ACCOUNTANT EXPLAINS: Should You Buy or Rent 2023

[@ProfoundFamiliarity]

After a mortgage is paid off, the only costs are utilities, tax and repairs, which can hopefully be paid on a pension. Whereas renters must pay an ever-increasing rent into retirement, which may eventually exceed their pension, leaving them homeless. This is a fear for me personally, as a renter.

[@r1273m]

I'm 75 and along with my wife we bought our first house back in 1971. We have bought several since then and we also have properties we rent out. We lived through the mega high interest rates of the 1980/90's and saw many people in trouble due to overstretching themselves when buying a property as interest rates went into double digits. It's important to consider what will happen in the future if such a scenario happens as is currently the case. One thing to remember though, if you buy a house and sell it many years later but do not make a lot of profit on the deal, at least you have lived in it "rent free" for all that time. I am definitely on team buy it!

[@MattBidewell]

If you're team buy perhaps you should consider selling your properties your rent out to give the youth...a chance to fucking buy

[@r1273m]

A lot more people would be in a position to buy a property if they didn't waste money on drugs, smoking, boozing, tattoos, foreign holidays and the like. Scrimp and save and then buy a cheap terraced house in a low cost area. When you come home from work you spend your evenings and weekends doing the place up so that in a few years you move to somewhere slightly better. Rinse and repeat.

[@PhilosophyLines]

@@r1273m Hopefully this is a parody comment.

[@PhilosophyLines]

@@jawlig For me it's more the 'spend all your time outside work doing DIY on your dilapidated property'. I honestly don't think the numbers add up for people without parental help, not in London anyway. The people I know who've done what you're suggesting have basically had their home bought for them.

[@dlc2479]

You didn't live in it rent free. You paid rent to the bank in the form of interest.

[@kylethomas8655]

The fact that you discussed opportunity cost tells me you are truly an accountant! Love it

[@DuncanInUK]

I am in my mid 20s now and working hard to save up for a mortgage deposit. Nischa you are absolutely on point there about the psychological factor to consider. For me personally, since I moved to the UK a decade ago by myself, renting is a vital and nerve-wrecking process for me as I don't have that safety net of moving back with my parents (which I think lots of people don't either due to location, family relationships etc), so personally buying is the only ticket out of the rent-find-a-house-move cycle, which is a bit of a nightmare on its own.

[@LawChatsWithMadeline]

I relate to this so much

[@storm1110]

I relate to this although I'm not from abroad

[@dmsjt5181]

As a 32 year old mom and step mom of 6 who has made every life mistake under the sun, the biggest and most important life lesson I’ve learned is that whatever stage you’re in, make sure your habits and choices align with your goals. For instance, I went to college in a small town where home prices were already cheap, but then the housing crisis happened. Then the houses were dirt cheap. I came to a very cheap college with enough money saved that could have been used for a down payment as a first time homebuyer. Instead I just blew through all my money like an idiot. That continued to be a theme in my life until quite recently when I was finally forced through life experiences to stick to a strict budget. Later on even, my husband and I look back and kick ourselves for not buying a house with a basement, living in the basement and renting out the main part of the house. It would have covered our mortgage and made it possible to have more dispensable income and travel like we actually wanted to. Now we’re having to start over due to an awful housing market and many other factors.

[@mimid.8346]

I'm on the exact same boat but now that we've realized our mistakes, well eventually reach our goals. We got to be strict on budgeting.

[@Jar1990]

How do u budget and any advice a mom of 2 x

[@dmsjt5181]

@@Jar1990 we keep a spreadsheet with all our expenses and we use YNAB to keep track of expenses and categorizing them. We got rid of extra expenses we didn’t need, and got more serious about putting money into savings. The biggest thing is not spending more than you have. Just the awareness you get from tracking your spending does wonders for not overspending, in my opinion.

[@connmarymark4898]

+121

[@connmarymark4898]

8940

[@michaelcheng4985]

As a property owner in the US, it's way too expensive to buy in the current market. Will be closely watching to see if this changes in 2023.

[@ShortFunnyTales]

I hope prices fall in Miami too

[@overcomerbtboj]

I’m waiting too from what’ve i’ve been reading interest rates are projected to drop by the end of the year so things should improve for 2024 and 2025

[@dirtbikefun]

What's coming will make most recessions look easy, and on top of that you are up against the WEF trying to put in place more controlling obstacles, id is surprised if it gets any easier in 5 years unless you find a way to improve your wealth.

[@alexsoto5800]

yep, agreed. Was fortunate and lucky to have locked in my mortgage loan at 2.5$ right before the Fed's interest hike

[@lih1352]

@@dirtbikefun What is coming? I keep hearing threats/predictions but please elaborate

[@christiannoone5869]

Really great video! Really well summarised and the numbers were articulated well! Another thing to consider as well with the buying scenario. Of that £1,780 a month, because interest rates are so high, the interest portion of that monthly payment is £1,350 for the first 5 years which is dead money and principle is around £400. This is due to the amortisation schedule. So when you compare that the dead money you’ll be paying from renting £1,560 and mortgage dead money £1,350 + maintenance to fix anything that breaks, people say renting is throwing money down the drain, renting actually is throwing less money down the drain now. Only difference is the dead money goes to a bank instead of a landlord. Issue is when something breaks, the bank won’t pay to fix it.

[@nischa]

Spot on - great point

[@MyJacopo96]

Generally 1350 of interest and 400 of principle is the worst case scenario due to high interest rates.

[@christiannoone5869]

@@MyJacopo96 Exactly. May as well rent the place

[@varunsia7609]

@@nischa iam looking to invest in property in uk ..iam indian

[@BMW-tr3nf]

Calculation of what you said is true. One thing you haven't mentioned that I think is very important is that you may save some money by renting but will never own the home. By buying in the first instants you will pay more because of the interest but the home will eventually be yours.

[@robm2245]

A buyer should not forget about the costs of sale. This can typically ad another 8 to 10 percent in costs upon sale of the property. Buying today would most likely create a loss over a 5 year hold vs renting. If you held for 10 years or longer, you would probably be better of buying.

[@bunniewood]

I’m in the other boat I think renting is better. There are so many phantom costs with owning a home and it’s the only asset in the world where you are taxed three times! when you purchase, when you own and when you sell. Not only that but often the interest you pay (money for nothing) is almost half the price of the property. A renter could live 15 years off that. I think if you rent but also invest into shares you will have faster growth and less responsibilities. I like the freedom to move when I want, where I want, closer to work if I need. I’ve never had a landlord kick me out. We have a lot of made to rent luxury properties here so I guess I’m lucky. But what if you buy a home and have a nightmare neighbour??? You’re stuck!

[@Anonymous-ez8rt]

I agree! My old neighbour was a nightmare!

[@renzildsilva]

Hi! I just wanted to take a minute and thank you for your awesome videos. It's not just about teaching basic accounting skills-it's about giving people a better understanding of their finances and helping them develop good habits that will stick with them for the rest of their lives. Unfortunately, these lessons aren't being taught in schools today. That's why there is a need to make sure that people are given the tools they need to build wealth and prosperity for themselves and future generations. These things are so simple, but with some self-discipline and the right mentorship, they could be taught to so many people. Unfortunately, due to lack of this knowledge in today's fast-fashion, instinctive buying and use-and-throw world around 90% of the younger generation will end up being part of the lower wealth gap.

[@marymurrow8869]

And starting with lures such as "free student overdraft" in the 1980s, even my generation (Gen X) has been trained to consider debt the norm. Better to have neither an overdraft nor a credit card - it only encourages unnecessary spending. But nobody taught us finances when I was at school, either. Unless, perhaps, you were doing accounting as an elective subject.

[@gavinr9107]

I purchased my home eight years ago during a 'peak' in Australia. In that eight years it hasn't gained a cent in value. It dipped then now only worth what I paid for it at the start of this year. I am fortunate that I have put a decent dent in the mortgage and have equity in it now.

[@AndrewJohn5544]

The one single reason i bought was for security, meaning i can make it a home knowing someone cannot kick me out with a month notice and also i can keep the property in a good state of repair where as my landlords in the past have done minimal work on the property's.

[@bupekabamba6017]

What you've written is the main reason in Zambia. If you own a home (which most of us build from scratch) no matter what happens you will always have a roof over your head. Imagine renting a property and you lose your job you can't stay in the rental without sturdy income. While if you own a home you have a place to stay while you figure things out if lose your job. And yes of course markets, circumstances and regulations differ from country to country. And for us mostly rental fee usually do not cover utilities. As a tenant you have to cover those

[@dlc2479]

​@bupekabamba6017 The difference is in the UK, very few can afford to build a home from scratch without significant debt. So if they lose their job and cannot afford the mortgage, they lose everything.

[@VinayakPadarha281224]

Went through the whole series of your "Accountant Explains" and the work that you've put in, is impeccable @Nischa! Great scripts, brief knowledge, beautiful presentation and gold standard narration of the different topics! Keep us posted with this life skill, the knowledge of finance!

[@Uncommonsensetoo]

I lucked out when I bought a 4 bedroom house when prices were low after the 2009 housing crash and that has worked out great for me. I've been renting out rooms which covers my mortgage and taxes. I also pretty much do all of the maintenance and repairs myself. I essentially have free housing plus significant increase in equity and value of the home. When you rent out you can also deduct a large amount from your income and expenses like depreciation and cost of supplies and improvements etc. at least here in the US.

[@kirankumarsukumar]

People underestimate how rare is to find a couple who are both good in finance and investing. Rare. Very rare.

[@himanshub16]

Hi Nischa 👋, love your explanations. To the point. I find one thing missing in all the analysis is the part where you miss out on settling on a good locality. If you buy a house today 10 km from the city centre, the city is likely to grow and that suburb in 5 years would become a mini city in itself - see Delhi NCR for example, or even Bangalore or Mumbai. But if one rents all the time, then at the time of buying at later point in life, the person will have to settle 25 km from the city centre because the city has grown and affordable places are outside, making it harder to commute if needed. This is something I miss in almost all analysis videos. Thanks!

[@foxyfoxtrot4233]

Regarding the value increase of a property - that is of theoretical value if you live in the property as you cannot use the value increase (unless the bank recognises the value increase and lets you use it as collateral against another loan). So I would generally refer to a house that you live in not as an investment, but as consumption choice (just like rent). Regarding the opportunity cost of not being able to invest the money that goes into e.g. maintenance and interest payments: this is very valid but only applies if the person renting is disciplined enough to actually make the investments. Lastly, owning a property where no landlord can just terminate the lease is a very reassuring feeling which cannot be measured in money but for me outweighs some of the correct rational arguments.

[@dappa0000]

This video is all over the place, its very very simple, in major cities where rents are high buy as soon as you can and in the best (LOCATION) for good capital appreciation, if you cant buy property just yet invest in either S&P 500 or Vanguard 500, in the long term property will out perform investments in these funds but its better to invest rather then leave the money in the bank. Outside of major cities you can rent as no point in buying in these locations as they have very low capital apprecation, so it all depends on LOCATION. You must do your own homework and see what locations are in demand by both buyers and renters and near good infrastructure ie transport, schools, amenities.

[@11bornrich]

One thing I've noticed or I "think" anyway is, a lot of my friends that invest in property love to talk about the potential ROI 5-10yrs from the time they've purchased the property but rarely include maintenance costs in their evaluation. I think the best combination is having equity in the property but hoping that either cash flow (from rent) or the increase in the property value will cancel out inflation & maintenance costs, and the other will be the net profit. If the numbers are really crunched thoroughly, a lot of homeowners that live in their homes don't make as much net profit when it's time to sell as they give off unless they happen to be in a booming market. I find that those who strictly buy properties to turn a profit tend to really go over the numbers in depth.

[@frankodozi5349]

Another option is live with your parents 😂

[@santhoshmass]

whoops their bravado their culture their macho ness for boys, the boss ladies girls me me me is at stake. There is chance of coversations sensible ones could happen which they may never be ready. In short not a good option 😉

[@leoladystewart8613]

And save up so you can buy with a good deposit.

[@OmniCloud987]

For many our parents are renting just like us 😂

[@udaisinghkanwar7250]

The best 😂

[@j.vosier6786]

Yep, my rent went up to $2600 a month, i went back to my parents house

[@PrezidentHughes]

It's a disgrace that somewhere to live and have a life and security is now a trivial commodity. In an ideal world, everyone should be able to own their own home.

[@si-hv3nu]

They can, it’s a choice

[@ralisimon4848]

Why??

[@languagestutor4636]

Hi, I am new here!I think the best is to act! So, there’s not the good time to buy a house, but all depends on your situation! If you are ready to buy your first home, and you have the right deposit, just buy it. On the long run, buying is better than renting.

[@chikondibanda6479]

It’s not as simple…affordability counts a lot. Accounting for all additional costs is important

[@Zale370]

Real estate does not not actually appreciate in value because the currency used to purchase the property loses value over time. This can make commodities seem like they are gaining value.

[@bg1616]

Main thing is to buy as early in life as possible. "As possible" being the key thing. Also, from experience you can pit mortgage brokers against each other. They look harder for a deal.

[@marymurrow8869]

And what can you do if you're older? Is it still possible to buy a property if you are over 50? (I mean over 50 and not a millionaire). People put me off a few years ago, now I'm a few years older!

[@bg1616]

@Mary Murrow I don't see why not Mary if you have a decent credit rating. If 50yrs old is your earliest as possible and you can get a 15yr mortgage going by 65 retirement. I have 15yrs left on mine anyway technically. Owning your own place will likely drop your accommodation costs over the next 20 years in the long term, rent will increase them.

[@huntsail3727]

Just found your channel. Love the clarity and simplicity of your presentations. Subscribed. Great job!

[@dlc2479]

Another thing to point out is that you actually can't do whatever you want with your property in the UK. If you're a leaseholder, you need freeholder permission to make any significant changes to your flat. Even if you're a freeholder, you need planning permission to make significant changes to your home. Owning doesn't necessarily mean freedom.

[@richardc316]

I bought my first property at 19 (40 now), best decision I've ever made. I've heard all the arguments for renting, but none of them make any sense to me. My mortgage payments are only half the cost that renting my house would be each month. Yes, you normally need a 10% deposit (£20,000 on a £200,000 terraced house), but you're not really losing any opportunity to invest that because you ARE investing it in a property, which on average go up just as much as the S&P 500.

[@machine0182]

Currently as a first time buyer it no longer makes sense for some us I would say. In my personal situation I have a really good deal renting so the interest on the mortgage alone costs more than my rent and with house prices set to fall substantially I think currently it would be better for a significant amount of first time buyers to hold off and buy at a later date.

[@freddy21ify]

Buying a house to live in is not an investment!!

[@richardc316]

@@freddy21ify Yeah I hear that all the time, and 'technically' your right, BUT if I can buy something that is almost certain to increase in value (and a rate to easily account for any maintenance costs), then it's good enough for me. I have money in stocks too, but my house is my favourite non asset (I know it's not actually an asset, lol)

[@del4668]

@@machine0182 Where is this magical place you live that the rent is cheaper than a mortgage would be on the property ? On the open market I would argue you never find a property to rent for cheaper than you could get a mortgage on the property.

[@bg1616]

Totally agree. Rent never goes down but a repayment mortgage usually does. If you buy at 20, your accommodation will probably cost next to nothing by the time you hit 40. Either that or you live in a much better house or have a big sum if money in the bank from a sale. Renting only makes sense in the short term.

[@miznikki2u]

Times are tough but we have to keep going. I am 32. I hope to be primed to buy a house with my partner by early 2025, fingers crossed. Thank you for your video!

[@Vraellko]

Good luck, I am in the similar situtation. Fingers crossed :)

[@bg1616]

Good luck, I bought my first after that age.

[@SPS_survivor]

Buying is all very well if you’re in full time employment and can afford to even get a deposit together as a single person. Very difficult for most without rich parents or inheritance or extremely hard working people, which I have the utmost respect for as the sacrifices are huge for many. Being disabled, I’m unable to work as some days I’m in complete agony and cannot move from bed as I’m crippled with spasms and extreme tiredness, this can vary greatly from week to week or even hour by hour - so I have no option to rent. (Not a sob story) - I’m ok 👍🏼 I would like to thank you Nischa for you’re awesome videos, I guess it’s a good income for you however KZbin generates revenue and how it’s worked out - but these videos seem very interesting and informative so a big thank you.

[@howardskeivys4184]

My current wife and I, set home together 24 years ago. Giving up our separate homes, hers rented and mine mortgaged. We scrimped to purchase a property sufficiently large as to be able to accommodate us, the 5 off spring we have between us and our 2 dogs. 12 years later, when all of our children had ‘fled the nest’, we decided to downsize. We sold our property with sufficient profit to help our off-spring set themselves up leaving us with a small ‘nest egg’. We chose to move into a spacious apartment in a prestigious development in the heart of the UK’s 6th largest city. The monthly rent works out to be almost half of the cost of a mortgage on a similar apartment in the same development. Fr us, renting is the logical option. An excellent video by the way.

[@rahim1404]

You are very well spoken and make complex scenario to a more simplified language to general public. It would be advisable for you to consider webiner sessions for your regular youtubers.

[@nischa]

thank you!

[@andrewlunn]

Very well presented. Clear, punchy and concise, another great video Nischa

[@nischa]

thank you Andrew!

[@bradk7462]

Great video, also worth considering that house prices can, and indeed will at some point, in some shape or form, go down. Your house price graph only goes back to 2008 but look a bit further to the 90's and you'll see big drops. Consider also the amount of government intervention since 2008 (help to buy, low interest rates etc.) that has fuelled the house price increase bonanza. You're right to compare rent v buy in the context of 1% increases or 3% increases, but folk should also consider those numbers in reverse when making a decision. Christian Noone also mentioned a great point worth repeating: when comparing rent v buy, factor in mortgage interest repayment which is a huge amount of dead money (although long term you obviously end up owning an asset).

[@Judah-wk1ps]

One thing is for sure, No One will be taking there home/homes to Heaven, which is very soon to become an eternal reality.

[@danielsechrist4410]

I can't believe people rent the same place for an average of five years in the UK! Renters I know in Denver sign 12 month leases and move about every 1-2 years until they can buy a home.

[@j6gossipgirl]

Great video, so on point!!! What may be an idea for another video is buying to use property vs. buying to rent out. In Germany for example we have really nice tax benefits for renting, basically almost all of the costs of buying, renovation (if any), maintenance, and mortgage interests are tax deductible. Not sure if that is the same elsewhere, but on top of the rental income that can be really nice bonus.

[@elmanitasdeplomo]

Here across the border in the Netherlands a lot of building/apartment owners who rent them out, are thinking of selling because of new laws. The housing market is completely messed up here.

[@happymaskedguy1943]

If you can flat share with the right people, or live with your parents and save a LOT of your income for 10 years, you have a chance at getting a deposit for a small home/ flat with the right lender. It’s not always possible, but when it comes to where you live, buying is ALWAYS better than renting.

[@jseverene4789]

I admire the way Nischa outlines out this information, so amazing, even got me into re-evaluating my life financially and i,m from far from Europe. Nicely done Nischa

[@ElmoTrades]

Financing a property is pretty stupid. Apparently everyone talks about equity on the home like is guaranteed. Yea lets drop this prices by raising interest now everyone is upside down on their loans massively. Good luck!

[@NetITGeeks]

Buying is also the far better option in most parts of Canada as of now. However, in situations people have brought a house in the higher up on the housing market curve (past few months). Now the housing market is expected to cool down a bit in Canada, this will result in a net loss in the short term.

[@nickbradley6218]

You're a fantastic auditor, and think this is a great way of explaining the pros or cons. I would say 1% for house maintenance is optimistic when you factor in life spans of boilers, general wear and tear, as well as people's need to freshen the appearance of their interiors over time.

[@Deepika1001]

Hi Nischa! I came across your channel on Saturday and have literally binge watched ALLL your videos! This is exactly the sort of channel I was praying for… I have two questions: 1) with the new law regarding no longer getting tax relief on mortgage, I.e. paying tax on the total income rather than on what you keep after all expenses (what it was previously). Does it still make sense to rent out when it might mean being out of pocket each month? 2) can you do a more detailed video on making a passive income from digital assets and also explain affiliate marketing a bit more…and what are the first steps for someone in a 9-5 corporate job to start this…

[@rosspatient9260]

Hi Nischa, great video and love your content. Only constructive points I’d have on this one are around other psychological factors and costs. Watching the oscillation of your wealth in equity markets is emotionally challenging for the best of investors, often leading to poor decisions. With property you don’t have a valuation number that you can see changing. This is a key affecting factor for those assessing opportunity cost and likely outcomes. Investing also has costs which will be higher if you use a wealth mgmt service (2/3% annual for affluent segment) to help keep distance between you and your cash as it oscillates which would probably be best choice for most! Keep up the good work and push on other platforms ☺️ Ross

[@Danzo1212]

I read a book that changed how i view money and the book is based on buying vs renting it makes a great argument to only rent because the money you use to buy the house you could use to start a business and invest in growth stocks, these combinations will outpace the growth of the house value and in tern you get to live in a house and pay no repair fees ect.

[@brasso4984]

Rent, so when I've had enough of our joke of a government, I can flee to a country that 80% cheaper and not worry about being a slave to a lender for 40 years.

[@smk666]

Renting vs. buying is like comparing apples to oranges. When you rent you're never fully "at home". You can't renovate exactly the way you'd like it or throw away furniture to make room for the ones you like more, you can't have the peace of mind that you could for sure live at the same place for the next lease term, you have to agree to bizarre rules set by the owners like "no pets" or "no laundry after 10 PM" etc. Owning real estate is in so many ways different from renting that comparing the two is like choosing between buying a new car or getting an electric scooter. Granted, you might be too poor to afford a car at the moment, so the scooter is a last resort but it'll never fully replace all the options that a car could give you.

[@spektred]

That really depends upon where you rent from. Here in California I rent and I can change out all my furniture as often as I want, I also can use the laundry facilities 24/7. Some apartmenrs even have their own washer/dryer inside the unit. Renting may cost more, but I don't have to worry about making any costly repairs if the air conditioning unit goes out, or if the fridge or food disposal breaks

[@philyahh]

Great video and use of real life examples makes it very clear to a house buying newbie. I would add that whilst these costs are comparable on a year by year basis, the house buyer at some point (say after 25 years) will have paid off their mortgage, and from that point onwards all income they get from work is theirs to keep, whilst the renter would have to continue their rent payments indefinitely. This might seem irrelevant but in reality would make a huge difference to your saving/budgeting requirements today if you know that one day your future housing costs will be zero (ie I don’t need to save in my 20s-40s because I know I can do so once I’ve paid off my mortgage).

[@petersimpson633]

That's extremely pertinent and a major omission to the video, plus the associated issue you will need a much larger retirement income if renting the rest of your life

[@waterbourne9282]

Good analysis for people to consider. My only comment would be to factor in the rent cost incurred as part of the opportunity cost of investing the deposit elsewhere. Not sure about the UK loans market but here in NZ a powerful strategy is using interest only loans which reduce our payments by around 25%, thereby increasing borrowing capability. In conjunction, using Interest Rate Averaging to manage the risk of rapid interest rate rises means you can ride through challenges of volatility in the economy and personal circumstances. What I used to was to do was determine what I thought I could pay off the principle from discretionary income over the course of a year. I would then have this amount on a floating rate and assuming circumstances allowed, hammer it with payments to reduce the principle. The balance of the loan amount I would split into five parts and fix them for one, two, three, four and five year terms. This meant that each year a only a portion of the loaned amount would come off fixed and only that amount would be exposed to the current interest rate. If rates had rocketed up my exposure and financial risk was much lower and I could assess if these conditions were likely to continue and if so have the time to adjust my financial situation to cope with them- eg sell property, etc. At this point after year one I would look at what was left floating, decide what I could pay off over the next year, float that amount, and fix the remainder of that loan on interest only for five years, repeating this exercise each year. If circumstances tightened I could reduce my discretionary principle payments to zero and just pay the interest, and when times were good go back to hammering the principle again. This strategy gave me maximum borrowing capacity and maximum control. Note that in a falling market the reverse happens, floating interest rates will be lower than what is fixed. However this is the averaging effect and the power of the strategy is resiliency. Note also that despite the inexperienced saying interest only loans are bad because the principle is not being reduced, there is nothing wrong with paying no principle as inflation is constantly improving your debt to equity ratio- do the numbers and see using the rule of 72 for example. As well for young people starting out, get flat mates in to help with the cashflow proposition with the bank and thereby be able to afford to get into a better neighbourhood / higher value property. Understand that the first house is not the one you actually want, but a stepping stone along the way to it. Start as soon as possible remembering that expression that compounding interest is the most powerful force in the universe- this is what inflation is doing with your property, and also understand the leveraging power of property- you can buy say GBP325k of property just with your GBP49k deposit, whereas you can only buy the GBP49k amount of shares with it. The asset value is what inflation acts on, not how much money you have in it.

[@annrrf1464]

Closing costs are £16k???? Which solicitor are you going to? Slaughter and May?

[@ZekeMagnum]

I got out or renting as soon as I could! Rent here for a 2-3 room apartment is about 1.000 euros/month. That 12.000 a year and 120.000 euros in 10 years!! That's insane. The day you move out after 10 years you just spent 120.000 on ''nothing''. Easy example, say that you have a mortgage with the same monthly payment and assume 50% is interest rate, you pay your future self 60.000 instead of giving it away. For me it doesn't matter if a house is a little bit more expensive than renting. I can't stand the thought of just giving money away

[@keys6]

Absolutely correct

[@mathixvw]

So glad I bought my home in 2020. With the inflation that followed, what I pay, that used to be a bit expensive (35-40% of my total income), now is already much more affordable (25% of my total income), plus I got a decent interest rate (1.9%, for a 100% house-value mortage). Now, when my relatives are talking about purchasing a home, and they say what they'd pay for a mortage, I always notice I wouldn't be able to afford for my home if I were to buy it today and should lower my standards for a smaller, badly isolated house that would cost even more in energy afterwards. For anyone having the intention to buy a home, I'd suggest to wait a few months, for the house prices to go down, and to take advantage of this waiting period to gather extra resources to put in on the purchase to both lower your monthly payments to the bank *and* to reduce your interest rate (further reducing the payments). Even though this is frustrating to pay a rent burning your money for nothing in exchange, you'll be glad when the house prices will drop by 15-25% in the next months and that your monthly payments went down by 30% because of that.

[@lshsparks1155]

Nicely done Nischa, my takeaway from all this is that everyones financial circumstances are different and it really pays to run the numbers in depth before making a decision either way. I think generally although the rate of rise of the value of property may alter in the short term due to the market/ economy in the longer term the trend is always an increase in value.

[@macpal9149]

how much is the question that flips everything.

[@RogerPack]

I think the average in the US is like 3.5% to 4.5%?

[@Kiwi_Dave]

Renting you have zero security vs owning. In general renters have significantly less wealth than home owners. Renting is fine if you are investing elsewhere, but that would be an extremely low number, most renters are just living from pay week to pay week.

[@slaveoth5114]

Renting gives me piece of mind. No worries of bank's repayments. If I had a mortgage I would be the most stressed person on the street lol.

[@Madzguy007]

@@slaveoth5114 Does it not stress you that with renting, you'll be poorer in the long term, most likely by a few hundred thousand dollars?

[@priyenshah5850]

Hi Nischa, I came across your channel lately and I must say that I'm very happy with your content. I work in the Investment Banking Division too and I can absolutely relate with your videos. I signed up for your newsletter monthly, just a suggestion - how about we build a community where all like minded individuals like us can come across and help each other?

[@nischa]

Thank you!

[@sidhu0081]

5:49 I think that you are equating the down payment return and the property appreciation. Which I think is not right because down payment is like 10 % of property cost where as when the price of the property in creases then then it happens on the entire 100%. Which is very very different.

[@Gentlemansfinance]

Definately agree on the oportunity cost. If you believe you can make money right now, grow your own business or invest your money with good returns, might be good to think twoce before buying. You gave another perspective which I totally forgot to mention in my video I jist created. Well done!

[@chrisrichy]

I love how you speak, right to the point. Greetings from South America

[@Agent77X]

You can find a home that is not current lived in a upper class neighborhood that is around $2 to $10 million dollars full furnished and simple live in it for free! When the home owner find that out, you still get between 3-6 month of free rent after court proceedings begin to evict you. 😊

[@jamesberry3426]

hi Nischa, love your content. One thing that people do is spend a lot on cosmetic stuff for the house when they buy and get bored but don't when they rent. over the years it mounts up.

[@jamesshephard2013]

So what happens in retirement? If you're renting, you still have a significant monthly expense and it's likely your income (pension) is less than it was previously (whilst in full time employment). In a mortgage situation, you probably own your house by retirement and so surely the better option?

[@rajjai]

How have I only just discovered this channel? I’ll check out all the vids, but so far so good 😊

[@timschmitt7550]

another comment: if one wants to invest in real estate one could e.g. buy also stocks of real estate companies which due to their large size can manage real estate more efficiently than individual landlords. For an apartment for personal use it is a different issue of course

[@TheNewSchoolGamer]

From anecdotal experience, home owner > renter, just compare net worths; the difference is staggering

[@sanaanimtiaz3897]

This is more or less in terms of buy home for investing, not for buying home to live or pass on to future generation, it would be nice if more accurate info was provided with pros and cons for both, renting and buying

[@MahoganyHues]

The UK is mad. How are people expected to find £65k upfront? Not everyone earns £90k

[@rayw4589]

Bank of Mum & Dad

[@rufdymond]

This is a interesting topic - I was actually speaking to someone once who put an interesting slant on this whole house buying thing. I only have to go off what he told me and I have no idea if what he was telling me was legit. He basically told me that he sold the property that he lived in when he was 29 - but instead of buying another property he invested the money and has been living in rentals ever since, he was I think 57 when we spoke. He claims that his investments have now grown to a point where he can buy the property he wants cash, and still have a sizeable sum left over. His argument was that if he would have stayed on the property ladder, he may well now be mortgage free, but would not have had anywhere near the amount in his investments that he will have now, even after buying a property. It was an interesting take on things - I couldn’t help thinking though that this wasn’t much different from downsizing your house at 57, buying a smaller house and putting the remainder in the bank. He never disclosed numbers but did suggest that his investments were worth a sizeable amount…….

[@7SideWays]

Game changer to buy a place with an income suite from a motivated seller. Great video !

[@sam11148072]

Buying a house on debt, to live in, is one of the worst financial decisions any human can make.

[@rohitgujral1933]

House appreciation depends on the location, there are many locations where prices haven't moved

[@dutch6947]

Nice video. House prices are currently falling and expected to fall resulting in a loss of equity if you were to buy now. Good comparison but maybe include the possibility of depreciation. Also, the government expects people to be unable to pay their mortgages hence they set up the mortgage bailout for those on UC in the autumn budget, not definitive but an indication that interest rates are likely to remain constant or increase further.

[@bushwhackeddos.2703]

Mass immigration means demand will always outstrip supply, until they concrete over the whole country.

[@thepermitman99]

Hate when people tell me it's always better to buy than rent no matter what the current market conditions are without considering all the variables.

[@3Torts]

4:50 ...People been repeating these platitudes for decades as though price* can go up forever and a collapse will never happen. Value does not equal price these days.

[@eliefeinstein6182]

Thank you so much for acknowledging opportunity costs! I may have missed it, but did you account for property taxes?

[@IanMcD204]

Good video, but I'd throw a few other factors in. If you're going to buy a home, it might take significant time to put the cash together for the down payment. So the factor on opportunity cost isn't just the future value of the home vs. the S&P: it's how much you've lost putting cash together for what is likely at least 6-12 months for the downpayment vs. investing that cash (never mind the cash losing value to inflation during that time). Secondly, people keep talking about "buying," but you really own nothing until the mortgage is completely paid, meaning you need way more emergency cash for if you get laid off/something major breaks. That's not even addressing the issue of people irresponsibly "buying" way more property than they can afford thinking it'll always go up, and there historically being unscrupulous lenders (at least in the US) who will give them adjustable teaser rate mortgages. My solution? I rent for the flexibility (and to avoid property tax) then invest quite a bit in REITs.

[@bestwaypropertysolutions]

Hi Nischa. I have just listened few of your videos that allowed me to draw the picture of what you do, what you focus on and how you manage your time and finance. In one of the videos you talked about Universities. Which means you had to finish one of those. Do you mind me asking which generation in your family you are since moving to UK and what your parents and grandparents did in their professional lives?

[@Dondaddyh]

Great comparison, fantastic content, I would love it if you slowed the speed slightly, I only rented for 6 months, many years later have a very healthy nestegg

[@GoldenAngel-]

The Advantages and Disadvantages of Rent Vs Buy

[@Ullahussain]

This is the conversation I have with clients who ask the same question, US real estate system is very similar.

[@RUFeelin]

One important factor is income. I had a look at a mortgage affordability calculator. For a single income at £53k with a 15% downpayment, the High End mortgage amount is £277k. So, for those that do not have the income but are able to save sufficiently for 15% downpayment, it is not wise to get a buy-to-let whilst still renting for yourself? This would still leave you with a property to live in after the mortgage is paid-off for the buy-to-let.

[@bg1616]

Buy to let mortgages usually need you to have 30% equity already. Isn't the rent money going down the toilet in this case anyway. Why not pay as much into residential to lower the interest

[@MCscarfacematt]

i bought outright with a 100% down payment in 2020 when i saw my hovernments plan to deal with covid by closing everything and paying people to stay home so the inflation was envitable. i lease the land for $260 a month but that includes water sewage garbage pick up and snow removal. which the land lease wouldnt even cover so i essentially get the land for free im just paying for the services

[@davidadamson3664]

If you own a $325,000.00 home where I live, (Southern Chester County Pennsylvania USA), annual property taxes on this property will be about$8,628.75. That is $719.06 dollars a month. ...And it only rents for $1,450.00? (Yes, I used dollars but you get the idea).

[@soundberry4747]

Another great video Nischa!! It really hits on the key question with the economic environment the way it is to helping you understand truly if you can even afford to buy (factoring in all the hidden costs etc like repair and maintenance per year). I thought the calculator you showed was also a really useful tool!

[@nischa]

Thank you so much, very glad you found it helpful and yes that calculator is a god send!

[@Uncommonsensetoo]

An option that should be included as well is renting out bedrooms if you are comfortable sharing. I rent out 3 bedrooms in my house to people I rarely see and that makes a huge difference. I also do all of the maintenance, repairs, and improvements myself. I also can deduct a lot on my taxes since I rent out like depreciation, supply/maintenance costs and improvement costs so my rental income is pretty much tax free because of that, at least here in the US.

[@niddynoddy]

As an average person, putting in the S&P is a good thing to do, but do you not pay taxes if you withdraw the money? So even if the value rises by 7%, there are still taxes to be paid when withdrawing the stock (considering a 1 year span), right?

[@businesshiring]

Most people don't realize, buying a home is almost double the price with the mortgage interest rate.

[@robertamelcore]

Is the stamp duty changing in April 2024?

[@mariiamuzykantova7004]

Thank you Nischa for your work. ☺It would be nice to buy a property in UK but it seems to be not easy if you are non-resident.

[@saltanatnauanova520]

Would you recommend to purchase an apartment/house at 20% interest rate? these are the rates we have in our country. we also dont have opportunity to invest in any stocks/ETFs as we dont have any market for that.

[@masterwrench4252]

Dang good video mame. I'm just one of many ignorant yanks across the pond who didn't plan...so now I'm scrambling to beat our, what 6+% inflation. My friends constantly ask why I don't buy a place of my own? I rent a trailer, at my best friends rental property, this also gives me access to the garage where I keep my tools (3 boxes & 40 years of buying tools...which are now worth 10% of what I paid) and a Harley I can't ride anymore 😢 But the point is...I pay $500 a month & an average of $80 for utilities. This allows me to survive on my $1400 I get from the Government... mostly. Over here, USA...I feel like another bubble is about to pop. Housing prices are rising, interest rates are rising, companies are buying property (ie. Zillow) and shoving the rents through the roof...dang. like I said, good video, I believe you validated my lifestyle. Thank you. May I leave you with something an older person told me when I was your age? He said, "Son, I don't own much, but everything I have is mine" Miss him. He would quote Ben Franklin "neither a borrower nor a lender be" and he passed, he was wearing holey jeans & socks...& 1.8 Million dollars in his brokerage account. Well, I'm 20% of that but, there's still time ya?

[@karinaharwin2349]

i love your vids, for not having bullshit intros in the beginning and straight to the point! new subbie

[@yasirnoori4848]

I agree with most, but I don't think stamp duty + solicitor fees + valuation = £16250. Assuming you are not a first time buyer (which makes stamp duty free) and not buying an additional property, the stamp duty is 5% x (325,000-250,000) = £3,250. Solicitor fees is

[@nischa]

Always better to be conservative, any leftover is cash in the pocket :)

[@merc340sr]

Oddly enough, in Germany, a wealthy country, most people rent rather than buy. Figure that one out!

[@TrailHiker52]

Do you have a video on what you look for in a property (home) you intend to rent out as an investment? Size of home (bedrooms and bath) in order to appeal to greatest number of possible renters? Neighborhood considerations? How much over cost do you like to make? Property manager or no? How long term do you look to rent for? Thanks Nischa.

[@gregoryrunningelk865]

Wow! You have done everything to learn about money, now real-estate. I have been trying to buy a house for five years, but I live pay check to pay check and able to save $10 bucks out of every check. I can’t afford a financial advisor. Which is why I subscribe to your channel. I’m listening.

[@bg1616]

Change job or drop some outgoings

[@tamil1001]

Great video! Could consider an adjustable rate mortgage or refinance in a few years as more likely than not interest rates will decrease in the future likely making purchasing a home more favorable. Thanks for the videos.

[@nischa]

Thanks for sharing!

[@JackBellVideos]

Been trying to buy a property for a year and banks seem to have gone into an ultra-cautious phase. I've saved £50k and need to borrow £260k and Skipton's will only give me £200k with a self employed income of £80k. Madness. So I'm now considering renting while I continue to save to buy in 1/2 years from now when the market has hopefully somewhat healed.

[@ratsliveonnoevilstar1]

@Play Google dividends no doubt

[@KristineKolodziejski]

I have just come across your channel accidentally while looking at KZbin monetisation, and also incidentally I am in the process of buying a property and this was just what I needed. I can't remember last time I subscribed so quickly😎

[@user-ij8no5zw6u-]

You forgot that in 30years you'll spent a lot more than 1% per year to redecorate and maintain the whole house. It'd be more like 1% of maintenance and on top of that 2 times at least redoing the interior witch is VERY expensive and makes the renting actually cheaper.

[@evidencemed4256]

As far as my own experience about growing money, stock is the choice, but have to be index not the individual company stock because in a normal free market law abiding country the value of index will never down to zero, and will continue to grow with 10 to 15 % return in a long run.

[@jayhernandez6812]

What is the current rates now mortgage 2023 in Illinois also is it really good time to buy house now?

[@kashkash5195]

If you live on your own 1700 is alot just for accommodation expenses after bills not much left