paying the landlords mortgage, insurance and property tax when you rent. It's situation dependent and I don't think there is anything wrong with renting. You do have the security of not being hit with a huge house maintenance bill if something goes wrong. But a mortgage gives you more cost certainty year to year whereas as rents tend to just go up year after year. The 1 bedroom apart I rented in 2012 was 760 a month, today the rent is 1125. My mortgage stayed the same the past 10 yrs and my home value has gone up about 100k.
Renting vs owning depends on if you are a 'live in the moment' person or not. And whether you can afford to save for the rent you will need for up to 20 years after retirement on top of the rent you are paying now. My worst nightmare is retiring and having to pay rent on a pension - that is a sure road to poverty in retirement, struggling over whether to eat or get medication/pay bills. Literally counting out pennies on your kitchen table. (Of course, if you are one of the lucky ones and are earning a great salary you can rent AND put money into investments for retirement etc). I bought a house 20 years ago. I only owe $12K on it now, so it will be paid off well before I retire. So when I retire (in about 8-10 years), I won't have to worry about paying rent or a mortgage. Yes, I will need to pay insurance etc. but that is a LOT less than I would pay in rent over a year.
@@db7084 it’s also a risk vs reward discussion to some extent. It’s lower risk to rent because you know of anything goes wrong with the residence, it’s someone else’s responsibility. If you own, you’re 100% in charge of fixing anything that breaks or needs updating. Sometimes that can cost $50 and sometimes that can cost $100,000. A lot of homeowners don’t have a good amount of emergency cash for those unplanned emergencies and then their house becomes something they just go further and further into debt for. If you’re a homeowner, make sure you have a plan for emergencies. On the whole, owning is more expensive than renting so if you’re a renter, definitely take advantage of that excess cash flow to maximize investments. I also talk to clients that when retire, decide to sell their home to rent since they don’t want to be responsible for homeownership stuff any more (i can’t that I blame them either). I don’t think one is better than the other, but I think a lot of ppl sleep on the opportunity renting provides for more consistent cash flow month over month.
Thanks for this one I’m in my early fourties and I’ve been thinking if I wanted to purchase home in next few years. Felt like it wasn’t possible being single parent & my income wasn’t high enough to support payment on my own. It ended up working out since I was able to really increase my income in last few years being able to move out of state. You never know if you move the hassle of selling house in a bad market. I feel like if I haven’t bought home by 50 would most likely need just need to take out 10 yr mtg or try to pay cash upfront-not sure that will be possible.
It is manageable but if you can push for a 15-year loan, it may be a little easier on the pockets. I have many friends in the same position as you. I think it's a good hedge against inflation and once it's paid off, should save you some money in retirement age. Be creative as Condos, Townhomes, and even manufactured homes can be more affordable and good for your needs.
Own a home. If you change your mind keep it as a rental. If you can eliminate your housing cost in retirement that is huge. The US has fixed home loans. The rest of the world it is adjustable. Take advantage of living in America
That's not true. You can easily get fixed loans in Western Europe, it's the norm for real estate financing. The profit in owning a home is higher in the states, because rental increases in for example Germany are capped to the average rental price of the neighborhood. You make only 2-3% yearly profit renting out real estate and for self usage it's even worse because there are no tax deductibles. Owning a house to live in is a lifestyle choice over here. If you want to be in the best financial situation, you rent yourself and put your savings into stocks, or buy properties to rent out, if you want to diversify your investment, but you lose profits that way, if you aren't leveraging loans hard.
In that guy’s situation, I think it is fine. It’s a very, very, very rare situation to be in, but every common sense rule has an exception. Even physics don’t work correctly around black holes (or something like that).
The question seem weird. Why wouldnt it be ok? Just because the average americans dream is owning a home, doesnt mean it is mandatory. YOU tailor your life to suit YOU, no one elses, and other peoples dreams and goals has nothing to do with you. I feel the exact same about owning a home, never have and dont think I ever will, because it is not something I prioritize. And I also, like this guy, want to be flexible and able to move around when I feel like it, not stagnating in the same spot for the rest of my years. Just the thought of it gives me the shivers. 🤣
Renting has tended to be a better investment than buying (although this has varied based in time and place) if one invests the money that would have gone into a home (minus rent) in the stock market, which tends to have higher growth, be more diversified, lower risk, and be more liquid. Switzerland is an example of a rich country where most people rent and, on average, live better than the typical American. Homeownership is great for some people, but as a country we would be better off if we abandoned the inaccurate notion that home ownership is necessary to be successful.
Same. Judging from your background you may also be from Hawaii? The homeowner dream feels like it's quickly slipping away even for just a simple townhouse.
![BOWKYLION - วิงวอน (ex-change) [Official MV]](http://i.ytimg.com/vi/cLdnZWDaO-w/mqdefault.jpg)
I think another upside to renting and moving every few years is keeping ‘stuff’ from getting out of control and being intentional with future purchases. More ‘stuff’ means more to move, and no one is a fan of that.
Is true😊
It’s lifestyle dependent not just a financial choice. Moving around, traveling lightly, and sampling the world sounds fun.
Honesty, this was refreshing to hear. I think you guys have an opportunity to talk to an untapped audiance in talking more on personal finance beyond what has been traditional IE: not being a homeowner, DINK (duel income, no kids), singles, and those that are not making 100K+ per year which appears to be the norm for this channel. Keep up the awesome work guys!!
I'm 25 and I feel better after hearing this. I have been working at my IT career for 3 years now and, I am also a veteran so yes I am eligible for the VA home loan. I was rushing to be in a home by end of next year, but now I think I will put it back towards when I am 28 as my goal to own a home but 30 at the latest. Main reason for pushing homeownership back, is due to the interest rates which is understandable to all. Plus I am also single with no kids and wife so renting is fine for me. Instead I will go crazy on saving/investing (traditional investments like 401k), paying off my car, upscale my skills by getting certifications, and continue to do my passion of travelling. Thanks y'all for the reassurance of better days :)
I have a mortgage, and when I do my annual metworth review at the end of the year, I purposely leave out the equity for my apartment. The way that I see it, my apartment is where I sleep, not something that might go up or down in value like a stock. I wanted to hedge against out of control rent increases, and that's what i have gotten. Prior to taking out my mortgage, I lived in a rent stabilized apartment, and if it hadn't been for issues with the management of the building, I would have happily stayed there as the rent was almost $500 less than my mortgage and maintenance fee. This conversation of whether renting is an inferior option is something that needs to die ASAP. It's that same mentality of viewing a home as an investment that turbocharged what we are seeing now with investors rushing in to buy up properties and increase the rent astronomically which in turn is also contributing to rise in home prices.
I'm a life-long renter who puts money into retirement investments. I have no particular desire to live in a house, and I like not being responsible for the building.
Owning a home is a terrific hedge against inflation home costs arent fully locked in(insurance taxes ect) but your year to year cost will be typically way less inclined to take off than renting. Follow the money explains a lot there's a reason all the big companies that run th3 numbers are snapping up all the starter homes, they are pulling the drawbridge up behind them
Terrific is stretching it
Home repair, insurance, taxes are not fixed. My mom purchased a home for 150k in 1999. Recently this year sold it for 600k. I’m sure if you take into account the costs I mentioned above, the improvements she made to the home, % owed to real estate agent and the opportunity cost of that money tied into the home instead of investing it, she would have better off invested all that.
Or even chose a better inflation hedge like gold
Insurance is fixed or hedged? I'll bet people in Florida would love for you to show them how to do this
“Terrific”.
In today’s market, you’re better off renting if you don’t plan to live in a home you bought for at least 10-13 years.
And that’s simply to break even.
After that time period, homeownership makes more sense than renting and becomes more cost effective.
Most homeowners don’t stay more than 5-7 years, however.
Lastly, I see so many people obsess over becoming homeowners without any idea of what the actual cost of homeownership is.
100% something will break in your home that most people don’t account for.
And if you live in Florida like me, the insurance cost is flat out ridiculous and disrespectful.
You would make better use of your money if you invest it and let it sit(not financial advice).
Military pensions have a cost of living adjustment and it doesn’t matter where you live, your pension stays the same. He can live in a small cabin in Montana and make the exact same pension as he would in Miami.
This is a very specific circumstance. He also has no family, so he has no reason to save, and no healthcare concern because that’s free forever.
That's a great question, especially living in an ultra high cost of living city like San Diego!
That’s a very specific situation. Military pension at that age will be between 45k and 75-80k a year (depends on enlisted, warrant officer, and commissioned officer). 42 years old makes me think he’s enlisted and joined at 18, aiming for 24 years (could also be a warrant).
If he doesn’t have a family and doesn’t want one, and has been saving on the side (there’s a sort of 401k for the military)… not buying is understandable. He also gets a COLA, so inflation is basically irrelevant.
A single guy with no bills, no work, nothing to worry about but himself, and doesn’t need to save because there is nothing and nobody to save for? I could live on 50k forever, probably a lot less, and be very happy with my lifestyle. He also gets basically free healthcare forever.
I served for 8 years and very much thought about making a career of it, but I met my wife, and family changes a lot of how you plan for things.
Owning a home is great because you get to build equity for example: I have around 300k in equity living in the Bay Area but I don’t even have 300k in my bank account. You could make your mortgage go down when you refinance. For most cases, you cannot get your rent to go down. I went from paying 1600s to 1400s in my mortgage when I refinance my interest from 3.5% to 2.25% in 2021.
It’s easier but you have no control over your rent and can get bad neighbors more often than owning
The pressure to own a home feels very similar to the pressure to go to college and get a degree. And the result of both is a lot of people struggling right now.
If you retire from NY or Cali and retire to a low cost southern state you have enough without needing home equity to supplement.
Looking like that’s the new way to go!
With a pension, a renter can arbitrage housing costs easier than a house owner.
When you rent, your rent is the maximum amount you’ll pay every month to keep a roof over your head. When you own, you’re mortgage, property, taxes, and insurance are the minimum amount amount you will have to pay every month.
You're paying the landlords mortgage, insurance and property tax when you rent.
It's situation dependent and I don't think there is anything wrong with renting. You do have the security of not being hit with a huge house maintenance bill if something goes wrong. But a mortgage gives you more cost certainty year to year whereas as rents tend to just go up year after year.
The 1 bedroom apart I rented in 2012 was 760 a month, today the rent is 1125. My mortgage stayed the same the past 10 yrs and my home value has gone up about 100k.
Renting vs owning depends on if you are a 'live in the moment' person or not. And whether you can afford to save for the rent you will need for up to 20 years after retirement on top of the rent you are paying now. My worst nightmare is retiring and having to pay rent on a pension - that is a sure road to poverty in retirement, struggling over whether to eat or get medication/pay bills. Literally counting out pennies on your kitchen table. (Of course, if you are one of the lucky ones and are earning a great salary you can rent AND put money into investments for retirement etc). I bought a house 20 years ago. I only owe $12K on it now, so it will be paid off well before I retire. So when I retire (in about 8-10 years), I won't have to worry about paying rent or a mortgage. Yes, I will need to pay insurance etc. but that is a LOT less than I would pay in rent over a year.
@@db7084 it’s also a risk vs reward discussion to some extent. It’s lower risk to rent because you know of anything goes wrong with the residence, it’s someone else’s responsibility. If you own, you’re 100% in charge of fixing anything that breaks or needs updating. Sometimes that can cost $50 and sometimes that can cost $100,000. A lot of homeowners don’t have a good amount of emergency cash for those unplanned emergencies and then their house becomes something they just go
further and further into debt for.
If you’re a homeowner, make sure you have a plan for emergencies. On the whole, owning is more expensive than renting so if you’re a renter, definitely take advantage of that excess cash flow to maximize investments.
I also talk to clients that when retire, decide to sell their home to rent since they don’t want to be responsible for homeownership stuff any more (i can’t that I blame them either).
I don’t think one is better than the other, but I think a lot of ppl sleep on the opportunity renting provides for more consistent cash flow month over month.
Thanks for this one I’m in my early fourties and I’ve been thinking if I wanted to purchase home in next few years. Felt like it wasn’t possible being single parent & my income wasn’t high enough to support payment on my own. It ended up working out since I was able to really increase my income in last few years being able to move out of state. You never know if you move the hassle of selling house in a bad market. I feel like if I haven’t bought home by 50 would most likely need just need to take out 10 yr mtg or try to pay cash upfront-not sure that will be possible.
It is manageable but if you can push for a 15-year loan, it may be a little easier on the pockets. I have many friends in the same position as you. I think it's a good hedge against inflation and once it's paid off, should save you some money in retirement age. Be creative as Condos, Townhomes, and even manufactured homes can be more affordable and good for your needs.
Own a home. If you change your mind keep it as a rental. If you can eliminate your housing cost in retirement that is huge. The US has fixed home loans. The rest of the world it is adjustable. Take advantage of living in America
That's not true. You can easily get fixed loans in Western Europe, it's the norm for real estate financing. The profit in owning a home is higher in the states, because rental increases in for example Germany are capped to the average rental price of the neighborhood. You make only 2-3% yearly profit renting out real estate and for self usage it's even worse because there are no tax deductibles. Owning a house to live in is a lifestyle choice over here. If you want to be in the best financial situation, you rent yourself and put your savings into stocks, or buy properties to rent out, if you want to diversify your investment, but you lose profits that way, if you aren't leveraging loans hard.
Brian, the question was is it ok to never own a home period. I think your answer missed the mark. Thanks guys for the content.
In that guy’s situation, I think it is fine. It’s a very, very, very rare situation to be in, but every common sense rule has an exception.
Even physics don’t work correctly around black holes (or something like that).
The question seem weird. Why wouldnt it be ok? Just because the average americans dream is owning a home, doesnt mean it is mandatory. YOU tailor your life to suit YOU, no one elses, and other peoples dreams and goals has nothing to do with you.
I feel the exact same about owning a home, never have and dont think I ever will, because it is not something I prioritize. And I also, like this guy, want to be flexible and able to move around when I feel like it, not stagnating in the same spot for the rest of my years. Just the thought of it gives me the shivers. 🤣
Couldn't agree more with this comment.
Renting has tended to be a better investment than buying (although this has varied based in time and place) if one invests the money that would have gone into a home (minus rent) in the stock market, which tends to have higher growth, be more diversified, lower risk, and be more liquid. Switzerland is an example of a rich country where most people rent and, on average, live better than the typical American. Homeownership is great for some people, but as a country we would be better off if we abandoned the inaccurate notion that home ownership is necessary to be successful.
Not being able to buy a home where I grew up is definitely depressing
Same. Judging from your background you may also be from Hawaii? The homeowner dream feels like it's quickly slipping away even for just a simple townhouse.
@@ccccccchhhhhh808 I was there on vacation! I'm from LA. Yeah it's an awful situation
You can rent a home
I mean it has to be Okay because most millennials won't be able to. It sucks out here.
Hei bro are you looking for a professional youtube thumbnail designer?
: )
Buy a home. Don’t rent-vest. Arbitrage isn’t worth it
Short answer : No
Long Answer: Noooooooo