Renting versus Buying a home | Which is better for you?

Renting can make more sense in cities with high home prices.
If you're ready to put down roots for a long time and buy a house you can truly afford, owning has worked out very well for most people. But renting doesn't always mean you're just "throwing your money away". If you're disciplined with your finances, then renting can be a perfectly fine lifestyle choice in the short term without putting you behind financially. It can even make sense over the long term for very financially disciplined individuals. For a more detailed explanation, including a spreadsheet you can download to adjust the variables: wheredoesallmym...
To start to understand when it can make sense, this video helps explain some of the variables that can affect the success of renting (and investing) as well as owning. real estate investing housing budget real estate video mortgage

[@opencarrydrift6308]

All this video taught me was that I know nothing in relation to money/investments

[@MrToolz.]

I know. I wish they taught this stuff in high school. Sucks cause if you want to know about ANYTHING thats useful you have to pay for it in college. Highschool is a complete waste of time. i have no idea what i will do on my own

[@NrangeGoDie]

study business and you will know this stuff, or look for cashflow, ROI (Return of Investment) and a little bit of Micro/Macroeconomical stuff, its not that hard if you once understood the system.

[@Sammysapphira]

Fourth Hokage They do teach it. you just didn't sign up for it.

[@MrToolz.]

benblue3 Yeah i didn't mean college. Im sure they do teach in college, like business classes. but in high school they never mentioned anything useful, not once.

[@asliceofcheese7888]

Fourth Hokage I agree, if my parents died all of a sudden, I wouldn't know from who to learn all this complicated shit o.O

[@coolnobodycares]

When you rent a house you can move whenever you want, life's too short to settle down folks.

[@freddiejones9713]

When you buy a house you can move wherever you want and rent it out, so you let the rent pay the mortgage while it appreciates in value. Life's too short not to make smart investments folks.

[@Scythe4214]

Except you can't afford the new house because you didn't sell anything.

[@freddiejones9713]

Scythe4214 What? Why do you need to buy a new house? Buy 1 house and if you want to move around a lot, just rent a place wherever you want to live while you rent out your own home. Why would you need to buy a new house everywhere you go?

[@valentinmarchelebouteil5781]

man don't try to discuss with goats :) let them live like they do, i need some renters :DDDDDD

[@freddiejones9713]

Valentin Marche le bouteil haha me too

[@hanswurscht6625]

the worst disadvantage of owning a house isn't even shown in this video. the worst disadvantage is that most people with average incomes have to put all their eggs in one basket. the average housing market might increase by 3,5% on average, but who cares about average when your house loses value? who cares about 3,5% on average, if you bought in high? diversification is THE ONE PRINCIPLE every investor has to have in mind. and it's the biggest mistake most house owners make. rodger might invest in high stock markets in his first year, but when stock markets crumble, he will buy in low in his second year. he might buy junk stock in his first year, but if he diversifies he will buy promising stock in his second year. owen on the other hand might buy when prices are low and in a good area where prices will go up over 25 years. but he also could buy in a high market where prices will go down. i'd bet investing in houses in chicago in late 1970 was a bad 25-year investment. and who could have predicted that kind of development?

[@The1SimLash]

I agree that buying stock or property at the right time is very important, but I don't understand your reference to Chicago homes in the 1970s. You could've bought a home in Chicago for ~$20k and today's median price is ~$270k, according to Zillow/Trulia, which is about a ~1400% increase. www.thepeoplehistory.com/70s-homes.html www.census.gov/hhes/www/housing/census/historic/values.html

[@trueRocc]

Hans Wurscht I think you might have the opposite thought on that. renters don't have to pay for new appliances unless it's in contact and your own. plus there are more bad renters to God renters, more people don't care about what's not theirs and just wrecks stuff. Face it, now adays your damage deposit doesn't go very far for repairs anymore.

[@manivvg8565]

A

[@Hakken1]

Moral of the story: Don't buy a house in Toronto.

[@JRPGGaming]

It's much, much worse pretty much anywhere in Australia... those taxes are laughably small compared to the shit that goes on over here.

[@Palthewall]

Thankfully I bought a house in 2016 after this video. Bought a townhouse in Mississauga for 450k. Sold it in 2020 for 950 k then bought a detached in Ajax for 800k in Aug 2020. Rented out the basement for 1400$ a month. Now thinking of selling now getting over 1 mill. Maybe will do that and move back west.

[@KoalaKrisp1]

Am I the only one fascinated by how the sharpie syncs with the animation so perfectly?

[@Ai2K7]

i was curious about this actually lol

[@alaritruuts523]

goanimate.com/

[@QSing999]

how do I buy this software PLEASE !!

[@alaritruuts523]

Arthur Schopenhauer it's a subscription software (online) can't buy it only use and pay monthly

[@cminmd0041]

Ha! Pretty funny that the software for this video is only to rent, not buy!

[@bbwoy1982]

Factor in relationships and divorce = Broke

[@86chanko]

lmfao

[@gb1709]

This is somerhing I never really ubderstood. Let's say a woman who has her own house and job gets married and gets a child and then gets divorced. Does she still get money for the child even though she can handle it? And what if only the father raises the child, does he get money from the woman?

[@kalingingsong]

depends on which jurisdiction you are in, rules are different based on state/province etc

[@randeknight]

Both parents must support the child, no matter what other circumstances. This is fine by my mind. Yes, in the rare occasion that the father gets primary custody, the mother is required to pay child support. However, the inner workings as to who gets what in the separation is seriously opaque and usually the man comes out much worse off than he should...and left paying for a house he doesn't live in anymore and a car he can't drive....and all too often, children he never sees.

[@gb1709]

Rand Knight thanks for the information, one last thing though. If a woman has a job and can handle everything by herself after a dicorce, does the man still have to pay something?

[@adamcolon]

Life is dynamic... jobs change, family gets bigger and smaller... accidents happen, opportunities arise. Given all of this, the renter has so much more flexibility to adjust to these life events while the owner is stuck. He has to wait and sell, possibly at a market price that is below his equity + fees. Then there's that peace of mind that comes with having now liabilities. Less stress. You pointed out the owner moving only once every 10 years, but realistically... people these days, given the job market, tend to move much more frequently.

[@markymarcb4932]

very good points.

[@XeXers]

I totally agree! I know a lot of people who feel trapped because they own their own home... and can't pursue some life option because they can't easily move. How much is that flexibility worth? that needs to be quantified.

[@shepdshepd4667]

In many places, renters do not have that flexibility. I noticed this author mentions Toronto. In Toronto, your first rental year you are obligated to pay for. For that entire year, your flexibility is exactly the same as a homeowner's as you'll have to find an appropriate sublessee. After that, many scum landlords try to encourage renters to sign a 1 year lease suggesting that's how they can keep their rental. If you throw that letter in the garbage, Ontario law forces the landlord into a month-to-month situation after the first year.

[@sparkleprizm199]

That makes sense.

[@aluisious]

The renter also has great flexibility to get his rent raised 400% in ten years.

[@YouGotPropofol]

Owen the Owner will actually own nothing once his wife leaves him and takes the house. Roger the Renters wife will leave him and he will just have his new younger gf come over to his rental house. Statistically these are more likely outcomes.

[@TonyaTko]

Are we all going to sit here and not mention that the initial math is WRONG: How can his net worth be $35,000 after year 1, when he would have spent $25,200 in rent the first year. Leaving him with a net worth of $9,800 -Tko

[@PreetBanerjee]

Why are you assuming he has no income? Perhaps you are confusing assets and liabilities (net worth) with cash flow.

[@TonyaTko]

***** Preet my dear, rent IS a LIABILITY. If you're going to take the money of brother A, from the amount of money he originally had and move it to the column of the money invested into the house - with no external income counted... then you must do the same for brother B. You didn't even subtract the amount of money brother B would have had to place as a deposit on the apartment - 1st month, last month and a month deposit is at least $6k right there... and that money has to come from somewhere. -Tko

[@PreetBanerjee]

First month pays for the first month, and hence would be a cash flow expense. Last month is held by the landlord and the landlord is required to pay interest on the deposit, therefore negating part of the opportunity cost. The net difference of one month's rent (as a deposit) over 25 years less interest owed on that amount isn't going to change the long term numbers in any appreciable way. Rent is not a liability. It is a cash flow expense. Whether it's the mortgage, maintenance, taxes, etc. being paid per month, or rent + investment contribution - those amounts are held equal to each other in order to make an equal cash flow comparison. Can you explain: 1. Why $25,200 in rent would not come from income? 2. Where would the investment contributions come from? 3. Why would the owner's monthly expenses from income if the renter's rent doesn't?

[@TonyaTko]

***** Rent is calculated on the balance sheet in the the expenses column subtracted from the overall monies brought in. I think its negligent of you to put up this diagram and not let the viewers know how much each brother is bringing in in income and Only state the net worth. For all we know Brother B is making less income than the rent and half of it, (or all of it) has to come out of his net worth. There are too many unknown variables for us to say for certain that his $35K net worth is not touched. Also, I don't know what type of math they're doing in Canada, but if a person has $6K in savings that IS a part of their net worth - so if Brother B has to put down a $6K deposit on the apartment then that would be coming out of his net worth Let me ask you this 1) How much CASH on Hand does Brother B have? 2) When he paid the lump sum deposit for the apt where did this money come from? 3) Why was the money he paid down on the apt not reflected in his original net worth calculation? Thanks in advance for answering -Tko

[@PreetBanerjee]

Rent is not a balance sheet item. It is a cash flow item. The reason income is not stated is that it cancels out assuming they have equal incomes which could be used to support either monthly costs of 1. ownership or 2. renting + investing. Assuming otherwise (that they have unequal incomes) would make the comparison completely useless. I would agree that with respect to first and last month rent, that $2,100 should have been deducted from net worth for the renter, but not $6,000. First month's rent is a cash flow item (because it pays for the first month's rent). The last month is a deposit, but as mentioned, the landlord is required to pay interest on that amount to the renter, hence the long run effect of that $2,100 less the foregone investment growth PLUS the interest earned on the deposit isn't going to materially change the 25 year numbers.

[@220volt74]

Your whole premise crumbles like a house of cards once you assume that someone can rent half a million dollar house for only $2100/month. If you used real-life numbers the monthly rent would easily be double that. Roger "the renter" would not only have no money left over to invest, he would die of starvation.

[@Rutibex]

The best financial strategy is to buy a tent and live in the woods rent/mortgage free!

[@gmansplit]

Seriously, who the fuck would buy a house that expensive (500k) especially with only 35k. I wouldn't buy a 500k house even if i had 5 million in my bank account.

[@gatewaysolo104]

on who's property?

[@Rutibex]

I live in Canada, we have lots of woods that aren't owned by anyone in particular except "The Crown". I don't think shes using it all at the moment :P

[@walperstyle]

It depends on location, taxes, government regulation and such. I would buy something like that in a heartbeat if It was in a community that had resources and low taxes. I could profit from it. The thing to realize it it can all come crashing if government creates new laws. Look at Vancouver right now, the govenrment is talking about making some laws to stop the foreign investment. Frankly, That will cause the bubble to burst, you watch. Edit: Though I agree that vacancy rates are an issue, we shouldn't hurt people that are trying to hide money here.

[@NaNslx]

Or get a tiny house for between $25,000-$50,000

[@illusion9423]

as a 17 year old I understood nothing why don't they teach this at school?

[@obedmpp]

Don't worry, at your age I didn't understand anything. In fact, 2 years ago, or even 1 year ago, I knew almost nothing about investments and bla bla. Just read some business books, don't rush into investment books or anything, business books will teach you about all this slowly, you'll learn by simple osmosis.

[@digitalproducts_me]

Illusion I agree, i dont know shit about Buying a car, about insurance, about rent etc. but i know how to analyze a poem in french

[@Sammysapphira]

Illusion why didn't you take economics? it's there in many many schools, if yours didn't have it then you should have gone to another school if it mattered enough to you.

[@illusion9423]

benblue3 I chose sciences instead At the time the idea was that the choice I took was the one that allowed me to make my money I'm not that interested in being a manager or something like that Seeing how the basic notion of modern day taxes got skipped for the classics of poetry just proves that I'm smarter than the people in charge of teaching me

[@lucy-dj1px]

Illusion you can do some research in economics and find meanings to words or phrases you're not familiar with while going through the study material. That's how I passed economics during my senior year in high school. 😊

[@eveofhades9260]

This is too adult for me to understand. I'm going to have to watch this a few times.

[@djordjemojsic4638]

Imagine listening on foreign language

[@eveofhades9260]

+Djordje Mojsic Much more difficult, I'm sure!

[@knecht6974]

+Mildred Fletcher I live in Germany and learn/speak english for about 8 years now, but have never heard the word mortage before, neither have I heard of interest/principal in this context before :/

[@mikaelb.2070]

I'm also German and if you really learned English for eight years then it is pretty strange that you never came across the words mortgage (Hypothek) and interest (Zinsen). Those are pretty standard words.

[@UltraSonic73]

+Adam Moer yeah, mortgage and interest are some pretty standard vocabulary to be honest :s

[@xavytex]

The ratio "Price of the house" / "Rent" in the example is 238. What I have seen in real life is that this ratio is more between 150 and 220. Hence the ratio of 238 in this example artificially favors the "renting" option vs the "buying" option.

[@PreetBanerjee]

Totally agree: in Toronto, this is a real world approximation (price and rent taken from comparable homes in same neighbourhood at same time). But Toronto is overheated compared to 99% of cities in North America.

[@xavytex]

***** What is holding rents from going up, or houses prices to go down to reach some kind of balance, like in other cities ? Is it a new phenomenon or has it been like this for a while ?

[@PreetBanerjee]

It's been building up for a while. There are many people suggesting that foreign capital is driving up prices (especially from China), but rents are more tied to the local labour market and people living here are getting squeezed out of ownership and sometimes forced to rent. When oil dropped, and because oil is a big part of our economy, our dollar tanked. At the same time, house prices in the hot markets started to accelerate even more. That adds fuel to the theory about foreign money as everything became cheaper for foreign buyers as our dollar tanked.

[@xavytex]

***** You must be right, I forgot about the Chinese... We buy 3+ times more from Chinese than they buy from us. They have Canadian dollars up the wazoo so they have to invest it somewhere. Seems like Canadian financial advisors fluent in Mandarin or Cantonese have a great future ;)

[@INeedMySpaceTech]

i was at 183 at my last place i'm around 220 now.

[@AR7271]

In today's economy renting makes the most sense. Lack of job security = you need to be able to move out relatively easily.

[@TomoNewsUS]

Rent where you live, own where you can rent.

[@azouachili]

In my 3rd world country (Algeria), in order to OWN a house you have to straight up pay with cash. No mortgage no interests, no increase, no nothing.

[@abhgup]

under developed economy... will potentially change over time.

[@ChemsddinK]

come on thats hard to believe,im from tunisia ans i think we have the same laws/ rules,i'm sure Algeria has interest banks,Algeria is not a 3d world country the youth are educated, they have a 3rd world goverment.

[@azouachili]

it's sadly the truth.

[@AndreasIndustriePro]

yeah im gonna go ahead and call BS on some of the points made: 1) if owning a 500k$ house brings over 3k$ of maintenance and taxes, who would rent this exact same house out to you for just 2k$ ? that would mean the landlord has no gain and pays additional 1k$ so that you can live in his home ... total BS! 2) Owen payd transfer taxes and legal fees as the buyer of his home so he would naturally transfer these costs to the new buyer of his home instead of ending up paying another 64k$ for fees and taxes ... that would mean he payd up twice ... 3) year 1 roger still has 35k$ when getting his keys to his rent house, which is wrong as you have to pay upfront

[@PreetBanerjee]

You're assuming that Owen the Owner is the landlord, or that landlords only buy at current prices with 5% down. You're forgetting that a landlord may have bought this house for $250,000 years ago and his cost of carry is much lower. You're also assuming that the market for rents is based solely on carrying costs, and not the supply of rental housing and demand of renters. If you have a rental property and renters don't show up, you lower the price until it's rented. This example is from Toronto (as stated in the video), where the price and rent were established based on actual listings at the same time, for comparable homes, in the same neighbourhood. Toronto is considered to be an overheated market in terms of the ratio of price to rent, which may explain your incredulity.

[@AndreasIndustriePro]

so what you are saying is that it might be in fact roger's landlord ending up with a loss ?

[@PreetBanerjee]

That happens in overheated markets, yes. Newbie landlords are willing to run breakeven or below hoping to cash in on the capital gain. Sign of a possible bubble and mania. Normal housing markets don't see that.

[@AndreasIndustriePro]

but then in this video that people all over the world can watch you compare owner ship to renting in this very special market which is in fact out of the norm ?

[@PreetBanerjee]

The channel is focused on Canadian personal finance. I agree it's out of sample compared to the rest of the world. There is, however, a spreadsheet which allows users to change every variable (link in description).

[@brentrichards4160]

I want to see the place that will rent a $500,000 house for $2100 a month.

[@DIProgan]

I've seen it for even cheaper.

[@COVID-19]

Somalia doesn't count

[@DIProgan]

How about Sweden. Also a $500.000 house is a $500.000 house wherever it is.

[@williamrobinsoniii4870]

how do you get 520.83 per month added to your rent at 1.25% on a 2100.s month mortgage. I'm not the smartest man in the world but help me out.. an 2100 for rent? that house must be beautiful?

[@DrKrFfXx000000000000]

Madrid.

[@solace881]

Buy a home if you can, you can always rent it out and move elsewhere. Bought my house last January for 175k it’s now listed to sale for 245k. Best thing I ever did in my 26 years of living.

[@dariusdobre9290]

bought BTC in 2015 for 20.000 best thing I did in my 29 years of living

[@alishainc]

moral of the story if you live in Toronto and are in your twenties like me, you are doomed lol

[@faint3745]

honeslty, i have no idea how im going to buy a house, if its this expensive

[@john5823]

Unless you're Drake lol. Then you're actually quite fine enjoying the view from the CN tower.

[@blackmayb3]

you're cute. I'll take care of you

[@londontrada]

lol, Try London, UK. I can barely afford to rent

[@danielphilipos7932]

Michael Jackson broooo 😂😂😂😂

[@lastnbrown]

Renting works for me. I'm able to invest and live in a building with a smimming pool, large movie theater, computers, gym, everything I need for a single woman.

[@joyceg7859]

All for how much a month if u don't mind the question ?

[@AdrianSanchezq]

+Lorraine Elijah Brown That sounds just like what I want to do. Also because I expect to move every 2 or 3 years, so as the guy said, the costs of moving are too high

[@lorenzofranco8406]

+Lorraine Elijah Brown OK. It may look attractive to you, now, but, after 25 years of doing this, it will not look so attractive. You see, what the guy int he video failed to mentioned is the effects after the mortgage plan is met. The owner will have something to show for the past 25 years. Whereas, the renter has nothing [in terms of asset(s)] to show for the 25 years.

[@lastnbrown]

+Lorenzo Franco I don't want the responsibility of a house. I like to move around. There are other ways to invest. Houses take time to sell, like Michael Jordan house for 14 million dollars. The only good can come from a house is the interest on the mortgage and real estate tax deductions. If I buy a house, I will rent it out for more deductions on repairs and keeping it up.

[@lorenzofranco8406]

Lorraine Elijah Brown What makes me laugh is, the fact that you debunked the whole premise of 'buying property' within a few sentences. You are really playing down the benefit of having a piece of land/property to your name. It's not as clear-cut as you portray it to be, Lorraine.

[@anevilscientist]

$35k in the bank and no debt, what sci-fi world do they live in?

[@canyouimagine]

Rodger and Owen are 45 years old, single, and take the bus to work. They have no kids and paid off their student loans 10 years ago. Both of their families died and, therefore, cannot ask for money. Rodger and Owen subsist on ramen and tap water.

[@BewareTheLilyOfTheValley]

Haha!! This comment is both funny and sad :)

[@sarysa]

43% of US home buys in 2014 were cash purchases. I also saved up for years and bought a way cheaper house with cash. Despite north american consumer culture, a lot of people are frugal. In 2016 I've had a month where I kept my bills under $500.

[@corb2347]

+ATLxawesome hahahaha Perfect :D

[@MsLia32]

45+25=70 they be dead by the time they can start benefitting from their monies

[@mrchallenger7616]

So alot of people are for " buying a home " ! What people keep forgetting is that people with morgage debt has this huge enormous dark debt cloud hanging over them for the rest of their lives, while me the renter has more money to put away every month ! People with huge debt struggle to pay their bills every month while i am ONLY paying rent ! I am mr anti debt and i am allways paying in full for everything i buy ! I have never had ANY form of debt in my life and i never will ! I know so many people with big morgages who has enormous monthly costs that they are having a hard time paying their bills ! And i can only say this - I Am Glad I Am Not One Off Them !

[@jonlevert]

Moral of the story: Buy a modest house and invest as much of the difference as possible?

[@jonlevert]

John Smith Oh, not at all

[@IaintTrynaGoOutLikeBIGnPAC]

+Jon LeVert Finding a modest house is one thing. Finding a house at a modest price is another thing

[@jhemmd17davis57]

+John Smith omg where do you buy a house with that price range???? will it look like a shed? lol

[@jhemmd17davis57]

+John Smith will that be in Mexico????

[@123lowp]

Or live with mom and invest in hookers???

[@sobekflakmonkey]

I live in Vancouver, B.C., Canada, so both seem impossible for the moment hahahaha

[@GomerKaine]

Haha, same. #TheStruggle

[@sobekflakmonkey]

AIIUserNamesInvalid Right, but that is actually the reason here in Vancouver, lots of foreign investors from China and a few from other places. Has nothing to do with race though, it just so happens that it's straight up rich Chinese people buying up a lot of property. The only mistake is when people use that as an excuse to hate all Chinese people, I just hate the rich folks who make everyone elses lives harder.

[@shi1483]

SK B yes u can, but ur government welcomes it, for foreign investment and tax benefit (u do know foreign investors have to file tax return for any rental profit from day 1, plus the usual and extra stamp duties, right? so they are not living in the country but still contributing by taxation).. I can invest somewhere else, but ur housing price won't go down anyway as there are always foreign investment plus local demand. Everyone including foreign investors prefer lower housing price , thats common sense of buying anything regardless u are local or not. Not to mention the physical job increase in ur building n construction industry. Most new properties in Aus is done by re planning of sub divison, which mean ur urban planning is actually utilizing its land use from a big old house that can only provide housing for one or two families to apartment complex that offer at least 20 times more, with that same piece of land, that actually lower housing price in its very basic form by increasing housing supply.

[@shi1483]

u should actually blame ur local developer and mortgage offering banks, they are the one who make billions by pushing the housing price up in forms of over optimistic pricing n evaluation. Where the foreign investment is come from , its actually irrelevant as long as it does not flow back in a short period of time, while u hardly see real estate investment being withdrawn in less than 5 years.

[@kostyp5489]

over 25 years his rent stayed the same? he rented the same house for 25 years or he was thrown out about 10 times, was stressed about that he can't find a place, lived a year in his brothers house without paying a rent? Do you live on a paper or real world? Don't mislead people!

[@Small_Vocaloid_UTAU]

4:40 They do compensate for inflation.

[@bjorn1583]

renter loses job and cant pay rent so gets kicked out with no debt owner loses job and cant pay mortgage so bank takes house and kicks him out with massive debt that will continue to rise until it is all payed off or becomes homeless living on the streets till his dying breathe

[@zdrux]

You don't get your house repossessed AND stuck with the loan, it's one or the other.

[@danielmiller7936]

Konstantin Petrunin

[@JaRW7]

An annual rent increase was considered in the presentation.

[@searching4adventure85]

Why is rent only $2100 on a $500,000 home?!? Wrong.

[@Duffyyy94]

We are renting a house that is worth 1.2 million. Our rent is 4800 / month. Sounds about right.

[@Kanriel]

The wrong part is how they established mortgage is $2300/month for the same house next door, so there's no way rent would be less.

[@chinese302]

He's sharing it with his boyfriend so maybe that's just his share

[@Duffyyy94]

lol ?

[@Duffyyy94]

Only 3 Bedrooms :/

[@TinyHomeTours]

This is why I live in an RV. I am able to live anywhere and I am still investing in my "home"

[@rileytavares4087]

Do you pay property tax for that?

[@Katzbynite]

Uhhhhh...NO!! His property tax is the tag fee he has to pay depending on the state. Insurance does not go to the state for property taxes..GEEZZZ!

[@rileytavares4087]

+Katzbynite I was just asking because I didn't know.

[@jalster2]

Katz def needs to calm down, but the vehicle insurance is probably more equivalent to home owner's insurance...

[@SoWhatJoshua]

it's a cool lifestyle, but it can't be compared to investing as in buying a home. homes appreciate in value while you pay the mortgage, but RVs depreciate in value as you pay off the loan that you used to buy it.

[@sneakycactus8815]

my brain hurts after this. Half this shit I don't even know.

[@longyearbyensvalbard3117]

ikr

[@Perceus589]

+Longyearbyen Svalbard You don't need to understand everything he says as long as you get the full picture, it's not that hard.

[@SomeKidsAtHomes]

then you're stupid

[@longyearbyensvalbard3117]

+Frostbite janfijooka blental inrackeste tromnar glantrennek aspottanond. Did you understand what I wrote here? No? Then you're stupid! Just because someone else doesn't understand what you understand doesn't mean they're stupid.

[@Perceus589]

Longyearbyen Svalbard There is a difference between knowledge and intelligence you have the knowledge to understand what you wrote, that doesn’t mean you are smart...

[@Rubysh88]

I think renting is still better because of the freedom it gives you, you can move to a new place anytime and downgrade if necessary.

[@RealLifeEddy2K]

and at the end of the day you own NOTHING. With buying a home, no matter what the economy does, once you own it, you only need to cover the 2000-3000 a year in property taxes, with renting you need to cover the 12,000 a year rental prices. Fuk that.

[@Rubysh88]

it also depends where you live (geographically), for some people it takes like 40 years or more to buy an house, in 40 years, a lot can change, i know people who lost some good job opportunities because it required them to move and they would lose a lot of money if they sold their house back then so it was either keep paying both the house and a rent or lose the job. And there's others who spend a lot of money and time commuting because they ended up working quite far from where they live.

[@moonstriker7350]

You only wish you could. Only spoiled westerns lucky to grow up in a period of booming economy think that. If the economy gets thin, the new place you might move anytime, at the whim of your landlord, is the street. Welcome to your new homeless life. Seen it happen with my own two eyes, the house I own a flat in, also has people renting (mostly from the municipal government). The police coming in their robocop gear, packing the furniture out while the family was screaming and crying standing on the pavement.

[@Rubysh88]

Lithian Haim i can see you don't know much how the housing works outside your little bubble. First of all, many will rent because they cant actually buy, the banks wont fund enough, im talking about having to put a 20% or more down pay. Besides that, landlords cant kick you out at whim if you made a contract and even if you do it illegally, they still don't want to mess with the cops because that would put them in trouble for renting without a contract so no, here in Europe, for what i know, as long you pay your part, you wont get kicked out. Also, you know you can rent homes that have all the furniture eh? You don't even need to worry about those.

[@moonstriker7350]

No, I'm the one who knows what's outside the bubble. The answer to your whole post is in my previous. Now that even western European and USA economy is starting to really stumble, you will likely soon learn. The legality/illagelity consideration and your rights about renting and having a place to live will end the same time as the gravy train, and the cops will b e evicting you, not protecting you, juts like I saw here.

[@Arcanineisthebest]

I feel like renting is the best idea for freelance workers and buying for people who have a stable income, because if work is slow, you can skip saving that difference for the moment, but if work is good, you can save enough to keep up.

[@jorge62142]

2000 AND FUCKING 17 AND THOSE KIDS ARE TALKING ABOUT STABLE INCOME i just gonna write lol so you dont know if im sarcastic... lol

[@theviralstory3356]

There are other factors worth mentioning, house maintenance for owners, commuting distance between workplace and home can be reduced to save cost and time when living in a rented house - helps you not lose out to a better job in future, also the advantage of moving out whenever you want from a rented place ,say if you find a cheaper better suited location.

[@jonathandpg6115]

house maintenance is about 1% and is shown in the video. it's added. Commuting distance can be the same this is more of a side by side thing.

[@theviralstory3356]

Gabzo Avro aah missed that, commuting distance at times makes a difference (atleast for me), since the video was mainly targeted around Toronto so may not be a huge. Where I live, the houses that I can afford to buy are generally in the upcoming areas around the city which is about 1 hour drive from my workplace, but I have rented an apartment which is 5mins walk. It saves me around 7-8% on fuel, more importantly 2 precious hours a day which is invaluable. Next time If I wish to switch my job, I can do without worrying about having my house and worrying about it.

[@jonathandpg6115]

Skywalker yeah he was more comparing places that are side by side. I agree with time I am finally getting my drivers license (I waited way to long) because the time I loose to get to work is Invaluable. I hate wasting time.

[@theviralstory3356]

+Gabzo Avro same here, hate wasting my time when most of is spent @office.. need to make most of what is left :D and congratulations on the driving license, drive safe ;)

[@TanAikHong1993]

you know people mostly won't give you a like because your comment shows that you are on the renting side.

[@Remrie]

Buy the ugly house on the block that way the other houses bring up the value of yours, rather than buy the nicest house on the block and have all the other houses drag down the value of yours. This also gives you room to put some sweat-equity (capital improvements) into the property that increase its' value and creates equity. Buying the house on the block without a garage and putting a 2 car garage on it for $10,000 might make the value of the property jump by $15,000-$20,000. Or build that garage yourself, learn a new skill, save $5,000 and still get the full $15k-20k gain. Same thing with swapping out the old bathtub for a nice tile shower, etc.... Buy for value, rather than sell the property, refinance and buy another and rent the old one. utilize leverage and other people to pay your expenses. It can be done in ways where people don't trash your property and stay for a long time. I've been at my house as a renter for 4+ years, my landlord lucked out on me, but he's not upholding his end of the bargain, his neglect to maintain the property and cheap rehab choices has cost me a lot of time and energy on the house and utilities and frustrations with making him uphold his end of the relationship. Tip: Don't rent your house to an experienced property manager either.

[@INeedHerPomPomJuice]

The thing about the ugly house is...who would want to buy it? If there's a neighborhood with all nice houses, and one crappy looking house, I doubt it would sell. If it did sell, it would not sell in the same proximity as the other houses. It's also very uncommon to find a poor looking house in a nice neighborhood. That's also a lot of time and money being spent on something that's not guaranteed. People who buy poor homes are not as well off as those buying nice homes, their jobs would be more centrally located in downtown of a city. Nice locations are usually far from downtown. However, if it did work out like you planned, it would be a pretty cool investment

[@Remrie]

+Sean Puffynipples thats the goal of savy investors. they invest with a margin of safety and give themselves room to utilize multiple strategies. if you buy the nicest house on the block and improve it further, you likely will waste your time and money and find it doesn't sell or appraise any higher. the trick with buying the lower end houses in those markets is making sure the RCE and ARV come in at at a predetermined target consistent with what is safe and realistic.

[@Robertking1996]

+Sean Puffynipples actually a lot of people. Most rich people live in neighborhoods close to downtowns where their jobs are located usually. This example applies to Los Angeles, Houston, Dallas, Miami, Boston; just about anywhere. Suburbs are a different case. But usually you'll see an old house in a nice neighborhood because the original owners never moved. Someone will eventually buy them out because they want to live in the prestige neighborhood and just bulldoze and build a new structure fitting their likes.

[@INeedHerPomPomJuice]

I'm just worried if the amount of time put into it is worth the extra 15k. That's a lot of time being spent improving it and making it better. Obviously in places like NY and LA, the story is different, but if we take a suburban neighbourhood the story syncs up better. The challenge is finding that house, the second challenge is actually buying it. Like Robertking said, if there's an old house in a nice neighbourhood the chances are the owners have been there for quite a long time. Why would they move? Even if they did move, I think putting in that much effort for little gain is not worth your time. Ideally you would want 10 houses, fix them up, and, say, get a 30k profit from each house. That would be a business. That's a millionaires game at that point :p

[@Remrie]

Sean Puffynipples It just depends on how much "meat on the bone" is enough for you/investors. Kudos on your last name Sean. XD But generally a rehabber tries to double their money. Buy a house for

[@thestev0ness]

If this is the type of content you create, you have gotten yourself a subscription. I enjoy the deeper look at hidden costs that many people seems to skim over, but also the real world senario as well. thank you for a non biased look on things

[@PreetBanerjee]

Thanks Stephen - appreciated!

[@LusoSparz]

I'd rather just rent and avoid the hassle of it all.

[@The757packerfan]

Which can be a valid point. But you are paying extra for the landlord to deal with the hassle that you don't deal with.

[@LusoSparz]

The757packerfan yeah I understand honestly that doesn't really bother me too much. I'd rather not have the commitment. plus having to owe money to the bank having to pay interest really just makes me more nervous than anything else

[@rambrasil]

Except your rent continues to go up.

[@LusoSparz]

Isn't that dependent on the economy and housing? I mean you can invest a fuck ton in a house and isn't there still a possibility that it can loose its value or something ?

[@The757packerfan]

Correct. The value of a house can go up or down depending on the market. Likewise, rent can go up or down depending on the market. So, the value of a house going up or down, as well as, rent going up or down, is a moot point. Since both can happen and no one can predict the future.

[@Potato0t2]

To add: Preet didn't cover the price:rent ratio, but that's one of the biggest factors in the decision, and more importantly the one you can know with certainty in advance (whereas whether a real estate crash comes or how an investment portfolio will do will be unknowable in advance). A $500,000 place renting for $2,100 is pretty typical in Toronto these days for a price:rent of 238X, but in the past (when your parents created the heuristics of renting being a waste), a place equivalent to one renting for $2,100 might have only cost $300,000. In some parts of the city the price:rent is approaching 300X, so a place that might rent for $2,100/mo would cost over $600,000 to buy! Checking out equivalent rentals is a key first (or zeroth) step before looking to buy a place. For the last point in the video: the renter can also choose to rent a more modest place and invest even more. Indeed, they usually have more freedom to do so as transaction/moving costs aren't as big of a barrier, so a renter only needs to find a place big enough to suit their needs for 3-5 years whereas an owner might try to upsize to ensure they have enough space to grow for the next decade or more. Indeed, no matter what kind of house the owner chooses, they should also be investing for the future (that part just isn't shown because it would be equal between the two cases -- here consider the renter's part not as their total net worth, but their net worth in addition to what they would both have saved and invested on top of shelter costs). Related to that point: Preet mentioned the drag of taxes, and the big capital gains hit at the end (assuming the entire portfolio was sold at once), however if in your owning case you would not have much headroom to save and invest (i.e. you'd be house poor) then you'd be able to shelter those savings from renting in your TFSA/RRSP, reducing or even eliminating that drag, further improving the rent case. For the first point on this last screen, I still lean towards the renting case: the money goes *somewhere*. If the renter isn't saving it, then they're likely using it to have a higher quality of life rather than being "house poor" (unless they're very undisciplined and are just wasting it unconsciously, which is a separate problem).

[@lennyp2237]

Something that is not accounted for in this video is that in the USA you also get a tax deduction every year for the Mortgage interest and Real Estate Taxes. Don't know the tax situation in Canada but this is a major advantage of owning vs renting in the USA.

[@PreetBanerjee]

That is correct. In Canada: no deductibility for interest on principal residence.

[@Dreaming7kid]

lenny p true! Tax deduction for mortgage interest and property tax. But dont forget, property also need HOA and insurance, plus maintenance, which can be a lot too.

[@orlock20]

A couple of factors are disasters from a flood to termites and real estate prices for the area. One can look at Chicago where housing prices collapsed. Insurance tends to under pay if the insurance decides to pay at all like what happened after the Katrina disaster and the World Trade Center attacks.

[@stevemasterson7776]

where is home maintenance? new roof every 20 or so years HVAC ect. 3.5% a year is extremely high for real estate, like bubble high.

[@douglasthompson9070]

Yeah, I've read a 1.5% return is a more conservative estimate that more expected to rely on.

[@stevemasterson7776]

yeah 1.5% is way more realistic.

[@BobbyHardenbrook]

The video did include maintenance, watch it again. It assumed 1.5% of the home value per year for maintenance...which seems about right to me. I.E. an average of $1500/year for a $100,000 home.

[@blupyxi5669]

I'm at 4%

[@BobbyHardenbrook]

Well 1.5% is the average. The good years and bad years usually average out

[@crynoking]

There's no way that's your real handwriting. I refuse to believe it

[@peterkuzmin8624]

CrynoKing I was thinking the same thing haha

[@crynoking]

lol

[@crynoking]

the straight lines... that's a robot. This guy is a robot

[@morganboutwell8231]

Sanjeev Nayak what's that?

[@PictureFit]

Great video, but just curious, how did this video get featured so prominently in KZbin's recommended page? Seems like a became a big hit outta nowhere. Wish I can get something like that for my vids o.O

[@CornellSkyers]

I'm now a fan of both your channels!

[@vangard0]

umm, isn't recommended videos just based on your Google searches (and things you watch on KZbin)?

[@Captain_MonsterFart]

I doubt it. I bet one can pay to have fake "hits" on their videos and have them appear in the recommended list. I find the cat compilation videos that show up with over a million views to be rather suspicious!

[@PictureFit]

Jaeman20 Yea it is, but this doesn't have much to do with anything I've been watching.

[@zolawrx]

All you gotta do is pay KZbin some money and boom people starting watching your video.

[@jalami]

Another thing to note that is VERY important is the risk of income fluctuations over time (loss of job, reduced pay, etc). In this example the renter is more protected against reductions in his monthly income (by temporarily reducing or eliminating his contribution to savings) and can even tap in to his savings if necessary (ie between jobs). He can also more inexpensively move to another city or area where the job opportunities may be. The owner is committed to making the full mortgage payment, and if there is a job in another city, they have to sell and move (and possibly buy), thus incurring added cost. Really the best option is at the end -- buy a more modest house and also have an investment portfolio.

[@HolisticDetective]

+Jeffrey Alami Better yet, move to a cheaper apartment and keep up the savings! Or Owen can rent out his big fancy house and rent a smaller apartment until his income recovers.

[@jdstarek]

Great video, I've tried to explain this idea to people so many times and very few seem to grasp that renting can be a better alternative...particularly in high cost areas like silicon Valley. Another overlooked variable is the mobility of renting. Also, a lot less upkeep. You should do a similar video on leasing vs owning a car.

[@metallicak5]

I followed for 20 seconds aaaaaaand you lost me.....I'm just not going to have kids, everything is fucking expensive nowadays. I need every penny. Plus this world is fucked anyways

[@Hakken1]

metallicak5 Your positivity has given me hope for the future!

[@metallicak5]

Think realistically....you think there's enough high paying jobs for everyone to live a happy life with a high paying salary, a wife, kids and a dog with a backyard?? There world isin't going to last long. one of these days something massive is going to happen and you have to be prepared.

[@riKringkast]

metallicak5 And had your watched the entire video instead of losing interest after 20 seconds, your would've known why your answer makes little sense.

[@MichaelBatmanKeaton]

metallicak5 preach brotha preach!

[@jayceinfinitealgharhythmns9814]

I've owned my house for 10 years and in that 10 years, I've made repairs, some "improvements" and such and now my how is worth less that 80% than what I paid for it. Mind you, I'm also still paying interest which will cost hundreds of thousands of dollars over the course of my loan. The money I've spent on repairs alone would've covered three years of rent payments in my current neighborhood. Do I regret it? No, but was it the best option? Not necessarily.

[@Auditioneere]

I always figured the point of buying a home was to live in it for the rest of your life? And then when you die passing it on to your family... Why would anyone sell a home they buy after 25 years?

[@notjustwarwick4432]

1 mill dollars

[@Auditioneere]

Lorenzo Panetta Yeah but then you have to buy another home anyways for probably the same price? If your home is worth a million dollars so is everyone else's.

[@BobbyHardenbrook]

You can sell the 1 million dollar home and then move to a retirement locale with better weather and/or lower home values. That's a common pattern in the U.S.

[@EternalSilverDragon]

People sell their homes all the time and for lots of good reasons: Up sizing Down sizing Wanting to be closer to family Wanting to be further away from family Moving to a healthier climate Taking a job in a different location etc.

[@fleamanATW]

A lot of people HAVE to sell their houses in order to afford retirement.

[@TampaTec]

when you own a house you basically rent your land from the Gov which is property tax but have to pay it Forever ($3000 avg yr), unless you are native american you pay 0.

[@cbflazaro]

The difference in the UK, is that if you pay 700 rent and you bought that house with a 25 year mortgage instead, the monthly payments would be about 500.

[@Ronaldus81]

Bruno Lazaro yep, it's the same in The Netherlands, especially in rural areas. Plus the rent will be increased yearly by 3-4 percent.

[@leimad13]

That is true, the problem is though that you can't get the mortgage even if monthly cost is £200 less compared to renting. My family pays £650/month rent and we tried to get a house of our own but banks won't agree to lend us the money. We earn not enough to cover for the loan even when we are able to pay £650 for the rent. So we are stuck renting until somehow our yearly income becomes acceptable by bank. That is even if we can cover 20% of the house cost straight away. Something is really messed up with mortgages in UK...

[@cbflazaro]

leimad13 same. I'm stuck on a £550 rent when I could easily afford a £1000/mt mortgage. Even if I save 10-20% deposit I will struggle to get a mortgage because my income is a mixture of self employment and a 0 hour contract to other company.

[@funofboredom]

Yeah, but how much do you pay in interests? If you take a longer mortgage, the interests will be more.

[@cbflazaro]

i rather pay 200 mortgage+300 interest for something that eventually is mine rent-free than pay 700 rent for something that will never be mine

[@omarghosn8655]

1) Renting also has piece of mind...the landlord has an obligation to maintain the property...if the house is infested by termites, you dont lose....the landlord does and you can move. If you own the house and it gets infested, you have major issues 2) If you own a home, you are not a prisoner of the rental market that may go up due to a bustling economy in your region. Think silicon valley...the people who bought there are loving ownership and renters are struggling!

[@MrClarkisgod]

I'm 35 and just bought my first home in cash. It is a huge hassle and a pain in the dick in general. I'm seriously considering going back to renting. Huge hidden costs and time sink.

[@OverSoft]

You're doing it wrong, i'm 31 and am on my second home (bought my first one when i was 24). I have already earned on the first house and my second one has appreciated €35.000 already. No one can tell me not to hammer in a nail in the wall, no one can tell me i can't do something. Also: what's the pain in the dick? Having to paint your house every 5 years? Really? That's the pain in the dick? Hire a painter: done. The upfront hassle is worse, yes, you have to get a mortgage and inspection, etc... But once you've got the house, there's nothing you have to do but pay the mortgage, that's it.

[@duper1025]

+Altair Ibn-La Ahad Exactly! I found the same thing, maintenance on the house, new roof, new chimney, and the time you mentioned, I spend my time shovelling snow mowing the lawn and raking leaves instead of enjoying life. Those you like gardening, great, I don't. Plus the house is way too large, filled with crap I don't need, big cost to heat and cool, taxes, enough I'm planning to sell and rent an apartment downtown and enjoy my leisure time!

[@PremiumFuelOnly]

If termites infest the place, get out there with a hammer and fix it, its your investment, you will benefit from inflation when you sell it.

[@OverSoft]

+Mostly Compilations Must be a US thing. In most countries things like solar panels are encouraged and always allowed. Also here in The Netherlands, at least for actual houses (not apartments) there's no such thing as HOA's. I've owned 2 homes and currently rent out multiple apartments, so (at least here in The Netherlands) owning makes much more sense than renting.

[@nunyabizness3866]

Well you can pay off your mortgage and live in your home on a lower fixed income after retirement, but a renter will still have to work to pay the same rent or downgrade to a cheaper place.

[@jeffdaman6969]

Nunya bizness True. I believe renters don't think long term when it comes to that.

[@nickcase2635]

Nunya bizness right! And the answer here is not living outside your means or at the limit of your means. If they had purchased a home that was $125,000 they would have come out way, way, way ahead of that renter, possibly with a fat IRA.

[@nunyabizness3866]

Well, if people were smart and planned ahead for retirement and the like, you could rent or buy and come out fine, but most people dont. All the money for those knicknacks you bought over your lifetime would really come in handy at the end. If nothing else you could be a responsible homeowner and get everything in tip top shape for the long haul in your 50s.

[@nerys71]

Nunya bizness smart planning have nothing to do with it if the economy prevent you from doing anything no matter how much you plan or how smart you are

[@nunyabizness3866]

Delaying or Denying gratification is a key method to making it in any economy. Being super frugal will also increase your odds. Sometimes taking a long time doing nothing but going to work and going home and curling up with a good book is the best option. Many times people just cant do what needs to be done.

[@TraumaER]

This is why I'm glad I rent and make mad money through investing. I can also move whenever I want and work wherever I want.

[@darc1290]

Let's not forget that while renting is more money per square foot of space, a renter doesn't have to pay when things (like a water heater or roof) break.

[@mikes7423]

he took that into consideration with the 1.5% repairs

[@iceweasel2199]

no he doesnt , but yes he does. Those things are included in the rent price. At least in my country. Its always better to buy than to rent. Like his example , its ridiculous to think you'd have a million saved up after 25 years, thats 3300$ a month you need to save EVERY month for 25 years.... and after all that time I already paid off my mortgage and live debt free , and you havent lived your life because you saved 3300$ a month and couldnt do anything else. Go ahead and to that =) I'd rather have my own place and live instead of 'going around the system' because renting is the better choice

[@ransom182]

$3300 a month over 25 years to save $1,000,000?! BAHAHAH I think you're investing wrong pal... Home ownership is a great thing because average people have no fucking clue what investing in their money in other asset classes actually means. They also have no self control and paying down their mortgage is their only form of savings.

[@mackenzieowens161]

@@iceweasel2199 learn the differnece between investing and saving, search JLCollins here on youtube and enjoy a lecture from him

[@bwing411]

And if Owen spend 500,00k buying a duplex where he rents one side and lives in the other, he would have his mortgage paid off for him. This video is not very accurate in the real world.

[@mgtazco]

You area right! But my real world is not your real world, each and everyone has different real world:) I think he's giving an average example of wha the real world looks to him. If you have a better idea make a video I'll watch it and comment for sure good luck everyone.

[@Killuminatismd]

+bryce e That doesn't make sense. If he rents half of it off and lives in the other side, why wont his renter just rent a whole duplex instead of a half somewhere else?

[@bwing411]

what?....that made no sense

[@Killuminatismd]

you are assuming owens renter pays Owens full mortgage while only occupying half of the duplex. Why would the renter pay that amount to live in half a duplex when he can get a full duplex for that price. Hence your theory doesn't work

[@Dragunovl33t]

He is high bro

[@VonGrav]

.. my old flat increased in value of about 100 000 over a 5 year time period. Though when/if you sell.. you kinda get back the money you spent paying down your loan.. So, Roger the Renter.. You missed out on alot of cash ^^,

[@mike-2342]

exactly

[@VonGrav]

***** Its the way to do it ;)

[@march11stoneytony]

Greater the risk, greater the reward. Lots of people around here are selling their homes and losing a lot though. I'm from an oil town though

[@march11stoneytony]

***** Now is the worst time too get out, since you'll lose the most.

[@joesmith9330]

100000 OVER 5 YEARS IS NOTHING COMPARED TO OTHER INVESTMENTS WITH A LOT LESS RISK AND MANEGEMENT

[@Lander76]

A person's house is a liability not an asset until the mortgage is paid in full. The BANK owns the property until the house is paid off. The only thing said person 'owns' is a massive pile of debt.

[@colinc1878]

The loan is the liability, not the house. If the house was a liability the bank would never let you borrow against it. The bank doesn't own the property unless you default.

[@Lander76]

+Colin C Both the loan and the house are a liability. The home is subject to expensive repairs and depreciation. Nobody owns their property until the mortgage is fully paid and they have received the deeds to the property.

[@danishkhan70]

so in that case your car is also a liability but we still finance cars dont we? If you just stay renting for the rest of your life you're paying off someone else mortgage, aren't you? That same mortgage you're paying off while renting is a "liability" to the owner of the home you are renting. But lets think about when the home is paid off? You stay renting it or anyone else for that matter and at this point what are you doing? You are putting pure profit into the home owners pocket! Regardless owning a home (if you can afford it) is way better even if it does involve getting a mortgage.

[@colinc1878]

Lander F Okay so liability is being used in two different senses here. A loan is a financial liability and a house is a financial asset. However, a house can also be a metaphorical liability in the sense that you have to do repairs and it can become a money pit. This is the same sense in which an untrustworthy friend can be "a liability." Same word, different meanings. I think the conversation would be clearer with only the financial sense of "liability" since we are after all talking about renting vs. buying.

[@Lander76]

Butt Pee Many people have to borrow money to carry out repairs

[@TAOSEELE]

I bought my House when i was 21 years old. It was 220.000 euros worth in 2008. Now it's worth 500.000 euros. I own the Bank 150.000 euros at this point. If i would sell now i would have 350.000 € i could buy something else and live without owning anyone Money. It is very important to know when to buy and when to sell. I bought the house in the Financial Crisis back in 2008 so it was cheap. Keep that in mind and you can easily make some Money and live a normal life.

[@OliverHamilton]

Interesting to see the difference. In the UK you're realistically looking at a 20% deposit and often mortgage payments are on par with rental costs.

[@mytymj7]

indeed, which makes renting worthless, dunno why it's so popular, where I live renting is only so something rich people do

[@randeknight]

Because so few people can save enough money for the deposit while simultaneously paying rent. This leads to children staying at home into their late 20s or even 30s so they can save up for the deposit.

[@brenden9758]

It's like that here too, the author of the video is just misinformed.

[@iSOBigD]

Because a lot of people can't imagine saving $20k-50k let alone hundreds of thousands of dollars in order to pay off a car or put a down payment on a home. Some live paycheck to paycheck, meaning they literally don't have money left at the end of each month. When a down payment on a home can be 5-20% of its value, it narrows down the people who can afford it because so many people don't save up, so they rent. It's the same with buying a used car for 50% of the cost after 2 years vs a new car for 100% of the cost + interest over ~5 years, just because they can't save up in the first place.

[@JustinCrediblename]

+cabington do your calculations include taxes and repairs? I doubt it.

[@oggyreidmore]

You said it in the beginning. You might as well pay your own mortgage rather than the landlord's. If the owner of the rental property also has a mortgage (that they are allowing the renter to pay off for them - which is most often the case) then the rent will always be more than the cost of ownership. Best case scenario - the owner of the rental is only interested in the long term asset value of the house and not short term rental profits, but no landlord in their right mind will take a loss for 25 years.

[@shadowles5]

However, at the end of the 25 year period, Owen owns a house, and Roger lives in fear of being evicted.

[@zdrux]

Where does the fear come from? Nobody can come and just evict you for any reason unless you're not paying; this is not different with ownership.

[@laxjoh]

There's a law you need to give heads up before actually kicking you out. They give you multiple notices and a final eviction notice. Roger is no risk of being homeless. He can easily just get another place. This vid is just under the assumption everything went by the books. life doesn't work that way; the point is to show you renting and buying homes don't make a difference between saving money REALLY. You can easily change the variable to be "housing market crashes" and then Owen in the middle of his mortgage payments is now seeing a bill he cannot pay and will be kicked out of his home on top of the credit companies seizing your assets.

[@blupyxi5669]

The landlord can just refuse to sign another lease. That's what happened to my sister. She was in that house for 4 years. She lives in fear that it will happen again to her new place. Plain and simple it's just not your home if your renting.

[@philmaggiacomo]

More Us-based, but I know I was 'evicted' from an apartment building once because the owner sold it, and the new owner wanted to turn the units into condos. Not sure how prevalent this kind of thing is in general, let alone in Toronto, but that could be one fear. Obviously, missing a payment should be the same kind of fear, though, again at least in the States, I know it can often be REALLY difficult to evict a tenant, even if they fail to pay rent for months. So maybe the renter does have less fear, heh.

[@keitaswan5775]

Raven Ashy my tenant will never own anything because they don't know how to invest their money like roger do. everything they made just enough to pay my rent and their bills. I'm 30 year old and only got 15 years to finish my mortgages. last ten years that I put money in the properties I never loose any thing yet. I actually got profits from each house already. and all my mortgages were paid by rental money so I don't see how landlord could be loose more than Tenant.

[@adventurer247]

This doesn't make any sense. How is the person supposedly renting a house for $2,100 a month when the land lords expenses alone would be over 3k? That doesn't make sense, at all!

[@PreetBanerjee]

Why do you assume the landlord's expenses are 3k? I see a lot of people saying the same thing. Remember, many landlords have been landlords for many years, perhaps buying when prices were much lower, or having a sizeable amount of equity.

[@adventurer247]

A smart land lord prices his rent based on the market. In this case he's going to base his rent off of what the house is worth. It doesn't matter if he has the house paid off, any real time landlord charges somewhere near market price. So, assuming around a 40% margin(this also allows for future investment), a theoretical landlord just buying a 500k house should be charging in the neighborhood of $4300 or more based off of your numbers. Which would line up with numbers local to me. Usually though, the higher the investment on the landlords part, the higher return he'd expect so that $4300 number could be higher just depending on location and the nature of the rental.

[@PreetBanerjee]

Rent doesn't always get priced against the house price. In fact, the key for figuring out which markets favour owning or renting is largely based on the local price-to-rent ratio. This can be dislocated. For example, in the example from the video (taken from actual data - similar homes, same time, same neighbourhood), interest rates have lowered meaning someone with the same income can now borrow more, but if incomes don't change rents can only go up so much. But Toronto is arguably in a bubble. In the description, there is a link to a spreadsheet for running any price:rent combination you like. I would suggest that most markets favour owning over the long term. But not all. And individual markets vary over time as well.

[@adventurer247]

I can tell you this, unless your housing is subsidized, the monthly rent is going to be higher than buying the house. So even if the landlord has owned the house for a time, he's not going to charge you less per month than what it'd cost you to buy the house. Renting can be a good short term deal if you don't have cash for a down payment or your job causes you to move often. Like you said though, owning a house is always the long term bet to save if you have the money to do it in the beginning.

[@fuzean1]

but there are places where owner are unable to rent out their property, maybe the example applies to those cases, ideally you would want a positive cashflow. I think another variation is using the same amount of rental payment but with a house owner that records positive cahsflow then show the difference as amount available for investment.

[@tyrannosaurhex6132]

What you did miss was why most of the people in urban areas chose to rent - mobility. There is an "opportunity cost" if you decide to buy a home and settle down in an area. While I am not from Canada, I think the fact that if you buy a home when you're 35 years old means you may very well let go of the career options that may come your way from other cities. A renter may well have a better overall income and net-worth at the end of 25 years compared to the home owner because he can move easily for a better paying job. A home owner, if he decides to move in such a scenario, will have three options: 1. Keep his home as it is, and rent it out in a new city. Which adds to the expenses multifold, and may well be not worth it considering that proportional hike in wages may not cover the proportional hike in expenses. 2. Buy a new home everytime he finds a better job. 3. Rent out his existing home, and rent a new home in the new city. Rent income from one covers the rent expense from the other. This is a very important point that you missed entirely in your video.

[@Xerilian]

That seems like one giant "WHAT IF" to me.

[@Xerilian]

That's not a what if. It's a liability as well as an asset. You're talking about some completely hypothetical situation of getting a job in some other city. I think you're WHAT IF is a bit more far fetched than someone buying a home and setting down roots.

[@beakerthefrog]

The average term of employment for a worker with a 4 year degree is around two years. Further, many companies are requiring relocation for management positions. They don't want you supervising the same employees you worked with. This is a growing trend, and it's unlikely to go anywhere. This isn't even factoring in the fact that opportunities often require one to relocate just by virtue of where they originate from. If you DON'T have a four year degree (I don't), you will still almost always choose where you live based on where you want to work. You go where the jobs are, not where you want to go. Relocating for work is becoming the norm in the western world. So yes, it's a "what if," but it's becoming less and less of an "if" as time goes by.

[@Xerilian]

If you say so :D

[@yandan8]

+TyrannosaurHex I agree, this is an important point. However I would suggest looking at this as separate *prioritized* decisions. Each decision made in its own time and context. Income/career would have higher priority than housing, because without income there would be no housing (both important). Both decisions can be revisited anew any time an opportunity comes up -- whether it's a better job or better housing.

[@stretch2187]

The rule of thumb for determining rent is that a landlord should be making 1% of the initial investment on the property per month after paying taxes and insurance. If I buy a $500,000 home and rent it that means the monthly rent is going to be $5,000 plus taxes and insurance. Cost or renting is always higher per month than it would be to buy the same home and pay a mortgage. The advantage of renting is mobility. If you're going to move every few years it is to your advantage financially to rent.

[@901blitz]

I can't think of anywhere in Canada where you will get $5000 a month rental income on a 500k asset.

[@stretch2187]

It's probably hard anywhere, at least on the residential side. There's not a lot of people looking to rent at that level. The point is though, that if you're not getting the right percentage from your investment property you're doing it wrong. If you've got $500,000 to use as an investment, you can't afford to have it not make you the right percentage. Where I am I could buy five houses for that and get my 1% a month on all of them, but doing it with one house would indeed be difficult.

[@nutman411]

ya, I think 5000 is a tad high. but its not unreasonable to get 3500 or 4000

[@faYte0607]

here in LA, a $450K home yields $2400/mo rent. That's 0.5% return....

[@futureprogrammer880]

lol i was thinking 2100 is alot monthly you can get places for 1,500 easy.

[@AJBurtonOperator]

A very unbiased informative video, thank you!

[@PreetBanerjee]

+AJBurtonOperator Thanks!

[@FORZAinter]

How come you didn't include extra costs though? No way nothing breaks in that home for 25 years. a renovation, some new appliances...Would love to know if that would make any sort of impact

[@AJBurtonOperator]

+A Osman Good point!

[@PreetBanerjee]

3:55

[@PreetBanerjee]

3:55

[@mikophilo348]

Anyone else came here to learn but left more confused than ever?? lol

[@badreligion9417]

right here lmao

[@erikdawg60]

Miko Philo i did, now i really don't know what i should do lol

[@MrEjblanco]

Miko Philo portfolios... sounds so easy... if i understood

[@erikdawg60]

Maxx Kroes so if i can i should purchase a home instead of renting

[@bobmario8520]

I paid rent for 14 years same house New Jersey ,the house just got sold so I have to move I have 2 months notice so,renting sucks

[@jondoe3599]

This is renting a house, rent a one bedroom for yourself (I rent for 900 a month in BC) and you will see your well far outpace buying a home.

[@informationyes]

Now this is an actual use for maths you know something that will effect our adult lives! This is what we should be taught in schools

[@PreetBanerjee]

Thanks Daniel!

[@KirstinHuberman]

Really enjoy your explanations and use of visual aids - also fantastic to find a Canadian perspective, which is hard to find! This will be my go-to video when I want to explain the same thing to my friends, family and clients.

[@OopsFailedArt]

This is a good video. I would like to remind people though that rent also usually increases faster than the escro for a mortgage and the base mortgage on a fixed mortgage remains the same. In the US our rent where we are living just increased by 8% which prompted us to by a home with similar overall monthly costs so that in 5 years we aren't paying nearly 50% more

[@dgofsky]

This video is excellent. Thank you so much for making it!

[@PreetBanerjee]

Thanks David!

[@PrecisionPulseCapital]

+Preet Banerjee would love to see a house I can rent for cheaper then I can buy lol clueless!

[@PreetBanerjee]

You're assuming Owen the Owner is the landlord. You're forgetting that the landlord may have bought that house 20 years ago for $200,000 and his cost of carrying is well below current market rents.

[@PrecisionPulseCapital]

+Preet Banerjee ok again please show me a house that is cheaper to rent then to buy ?

[@p46709394]

+COGS's CORNER Can you tell me where to buy a $10 dollar note by paying $5, please? Hey I am sure someone on Earth would do that, so u should be able to answer!

[@lullemans72]

"roger the renter" made me think of "bob the builder" and "joe the plumber"

[@PreetBanerjee]

I actually think you might here about a Roger the Renter in the next election, at least in jurisdictions where house prices are entering bubble territory lol

[@romanfox5368]

They're brothers.

[@CJinsoo]

I like the phrase “when you buy, you rent money” renting and spending difference=hyperbolic discounting this is such a great video, clear, concise and comprehensive, which is very hard to accomplish in under 10 minutes.

[@JoryRFerrell]

This video is highly misleading. First, it starts with an extreme case: a 500k home. Second, it makes a generalization based on this HIGHLY irregular case. The average home buyer is NOT buying in the most expensive parts of Toronto, Canada. And the average home buyer is spending more like 100k-250k. Taking that into account, a person with $800-$1000 in rent will pay the same general amount in rent that they would when buying that 100k-250k home, on a 20 year mortgage. Inflation and a lot of other variables play a part. But so far that math means that you could buy a home, and after having spent the same amount you would have in rent, you could look forward to not having to pay rent potentially for the rest of your life. If you pick a home in a decent area, Your home value could increase, leaving you even better off. You could then rent that home out, and use the money to upgrade your home. In the end, if you have a very stable, decent paying job, BUYING a fiscally-conservative home would be the better bet. You could also invest in green energy for your home, potentially eliminating your utility bills. It would possibly be more difficult getting a landlord to allow you to install a windmill and solar panels that you intend to take with you should you move.

[@UrMMV]

Places where a lot of people actually live have median house prices around 400-500k. places most people dont care about, its around 100-250k. I would not pay 2100 rent for a 100-250k house, but i do pay 2100 rent for a 500k house.

[@JoryRFerrell]

UrMMV First...let me say you kinda of come across as snobbish with your attitude towards those who cannot afford half a million dollar homes. I would proudly own a 250,000 home. To address your main point: The average home is not above 250k. www.huffingtonpost.com/2014/03/13/median-home-price-2014_n_4957604.html Like I said. Between 100k-250k. And you are correct for saying you would not pay $2100 to live in a 250k home and neighborhood. But that was not the example I gave was it? If you have around a ~$1000 dollars in income, you probably are not going to complain about a chance to live in a 200k home. Actually...looking around more, it seems that both our estimates were a little off. homeguides.sfgate.com/much-should-charge-rent-house-8314.html My example of $1000/month was a little on the low side for a home priced around 180 (average of 100-250). It fits for the bottom of that range. My mom actually paid around $1600 for a roughly 180k home. That's not bad, considering how calm and nice the neighborhood was (before it went to hell). But at the same time, this article says that many people are paying just shy of your example of $2100 for a 200k home. That's 50k off. So it is safe to say the average person is apparently willing to pay ~2100 to live in a 250k home. Maybe you are not. But then... maybe you are not everyone, and everyone is not you.

[@wesd991]

+Jory Ferrell this video is an example in Toronto. the avg cost of a home is 800- 1 million and yes the avg rent prices is over 2 grand a month. moving out of the city about 30-45 mins away and you won't find anything less than 300 grand and I'm talking about condos that are glorified apartments

[@JoryRFerrell]

Wesley D I will admit that I wasn't paying complete attention to the video. They do state that it doesn't ALWAYS make sense to buy rather than rent, and that it can sometimes be more beneficial. Still...the average person (i.e. a person who doesn't make enough to afford a half-million dollar home) should definitely look into the idea of buying rather than renting. In the long run, it's more cost effective.

[@Checkersss]

Well, it fits perfectly for me. Homes in Toronto and Vancouver are typically over $500,000 now... $100k-250k (what you said) will get you a shitty condo here in Toronto.

[@eavening4149]

and this is why you buy with cash and then rent... also, you wouldn't be able to rent that house for 2,100...you always rent for more than the mortgage to cover all landlord's expenses...this wasn't an apples to apples comparison at all.

[@eavening4149]

only makes sense to rent if you're not staying in one place for a long time.

[@vampcaff]

5 percent down payment... must be nice.

[@Rubysh88]

banks here will fund 80% if you're lucky...

[@RealLifeEddy2K]

that upfront bullshit is just that, bullshit. I never had any of these LTT fee's when I bought my house...It was 110,000, I put 3500 down and the actual loan came out to like 108,500 or something...So 1500 total in taxes.

[@Rubysh88]

Real Life Eddy You got lucky, here, banks here rarely fund more 80% of the house value, meaning you need to pay 20% or more upfront so a lot of people end up renting their whole life, it's that or they have to use third party loan services with huge interests....

[@daewalkr]

Lol think that's bad it's min 20% in NZ

[@KingBobXVI]

Seattle too, unless you want the default insurance.

[@aftech7268]

This is such an inaccurate assessment - buying always wins over renting - investing in stocks is never consistent compared to real estate profit. Anyone owning real estate has more equity than counterpart that rents.

[@moonlightshow7]

How does roger the renter get 1,025,000? He invested the 35,000? On what? How come it appreciates more if he invested that in a property?

[@PreetBanerjee]

A stock portfolio. Which have beaten housing over long periods of time. observationsandnotes.blogspot.be/2011/07/housing-prices-inflation-since-1900.html

[@flamingcokecans]

it's not that the $35,000 grew that much, but that he also put the difference between rent expenses (rent + insurance) and ownership expenses (mortgage payment + maintenance + insurance + ...) into his portfolio as well, an extra $1100/month

[@familydinner1]

Not in Vancouver they don't.

[@danieljckson]

moonlightshow did you really watch the video?

[@swordoflight7789]

I thought the same thing because he did not clarify very well, that the renter was investing the hypothetical "difference" between what a mortgage holder would pay and his particular rent. Which would be 1100 a month over 25 years with the starting 35k from the beginning. The money you make from such a portfolio automatically stays in said portfolio I think some people above are confused. Watch the video again, Would you save the difference? or spend it. He is talking about the difference in between what the renter and the mortgager pays which is hypothetically 1100 dollars in his dumb ass example. So basically to even sort of catch up to the homeowner you would have to start a portfolio / money market account with 35,000 in it that paid back some high numbers like 7% you would then have to add 1100 a month to it for 25 years faithfully and hope for the best, and you will still most likely do worse than the guy who just bought a house unless he is moving and reselling constantly. I think the topic kind of falls flat on its face

[@stonebreaker950]

Where can you find an investment portfolio that grows at 7% with low risk? But buying a house (assuming it grows at 3.5%) and selling it later almost suffers no risk.

[@PreetBanerjee]

7% with low risk doesn't exist. Similarly 3.5% with NO risk doesn't exist, but generally would be lower risk, but in the case of mortgages, it's also leveraged.

[@SexyBakanishi]

Unless your interest rates go up and you can no longer afford payments. Or you get a market crash, as you do periodically. Or you go to sell your home for retirement and it isn't worth enough to keep you alive for the next 20 years, or there isn't a buyer.

[@riKringkast]

Great video! As an aside, owning makes more sense in countries with low interest rates. Like here in Norway, where the interest rate it 1.8 %. Mortgage payments are about half of what you pay for rent, so the advantages of owning are enormous.

[@harley22x]

assuming the houses were identical, the costs for the landlord are going to be the same, unless the landlord has paid the mortgage already. What landlord would rent a house out for less than it costs to maintain it???? landlord would want to be making money on top of the costs.

[@paulprovencher1478]

Harley Meekins This.

[@Kanriel]

Exactly. How are they neighboring houses but the renting guy has found a landlord willing to lose $1k/month, just wat lol

[@paulprovencher1478]

Eagle Strike I think it works if the owner of the rented house has paid his mortgage, or has a very long term mortgage.

[@Azreal911]

very true here, it's funny he's assuming for 25 years roger the renter never had a rent increase?! I live in the big cities and rent has been jumping like crazy here along with mortgages! and no landlord would rent for less than market value whether their mortgage is paid off or not. that's just stupid business sense. Plus anything above and beyond the normal carrying costs is gravy and can be put away for when things go wrong and needs attending in the rental. BUT if you are in a landlord situation with an extra house this video has nothing to do with you and you will profit greatly in the end of 25 years since someone is paying for your mortgage and not you. so yeah in 25 years when your mortgage ends it doesn't matter if you work or not because someone is paying you monthly to live then.

[@helenrogers5569]

Harley Meekins. The bank too is "making money" over the years. They aren't doing you a kind gesture by loaning you money. I don't think he figured in the cost of maintaining your home. What is best for one at particular stages in their lives may not be in another's. Demographics can have a vast impact also.

[@jaybartgis5148]

This is nowhere accurate. Where did they get the number 2,100 for Roger's rent? If Owen's identical house costs $3,320 a month... then there would be NO WAY ANYONE would rent out their house to Roger to lose over a 1000 a month for no reason. It would be more on the lines of around $3500-$4000 a month

[@533n]

+Jay Bartgis His example was in Toronto. Go on Craigslist and look up a house that costs $500,000. It will rent for $2100. That is why people say homes are over valued in Toronto. People are buying higher for various reasons, not hte least of which is speculation.

[@jaybartgis5148]

So you're telling me all the renters are losing money every month?

[@RiverRock03]

+Jay Bartgis I'm with you. I have never met a landlord who rents at a loss, much less a $1200 loss.

[@RiverRock03]

+533n Can you link one of these houses that costs $500,000 and rents for $2100?

[@jaybartgis5148]

***** renters pay mortgage insurance and utilities. The land lords simply add it onto the rent. There is no WAY any land lord would pay over a thousand dollars out of their own pocket to RISK a random guy damaging his house for not only any profit... but a lose. Get a grip on reality and economics.

[@REDRoverMike]

I understand the point of this video, however the assumption that monthly payments toward rent will be almost 30% less then a mortgage payment is very incorrect. Even a home owned by an investor and managed by a property management company will ask for more then a comparable home's mortgage due to the fact that they expect a return on the investment and management fees. Even with 25% down like most banks require for investment loans, the loan payment wouldn't be low enough to justify a rent that low in comparison to a mortgage on the same house. The only way for Roger to really turn a higher 25 year-end net worth would be for him to live a lower quality of living expenses i.e. Apartment or renting a less expensive home than Owen.

[@REDRoverMike]

In the video he said that renting a comparable house compared to Owen would be 30% less expensive then it would to own the house. You are right in that the homeowners are receiving rent for the property and that it paying off the mortgage on the home over time, but on a 25 or 30 year mortgage that would take a very long time. Also, if the rent is 30% lower then a mortgage then the homeowners still have to pay that amount for that person to live there.

[@Lardzor]

I'm sure there are scenarios where renting could work to your advantage. They're just not real world scenarios. I was paying $2,200 / month for a 2 bedroom apartment last year. This year I'm paying $2,400 / month for the same apartment because of a 9.5% rent increase. I'm sure I can look forward to the same next year. I've never seen a rent increase as low as the rate of inflation, and renting a $500,000 home is going to cost a lot more than renting my apartment.

[@nutman411]

Well said.

[@alborzzz]

There is a limit to how much the landlord can increase your rent. For example in BC, canada it is 3.7%. www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/during-a-tenancy/rent-increases

[@wernerbeinhart2320]

Yeah, but the landlords have ways to get around it. We have a case in the city Münster, where a company bought and renovated apartments at Münster trainstation. The government decided, they are not allowed to charge more than 8€ per squaremetre not including Gas, electricity and so on. But now they are charging 16-32€ per squaremetre. The owner of the Company just rented the flats to other companys for the aforementioned 8€, but they charged a lot more. Turned out the owners of the two companies were his son and daughter.

[@lovethyenemy435]

slaves either way what ever angle you look at it

[@benrichardsartist]

By the time it's payed off and you can relax, you die. haha! The only other option is to become a hobo.

[@Dake21]

Landlord slave or bank slave, your pick. Even if you own you have the governement over your head telling you what you can and can't do with your own property.

[@TheZoeBig]

love thy enemy You can just move when you're renting. How are you a slave?

[@lovethyenemy435]

no what I'm trying to say is renting is a lot easier to move around the different countries aka human cattle farms of choice/freedom. I'd rather rent than get a mortgage which will put me in debt until I'm in the ground... but ye either way you look at it we our trapped in the world wide web.

[@BIGGELATO]

love thy enemy .. what if u decide selling the condo/house in 2-3 yrs? U could also renovate it and flip it.. make some cash for urself

[@OldMusicSoul]

WTF happened to Rogers rent? He would be paying roughly 25k a year plus renters insurance, damage deposit and renters move more often than buys.

[@MegaKaitouKID1412]

As long as renters aren't breaking their lease, though, moving costs for renters are pretty minimal, even assuming they lose their damage deposit every time-- at least, compared to a homeowner moving. Personally, my moving costs from the last place I rented to this one-- given, the first one is a room in parents house at well below the rent market and no lease or anything-- was... well, gas for a car and a truck pulling a trailer. Renters in general have less stuff to move, in addition to everything else they're not getting hit with for buying/selling every time they move, so unlike a homeowner most aren't going to get hit by the same cost of movers, especially if they have friends/family willing to help.

[@OldMusicSoul]

I don't know what you thought i was saying with that comment but i was wondering why he didn't include what Rodger is paying for rent? His rent would have been 25k a year that is getting pissed away toward nothing but making a landlord richer.

[@christopherdelaiglesia7527]

Rent was factored into the amount saved in investments per month. Both commit $3220/month and Roger uses $2120 of that for rent/insurance then saves the rest. Owen uses the entire $3220 towards his mortgage. I don't know about damage deposits though.

[@MegaKaitouKID1412]

OldMusicSoul I was pointing out why the "and renters move more often than buyers" doesn't make any difference anyways.

[@OldMusicSoul]

Renters do move more often than home owners. And the scumbag landlords do anything and everything to make excuses of why to keep some or all of your damage, and if you don't go along with there bullshit you will end up going to court for your damage which adds up to costing even more. And not everyone has family that will help move you might as well be saying that my mommy and daddy will pay for my rent too so I it doesn't cost me anything to rent.

[@rando5000]

I like the concept behind this video. However, there needs to be a caveat. Portfolios may not average out to 5-7% over 25 years... some people are lucky just to get back what they put in :( Another consideration - there's no guarantee on property appreciation. If you bought in Detroit 25 years ago, your house is probably worthless today.

[@PreetBanerjee]

Both are great points. Thanks for commenting!

[@pinkietoes]

If you take out stock picking and instead go with something diversified like the SPX, there's probably a lower chance of coming out break-even over 25 years (also considering dividend reinvesting). I think portfolio wins out if the person cares more about having liquid assets for those worst case scenarios; no doubt a lot can happen in 25 years.

[@ppipowerclass]

I would rather OWN the home, instead of paying someone elses mortgage. I would rather be able to paint the walls, remodel the kitchen. 500,000 for a house? That is CRAZY expensive. I live on an island right now, and my house was MUCH less than 500,000. Renting IS throwing your money away. I know, I own over 50 rental properties, and bring in almost 35,000 a month in rent.. All of my properties are paid for. So, if you want to encourage people to keep giving me their money, by all means :)

[@celests6545]

Renting gives you freedom to move around. My rent was less than 800 Cnd all included. That's a pretty good deal for a young professional who wants to travel. It's good to own if you can afford it, but if your struggling to make ends meet renting is ideal.

[@ppipowerclass]

Also, generally speaking ( at least here in the states ), a home mortgage is MUCH less than rent. You can purchase a home ( even with very little down ) and your payment is 350 USD for a 3 bed, 2 bath average home. While, I charge my renters anywhere from 600-750 per month. Even if you decided you wanted to move and buy another home, or rent.. You could rent your home out at that point, and still make money ( or save it ).

[@NicholasGuidaa]

Seph0ria houses in Toronto will easily surpass $1,000,000

[@nessala4931]

You must live in an area where the housing prices are cheap. In the Bay Area, a 3 Bed 2 Bath 1800SQFT is EASILY 1million+. As a landlord, you will not even come close to the monthly mortgage after factoring in the rent.

[@ryanwhiteman9184]

Seph0ria, most rentals allowing kitchen remodeling and painting, you're just a shit landlord.

[@danielalexw]

It actually makes perfect sense the aim is not to focus so much on the calculations and rates but moreover on the concept, which is quite on point just have to shop around for the best investment opportunity.

[@sarahdez1]

Omggg you draw and write so well :o !!! Thanks a lot for the advices!!!

[@aurelianspodarec2629]

LOL it's a computer programme haha it's a special software ^^

[@Zavtar]

Do you know how the software is called please ?

[@PreetBanerjee]

www.videoscribe.co by Sparkol

[@Kenneth_the_Philosopher]

On a five-year mortgage, the payments are actually 8,984.35. How did you get 2,318? Why did you use a five-year instead of a 30-year mortgage?

[@PreetBanerjee]

5 year term, 25 year amortization.

[@patbellew]

the idea that a home worth 500k is going to cost a renter 2100 a month is absurd.

[@lokironin6934]

it really depends on the market - housing prices and rent are not perfectly correlated and especially in heated markets landlords are willing to drop rent as they expect large capital gains.

[@patbellew]

Thats just flat out not true. Find me a 500k home for rent for 2100 anywhere. Certain markets could be more competitive but your talking about renting for less than half a percent of what the home is worth. Why would a landlord lose money on a home? Also, in this video he says the he adjusts the rent for inflation...Lets assume the renters home value increases at the same rate as the owners home. Now the renters landlords tax burden has doubled but the rent is only adjusted for inflation? Give me a break...

[@jamesh4866]

i rent my house for 2100 its a 550k house

[@patbellew]

do you own outright? where? taxes?

[@mmmmuffinn]

+Pat Bellew In Sydney Australia example: house price costs +$500k and the same property rented out for e.g $2.1k per month. Negative gearing tax policy provides incentive for investors to rent out at a 'loss'.

[@ALEJANDRODAVILA86]

why in the world would you need a 500K home? Owen doesn't need a house that big

[@PreetBanerjee]

+ALEJANDRODAVILA86 The price will vary by location. A 1000 square foot home in one city might be $100,000 and the same type of house might be $500,000 in another. The point is to compare local prices versus local rents for similar properties when doing an analysis. The point of the video is walk people through HOW to do an analysis. If your local market has cheaper homes than $500,000 but rents are the same as in the video, owning would look much more attractive. But if rents are lower, knowing how to do the analysis will tell you if they are low enough to rent, or high enough to own.

[@pineapplel0ve]

I'm from Auckland in NZ. A 500k house these days means a standard 3 bedroom house. It's very expensive to live in Auckland NZ.

[@girohead]

+pineapplel0ve you call that expensive? I'm in the SF Bay Area where there is very few 2br condos for that amount. This video doesn't show the most probably rent increases, which here are unreal. While that house might not appreciate as much as you'd like, it'll prevent the unsustainable spikes in rental costs. There are simply too many variables, but this video was very good.

[@michaeljones4465]

+girohead love the bey

[@ccjohncc1]

+ALEJANDRODAVILA86 If you took the time to get to know Owen you would understand. he is a very nice guy who does need that home.

[@THEKITPLUG]

Why is no one talking about the huge increase in cashflow the owner will have after he pays off his loan? That extra cashflow if invested properly will destroy the guy who has to continue forking out money for rent. You can't live in a stock portfolio.

[@The757packerfan]

Good point. The video stops as soon as the mortgage has been paid (25 years). But if you were to continue for another 25 years, the person who bought a house and now owes $0 per month is living the good life :)

[@JiminysCricket]

This is an excellent video. A very succinct teaching tool that hits all the main points and can be used for teens and adults. Unless of course it's some of the adults that are leaving messages in this comment section. Some people are impossibly dumb.

[@peterpiper7441]

$500,000 for a house in Toronto? That's a ridiculous amount.

[@PreetBanerjee]

Agreed. And that won't buy you much these days.

[@macrick]

500, 000 cad is reasonable for a house, a brand new condominium in Singapore cost almost 1,000,000 sgd (approx. 947,640.37 cad)

[@peterpiper7441]

Cam't believe it can be that much. I thought Toronto was supposed to have reasonable prices? How can anybody afford that on an average salary?

[@PreetBanerjee]

www.theglobeandmail.com/real-estate/mortgages-and-rates/what-1-million-buys-you-in-one-hot-toronto-neighbourhood/article24044731/ Housing in our large cities is becoming a hot political/economic topic.

[@peterpiper7441]

Didn't it used to be relatively inexpensive there? What happened?

[@nickmitchell9906]

While this video was helpful I think if anyone was planning to stay in one place for 25 years they would buy a home. For people who like to move around renting is a good choice as it is much easier to change your living place then being trapped by an expensive purchase

[@awildmoosey]

ants mirez lmao

[@L33t3n]

but just in case lerry the landlord was stupid enough to marry her and not even creating an marriage contract:-) seems like youre talking from experience ? sorry to hear that..

[@MONEYwithMARKALBERT]

I agree that practically speaking ownership it better over renting. When you own you have the benefit of seeing your Net Worth grow 2 ways (increase in housing market value and as you pay down your mortgage month by month).

[@XxNnjaxBudderxX]

The point of buying a house (to me atleast) is so that you dont have to pay for it after 10-15 years. It is much better for the long term, as you arent paying it forever. You don't suddenly have to stop paying rent.

[@moneyway9944]

you do pay for it still with your equity tied up in the house... there is always a cost no matter what.. rent, interest, or missed returns

[@moneyway9944]

plus add in property tax, maintenance, and insurance that will continue along with the opportunity cost of your capital

[@theboxer5]

How about Roger the Renter rent a room for $600/month then he can be RICHER! lol

[@dont.beknown5622]

LOL!! If you can find cheap rent and are single or a couple with no children, then an apartment would be the way to go. Much cheaper - but..like the video says - would you invest the difference? Roger has some good money discipline. To have a portfolio like that after 25 years...damn...

[@steffimaier7297]

Was thinking the same! Why would a single person pay so much rent to live in a house all by himself? And when he moves in with his partner, the rent will be split and he would safe money as well.

[@The-Cat]

Dont you pay taxes for that source of income ? maintenance and another insurance

[@slug237711]

LOL, $600 a month?! SIGN ME UP! Where is such a place located? All the apartments in my area, even the dankiest hell-holes, are at least $800 for the size of a closet.

[@theboxer5]

Rent a room in someone's apartments or house. Here's a hint from LA for only $500/month. losangeles.craigslist.org/sgv/roo/5666382781.html

[@bmcgrath8892]

Renting a home worth $500,000 where I live would easily be about $4000-$5000 a month. $2100 will get you a small house here.

[@JamesAutoDude]

The repairs are also variable... Renting you can usually have the landlord replace stuff. Owning you better buy quality replacements or you'll be forking out money all the time fixing/replacing stuff too. Sometimes you get lucky and don't have to replace anything, other times it's every year dumping money into new stuff until everything is replaced Also, if your house happens to become in a fire zone or a flood zone in the future, your insurance goes through the roof if you own

[@umbreonix]

Our education system has completely failed us on things that really matter like how to file taxes, write checks, etc. 99% of the people here (myself included) seem like they got lost about 2 minutes in.