Can I Just Rent Since I Donât Want To Build Wealth?
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- Äas pĆidĂĄn 15. 05. 2024
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On average, over 35 years, a homeowner spends an additional $250,000 beyond the house's selling price on interest, maintenance, repairs, taxes, and remodeling. I have $250k in savings for a home, but with current high real estate prices, should I wait to buy and invest in stocks instead?
investors are extra cautious right now. They want to make sure theyâre getting a good deal given how much mortgage payments have gone up, and when they donât feel like theyâre getting a good deal, theyâre backing out, so definitely looking elsewhere is a necessity
In my opinion, home prices will need to fall by at least 40% before the market normalizes. If you're unsure if to buy a house or not, it is best you seek guidance from a well-experienced advisor for proper portfolio allocation. So far, thatâs how Iâve stayed afloat over 5 years now, amassing nearly $1m in ROI
I hope it's okay to inquire if you're still collaborating with the same fiduciary and how I can get in touch with them?
I'm really hesitant about giving specific recommendations since everyone's situation varies, but I've worked with "Kristin Amber Landis" for years and highly recommend her. See if she meets your criteria.
Thanks for sharing. I curiously searched for her full name and her website popped up immediately. I looked through her credentials and did my due diligence before contacting her.
For boomers and senior citizens, the current market and economy are unnecessarily harder. I'm used to simply purchasing and holding assets, which doesn't seem applicable to the current volatile market, and inflation is catching up with my portfolio. My biggest concern is whether I'll survive after retirement.
Just buy and invest in Gold or other reliable stock , the government has failed us and we cant keep living like this.
Yes, gold is a great investment and a good bet against the devaluating dollar, been holding some for awhile now, Iâm grateful my adviserâs moment by moment changes in the market are lightening quick, cos who know how much losses I wouldâve had by now.
Please can you leave the info of your lnvestment advsor here? Iâm in dire need for one
There are a handful of experts in the field. I've experimented with a few over the past years, but I've stuck with ââColleen Rose Mccafferyâ for about five years now, and her performance has been consistently impressive. Sheâs quite known in her field, look-her up.
Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.
It depends on your individual situation and what you want out of life. I never married and have no kids. I choose to rent. I'm 70 now and don't want to own a home. I'm in a brand-new apartment with a lakeside view. If something needs maintenance, I just pick up the phone; I don't have to worry about vetting plumbers, electricians, etc. I don't have to cut the lawn or trim bushes. I can travel whenever I want. Once I pass away, my executor can just take care of my personal property as specified in my will, and he doesn't have to worry about selling a house. It's different for families; of course they want to have their own homes. It's what makes sense for you.
â€â€â€â€
God bless you. Sounds like you're doing very well.
Jesu$, thats bleek
@@MrJimmy3459 thatâs to you ! Everyone in life has different goals and things that make him happy as someone much younger sounds like heaven and what Iâm aiming for .
@@PettyLabelleno, itâs super bleak. Alone, watching your remaining friends die surrounded by their loved ones and children as you slowly realize you have nothing of substance to leave behind when you go
I was this guy. Lifelong renter, but only because I moved so many times during my career it didn't make sense to buy a home. I'd end up having to sell it within a year or two. If I had planned better 25-30 years ago, I'd probably have a fully paid-off home now. Instead, I'm now renting a friend's garage apartment because the rents in my area are insane. Marco, my friend, do yourself and your wife a big favor. Buy a home (even if just a condo), and suck up the property taxes and maintenance costs. Once you're no longer paying rent or a mortgage, those other expenses won't seem quite so bad.
And make sure to buy it before the banks all fail đ
Iâve had 17 address changes in my 22 years in the military. Currently have 3 houses. Wish Iâd started way earlier đ€Šââïž
You could have lost hundreds of thousands by buying a bad house
@@anonymous-rz6zj
Guess what?
Donât buy a bad house.
I bought a condo in 2021. My mortgage is less than what I paid in rent and I hated my apartment and the area I lived in.
I bounced around the world for 25 years with the military, renting was better, BUT I saved extra to buy a home with cash when I retired.
Better option would have been to buy a property as early in life as possible. If in military, use rental agency to rent it out and gain capital appreciation in addition to nice income tax deduction. Thank you for your service.
@@paulbrungardt9823. 25 years military here. That is a great plan if you know where you want to retire. Many of us donât know where we are going to land. I wish I would have bought early but I never thought I would end up where I am.
Thank you for your service brotha.
Military here and just purchased a home in 2021 bc we HAD to! For the first time ever, renting what we wanted was well over BAH and we knew the price could go up every year. We set a budget of $300,000 and purchased a brand new home. Sure we saw nice and more spacious homes, but we knew this wasnât our forever home. We still invest heavily and always made sure we could afford bills on 1 salary. We canât wait to purchase our forever home in 2 years after my husband retires. In addition, our home has appreciated almost $100k.
@@paulbrungardt9823youâve never been in the military before. I understand the principles you listed that make financial sense but Iâve personally seen people do this and it was a complete nightmare. I followed his path. Military for 20 years living in apartments, retired 9 years ago and next year Iâll have my new build home paid off.
Alot of seniors who retire and never buy get priced out of renting.
Yup, that's part of the reason why Baby Boomers are the largest growing demographic of homeless people in the USA now. Many of them never got into real estate, meanwhile the cost of housing has far outpaced inflation or incomes and these people are priced out of housing period. Interestingly enough the government doesn't care, they're more concerned about housing people who walked across the boarder without permission.
This!! Look at what happened with inflation the last few years. For someone on fixed income their buying power has dropped significantly.
@@passive101I mean if you retire at 65 and live past 75 youâre probably in trouble unless if youâre planning on being frugal til the end of days. Even then medical bills can eat into retirement more than youâd expect and even though you expected a comfortable retirement it may not be the case.
I agree. The thing is, if you ever plan on retiring, owning your home is the best plan because renting is a great way to end up homeless. Even the maintenance that you have to do with your home is still a lot cheaper than paying rent. Because when pay rent you are paying for maintenance anyway.
A lot of seniors wonât be priced out either especially with other assets and things like passive income,dividend payments investments,annuities,social security,401k,IRSs,rollovers,etc.
I can go out and rent a very nice luxury apartment with garage in a gated community and live there indefinitely because of my assets.
All about choices and the decisions you make beforehand.
Heck some seniors are priced out even with home ownership because they did not plan for retirement.
I'm not really interested in building wealth either, but it sure is nice having my home paid off. No rent or mortgage, or car payments, or student debt. Maybe I am building wealth đ
Why would you not want to build wealth. Like are you dumb
Well done
This person wins. Having to no expenses is the way to go.
You donât any of that stuff the government does. Try not paying your property taxes and see how long it takes for a guy with a pew pew strapped to his hip to show up and educate you on who really owns it đ
@@BeardedVeteran1776 dude said he would rather build wealth for someone else than himself đ€Ł
Heâs acting financially savvy but canât comprehend the benefit of owning a home instead of renting forever? Weird call.
Renting is not throwing money away! If that's the case, booking a hotel on a vacation is throwing money away, too. Why book a hotel? Just sleep in your car. When you rent, you're paying for a roof over your head, amenities, location flexibility, and 24/7 staff members to upkeep your residence
I agree, I never understood the logic. Youâre literally paying to live with a roof over your head. How is that a waste?
People these days are idiots. They don't understand that some people just don't care about money. They care about their lifestyle and well being. Renting in the city is way more affordable than owning a home in the city.
Simple... because with owning, someday you won't have to pay anything but property taxes and maintenance. But if you think renting is so great, please do because those like you make ME MONEY!
The real estate where the caller lives is extremely more expensive than renting.
@@ryanj357 LOL you could not pay me enough to live in the city. Suburbs or country but not the city. The city, any city has lots of people and I despise people!
Wealth is security, it provides basic necessities, good education and gives you choices.
Indeed.
Too many people think wealth is all about material things and keeping up with the Joneses.
It takes the pressure off and that is a blessing.
At this point owning a home does not equal wealth and rent is not âthrowing money awayâ it can absolutely be a way to save more money as you have no property tax bill, home insurance, repairs, landscaping etc. Not everything is black and white.
You think landlords pay those expenses out of their pocket... newsflash for you: the landlord includes all these expenses and some margin when they set the rent amount. You are paying for all that; you just don't see the itemized bill.
@@MahbubSiddiqueethis is 100% correct however, renting is cheaper than owning for many other reasons. Interests isn't an insignificant amount. Its a serious amount. When you have major repairs to your home, that goes against your actual realized value. If you have a $350,000 house. Lets say you paid that off in 30 years at 4% just for giggles. You put 20% down and borrowed $280,000. In 30 years you paid $481K plus the 20% you put down for a grand total of $551K. That is pure mortgage. No PMI, property tax, or insurance. No repairs either. Do you need a new roof after 20 years? $20-40K. Do you need a new HVAC system? $7-15K. And upgrades? The list goes on and on.
Now take into consideration you aren't getting a 4% rate, most people aren't putting down 20% and it doesn't include any of these fees. In 30 years that house may only be worth more, it may not. No one should be getting a home to be immediately underwater. I rent. But my rent is 12% of my net income. If I was laying 25% or more, then hey renting is a losing proposition much faster, but if you aren't doing it for more than 10 years, you will be fine
@@MahbubSiddiquee right now is a weird time where itâs cheaper to rent than to own in almost every state.
When I rented, my rent was under $1200 a month (from 2019 to 2024). The property taxes alone that my friends pay who bought in the last 3 years? $900-$1100 a month. Thatâs Houston TX.
See the issue with those numbers?
@@MahbubSiddiquee I doubt OP thinks that's not factored in, but the fact of the matter is, homes are as unaffordable as they've ever been. Renting is actually the smart play right now for a lot of people. It might stay that way until enough boomers leave their homes that the supply increases, or that enough people buy houses for the costs they are right now and at the rates we're seeing right now that people default on their mortgages. The fact that most people bought cheap houses with low interest rates is keeping supply low and prices high. Something's gotta give, it might just take a while. While rent is expensive, it's also the worst time to buy a house in human history. No winners here.
You pay all those...it's just factored into your RENT.
Why would you not want to build wealth long term? Not thinking like a yacht or something, just being able to retire.
That's the problem with a lot of idiotic Americans, and I think Rachel explained it pretty well. They're not trying to force people to build wealth just so they can look at digits in their bank account or have a yacht or a collector Ferrari in your personal showroom like this guy is probably thinking. He's going to get to retirement in 25 years and realize he can't cover the cost of rent in 2060 let alone do that for 30 years as rents continue to climb even after that.
or just being stable being able to retire is never a guarantee we where never promised tomorrow no amount of money will change that
Buying doesnât equate to building wealth. Say you buy a 500k house with 20% down today you will pay the bank back 900k in interest. That isnât including the property tax that will be a few hundred thousand, home owners insurance another 50-80k. Sure you build equity but it is like putting the money in a bank account with a negative interest rate. You will get most of it back but itâs not going to be what you put in. For the marry the house date the rate folks in 1972 rates were 6 percent. They surged to double digits by 1977. Peaked at 21% in 1982. Rates didnât go back this single digits until 1994. Rates didnât hit the 1972 low of 6% until 2004. So who ever got a 7 or 8% rate from 75-76 was locked into they for the life of the loan. So yo cannot bet on rates. We could be in a high rate environment for decades. The cheap money party I s over.
I think he said they arenât interested in adding real estate to their portfolio. They have retirement accounts. It would be interesting to know if they have kids. I do, but it doesnât matter to me if I leave them an inheritance l. Iâve never received one. I may one day, but I may not.
I think he misunderstood what the Ramsey show meant by ' building wealth' but Rachel explained it well and tbh it's different for everyone.
Freedom is different for everyone. If freed up time by not owning a home is freedom to you, great. If freed up income by owning a home outright is freedom to you, great.
"No surprises" is an odd expression for a renter. I was booted out of two rentals within a 12 month period because the respective landlords were selling. A relative is about to get booted out for the same reason. These were nice homes in nice neighborhoods. Being forced to move house is a stressful surprise for a renter.
this is what I fear
same thing happened to me this year twice and both landlords kept my last month rent deposit so I need to sue them to get it back. I would love to own a house, dealing with slumlords is a nightmare.
a lot of wealthy people just rent very high end apartments. honestly i'd take a very upscale apartment any day over a house. Even if i was wealthy, i would then have to hire people to maintain the house. Don't have the patience for all that.
Yeah they rent from the business that they own through a trust
Apartments are not fit for human habitation. The only creatures that live there are cockroaches, vermin, bedbugs and spiders
Good luck with that logic.
I donât agree w his decision, but I understand whereâs heâs coming from. If you are not 100.00% committed to being a homeowner (and all the responsibility that comes with it), donât do it. And this guy doesnât want to be a homeowner. Nothing wrong w that.
What responsibilities?
Being a homeowner sounds romantic until you realize that you are placing most of your wealth into this immoveable piece of Earth and sticks that sits there, makes you no cash flow (Assuming primary residence), and your values can go down at any moment if your neighbors move, become landlords, and rent out to felons. Tell me about your equity when the neighbors come in, park cars on their lawn, and have unleashed pitbulls running around the front yard. No one will buy your shitbox then.
@@trump1105If you have plumbing or electrical issues, you pay. Hail storm damages your roof? You pay. Some people simply donât want the responsibility.
@@hestiaa9354
Thatâs no issue when you buy a home you can truly afford. Those are called inconveniences. Same responsibilities to pay whether from insurance,warranty,cash,EF,investments,savings,or included in monthly rent payments.
Paid off my primary home in 2008. Completely debt free and retired 15 years early in 2020.. My emergency fund alone is over $200k for starters. Never had those issues and funds/investmends keep growing.
Also currently renting a cottage in Austria for two months.
I get exactly where this guy is coming from. I'm 34 years old and I really don't see myself owning a home unless my partner wants to. But right now we are perfectly fine renting. We like having the option of moving anytime we want and I like not having to worry about upkeep. I'll probably buy an affordable condo in cash when I retire. Home ownership is not all that it's cracked up to be.
Iâm 33. I have a multiple properties, and I love people like you.
I with you there... sold my home back in '21. I'm content with renting for a while.đ«
I haven't had shared walls in 10 years and love it. Any moment now you will get tired of moving.
I have a 2400 Sq ft, 4 bd/3 bath house. Built brand new. HOA includes fiber internet, gym, and 3 pools.
Mortgage, insurance, taxes, utilities and HOA is $2500/mo. 1 mile commute to work.
Everyone has their own needs and plans which may include flexibility. Rachel is the only one that gets it. They are so hell-bent on buying a house without considering a persons circumstances. They just spit out historical data which may not apply to a young person today with housing being extremely costly, insurance, HOAs, repairs, heating, A.C. etc...
@@dr_pinna543 I spend half that on rent lol and I'm not in a shitty building either. The building is only 6 years old so it's rent controlled. $1500/month gets me a nice apartment in the city where a house would cost me 4-5k per month. I'm not slaving a way my entire life just so I can afford a house fuck that. I don't plan on renting forever but I'm not going to be stupid and buy the first condo I see. I'm going to pay it in cash when I'm ready
Rent within your means. After Surfside for example condo fees are going up so rents are going up. Be ready to move to a cheaper place.
99 out of 100 times as long as you pay your property taxes, no one can legally kick you out of your paid for home. I didn't use 100% because of eminent domain laws.
But with renting, even if you pay your rent on time, when the lease is up the landlord can (with notice) choose not to renew your lease and you're out. Why would you want to put that much control in your landlord's hands!
I do NOT want a landlord!!
Colorado actually just passed a law landlords have to allow you to renew the lease if you want, outside of specific situations. I don't fully agree with it, but it does take that uncertainty as a renter away if you've been a good tenant
@@hardchooligan What if it is a home that is rented out not an apartment complex and the landlord wishes to sell it for CURRENT market value OR what if the landlord wanted to move into the home. I've seen both in my observations. I'd hope that meets those specific circumstances.
As long as you pay property taxes, insurance and possibly HoAs. A fire or a flood can kick you out of your home. The alternative to buying a home is not renting but renting and investing the difference is an economy such as this one.
@@michael88366 I have home owners insurance. But you do it your way and I'll do it mine. And I'm doing just fine, in my paid for home, thanks.
Totally agree. Iâm renting a house while saving up for 20% down payment. I have moved each year once the lease is up: either the owner decided to move back in the house or I donât like the area Iâm currently living after all. Either way, Iâm currently apartment searching and I canât believe how expensive the rent is for a mediocre apartment. I will not pay $2k on a 2x2 for something thatâs worth $1400/month. All and all owning will giving you security and knowing that no one canât jack up your rent anytime they feel like it.
My wife and i currently rent. Perks of where we live include multiple landlords families who started living debt free before Dave Ramsey was born.
Our 2 bed 1.5 bath attic in a house the owner's grandpa built is $750 a month.
However I'm also on track to double my income in this decade so we're looking to buy in about 3 years. Renting makes sense today, owning makes sense 10 years from now
Renting isn't "throwing $ away" - you're providing yourself a (hassle free) place to live. Property taxes and HOAs can be a real pain for homeowners.
All about choices.
Only a pain for homeowners that couldnât afford a home in the first place and should be renting anyway.
never buy always rent, make sure you lease cars at the max APR and max out ur CC's
đ€Łđ
We're all gonna die anyway, right? đ
Hahahaha. "Volunteer to deliver pizzas"
lol
Funny because it looks like the FOMO homeowners are in worse shape. "Real estate never goes down so let me get a 1% down Zillow loan with 55% DTI so I can build equity"
The wife and I rented for many many years before buying and I absolutely love it. Landlords can raise your rent or sell the property anytime they want. Also, I REALLY love having property and space between myself and my neighbors. Every time I see apartments now I feel a bit nauseous.
Itâs the property taxes that annoy me. Mine went up 24% last year just because. I didnât do any remodeling or put in a pool.
Number one the rate can change as the local government needs change. And number two, your property value increases even without improvements and property taxes are based on current market rate.
I bet you know that already though, lol
My HVAC just cost me $34,000. Over a 15-year lifespan, that's just another ~$200/mo in housing costs. Add up the taxes and all the projects to keep it in good shape it can be a lot. An asset, but one that can create a lot of liabilities.
@@tenningale thatâs a lot of money. Mine was $10k a couple of years ago and I thought that was a lot.
â@@tenningalethe "asset" IS the liability
I live in Ontario Canada where a property tax increase that large would be illegal â@@GAFB1122
I own to have control over my living situation, but renting is perfectly fine. The money comes out slowly and rent is the maximum you pay. You don't have money locked up that could be getting you better returns elsewhere. My home's "appreciation" over the long run is just around the inflation rate and it consumes around 5% of its value annually just in operational and maintenance costs.
when I turn 70 who knows how much renting will be...but as a homeowner all I will have is insurance and taxes and an asset worth a couple of hundred thousand dollars that keeps increasing in value I also have 401k, Roth IRA and a pension .. I just feel like long term renting makes someone else rich!!
I make $250k a year and am young and single. I pay $1500 to rent a nice place. If I had to buy a small house I liked it would be at minimum $700k. Doesn't make sense for me right now when I can invest the difference. Also the "wealth" from your primary house can't be used for anything unless you move somewhere cheaper
Same..
Exactly, you can't sell a slice of your house and if you do sell it to lock in the profit, a new house will also have appreciated in price.
Agree, you are killing it, you will build wealth fast by investing in the stock market which offers way better returns than a house
What do you do to make $250K a year?
@@MenDrinkTea I'm a new dentist
Great question and great advice. The older generation always told us to buy a home so you can write off the taxes but so many people did this and couldn't afford the home. I was born into the 60s and you were shamed if you didn't want to buy a home in your late 20s or 30s and it had to have a yard. I am so sick of taking care of a yard I could scream. When my husband retires in a few years we will move and get a garden home or a condo. If you can't afford to buy the home and take care of it, rent and go have some fun.
This call feels fake.
If you don't enjoy working on a home, you shouldn't own one. That's my opinion. I'm chronically ill and poor. I can't afford a house, and definitely couldn't care for one.
Im 38 when i was 18 i remember looking at a 1 br apt was 375$ i thought that was ridiculous now its almost triple that at this pace rent be 4-5000$ a month when Iâm retirement age
You have two options. Either pay rent until the day that you die, or pay a mortgage for 15-30 years and then you OWN the property. I donât know about yall, but I donât wanna worry about rent increases when Iâm 80.
I am really surprised the caller hadnât thought about this himself
â@@nualanicghearailt8011 Perhaps the caller is banking on the fact that their fat nest egg at that time will be enough to handle the rent payments then.
@@taurusthebull76 Or their nest egg will be big enough to just buy a house in cash when they retire instead of continuing to rent.
What if you die before then?
What if there was a third option? Home ownership is nice, but no one ever talks about what it took to get there, living on instant noodles, working and saving their asses off to get there. Still might be worth it but no one mentions that.
All I know is I own my home outright and my property taxes are a fraction of what rent is in my area. And that will always be the case because when property taxes go up, landlords will raise the rent.
This is an incomplete analysis if you don't include the opportunity cost of buying your home outright. If you do, in many markets, it would be better to rent.
ââ@@michael88366I'll take my paid for home over your opportunity costs anyday and twice on Sunday. You can insult me with words like dumb all you want while I stretch out in my paid for home with NO landlord!!
Exactly.
Yeah my Oklahoma annual property tax was less than two days take home pay when working.
Property tax hasnât gone up at all since I filed homestead exemption over 15 years ago. Itâs $1560/yr. compared to $1600/mo. for luxury rental apartment.
Even my entire monthly household living expenses (including tax,insurance,condo fee) is cheaper at $1200/mo. here.
We have dual homestead exemption but I donât think I can do the second one.
Now Iâm retired and my investments pay them.
Ironically Blackrock ETF dividends pays my property tax in Florida.
â@@blackworldtraveler3711Dude, don't mention that you enjoy travelling and getting cc points. This guy will freak. đđ
On average, after 30 years, a person spends 223k more on their house than it is worth when they sell it. Most of the 223k goes towards interest, maintenance, repairs, taxes, and remodeling.
Divide 223k by 30 years, and you get 7433/year for housing cost. Compared to the cost of rent/year that's a steal.
â@oldmoney1022 It's ($7k/yr extra for maintenance / interest etc + mortgage principal + taxes + insurance + HOA) vs Rent
At 7.5 percent if you buy a 500k house with 20% down you will pay the back 900k in interest alone not including principal.
@@oldmoney1022 $233K/30 years ON TOP of the cost of the house. $7433 PLUS mortgage principle as well. Not just $7433/year all together. NOT a steal.
@@oldmoney1022 But also take the down payment, closing costs, and early year savings of renting over buying and place it into index funds and compare that. No need to assume that renters have to be bad with money.
Renting in my area isn't much cheaper than owning the same house with 20% and good credit. Yes, unexpected bills come up with owning, but the house will be yours in the end.
It's totally fine to rent. It keeps your options open to take on employment opportunities as they become available and gets you a chance to work/travel to different places without the hindrance of buying/selling every job opportunity. We saved a lot of money this way. Six years ago, we finally built our house for our kids to grow up in, paid in cash. We absolutely hated the idea of a mortgage.
Congrats on being disciplined. Many would waste money on other things while renting.
Sadly we all know True Home Ownership doesnât exist
Well you can rent and included in your rent is property taxes.
Or you can own your home AND only pay property taxes. But yea keep complaining about the big bad government, lol.
Exactly đ that's why these conversations are sooooo hilarious đ
If you have a home you must own the land as well
@@misutasutanto6312 Why are they soooo hilarious? Anytime someone says they own their home I know what that means. I know that means they have no mortgage.
So YOU can choose to pay rent and included in that rent it the landlords cost such as property taxes, etc. Or you can choose to live in a paid off home and only pay property taxes.
What is true is, unless you live off of taxpayers with free subsidies, you will pay to live somewhere. Rent or own, up to you.
@@GAFB1122 If all of the expenses of homeownership are included in rent then how are rents nearly everywhere cheaper than mortgage?
@matthewphillips5483 LOL, there are some true believers "I'm renting forever". Have at it and make your landlord wealthy. They don't own the rental property to not make money afterall. But not for me. I will happily live in my beautiful paid for home.
Renting can be better long-term in some situations, especially if interest rates remain near where they are and you save extra money for retirement.
Not to mention property tax skyrocketing and insurance companies dropping homeowners for no reason. It's insanity
Yeah, thatâs just something that poor people say. And most of these commenters are bots paid for by big corps that buy homes
Until you take into consideration that rent is guaranteed to double every 15-20 years.
Renting has its benefits and having a mortgage has its benefits. Everyone's situation is different. It is best that you understand all the risk/rewards that come with both to see which best fits your situation. You may be surprised by what you find.
One thing i always hear is renting always goes up, but a house payment does not.
But one thing that never gets mentioned is the expenses of and the maintenence costs to owning a home DOES go up. The gas/energy to running the lawn mower, labor costs of a repair man, prices of maintenance items at Lowes/Home Depot.
Thank you, George, for saying renting is not a sin.
Id love to own a home. I plan to. But the positives dont outweigh the negatives for me right now
Our property taxes go up each year. Even though our house is paid off with insurance and taxes going up each year + maintenance is like a monthly rental check.
This was so well explained. Anyone wanting to know the difference between the benefits of renting versus owning who has no idea about anything real estate should watch this video
I have realized people with power are generally jerks by default. Therefore, when it comes to your home, THE most important possession in your life, it's best to reduce the people that can exercise power over you. A landlord is a worse proposition than the city bureaucrats (pro tip: the city bureaucrats are jerks to the landlords, and renters get the downstream consequences of all of it).
Renters vote in new property taxes, thinking that they don't have to pay it, landlords do. City enforces, landlords increase rents to cover it and then renters complain that landlords are evil for raising rent.
@@jenniferpearce1052 Exactamundo!
That may be true for broke people. But a financially stable person can afford rent anywhere.
I rent from a corporate landlord and have never had any issue with them. They never bother me as long as I pay my rent or if I request someone to come fix something. Contrast this with creepy mom and pop style landlords who place hidden cameras in the house and do all sorts of disturbing shit.
You will spend more in the long run doing that. Rents always go up. Mortgage is locked and once your place is paid off your cost go down even more. Mine is paid off and with taxes and insurance and hoa for a newer house monthly I'm paying like $450 a month...renting my house now I'd be paying $3000+ a month.
Anyone who bought pre-pandemic is not worth listening to and doesn't understand the current market dynamics.
Buying a cheaper house or condo and paying it off as early as possible then investing is the best option. This way you can not have debt and put your money in mutual funds and compound your money in interest. You want to earn interest and not pay interest in your life and it will work out great. 2 jobs, a side hustle whatever it takes
Nice thing about owning a house is when you retire and downsize, you can sell the larger house and pocket some spending money.
A co worker of mine said something smart to an apprentice, you don't want to kill yourself when you're young and sacrifice your body when you're old and actually have the money to enjoy it.
When you're young you have nothing but the ability to work and save, when you're older you have the finances to do all the things you want to do without having to kill yourself to do them. It's a double edged sword, to those that just want to party and "enjoy" their lives. Sooner or later you're going to regret throwing your money and body away
Forced savings is good for those tempted to spend on lifestyle creep.
@@dr_pinna543 This goes out the window thanks to easy HELOCs and cash out refis. Owning a home cannot prevent fools from losing their wealth.
He could rent until heâs old enough to buy into a retirement community, which would probably take care of things like repairs and maintenance anyway.
So throw money away on inflating rent prices for 50 more years
@@hangguy209 50 more years? Heâs not 15 yo, lol.
@@rachelharrison7961 you can pay off a home early. Why waste it on inflating rent?
I worked with an elderly woman who renting the same apartment for 40 years. She ended up having to move out of it because she couldnât afford the rent anymore. She now lives with her daughter. It will always be better to rent than own. Renting is supposed to be temporary.
Exactly đŻ and when she moved out I bet she had little to her name. If she couldn't afford rent then that's a safe assumption.
Note, some will say seniors are forced out by property taxes but at least they have an asset they can sell and use to downsize.
@@GAFB1122
Yup selling home to downsize or even a reverse mortgage.
Also where I live there is double homestead exemption, property tax senior freeze at 65, and other perks for seniors over 65.
Love listening in to Rachel. Very smart!Her and George bounce off each other great! Thanks you both!
As a land lord, I love this type of guy!
Dave Ramsey and his crew never get tired of plugging for the real estate and mortgage industries. Buying real estate is ONE WAY of building wealth, and it's debatable as to whether it's even the best way. If you prefer to rent and doing so costs less than owning (which is usually the case), you can then use the savings and build wealth in other ways (stocks, bonds, precious metals, etc.). And only a fool would be considering buying a house in this market.
Began with precious metals. Something about silver for me. Even have about 20# of copper pennies. đ„đ€đŒ
They know math! đ
@@JustinCase780 And you obviously do not.
@@mattm597 Sarcasm. Look it up. đ
@@JustinCase780 Sorry. Hard to tell on here sometimes.
When you rent, you're already paying every single cost associated with that property. EVERY. SINGLE. CENT. Taxes, repairs, mortgage, insurance, all of it. You are paying for that. Then you're paying the landlord's profit, on top of it.
Um, no you aren't. You sign a 12 month lease. When the water heater breaks in month 3 or there is flooding in the garage, it has no effect on my rent. That's the landlord's problem.
Are you paying the opportunity cost for the home equity? You can't be because that investment opportunity has always outperformed owning real estate.
â@@TechnicallyTrenthope someday it makes sense to you
@@TechnicallyTrent Landlords aren't charities. Rent is priced in a manner to cover these costs you listed. Water heaters don't need replacing every 3 months. Past tenants were paying a premium in rent (as are you) for the eventuality you outlined where the water heater failed.
@@mikekeenanphd Real estate in the USA has a tendency over the long run to mirror the rate of inflation on the dollar. That said, as they outlined in the video, you don't need as much in retirement when your housing expenses are close to negligible because you paid off your mortgage. So the discussion of opportunity costs should be re-framed as, I hope you ARE getting an investment premium as a renter because you're going to need it when market rate for a rental is 2x or 3x the price 30 years down the road when you retire and need a place to live.
I get where he is coming from. My experience, especially any house 1980's and back. Crap breaks ALL the time in a house. And you have to he prepared to fix that. It can stress you out real quick.
My buddy has a house. It's from the 1970s. Every year something breaks. A/C, Heat,, Roof, Plumbing, Garage Door, Hot water heater . Usually at least a 3,000$ bill every year. It's a big responsibility.
You definitely want to be sitting on enough cash reserves to be able to fix the most expensive thing. Usually the HVAC or roof.
I bought a new build in 2015 and so far the most i paid is for a/c maintenance and a new garbage disposal. I do my own yardwork. It's not for everyone but I bought where I plan to be for at least 20 years. 1 mile commute to work and my $150/mo HOA includes 1 Gb fiber internet, 3 pools, and a gym. My total housing cost is $2500/mo. In 3 years when I pay off my mortgage (12 years total) my total housing cost will be $1000 (taxes, HOA, insurance). Yes I will have to have repairs done in the coming years but if the house isn't too much of your income, it's no big deal. 4 bd/3 ba single family with 2400 sq ft. Household income is $250k.
Our house will be paid off next March. 9k more per year in our pocket to do whatever with: invest, vacations, krokodil.
Nice!
9k more per year? Your mortgage payment is $750 a month? That's non-existent nowadays without having a down payment of 75% or higher for a small/regular size house.
People also forget or choose to ignore the tax savings that come with home ownership. You can write off property taxes and mortgage interest on Schedule A each year. And a big one, you can exclude $250K (S) /$500K (MFJ) of gain when you sell. And you can do that multiple times in your life as long as you follow the rules regarding what constitutes principal residence and time frames.
I don't advise people to do something for tax purposes only, but it should be factored in when you run numbers.
I can't think of any tax deductions for renting for individuals.
It's not just the increasing cost of rent, but also the fact that you have no long term stability in housing. Who wants to be moving at 85 when the landlord dies and his kids want to sell the property?
The other thing is a landlord can end your lease and not renew and you need to scramble and bounce around. Is that something you want to do in your 50s and 60s and beyond?
They go to the city and fight for rent control because they can no longer afford to vacate and rent a new place.
Renting works for some people, in specific circumstances, long term,. I suspect most people are going to see renting as a way of juggling payments to consume more NOW rather than look at the money they earn as a tool to grow their wealth and have a nest egg to live comfortably life in old age.
Good question and good answers!
I'm really liking the longer videos you guys have been putting out over the last few weeks. The 7-10 minute calls allow you guys to dig deeper and shed more light on the situation versus the 4 minute calls you guys have traditionally done.
Imagine not having a mortgage to pay then you can retire early. Yes I realize you still have to pay property taxes and your monthly expenses but if you're a minimalist you can get by with that working 20-30 hours a week đ€·
That will be me in 3 years. $2500/mo down to $1000/mo for a 4bd/3ba with 2400 Sq ft.
You don't need a house to build wealth. Simply renting and investing as much as possible into equities instead is argubly a superior strategy if you don't care for home ownership. A house is a liability, not an investment.
I bought at age 55. It was a miracle. Much better than renting. And a 2.62% interest rate. True miracle
I rent a house out to a 60 year old permanent renter. His wife just moved out and he can barely afford to live there. What I charge him is way less than similar properties. I consider it a ministry at this point. He is a train wreck waiting to happen. Life long renting is a horrible decision. You condemn yourself to poverty in old age. STUPID!!!! My wife and I own 4 homes, some by default and 3 are paid for, including the one we live in. The 4th is a small mortgage that will be paid in 2-3 years. Buying should always be the goal.
Good luck man... tenants are a fucking nightmare to deal with.
So if someone has 3 million in investments but chooses to live in an apartment while their assets continue to grow they will die in poverty? Do you realize how stupid that sounds?
Unfortunately all you are doing is enabling his lazy lifestyle, his wife probably left him because he's a lazy bum. He needs life to bite him in the azz, imo raise the rent to market rate you are not his mother. He's a 60 year old divorced man why does he need to rent a whole house by himself? He needs to increase his income and rent a more reasonable apartment and get some roommates
I would never rent long term.
Yep two things keep rising that rarely decrease: taxes and rent.
I really like how the gentleman was very receiving of the advice. Sounds like he just never had it all broken down to him in the way Rachael and George did it. He is definitely on the right track. Good luck to him...
Problem is with the price of renting now you can not put money aside to buy a home
Homeownship isnât the only path to wealth
I think the caller is confused saying âhe doesnât want to build wealthâ. By investing 15% of your income into retirement you are building wealth
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Iâm kind with dude. I do want to build wealth though. But I like renting. I donât want to buy a big ol house or really just a house in general. We live in a 6 bedroom 3 bath house sitting on 15 acres right now weâre renting for $1,200 a month. But itâs so much responsibility between the rent and how much we have to constantly clean. Weâre moving, buying a $35,000 trailer, and weâre gonna pay it off fast so we donât have a mortgage at all. Plus the cleaning is gonna go way down because itâs a smaller place. Less responsibility.
where are you living to have that rent for that much space and land? I'm lucky to find a 3 bedroom apartment for $1,750. Anything at $1,200 I may end up shot walking at night.
@@andrewroof8042 I got EXTREMLY lucky. I worked at a local sheriffs office for almost 4 years. The girl and her husband Iâm renting from had this house and land that they were trying to âsellâ except they werenât very active with trying to sell it. They make well over $100,000 a year together. Anyways they owned that house and it was just sitting there and they were making the monthly mortgage payment of $1,207 a month on it (theyâve been paying on it a long time itâs been through refinancing and everything). Anyways they were just making a monthly payment on it but they moved out of it years prior. So it was sitting empty for like 3 years and they were just making the monthly payment on it. We just picked it up for pretty much the price of the mortgage theyâre not making a dime of of us weâre just paying the mortgage. Technically we pay $1,200 a month to live there. The mortgage is $1,207 a month. There paying $7 a month. There just happy to not have to pay the mortgage.
@@andrewroof8042 I do fully understand how lucky we are to have what we have and I understand in todayâs market 1,200 is cheap. But Iâve never made a lot of money so $1,200 for us is very hard. Our mortgage is gonna go down to $500 in July when we get this trailer so we will save the $700 a month. Which is a huge deal for us.
Where the hell do you live for that price
Don't trailer homes lose value?
Thank you, Rachel , that makes perfect sense but what about for a single person who does not plan on having children, ever, and whose career has you moving every 4 years? Wouldn't renting be a better option?
You definitely have my sub. This content is next level. For me Eledator was the turning point. Please keep doing what you do and keep being you, love it.
I actually rent because i want to maximize my wealth. I never understood paying a mortgage with an interest rate of 4% on an asset that would only increase in value 2-4% on average yearly. If you take your mortgage down payment + the extra cash you save each month (because renting is cheaper monthly) and just put all of that into the market earning 8% yearly, you will almost always make more money over 30 years when compared to owning a home. The leverage you get from real estate is only valuable for rental properies where a tenant is paying your mortgage. If youre living in the home, you won't see many gains.
You get it
Renting is not cheaper monthly. The only reason ANYBODY would be a landlord is that they profit from dong so. Which means they charge more in rent than it costs them to own the property.
@@amireallythatgrumpy6508 landlords generally can't just buy a property and mark up the monthly price to make a profit. In order for them to Cashflow a property, they need to do one of a few things:
1) rent to tenants that have horrible credit and can't go anywhere else. You can charge these kinds of people a high premium because they're a high risk. It's profitable but risky. This isn't something that a home buyer can capitalize on to make a profit for themselves.
2) you buy a house and then increase its value through renovations. The rent can then be marked up higher than the mortgage rate that was locked in. But let's say that you were a tenant of this house after renovations, and then decided to buy the home from the landlord. Your monthly expenses would go up compared to renting it.
3) the landlord owns several units and can leverage economies of scale. For example, apartment building owners typically hire a maintenance crew instead of hiring contractors because they have so many maintenance problems in an 800 unit apartment that they can leverage cheap full time labor. Someone owning a single family home could never do this.
4) they find a unicorn house that is priced well below market value. If you do that, you can buy for cheaper than renting. But most people don't do that.
@@amireallythatgrumpy6508 CZcams deleted my reply because it got marked as one of those fake investment scam comments. I'm not going to retype it but I encourage you to crunch the numbers yourself. I built a calculator that compares renting to buying, and in every city that I've ever lived in, there was only one where buying made sense. The people were very poor there so house prices were cheap and rents were high (you can charge higher rents to poor people because they're considered high risk). In All the major cities I checked (Dallas, Seattle, Austin) renting was cheaper.
Homes been increasing 10-100 percent over last 4 years đ€Šââïž. Once how paid how no more payments except maintance and property insurance. You be paying for rent for life someone else investment đ
No body talking about taxes and insurance on the house changing the mortgage payment every year
Why? My insurance/tax has gone up 1500 a year(not a month) since 7 years ago. A apartment a mile away has gone up 1200âŠa month (not a year)
Yeah, those things cost money but not more than renting. I think that is the point. Otherwise people would never rent property... because it would cost them more just to have the property than what they would get from the rent.
Those go up on rental properties and tenants pay for them. They're simply bundled into one item called "rent".
Rents also increase based on property taxes and insurance so the distinction is moot. The issue is that over time, your mortgage payment (not your escrow payment) stays fixed, while your rent increases based on inflation and supply and demand of rentals on the market.
@@duckpwnd You are correct. However, those items are also considered a business expense for the landlord. So, the amount NEEDED to be put into the rent for those items is a bit less than what you would pay for them if you owned the place. Not arguing that renting is better, just ensuring the variables are looked at correctly.
I highly recommend a condo. Our condo has an amazing board and management team we own our unit and we pay about $1000 in HOA but itâs like living at a resort and itâs way cheaper than rent. We bought it cash . often the maintenance is happy to do minor household repairs for a very affordable rate, we absolutely love it
Yes youâll build equity. But Long term doesnât account for repairs, PMI, taxes, so many other considerations. I know multi millionaires that rent.
Ken called in with a voice modifier from the studio with a great script while eating his burrito special.
Rent is the most you'll pay per month. A mortgage is the least you'll pay per month.
Mortgage balance decreases and eventually becomes zero. Rent never ends.
So your argument is false especially in light of my mortgage is paid off. And property taxes, home repairs/maintenance is a fraction of rent in my area.
I live in a very expensive area. Things were way more affordable when I first moved to the area, but I wasn't sure if I would stay or not, so renting a room made the most sense. Now, I've been here 8 years. My landlord is wonderful and I'm still paying the same thing for my beautiful master bedroom suite. I was able to get debt free, and I've been saving and investing. I should up my investing. Anyway, housing prices have exploded and there is no way I can afford anything in the area. I'm an engineer too, but I'm on the lowest paid branch of engineering and haven't gotten my professional license, so while I have a good job, it's not good enough to afford anything when even town houses are going for $400,000 to $750,000. Condos have crazy hoa fees and single family homes are over a million dollars. So, I'm saving & investing.
I would like a to own some day because I'd like to have a pet, and paint the walls. But, I've gotta save up a big down payment 1st.
Living in a house is so much better than living in a an apartment.
That seems very personal. I prefer apartments, especially living downtown, with everything close to you.
@@eleo_b I prefer more space between me and strangers
@@jasonbornne7767 yes, itâs personal preference. I kind of like the anonymous aspect of apartments compared to suburban neighbours
yeah I like no shared walls or someone with lead feet above me.
Renting sucks when you get older. Buy a modest place.
This guy is talking a lot of sense. Yes, home ownership is a lot of work. The truth is, I didnt feel like I had a handle on it until I retired. Now I have the time to keep up with projects, contractors, etc. I just spent over 10k putting a roof on my garage. Yes, 2k per month of rent adds up, but for most people, thatâs easier to stomach than coming up with 13k for a roof. Most people in Europe rent for their whole lives. That seems smart. These people are middle aged. So they would probably be in the market for a small retirement home. Itâs foolish to end up stuck in a huge family home as elders. Plus that messes up the housing market for young families that want more space.
I have owned homes before, I have rented the last 34 years. Due to the rent crises I just bought a house in Florida, new construction. I am debt free with a 12 month emergency fund. My wife and I are on s/s and the monthly nut is taken care of and then some. This is peace of mind, nothing beats that.
40 đđđ , i wish I could have bought a home back in the 2010s but I was n first grade, now Iâm 20 and have closing day on the 28th
if you have children, the stability and space of a house and a yard is great. if you do not have children, a house seems old school. these days, people without children like the idea of being mobile, constantly switching jobs, environments, etc. he's right, having a big box of wood and nails that needs repairs and upkeep isn't necessarily the best and easiest route.
Thank you for your research. I find your videos are well done. RIght now I'm keeping an eye on Eledator
No. There is such a huge opportunity cost. The potential to dwarf any rent increases and paper net worth millionaire home owners is huge. Buying a house doesn't have to be somewhere in everybody's wealth plan. Ramsey team is real estate people so askng them is like asking for health advice in McDonald's.
Let me tell you how I live in a $2 million house that I got for free. Now you might think that this is an inheritance. Or maybe some sort of unusual event like winning the lottery. Maybe even think Iâm going to describe a scam here. Itâs none of those things. About 10 years ago I bought a home for approximately $650,000.. I sold my previous home and use the proceeds for the down payment, using a mortgage for the rest. At the time the rate was 3.5%. Obviously better than now. Since then I paid off that mortgage early. I did pay interest cost until that mortgage was paid off. And of course I pay taxes every year. And yes, there are repairs. Lawn care, painting, power washing, all the stuff. But when I bought the house, I knew I had the money to pay for those things. So they didnât break me financially. I couldâve bought a much more expensive house, but I chose not to because I wanted to have enough money on hand to pay the mortgage down early and to, pay all the associated costs without too much stress. Iâm not sure exactly how much money I have paid for the house, the mortgage, and the upkeepcosts. But Iâm very sure itâs well under $1 million. And as I said, the house would now sell for about $2 million. So I lied when I said I got the house for free. I got the free house plus $1 million. Because houses are usually in appreciating asset, in a very real sense theyâre often free or better yet cheaper than free. But it is important that you be able to afford the costs. It wonât work if you canât make the payments. It wonât work if the house is ruining your life because itâs causing so much stress for you. You need to buy below what you can afford. Thatâs not easy to do in todayâs market. Maybe itâs impossible for many people. But if itâs an option for you, it is way better than renting.
Itâs not free when you had to work save pay for it. But you did get lucky. Hereâs how you can live free in a 2mil house without the upfront cost, truly free: house sitting. Yes you move even more than you would renting, but itâs way cheaper even with travel costs and responsibility of strangers pets, and you live many lives in many homes for a fraction of the cost of both rent and mortgage
I totally understand why many are not buying right now. But if there is any way you can, you should. I bought my house in the early 2000s on a 30 year fixed mortgage. Just over 20 years later, required monthly payment on a 3 bedroom single family house with 2 car garage is less than a studio apartment. Because my income went up but my "rent" did not, I'm not only able to save more, I am making double payments to the mortgage now, and I still have fun money. Yes, I had to replace a roof, the HVAC twice, and other minor things over the years. I'm still so far ahead of those paying triple what I do on the same size house. When I retire, I will have zero "rent" payment. Just taxes and a cheap HOA fee. If you never buy you will never escape that huge monthly cost.
Once I calculated what it would cost to live in an apartment versus my house. When I annualized the costs of major repairs, interest on my mortgage, higher costs for electric and gas, it looked like I could afford 4 times the space in a house as I could with an apartment for the same amount of money.
Very much an oversimplified approach to real estate. Carrying and transaction costs in real estate are real. Monthly payments given recent increases in many markets are often double compared to rents, especially with interest rates where they are. Biggest advantage to owning a home isn't really the investment, it's the stability which is especially important if you have a family.
If you really DON'T want to build wealth buy an over valued house at 8% interest ... that should do it!
Even with the latest appreciation on my primary residence, I am still not even close to breakeven and I haven't had a mortgage for 3.5 years. I paid ~150K in interest for the 12 years that i had the mortgage, and ~60K of improvements. I have a lot of deferred maintenance also (~100K after inflation event). Property tax and insurance is roughly another $85K. Total cost ~$775K - 75K savings = $700K breakeven (not including opportunity cost of having invested my down payment). My Mortgage was $20K annually but I paid it off early because of the baby steps (-75K). I could rent a house similar to mine in 2024 for ~4K a month. I could have rented for 15 years and been ahead...and now that houses are super expensive, there is no chance you'd beat renting. Also, there is no way to factor sweat equity, realtor fees, and any other repairs that the future owner will negotiate. I figure I have to sell now while the market is up or I will never get out.
Buy a condo or place where maintenance and yard work is included in your dues.
Big issue is the high HOA. If you can find one with low fees you're golden.
Owning a home means cost of living stability and we can see that with rent increases in the last 4yrs. I own a house and a small cottage on the property. Within the year my cottages rental income will pay 95% of my mortage and taxes. I'm still 20yrs from retirement and will be socking that money away for 20yrs.
Yeah, but off whose back? That is why I feel like renting is unethical.
Renting vs ownership depends on where you live. If you are in NYC, renting might be the best option such as a rent controlled place, or if it is a fraction of trying to buy a property. In other places, it might be better to own a home, if you can maintain that home. You can build wealth while renting too. I rented for 10 years in NY before I purchased my first home and was putting 50% of my net income into investments while renting, so it is possible to build wealth while renting.
You can easily go either way in Oklahoma.
I live in an older apartment complex that is well maintained but doesn't have some of the luxury goodies that are in more modern places. My rent is very affordable and that allows me to put money aside each month that I would not be able to do to buy a house here that would be nearly twice what I pay now.
There is no such thing as a well maintained apartment complex.
I work in the rental industry and I see this all the time. Just had a tenant get a settlement and instead of buying real property like I suggested (he asked me), he bought 3 vehicles. So living in small apartment is that person's plan I guess. I'm sitting here at age 40 with a paid for home I constantly work on. No rent/mortgage is so freeing! And the equity is a big bonus.
I would have asked the guy why he needed 3 vehicles more than a house đ
@@shanep2760 Like Ramsey said it's a behavior problem. If you're disciplined, great, most have issues with lifestyle creep and aren't putting the extra cash into retirement/savings. Hence why Ramsey Solutions has job security lol.
I would add you donât have to start with a house that fits your wants. Start with something smaller that fits you true needs. Then you have more buffer room.
Tell him to buy a condo or townhome? Fixed rent in an apartment style living.
Depends on cost to own vs rent.
There are plenty of scenarios (like now) where the cost of renting is less than owning a house. Historically, stock market returns are higher than real estate. Even with real estate, REITs are much more diversified than one house.