One thing I noticed when I was working in real estate was that people who buy generally end up spending a lot of extra money that they didn't need to. Things like buying more living space than they actually need (and would have rented) just because the bank was willing to let them borrow more, then redecorating the house, new furniture, etc because it's now their 'home' and not someone else's. Then a lot end up buying a pet, because they weren't allowed one before while renting. Then because they have a load more space, they end up filling that space with extra 'stuff' that they logistically could not have purchased while renting. It ends up encouraging a lot of extra spending that they wouldn't have done if they had rented. For example, I'm single and don't need much space so I rent a small bedroom in a houseshare for 20% of my salary and literally don't have the room to fit loads of nice stuff in here. I'm not allowed to redecorate, not allowed pets, etc. I'm forced to keep everything very minimalist, which naturally caps my spending a lot even when I really want to buy something. The 80% I save gets invested. In a few years I'll be able to buy a place in cash as a result. There's no way I would have saved this much if it was entirely voluntary. I'm disciplined, but not THAT disciplined!
@vromerone7 жыл бұрын
I Fully get your housing cost, lol. I lived in Fremont, Ca. for a few years. In comparison to other areas, the housing cost is unbelievably high!!! Living in Fremont, I met a Filipino woman who was about to loose her home due to a job loss and divorce (no kids) , hmm... she was smart, she started renting out the bedrooms in her 4 bd. house for $650.00 a month each, and the Master room for $750 She slept on the couch. She found it really easy to find working singles to rent in that very expensive area. She saved her house and paid it off while many of her friends lost theirs, refusing to rent out rooms to "strangers" !!! In 2012 she sold her house for 700k and bought another house in Union City, Ca. for 420k cash deal, no loan!! She purchased another 4bd. house and she continues to rent out the rooms as income on her 100% paid house. Her tax bill is about $6000 a year, other than that, she is killing it !! She not only lives in her house for free, she is making $2700 renting out the bedrooms to people who work all day, lol !!! BTW, not to mention, since 2012 her new house is now valued over 600k!!! Love your video!! Thank you and God Bless you!!!
@BeatTheBush7 жыл бұрын
What an awesome move by her. With the housing prices inflated so much, it *might* be a good time to sell, I don't know. But what a great story of doing the right things at the right time.
@se7enzee4447 жыл бұрын
She can also rent the rooms out to IT professionals through Airbnb.
@jesusf.26007 жыл бұрын
Dexter Morgan Same thing in the Santa Cruz-Monterey Counties. A 1 Bedroom-1 bathroom apartment cost $1300+ a month. Hell even a 450ft studio costs $1,300+ a month.
@edsensation7 жыл бұрын
Dexter Morgan first get out of Miami it's overrated. Move to Orlando where houses are cheaper and yes you can get a house for what you're paying for a small studio.
@zhangyiming19847 жыл бұрын
He can't leave Miami, he is Dexter Morgan......
@tubejim1018 жыл бұрын
Really well thought out. Great video. Over time, rent keeps going up. In my area, in 97 it was about $400 to $500 to rent, now it is $800 to $1,000. When you buy it seems high at the time. When you buy, you lock in that price. Over time, as the dollar looses value, its seems like less of an amount. Remember when minimum wage used to be about $5 an hour. Now they are talking $15. So inflation seems to help with home ownership over time.
@BeatTheBush8 жыл бұрын
Good point about the fixed mortgage price and increasing rent. Even though mortgage might be a little bit more expensive than rent at a moment in time, it might still be worth it to buy because rent prices may increase. So buying and holding long term a buyer will see the burden get smaller and smaller due to the 2%ish inflation.
@anthonysigman61387 жыл бұрын
Plus when you do pay off your mortgage, you will reduce your costs down to only the taxes and home owner's insurance. If you had been renting this whole time then you would still have to continue to pay this inflated rent indefinitely.
@VTECsqznN2O7 жыл бұрын
Completely agree. Our choice is buy, and lock it in, or have to give up everything and move out of state, starting completely over (no thank you!). The rent here is absurd and we are already spending about 40% of our pay just to live in an old apartment. Buying is a no brainer here.
@daveheel7 жыл бұрын
all that is true and which is why i want to buy. the problem i faced was getting a loan though as true for most people. also, you have to consider that the house will have more problems the older it gets and repairs can be very expensive. are you ready for a $10k new roof, an old a/c going out, etc? and if you're selling the home after a year or so, you won't build much equity if at all--all the mortgage will go toward interest.
@KentPetersonmoney7 жыл бұрын
tubejim101 I learned the hard way. I thought rent would stay the same price for years but I went from spending $534 a month to $575 a month in a single year. Now i'm like, I should have bought a condo. Hate how prices change.
@mine16853 жыл бұрын
Dear BeattheBush, I have been watching your videos since last week (total one week). I like them very much. Meanwhile I watched countless videos about renting versus buying. They were all confusing, too complicated, too fast, not explanatory enough, too subtle, too ....., etc etc. Then I saw this video of yours. I was so happy!!! It is because I was pretty sure that you would explain it VERY WELL. I was right in believing in your. I swear, out of all the videos I watched in this topic, yours is by far the best. You explained so well, so clear, so calmly, so in detailed but also up to the point. Thanks a million, billion, ...... . You are the BEST!!
@Radnally7 жыл бұрын
I lived in an RV for 4 years while working in the SF Bay Area. It saved me at least $12k/year. And I was able to move close to where I worked. I bought a house in AZ, mostly due to the money I saved.
@BeatTheBush7 жыл бұрын
Wow! I see some people doing just that in parking lots. =D I wonder what it feels like to do that.
@LXZTUBE8 жыл бұрын
The part about rent being comparable to a mortgage is very untrue for North Carolina. An $80,000 house here rents out for $1050, while the mortgage would be around $400 (and that is with 3.5% FHA down). Renting in North Carolina, at least in my area, unless you go into dangerous parts of town is skewed beyond belief.
@BeatTheBush8 жыл бұрын
Interesting to hear it is untrue in North Carolina. The point in this video is to highlight the confusing middle ground where they are equally prices. In your case, it's a no brainer to own.
@LXZTUBE8 жыл бұрын
The issue is on a larger scale like a pro tour, the decks that could easily wipe the floor against Mardu Vehicles get beat by other decks but those decks suck against MV. Outside of protour however, people just copy the "top deck" and .. boring.
@sparkhousegaming94037 жыл бұрын
I've been binge watching your videos for a while now. Gotta say your opinions/suggestions make sense and I like how you share your experiences with it rather than looking at things from a theoretical point of view (you add practicality to your statements). Loving your channel and definitely recommending it :)
@BeatTheBush7 жыл бұрын
=D I'm glad you can relate or find it helpful. =D
@Myfrugallife7 жыл бұрын
It is better to own in the long run, especially if you have family and kids and need more than just one bedroom. We pay a lot less with tax and insurance every month than it would be to rent even a small apartment around here. And we live in a big house with a pool and an acre of land. The only downside is that when we bought this house, it needed lots of repair and replacement, but we were able to do most of things ourselves and about 75% done now. We can only afford to put 200-300 towards the repairs, which would be eaten up by rent if we would be renting.
@BeatTheBush7 жыл бұрын
Yeah, the markets differ but I do agree it's generally better to own. The rent prices usually increases while your mortgage on a fixed rate stays the same for 30 years! Do you get a lot of evaporation on the pool which costs you a higher water bill? Do you put homemade lilly pods to keep it from evaporating? Or solar pads to heat the pool with the sun? =D
@Myfrugallife7 жыл бұрын
We are in California too. We don't have a water bill, we have a well, which uses electricity when we pump the water. The sun is the only source for heating the water for our pool, which takes the water for it. lol But we get free rain water in it whenever it rains in the winter, we don't have rain in the summer time. I think, its cheaper for us to add the water than buying any special equipment to protect the water. We use the pool almost every day in the summer time. We have the shade tarp kind of things that we stretch over pool every summer and take it off for winter to have them last longer.
@BeatTheBush7 жыл бұрын
Nice. There are various DIY ways to protect it, just saying. Your own pool does sounds nice when its so warm these days. And when you have your own, you can be sure there's a lot less pee and poop in the water.
@Luxyglamlife7 жыл бұрын
In NJ property tax is like $1,000 added to your mortgage and not $200. It all depends on where you live. Plus no one ever factors in if something breaks. my landlords shelled out a lot of money over the coarse of 2 years with things that needed to be fix and bought. When you rent you don't have to worry about those high cost projects. Also it is impossible to save up 40K when you are living paycheck to paycheck. You literally have to find a side investment where you can do that.
@BeatTheBush7 жыл бұрын
You certainly cannot save up living paycheck to paycheck so that much more important to reduce expenses which increasing cash flow. It can be hard and darn near impossible though if the base income is low and you spend all of it. However, if income is moderate, you can turn it down to low and save the rest.
@Luxyglamlife7 жыл бұрын
Yes this is true. Finding an ideal job that can boost your income is almost near to impossible even with a degree. It's even worse when you have to pay $1,000 a month on childcare and $500 a month for before and after care for a school age child. It's like no matter what you do money always finds a way out of your pocket before you can even see it lol.
@bsm67766 жыл бұрын
Luxyglamlife the landlords maintenance cost is figured into your rent.
@AB-py6jl6 жыл бұрын
@@Luxyglamlife correction: its near impossible if you have the WRONG degree. If youre not doing anything stem related good luck.
@bluenosedive8 жыл бұрын
Great video, I like the long term concept. I live in Toronto and the market here is just so unaffordable for a young professional like me. The mortgage would be almost twice my monthly rent!!! So I decided I would rent cheaply and buy in 2 to 3 years, hopefully the market will have cooled down but I doubt it.
@BeatTheBush8 жыл бұрын
Wow serious? For a comparable place? In that case, it's hard to justify buying unless of course it keeps on going. There's the million dollar question. =D
@hashimalijaffery80877 жыл бұрын
The market is starting to even out.
@LaTuya_7 жыл бұрын
I love your videos!!! I recently moved out of my apartment and moved back in with my parents to save money to buy my first home in the next few years 🙂
@BeatTheBush7 жыл бұрын
If they are okay with it then it's all good. Might be good to see if they expect anything from it just to be totally clear and not build up any angst so that you can actually stay for a few years.
@KhushbuMel7 жыл бұрын
Hard to say which is better. A talk with one of my landlords terrified me -- 650k to buy and around 200k in repairs to get the place up to code.. The house was nice, but nowhere near 1 million nice. Still, he can say that he owns property in NYC, and no one will hike his rent. Good luck with property taxes though. Now, a million dollars tossed into index funds would be workforce game-over for me and a lot of people. The passive income would allow one a lot of flexibility in choosing a place to live. Cultural and experience baggage has biased toward renting and against buying. I associate home ownership with sudden $20K bills. Also, a large down payment would break my spirit: to me, that's wiping out multiple years of saved up income in one shot in order to lock myself into 10-30 years of debt. Other thoughts I've heard on this debate: 1. Rent for freedom to move. Buy for stability. 2. Renting will NEVER be cheaper than buying because the landlord will always pass the extra expenses to the renter. 3. Don't view your home as an asset unless you truly plan to sell it. This belief in increasing home value can lead to financial overconfidence -- you can't spend the money because you are living in it! A. OK, I've seen family members take out a second mortgage (?) on a paid-off home, pocket the money and buy another one. I don't consider this normal. And thinking about how this is possible confuses me.
@BeatTheBush7 жыл бұрын
200k is a lot in repairs. The appearance of the house seems to have nothing to do with the price as the location is what costs the most. Yes, wouldn't everyone love a million dollars? lol. Knowing what to do with it so that you can live the rest of your life on it is a different sotry. Buy has advantages mainly from the home appreciation which can be very significant. But it's hard to know if you will get this appreciation or not or if you are buying in too high. Rent is sometimes cheaper than buying depending on the market.
@addicted2baseballrgd217 жыл бұрын
ChallahRajni It sucks owning when things go wrong. I bought a duplex and reside in one unit, and rent the back unit. I was unable to put 20% down, so the PMI is killing me. The rent doesn't cover half the mortgage, so basically I'm subsidizing my tenant's rent. Than the repairs are a pain in the ass, just dropped 16K in plumbing repairs. Also I pay for water, trash, sewer, Gardner and any minor repairs that come up. I'm unable to raise the rent, because the market isn't calling for it. My rent is in line with the neighborhood. The general rule of thumb is if you own for 5 years, that's your break point advantage over renting. Owning in the Los Angeles area, plus the major repairs I had, I think my break point is 7 years.
@JRCxyz7 жыл бұрын
Addicted2baseball rgd What was the cost and the corresponding 20%?
@oldtoby42068 жыл бұрын
I am at that point where buying seems really tempting since houses are really cheap in my area and I have roommates who wouldn't mind paying rent for a room if I bought a house. Its just that I am so comfortable with the flexibility of moving after 2 or 3 years if the neighborhood, management or apartment (maintenance) start to suck.
@BeatTheBush8 жыл бұрын
The flexibility is really nice because you can just pick up and move to any city you want. With a house, you're pretty much glued to the ground unless you rent it out but it has its own hassles. At some point like you said, it's much much more worth it to just buy. If they rent from you, maybe it'll cover the mortgage and then some. What a deal.
@Myfrugallife7 жыл бұрын
It's not always possible to write off the interest on the taxes, just because for some people like us, the standard deduction would be more than all these write offs combined. And you can only choose one, either standard or itemized deduction.
@BeatTheBush7 жыл бұрын
Very true with the write off. I guess I'm too used to seeing the huge interest paid on huge mortgages here in California. This makes itemized the primary choice for many.
@Myfrugallife7 жыл бұрын
We only pay about 3.5K a year in interest now because the amount we owe is lower now, and our interest is 3.8% now. We refinanced 2 yrs ago to 15 yr and lower interest rate. Its have seen lower rate advertised after that, but we were able to refi with no fees with the same bank, so I think we got a deal.
@BeatTheBush7 жыл бұрын
I guess as you pay off the loan it decreases and at some point, it will be too low to be of any use in itemizing.
@ShuffleSk8Ter7 жыл бұрын
the best cheapest bet is live in your car! that way you have zero out going BS
@BeatTheBush7 жыл бұрын
I wonder if I should try that out for a while. lol. It will be quiet an experience!
@Woke3657 жыл бұрын
Lawrence Harasim live in your van.
@100Bucks7 жыл бұрын
Lawrence Harasim or just live a simple life. Only buy what you need, not what you want.
@margecole70717 жыл бұрын
or ditch the car and live in your house.
@luxciousupholstery7 жыл бұрын
Live in your vehicle, and rent out your property :D
@Vagabond_Gaming8 жыл бұрын
After watching several of your videos, I subbed your channel. I really enjoyed it, and strangely, I've noticed I was already practicing what you were teaching on the channel. That must be a good thing haha.
@BeatTheBush8 жыл бұрын
Thanks for your sub! I guess there are more than one theme running across all my videos but it does involve pointing out the finer points of common life decisions. Hopefully, I'm making the world a better place for most. =D
@VTECsqznN2O7 жыл бұрын
Finally a financial blogger that doesn't say that owning a home is a bad idea, I see so much of that and I wonder where those people live... . I think a lot of people don't know what its like to live in an impossible market...NY, CA, Vancouver, Seattle etc. Buying is sooo much better in the long run in these markets (as long as you don't overpay as you state). Also, I can now make more money with a house. The nature of what I do for a living isn't allowed in apartments, so my side money is very limited. (I work with animals). Having a home will actually allow me to expand. I also wanted to add that you can do a 5 or 10% conventional and petition to have the PMI removed when you've paid it down enough or the market has climbed enough. That's what I am doing because I can't pony up 50-60K for a down payment (plus closing because in hot markets, the sellers almost never pay it). Home prices here are climbing at around 7% and even 9% around here right now. Even with PMI the mortgage is the same as what I'm paying for rent. So its still a no brainer. Also, stay away from FHA loans in hot markets, save up so you can get to 5 or 10% down at least..., the sellers wont even look at your offer anymore if you are FHA in my area. Heck, they don't even want to deal with regular loans, there are so many cash buyers! I have an 800 credit score and it was still very hard to find someone to sell me their house. Great vid.
@BeatTheBush7 жыл бұрын
Yeah, you see, it really depends on the market. Usually, it's a great idea if the price appreciates and long term it seems to be aggressively appreciating anyhow. Can you imagine if there is a down turn you could be underwater rather than rising up to 20% home to loan value. But if you wait long enough, it will likely recover. In the mean time though, it might not feel so good to see ~100k of paper loss.
@mikeroberts1627 жыл бұрын
Great video I live in Contra Costa County (east bay). I bought my house in 2003, and when people I knew were short selling their homes because they were upside down I held on to mine. I now have 150k in equity because I whethered the storm out. It turned around and the house went up in VALUE!
@nibabi7 жыл бұрын
This video and the comments provided some good insights. The most important was the fact that a mortgage may save you money over the long run whereas rent continues to increase. The cost of the mortgage may be cheaper in the future due to inflation. I had not thought about that.
@BeatTheBush7 жыл бұрын
Having a place paid off is also an important component of early retirement. Mainly to reduce living costs but you could rent. That however, takes a much larger passive income.
@donha4758 жыл бұрын
Rent. So much more freedom. So much less risk. Regular people don't realise how much risk they are putting into a massively leveraged asset like a home... What if interest rates go up. Economy crashes. You lose your job and Housing prices collapse. A not-so-unlikely scenario would involve all of these things happening at the same time... You are fucked in this situation. But if you are renting... you can buy up when there is blood in the streets and cheap house prices.... Everyone is waaaay tooo indepted. It is actually the right thing to do to society sake to not go piling into the housing bubble...
@BeatTheBush8 жыл бұрын
As it is in the US right now? I agree. =D Some may even go as far as selling their homes in anticipation and then buy something similar back after. The thing with a bubble is, you never know when it's going to pop so you may be renting for a really long time. It's pretty dangerous to buy at the peak with the job loss issue and subsequently being on the street and homeless. However, I know I keep on arguing on both sides, but there's something to be said about buying and keeping it for the long run to live in IF you can keep on paying the mortgage.
@donha4758 жыл бұрын
BeatTheBush It may be hard to pick the top but I think that when it crashes down... you will know... Have you factored in over a 20-30 year period option #1: Rent and have the freedom to invest wisely in particular asset classes etc. that will rise in an economic collapse... THEN sell and buy a house near the bottom after a crash (you could get 2x or 3x your net worth out of this transition and then rise the next housing bubble up.... Versus option #2: Lock yourself into a house (becoming a debt slave to it and unable to even move locations easily for better job opportunities etc...) and just hope that you didn't buy at the wrong time... hold for 30 years to balance out the ups and downs... I think option #1 appeals much more to me. I keep my freedom and imo a wise investor can make a better return (relative to the risk being taken)
@BeatTheBush8 жыл бұрын
Hayden Donnelly NZ In theory I agree but no one can tell the future. Even the wisest investor get it wrong sometimes. So it comes down to if you can say you got great average return and if you are reliable and consistent. So for those that can actually do this, well, they're the millionaires. =)
@donha4758 жыл бұрын
BeatTheBush Well to get consistency you want to diversify and hope that your batting average is pretty good. You can afford to be wrong though if you are making like 100 investment decisions.... A house = one big fat risky, leveraged financial death trap - what sucks the most is that my government here in NZ wants to keep taking tax-payer money to keep subsidising housing even more that they were before and regulate it more tightly which constricts supply... Madness. And I, as a sensible renter have to pay taxes to subsidise everyone else's stupid financial decisions to insist on living in an expensive place in Auckland when they don't have a suitable job to support this choice... and these same stupid people will once again vote for more big daddy government handouts (that get stolen directly from hard working middle class people like me - I work about 70 hours per week but only paid for 60 on salary). And the irony is... when you tax everyone to subsidise people to buy homes... It drives up the price of homes! Because it is subsidied!! Therefore artificially raises demand... It just gets thrown onto the growing "government tab" aka your own future taxes...
@BeatTheBush8 жыл бұрын
Still, it's nice to have a place you own to call home. Owning one outright is critical (but not absolutely required) for early retirement as paying rent greatly increases the passive income you need to retire. I mean, I respect your opinion and I cannot for sure say buy or rent only is best in this environment. So I'm not arguing for or against it. Btw, I was just in Auckland! Apparently locals pronounce it "Oakland" =D
@Totsudon8 жыл бұрын
I was reluctant to watch this video because I was unsure whether I would get any useful info for Europe but it kinda does work the same way around here, I learned a lot and I'm sure this will be useful because I'm in my early twenties and I'm going to have to make a few decisions in a few years time, like, whether I even should bother renting. Thanks for clarifying some of the doubts I had for a long time, useful video, as always :)
@BeatTheBush8 жыл бұрын
Thanks for watching even though you're in the Europe market. I tried to make it broad and just lay down the ground work necessary for a person to make their own calculations. Hopefully, I point out some things that one may not have considered to make a better decision. I guess sometimes, it's a requirement to rent if you're still saving for a down payment.
@billyboy88888 жыл бұрын
always buy instead of rent, especially if youre in a big city. house prices always go up, more and more people move into big cities. another thing is that european countries attract rich immigrants. all those factors drive up the price of housing. looking at it from long term perspective, you will make a lot of money when selling the house.
@MrAlanjames997 жыл бұрын
Nice video.. I've been having similar conversations with my GF.. In Australia, I think renting has become more cost affective. High interest, crazy high house prices, highest private debt int the world... People are becoming very over leveraged in AU
@BeatTheBush7 жыл бұрын
It really is dependent greatly on the market. But then lets say the market becomes insanely heated and never calms down in 5 years. Even with a low rent compared to buying, it might be better to buy. It's really hard to anticipate where its going to go.
@dss30577 жыл бұрын
Do you wear the jacket inside in order to save on your electric bill?
@BeatTheBush7 жыл бұрын
Partially. I tend to wear a jacket even when the temperature is 74F inside. People ask me if I'm cold all the time, it's just what I do.
@EnvelopeBudgetingMethod7 жыл бұрын
Great video very educational. I just subscribed! Thanks alot. Keep up the good work!!!
@BeatTheBush7 жыл бұрын
Thanks for your sub! Will do. =D
@se7enzee4447 жыл бұрын
A decent house in the Bay Area is over $700k. People can rent out part or the entire house out or do AirBnB. But for me, I'm renting, $1k a month. It's just much liability and too much stress to buy.
@BeatTheBush7 жыл бұрын
It does cost a lot more in terms of maintenance. The current housing market is highly inflated so we'll see how it goes.
@darylsmith93188 жыл бұрын
Cool channel man.
@BeatTheBush8 жыл бұрын
Thanks! Welcome Baz!
@Yayletesha7 жыл бұрын
I see the benefit of buying low. Just curious if the appreciation aspect of home ownership benefits the buyer while paying the mortgage or only after the homeowner sells their house?
@BeatTheBush7 жыл бұрын
Appreciation can help the buyer to get it lower than the 80% debt to loan ratio so you can get out of the PMI. It can also allow you to get a HELOC easier, so there are benefits even without selling.
@kenya10677 жыл бұрын
that's an awesome question. tbh I think I'm leaning towards renting. just because a contract seems contracty lol
@geraldinepearson8897 жыл бұрын
Thank you for your videos. I'm not the greatest mathematician but the way you explain math (and explains) I get it. Thank you
@BeatTheBush7 жыл бұрын
Glad you can take something away from this vid. =D
@thisistotallyfine7 жыл бұрын
What advice would you have for someone like me who is living in the most expensive city in the world (Hong Kong)? I'm currently renting a one bedroom apartment for around $2000usd per month. An average sized apartment (500sq feet) costs around $1 million dollars. Given that there don't seem to be any signs of a cooling market (especially HK), do you think it's the right time to buy? It's definitely not a good deal to buy an apartment anywhere in HK, but I'm a working professional who have a relatively higher income compared to most professions.
@BeatTheBush7 жыл бұрын
dang 500 sq ft only. I haven't looked at pricing there but that sounds about right. And somehow they are these cold high rise cement buildings. I'm not sure about signs of cooling market. It always seems that way. The only way to deal with this is assume you will stay long term of 10+ years if you are going to buy. It's hard to swallow now but buying in means your cost per month will be way more than $2k a month.
@thisistotallyfine7 жыл бұрын
Oh cool didn't expect a reply since this was an older video haha. Anyway I'm a new subscriber from HK. Looking forward to your new content! And yes the housing market is just too crazy. My option now is just to wait it out for 2-3 years and see if it dips. Even if it dips I'm only expecting about 10-20%. But renting my place for 2 years is already $24000 x 2yrs = $48000
@JRCxyz7 жыл бұрын
greentealatte Whats your profession and salary?
@sagemulkey98906 жыл бұрын
Absolutely fabulous video
@BeatTheBush6 жыл бұрын
=D
@DyJKevin7 жыл бұрын
Your videos supplements my school courses. Really great stuff
@BeatTheBush7 жыл бұрын
=D How interesting. Do they teach if you should be buying or renting? I assume it might be in a different context.
@gwenshin7 жыл бұрын
Sometimes people think just because the home payment is the same as their rent, they should buy. Not always. Like you said unexpected expenses come up with a home that would not if you were renting. Like a busted water pipe, a/c or refrigerator breaking, leaking water, roof repair. If you're renting, all you do is make a phone call, and move on with your life. If you own, you had better have the money in the bank, or at least a good amount on your credit card to cover the unexpected.
@BeatTheBush7 жыл бұрын
The unexpected expenses is real but then if you do your own repairs, they can be minimized.
@whytedaisesify7 жыл бұрын
I have always been "for buying a home" as I prefer to keep it forever (if I am able to). *When you say "heated"...do you mean there are a lot of buyers so the market is high or just the price is high? I am hoping to purchase the home I am renting the end of the year and I have been trying to convince my landlord who will consider-- if the price is right. The property is a duplex style with land in the back yard still- enough to build a one/two bedroom to let out. It's a hefty debt but a good investment in the long run. I am new in the investment world and trying to do as much research as possible. I am not good with the lingo, so it will be helpful if you can explain some of the verbage. thanks
@BeatTheBush7 жыл бұрын
Heated as in the price is much higher than the median income which makes is highly un-affordable to the normal person. Long run is good as in 10+ years but the risks of buying and having a dip soon after is elevated right now in most markets I feel. I could be wrong though.
@pedrofdmp7 жыл бұрын
Problem is job security, if there is a economic downturn in your area you will have to move elsewhere to find a job and pay rent at the destination. Meanwhile you won't be able to rent the home you bought due to the same downturn. You'll end up paying rent + mortgage and live a miserable lifestyle or just go into bankruptcy and loose all the money you put in the mortgage. Buying homes is a good deal if you don't depend on work for income and survival, else it's a bigger risk than the real estate industry wants you to think.
@BeatTheBush7 жыл бұрын
That is indeed possible in a huge downturn without proper emergency savings. Hence the need for an emergency savings to tide you over.
@lisaadams426 жыл бұрын
I have to be free to move to where I can find work.
@boingedesan7 жыл бұрын
Thanks for sharing your insight! What are your thoughts for renting vs buying in Singapore? Government housing prices here are slightly higher or comparable per sq ft. The kicker is, you only own the house for 99 years before it gets repossessed by the government. Property tax, maintenance etc. is charged as per normal. Condos can be around $6-700k range(99 year lease), with a higher monthly maintenance fee. Freehold properties like semi-detached or bungalow the size of a typical home in US start from USD$2.5million, out of reach for the common people. PS: The cost of housing can be too expensive for some, who choose to live in tents by the beach! The weather is nice enough year round.
@cjcj74027 жыл бұрын
Your video are so impressive! Truth be told, quite inspiring. Thank you
@BeatTheBush7 жыл бұрын
You're welcome!
@george5437 жыл бұрын
Great video. It really explains the logic well. Thanks again!
@BeatTheBush7 жыл бұрын
No prob. Although I do think the market is a bit heated right now but don't listen to me as I have no idea where its going the next few years. Long term though, it's probably okay to buy even now.
@JamesWilliams-qn5cq8 жыл бұрын
Thx 4 the post...
@BeatTheBush8 жыл бұрын
You're welcome! =D
@ReasonableHuman17 жыл бұрын
Great video! How do you figure out that market is hot in a particular area? is there any statistical algos/mothods? Tools?
@BeatTheBush7 жыл бұрын
It's hot to me when the price is way higher than average income. Hot does not mean it will lower in prices as being hot could be very extended. So I cannot really guess where the prices will go.
@emiami67007 жыл бұрын
I am a big fan of your videos! I'm curious if you own or rent. I will be buying a home next year in Miami, FL and would appreciate a video that lays out the step by step that goes into the home buying process and perhaps a few tips. Thank you for your positive attitude!
@BeatTheBush7 жыл бұрын
I haven't really said if I did one or the other as I try to only release info that is absolutely necessary for understand the concept in a video. Here are a few things to check before buying a house: kzbin.info/www/bejne/qnfMp6WQZ66cjJY
@emiami67007 жыл бұрын
I apologize for prying and you are right, info that is absolutely necessary to get the point across does not have to be personally relinquished. I did check out your suggested video link and I already was aware of all points made. Thank you for your response.
@oldtoby42068 жыл бұрын
Oh!!! and great video!
@BeatTheBush8 жыл бұрын
Thanks! =D
@moupatte7 жыл бұрын
I just needed to hear buying is better, great video
@BeatTheBush7 жыл бұрын
I think it's generally better. Like 95% of the time and it varies depending on the duration you will keep the property too.
@holycrapchris7 жыл бұрын
It might make sense to look at this from the income perspective. Will renting or buying lead to a larger income? Depending on your marketable skills, renting wins from this vantage point. Owning housing has an anchoring effect, reducing the likelihood that you will be willing to move to attain more lucrative employment. This can be super important to your financial wellbeing, particularly early in your career.
@BeatTheBush7 жыл бұрын
That's an interesting point about the anchoring. If you are so inclined to pick up and move, you could always just rent the place out as well.
@Sophy20017 жыл бұрын
i thought that you were going to say that the benefit of buying is that at the end of the term the home is technically yours ( not including taxes and insurance) where as in renting the place is never yours.
@BeatTheBush7 жыл бұрын
That is implied. This is more about the immediate cost difference today rather than comparing 30 years later.
@rubenalvarez19797 жыл бұрын
Great videos thanks. But something I see missing from these rent vs own videos. You should also include that most people will pay a Real estate agent 5% to sell the house. In a $200 house, that's $10,000 of guaranteed loss. Just something to consider.
@BeatTheBush7 жыл бұрын
Generally 3/3% for a total of 6%. It's part of frictional costs and it's huge on a large value property. Luckily, you can reduce this by ummm, never selling it or minimize the number of times you buy or sell property.
@hodoprime8 жыл бұрын
You're missing transaction fees of selling house. Also, owning a home brings a lot of risks.
@BeatTheBush8 жыл бұрын
Good point. That will be the 6% realtor fees along with other fees that seems to go on and on. Yeah, buying on a bubble will set you back a long way but, sometimes if you need a home, you need one and cannot wait 5-10 years for a potential market cooling.
@mementomori292317 жыл бұрын
hodoprime wow, not owning a house is more risky. I get a super low, tax deductible mortgage for a cheap house. I will own it free and clear soon. my friend who rented all this time has no equity and his rents are going up. in a few years I won't have housing costs, but my friend will pay rent for life.
@DanielMuvdi7 жыл бұрын
Also you in this example say that rent is equal to a mortgage payment. but in my city right now rent is double the mortgage payment for the same like property. so yes owning is the best way to go also in (Portland Or) prices are just going and going up is getting crazy. i will say this video is good for demonstration but every single case is very unique.
@inkey27 жыл бұрын
forget about a house....buy a condo. I get my taxes, condo fee, water, heat, maintenance for under $500 a month
@Parliament1mg6 жыл бұрын
MemoryDecipheR You can rent house too. You actually bring up the good point. With rent, you have freedom to move out with little transaction cost (basically just moving) when you have loud neighbors, etc. With buying, you will have to incurr larger transaction cost (realtor fees).
@sbrazenor26 жыл бұрын
I was smart about buying. I waited until the market in my area stabilized after the crash and lending started up again. Then I bought a foreclosure for $67K and put another $16K into it for renovations on an FHA 203K loan. Monthly it costs less than a small 1br apartment in my area, but I have 3br, my own yard, my own laundry setup, my own parking area, etc. The present value (at least on zillow) about 6.5 years later, is $183K and rising sharply. Even if the market tanks again, it's still a reasonable piece of property to have, and it's affordable in any terms you consider. (Compared to rent or other ownership options.)
@BeatTheBush6 жыл бұрын
Great job! Glad you can get this equity! Not many people can buy at such a low level.
@BBones-w3y7 жыл бұрын
You forget that renters get standard deduction. And a house really costs 1.8 to 2 times the mortgage per month. There are costs to ownership that you didn't add up. And the compound interest of 8% is lot more than simple interest for 30 years. You must be biased towards buying a home (like most people out there).
@BeatTheBush7 жыл бұрын
Depends on the mortgage amount when you use that 1.8 to 2x factor. 8% is if you invested the cash and get the average annual returns on an index fund. The higher this rate the more favorable it is towards renting actually.
@Hyperjohn787 жыл бұрын
nice video!
@BeatTheBush7 жыл бұрын
Thanks! =D
@djmaisuria8 жыл бұрын
Great video
@BeatTheBush8 жыл бұрын
=D
@gertieyounger49338 жыл бұрын
+BeatTheBush web
@mi2ke7 жыл бұрын
nice explanation. you should add the inflation to the renting calculation as well. Soi if you pay 1267 USD rent / month this year you will get an increase on the rent of around 2% for the next year and so on...
@BeatTheBush7 жыл бұрын
Oh yes... although rent might inflate at a different rate than the inflation metric.
@aFreeman04097 жыл бұрын
The correct answer is BOTH. You BUY a brand new house, pay the 20% down, and RENT out the house immediately for 3 + years (use 40 months since it is easy math) and match the rent - DOLLAR FOR DOLLAR on the mortgage. In ONLY 40 months, you NEARLY FULLY OWN THE HOME. Example: 150K house, 20 % down is 30K. Rent it for $ 1,500 a month and match it thus paying $ 3,000 on the mortgage. Then go look at the balance on the mortgage before you pay the 41 payment: $8,921.25! PS Now what happens if you buy a multi-family property instead of a house and have several renters instead of just one. Ah, money multiplier! Happy accumulating your wealth!
@BeatTheBush7 жыл бұрын
Ok. So when you match, where do you live? You could just live in it and pay double mortgage too.
@Chris930367 жыл бұрын
oh no.. the cost of living in Southern California is high. It usually cost $400,000 to purchase a decent aged single family home or about $1,200 a month to rent a 1 bedroom, 1 bath apartment that is roughly 6 years old.
@BeatTheBush7 жыл бұрын
Very true. The cost of housing varies widely from one area to another. So you can just use a multiple of my calculations to fit your area. Some places have homes fro 200k, others its more like 800k in San Francisco.
@Chris930367 жыл бұрын
BeatTheBush Thanks for your advice! Your channel is very helpful!
@Dancerlil7 жыл бұрын
You would make a great financial planner. Seriously, a good fall back job if there ever was one. I own my own home, well to be honest the mortgage company still owns some of it. With the way housing has gone up in recent years I am glad to have it. Was hit & miss sometimes. I had two young sons when I divorced years ago. No alimony & very little child support. Also had a low paying job. As Victor mentions below, you can always rent out a room which is what I did through Craigs list for many years. A some point I no longer needed it but things changed once again being on disability. And so I was an Airbnb host for the past four years. Taking a bit of a time out right now. With Airbnb you can chose which days of the month you want guests. You make up the house rules, etc. As you know $200K is impossible in Silicon valley as far as I know. I do have a sister that lives in Orland, Ca. Tiny old ranch house on three acres. She paid $85K about three years ago. Blessings, Liliane
@BeatTheBush7 жыл бұрын
+marycatfish Thanks! I do offer a few limited services through my Patreon so doing a little bit of it already. When there is no other way, renting out extra space makes perfect sense.
@christianhill71567 жыл бұрын
BeatTheBush you have Home Insurance. Occasional maintenance, utilities, Home appraisals that increase property taxes...you lawn... a car, gas, and it to mention the risk of Home value decline. It’s also a fact that with home prices now first time buyers can only afford a 5 To 10 down payment. So in theory you could get 3 houses at 5% down as investment properties....rent yourself... and the rest of the 10,000 can go to investments. In 5 years or so at a 5% appreciation rate on each house you would make 168,000 dollars in just added property value. If you make 150 dollars a month in rent from each house you earn 27,000 and your 10,000 dollar investment becomes 12,000. That’s roughly 200,000 dollars in just 5 years. That’s just 5 years. Frugality and deprivation is not the key to success. Neither is overextension and gluttony. Strategy is. People want a lifestyle that allows them not to worry about money but they also want to be happy and content. That’s y a lot of people try but can’t save like you can. You have to diversify...always. And ps there is a lot of added value...especially to consumers to reselling.
@PaulTranDIY7 жыл бұрын
You didn't mention that fact that you lose 6-8% of the final home sell value to real estate agents and fees when you sell your house. If I were to spruce up my house account for the 6% I am forking out 100k in expenses just to sell the house. With appreciation my property taxes have increased by 25% in 2.5 years living in my current house.
@BeatTheBush7 жыл бұрын
Best way to avoid it? Buy and hold it FOREVER. no frictional cost.
@PaulTranDIY7 жыл бұрын
Yeah I could do that but as of now even if I paid off my house, property tax, maintenance would = $2000 dollars a month and that is only increasing every year. I need to downsize in a couple years and buy a less costly home. Have any suggestions?
@UchihaSumairu8 жыл бұрын
"the mortgage is going to cost the same" not even close actually. My rent is 1200 for a 3bed 2 bath 1600 square foot house. I could buy this same house for 118k (some are 100k or less in this area but im going off the zillow price of this EXACT house) the mortgage would be nearly half of what i pay in rent. So in this situation I would save quite a lot of money that I could reinvest into other things. Lets not forget about deposits required to rent that pretty much never get given back no matter how spotless you leave your house :( and that rent raises generally every year unless you move and then you need ANOTHER deposit. I'm sure it depends on the area though. Rent is getting insane though because they know most people have no choice to pay it.
@BeatTheBush8 жыл бұрын
I had to make mortgage = rent to make a baseline case. So from here, you can easily know that if rent is 2x then it's a pretty no brainer to buy. A full house for 118k? I have never heard such a thing because I've been surrounded by California prices all my life. To me that a literal steal. =D Good point also about the ever increasing rent and deposit prices, that makes the choice to buy even easier. In fact, it makes is so that as long as you can afford more, you should buy them and rent them out.
@UchihaSumairu8 жыл бұрын
BeatTheBush Yeah I lived in Cali as well and it was insane!! There are actually 3beds for much less than that like 80kish but they had damage or bad paint jobs. Florida is usually expensive but I live 30 minutes from a big city instead of in the city itself :) That and the recent hurricane helped. Its a great place if you want to invest in property as you buy right after a hurricane during the winter, then sell 3-5 years later when your property value has doubled :)
@BeatTheBush8 жыл бұрын
Curious Wars Goes to show how crazy the market is in CA. Perhaps one could buy hurricane insurance in the area you are talking about or if it happens again within that time frame it might be a huge risk. With the recent whether the last few years, it appears to happen more and more frequent.
@UchihaSumairu8 жыл бұрын
BeatTheBush I think you legally have to have homeowners insurance here that covers hurricane and natural disaster. most places require flood insurance as well here. Though i'm not sure if that's just the mortgage company themselves or the law.
@BeatTheBush8 жыл бұрын
Curious Wars That makes sense now that I think about it. Earthquake insurance is required usually in CA. It is more the lender requiring the insurance to protect their assets.
@badass66568 жыл бұрын
For those of us who are or were dedicated to early retirement. Rents can be in smaller units than purchasing so I can rent a room but cannot buy a room in a shared house. I did note the comment about rents increasing while mortgages do not. So if you have a very stable job and are not likely to move often and inflation continues to be endemic buying would be an advantage. It is unlikely that house price appreciation will be at the same pace in the next 50 years compared to the last 50 years.
@BeatTheBush8 жыл бұрын
I don't think I can predict the next 3 years let alone the next 50. Surely, the people 50 years ago did not think their home price would increase so much after accounting for inflation. Renting is more mobile yes. But in short, if you buy at the right time, it can represent a huge leveraged benefit.
@badass66568 жыл бұрын
What caused the rapid increase in house prices was an expansion of house prices to wages. I mentioned this in a previous post using London as an example. This price expansion is unlikely to continue but not impossible. I agree with the leverage argument. 50 years is actually easier to predict than 3.
@BeatTheBush8 жыл бұрын
Increase in house prices likely has many causes and I probably cannot name all of them. But perhaps location, lower interest rates, job market, housing demand, supply or rentals, supply of houses. I'm actually thinking 50 years is harder to predict. Maybe then, people will be living in pods?
@badass66568 жыл бұрын
House price inflation = Inflation + economic growth + changes in the affordability index The longer the forecast period the more inflation and growth are the determinants. BTW same rule apply to forecasting stock market performance but a part of the index may be international and add the starting yield. You are describing what may cause the affordability index to change. Low interest rates. Obviously cannot fall below 0%. Job market. demand cannot expand beyond the affordability of the salaries of those jobs. Housing supply and rents. Cannot expand beyond a certain level of affordability. Perhaps we are not there yet but what is clear is that affordability is less than it was 50 years ago. What would happen if the affordability index starts contracting??
@BeatTheBush8 жыл бұрын
Silicon Valley area has a huge issue with affordability. The salaries are immense but the housing prices are huge too. Then cash rich companies decide to pay more and make the housing even more expensive. For the US at least, the interest rates are targeted to rise very slowly over the next few years. I'm not sure if the Fed can do this but they are trying to without damaging growth. But as interest rates rise, it becomes even less affordable which may put pressure on prices. Hot market areas like Vancouver, San Francisco, are sorta bubbly and no one can really predict how far it can go. One thing is for sure though, why should one buy when it 'seems' bubbly as that is pretty dangerous.
@jessicac63097 жыл бұрын
Ah I wish this was applicable in other countries! In Australia, housing is terribly expensive. You'd be lucky to find a house (not a unit or an apartment) for under $500k within the metropolitan area.
@BeatTheBush7 жыл бұрын
In CA, it's just as expensive as Australia. The amount I quoted is really for the average across the US.
@zachsmith98417 жыл бұрын
could you do an updated version where you compare renting an apartment vs renting a house vs buying a house?
@prettybullet46465 жыл бұрын
I have always been a home owner, never rented. My first home was deeded to me by Mother. Years later I sold it and bought the home I presently live in and as of 2015 I own it free and clear. Of course home repairs are an expensive pain in the rear but once the repair is made at least I'm not having to face monthly rent and house payments on top of the cost of home repairs. And since I live in Arkansas property taxes as compared to other parts of the Country are actually cheap. Another benefit of home ownership is that I can borrow against my property if needed.
@gilltan42806 жыл бұрын
in the bay area, it's very hard to have the rent your tenants pay, cover the mortgage of the house, since housing prices are so inflated
@BeatTheBush6 жыл бұрын
Specially right now where housing prices are... I don't even have a word for it. Astronomical? Bat s* crazy? W!&*#$?
@ruthmartinez61058 жыл бұрын
Hi, love your videos. I'm so blessed to have found you. you have lots of gifts to give to society. just in one morning that I found your videos when listening to my God's sons in the morning , your video showed up! I was very happy because you"re teaching what colleges are missing. I'm a mom and I want to teach myself savings & investment so that I can accomplish my dreams and teach same to my children & grandchildren. God pays you with infinite blessings and grant you all the desires of your heart because your heart is good and want to help people. Thank you so much !
@BeatTheBush8 жыл бұрын
Yay! Thanks for finding my channel! What a nice comment you left, you've made my day! =D =D =D
@pschuyler8 жыл бұрын
What about 7-10% Transaction Costs (Closing on buying, sellers commission, sellers closing costs when you sell), Maintenance on the primary residence, Insurance is usually more expensive than renters insurance, and you have tied up 20% of capital into a liability that is not making any money. I like the idea of buying a house when your investments make enough cash flow to pay for property outright, and enough passive income to pay for the expense, then its truly a covered liability.
@BeatTheBush8 жыл бұрын
Very true. The transaction costs can be significant. Selling is a major hurdle though and this renting vs. buying thing can only be finally calculated if you ever sell. This is why I put the 20% down as a reduction in what you would pay in rent. You can subtract on rent or add it as a cost to the home side.
@danielprovost17 жыл бұрын
how big of a Down would you put down on a $240,000 home if you had 120k would you put all of it or hold some back
@BeatTheBush7 жыл бұрын
It depends on how skilled you are at investing. Look at your track record and see your average return per year. If you beat the interest they charge then pay the 20% down and keep the rest in investments. If you do not beat it, then do 20% and keep some 1-2 year emergency fund and the rest is 'possible' pay off fund. When you have enough to pay it all off in full, you just do it. Otherwise keep it liquid for possible opportunities like real estate investing, business ventures, many possibilities.
@ZombieWeiss7 жыл бұрын
waiting for a market drop in Melbourne, Australia!
@yvs09116 жыл бұрын
ZombieWeiss it will never happen
@EOYaya5 жыл бұрын
ZombieWeiss how's the wait going?
@UmTheMuse7 жыл бұрын
A lot of people have done similar analysis work, but it's good to go over it again. In this particular video, one thing really struck me: that graph makes it abundantly clear "owning" a home involves a lot of leverage (if you assume 20% down payment like BeatTheBush does here, it's a 4:1). I don't know if it's possible to leverage that much in the stock market continuously for that long, but shouldn't we account for that level of risk? Also, another concern is liquidity. The value of your home is mostly theoretical until you sell. You cannot (normally) use that gain anywhere else. In fact, it's a lot like BeatTheBush's analysis on peer-to-peer lending. The mortgage company takes its first bite when you first invest and then charges you each month (actually worse, because you pay them first before you get anything back), you're the one taking on the lion's share of the risk, and it's hard/expensive to get in and out of the investment. All that said, I still don't know if renting is better or not. The mortgage is a collateralized loan; you guarantee that you're going to pay each month or risk losing your home. Also, as others have pointed out, renting tends to be more expensive than your mortgage. Then there are non-financial and ancillary gains to consider. Pride of ownership, customization of your home (including things like solar panels, upgrading energy inefficient heaters, and so on), and probably location differences.
@BeatTheBush7 жыл бұрын
Great summary! You can leverage more for bonds, less for stocks. I think it's 2x for stocks? Saying the gains is mostly theoretical is too far I think... I mean, when you do sell it, you need to also move to a lower cost of living area to realize the gains. But the gains is very real, IF you sell it.
@kalikutie19858 жыл бұрын
The 8% ROI is really high. Maybe it's normal for someone who really knows the market, but i think it's more like 4% for the avg. investor. Also, when you buy a home, the tax advantage will vary depending on your income. I have a friend who bought a home and barely saw the difference in her taxes. I recently bought a home and saw a HUGE difference...like I should have done it MUCH sooner!! My coworkers (in a similar salary range) who do not own a home had to pay taxes and I did not.
@BeatTheBush8 жыл бұрын
8% is actually average ROI if you just plop it in an index fund on average but word on the street its going to average a bit less the coming years. Hmmm, I'm not too sure about looking at the final outcome of your taxes to see how much tax advantage it has. One thing is for sure though, you are still net negative because you spent money on paying the interest portion of the mortgage. When you say they paid taxes and you did not, it's hard to say what happened. Was the number of exemptions the same? Where there other factors in the income tax? Hard to judge based on if you get a tax return or not.
@mwan6508 жыл бұрын
I wish the property tax of 1% on a $200,000 home was $208, might want to look at that one again. Enjoyed your video. Thanks
@BeatTheBush8 жыл бұрын
$208 per month. So it's really ~$2400 a year. I calculated it by month as everything else is monthly.
@ojbkojbk79497 жыл бұрын
I really like your videos but for this one, I instantly gave up at $200k house....here in Toronto 200k is not even enough for down payments as detached houses are generally over $1 million.....in some areas even condos and townhouses reached a million
@BeatTheBush7 жыл бұрын
Aww don't do that. I use that as a baseline and you can easily do multiples of this. So if you want 1 million, multiply everything by 5.
@MicahBuzanANIMATION7 жыл бұрын
Been living in my parents basement, paying rent for cheap while saving up money to own a home. If you don't mind America's social stigma with living with relatives, and can have a civil relationship with your family, then it makes the most sense. Being a pragmatist trumps being cool in the long run :)
@BeatTheBush7 жыл бұрын
It really does give you a huge leg up in saving for the down payment.
@elliottmiller32827 жыл бұрын
Couple of things. Historically the stock market is something like 10 - 11%. The 7% number often quoted is after inflation. However, inflation also effects housingr prices. A lot of the calculations I have done suggest getting a 15 year mortgage over a 30 year one. The difference being that 30 year mortgages have a lot more interest in them. Like 70% vs 30%. I also think we should factor in some behavioral economics in here. When you buy a house and have a 30 year mortage and expect a lot of debt. You buy more of a house. This is more interest that goes to the banks each year. But renting low and then saving up for a big down payment, or even an entire house, means people are more likely to get something reasonable.
@BeatTheBush7 жыл бұрын
Depending on your area, saving for the entire house might be impossible. You could move to a low cost area but that's a different story.
@elliottmiller32827 жыл бұрын
nothing is impossible if you are strong willed enough, and willing to make sacrifices. although I do agree that many areas are very difficult. It should be said, however, that if you are in an area with high housing costs then it is on you to have a job that pays you enough
@susank.49457 жыл бұрын
I have never bought a house, nor wanted to as I like to move around and my job affords me to be able to live anywhere. However, my husband is in the military and has to move and there are no rentals where he has to go (at least none that allow pets and we must bring our cat). He also feels he needs to own something at his age. Whatever. Should we consider buying a smaller place on the water and/or near a touristy area or live in the countryside away from all of that and get a larger house? I would feel more comfortable in the former area as the latter kinda scares me.
@BeatTheBush7 жыл бұрын
Hmmm, I don't think I can decide for you which to get as only you would know. You have to weight which is cheaper and which is more convenient. I would go with smaller cheaper so you have less to clean and just try to be more efficient in space usage. If people in Japan can live in a 10 sq meter apartment then there's something to be learned there.
@donaldedwards18017 жыл бұрын
You and your husband could get a Va loan and find a 2,3,4 duplex
@muhammadiqbal-dx1hu7 жыл бұрын
Good content here, I am a 21 years old living in Indonesia. I want to learn more about spending money because I recently got a job. I think in developing country house price always increasing every year. Demand is very high especially in big city, I just never calculated between rent and buying house. This is very good for me to consider for future. Thanks a lot man
@BeatTheBush7 жыл бұрын
You're welcome! =D
@lawrencechrysler63728 жыл бұрын
I'm building my credit so I want to rent for a year..then look at buying my first place..thx for the info!!
@BeatTheBush8 жыл бұрын
If you have the down payment already, it might come down to if you want to pull the trigger now and maybe refinance later when your credit improves. But then that in itself has various risks.
@donaldcoles7607 жыл бұрын
advantage to lease is being able to be more mobile for better pay or location, I'm happy to lease beside the water/ocean, good safe fun area, no crime, its a lifestyle choice. I choose other investments besides property. I made 30k just buying and selling classic cars in a year..I bought old classic, wash them and spend a little on things and sell them on ..my best one was a car I got for $2500 from outback Australia, I trailered it home, washed it and sold it for $8500. another..a vw 69 beetle, I got it for $1000 , fixed a oil leak ($200) and sold for $3750..it keeps life interesting..I do this on the side as work a job with 100kpa wage..moving to this job payyed double , if I bought a home in a area that was to far away I wouldn't get the better job and my fuel bills were $100+ per week and 10hrs travel time. time is money too!
@socialmenteinconveniente7 жыл бұрын
Own what you can rent, rent where you live. Buying a house for living is like buying all the food you will ever eat for the rest of your life. The higher cost of rent where you live is the price of mobility (leave when you want or need) and not to have to do any maintenance nor pay taxes.
@LenCommu7 жыл бұрын
If you rent for 30 years you have nothing, if you pay off a loan for 30 years you have a house. In what universe would renting be a better option? You might as well flush your money in the toilet if you rent something.
@BeatTheBush7 жыл бұрын
If you rent for 30 years and if the rent is less than the equivalent living space you would have built up a large chunk of cash. This depends on the market you are in of course. Some areas do have rent cheaper than buying but it's rare so I do think buying is better than renting in most cases. It's also better to rent if you can properly anticipate a downturn say right before 2008.
@LenCommu7 жыл бұрын
So tell me, what does investing mean to you? I see many people using that word, but what does that mean? Invest in stock? Another thing is that I live in Belgium. Renting a place and paying off a mortgage cost pretty much the same. So that's probably why I couldn't understand why people would rent a place. Luckily BeatTheBush gave me a good explanation about the how and why. :)
@windingpath7 жыл бұрын
Good analysis. If you take inflation into account , which only affects rent, and considering in long term house will always appreciate, buying is almost a no-brainer. The key is to buy property you can truly afford, even in a down market.
@BeatTheBush7 жыл бұрын
And possibly buying not right at the peak will save you some grief.
@navdaman44317 жыл бұрын
Hello friend great videos! Btw I'm in the state to continue renting at the moment or buy, what do you recommend as of right now? It seems like home prices are very higher right now though. Any chance they will start coming down? Let me know your thoughts appreciate it.
@eddz997 жыл бұрын
Yup, your are better off buying especially if you have $40k liquid cash on hand; as a matter of fact you are better off buying, (depending where you live), a small condo or townhouse, possibly a short sale or bank owned REO property with that $40k CASH, therefore only worrying about taxes and or association fees, which should not be much; this would give you the opportunity to bank and or invest the extra disposable income you would saving by not committing to a $200K mortgage. One is most likely to save up to $800 -, $1000 monthly,there is you 8% return and you own a condo/townhouse straight out. Remember, the idea is to LIVE BELOW YOUR MEANS.
@LivvieLynn6 жыл бұрын
Always have been taught that investing in your home is a horrible idea. However, comparing renting vs buying is always true. But, the job market is so flexible anymore that mobility remains one of the top factors.
@BeatTheBush6 жыл бұрын
The timing has a lot to do with it and it's hard to predict the future. But for most cases, it is better to buy.
@mellead87276 жыл бұрын
You're awesome my friend!
@BeatTheBush6 жыл бұрын
Thank you!
@mellead87276 жыл бұрын
@@BeatTheBush glad I found your channel! Do you do any counselling on California Purchase Agreements? I am making an offer on a house here and my realtor requires me to sign that Purchase Agreement in order for him to submit it to the seller. If the seller accepts the offer that contract will be legally binding. Let me know if you could charge a fee so you could go over that contract (it is a few pages) before signing it. Thanks in advance!
@BeatTheBush6 жыл бұрын
I do not do counseling at the moment. But then before signing I can assume you want to do all the regular checks like termite, mold, etc.
@mellead87276 жыл бұрын
@@BeatTheBush no problem! Well that's the thing: that contract stipulates that the seller will have to have an inspector chosen by the realtor come in to do a termite inspection (not a mold inspection but termite only). And the realtor wants me to sign this contractual agreement in order to make my offer ...so under the terms of that Purchase Agreement the seller is not required to do the inspection before I sign to make my offer .. When it should be done before I sign anything .
@akaAlias5 жыл бұрын
buying only for cash, even if it means renting and saving for 15-20 years. with a mortgage you are basically giving up your freedom and flexibility. if you cant afford your rent for what ever reason, you can move to a cheaper place. if you cant pay your loan for a certain time, your bank (the real owner) will sell it and you lose all your money you put into. even if you are buying the same property years later for a higher price (in cash), its still worth it, cause you never put your freedom and fortune at risk. correct me if im wrong :)
@DiscoInTheNunnery7 жыл бұрын
The NYT published a neat tool that allows you to play with the assumptions made in videos like this one. Here in Seattle, where a starter home near the city limits goes for about 400-500k, it still makes sense to rent if you can do so for less than 1.5-1.8k a month (granted you invest what would have gone to the principal of your home in something like an index fund) BUT, most importantly, this tool allows you to see which factors affect the rent vs buy decision the most. At least in a market like Seattle, these factors are the investment growth rate (if renting), the home price growth rate (if buying), property tax rate (if buying), and homeowners insurance (if buying). All of these variables are largely outside of your control. This is a strictly financial tool, and doesn't take into account the more intangible benefits of renting or buying, of course. Here's the tool: www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html
@BeatTheBush7 жыл бұрын
Ahhhh and in order for the tool to work correctly, you have to correctly estimate all those input factors. That will be impossible. It's pretty inflated now, that's all I can say.
@Chan-rc8oh7 жыл бұрын
how did you do your monte carlo?? why did you say... 95 percent at a time... can you show us the spreadsheet to check if you have done it properly.... thanks...
@BeatTheBush7 жыл бұрын
It was based on a paper that did the monte carlo. Otherwise I would pull out Matlab, lol.
@xrplazarus48427 жыл бұрын
Yes this is a great video. Also, if you calculate in average inflation it helps as well because you're paying back your debt with inflated money
@BeatTheBush7 жыл бұрын
Waiting for inflation is such a long process though.
@xrplazarus48427 жыл бұрын
Yeah, I agree. It's unlikely we will have long periods of deflation, so some people can ignore it cause likely it will help you and only slightly. For me though, if i'm going to buy a house for the future though and get a 15-30 year note it's definitely worth considering. Especially considering that, although in recent history inflation has been around 2-4%, historically, we've had entire decades with 5-7% average annual inflation. That's average annual inflation too so it compounds every year. At 7% it only takes about 10 years for prices to double and at 5% its about 14.5 years. It's essentially like front-loading a contract. I'm not sure though if inflation estimations are calculated by the lender, but big banks are pretty smart so maybe they are already pricing it into the loan value.
@Stephanie-hv1vn7 жыл бұрын
is it a bad idea to buy if you cant put 20% down but put 10% down? good credit
@BeatTheBush7 жыл бұрын
It's a spectrum here. Think of 20% as a test on yourself to see if you can handle saving so much money. I.e. handle paying a mortgage over the long term.
@Shawk957 жыл бұрын
Couldn't you have used a black marker?
@BeatTheBush7 жыл бұрын
I could not have because it just ran out of ink. I got new ones since then.
@Shawk957 жыл бұрын
OK sir. No big deal.
@lifelist1m3707 жыл бұрын
how about buying a condo?
@BeatTheBush7 жыл бұрын
condos are good too. The prices tend to not appreciate as much as homes though.
@josenieves98977 жыл бұрын
It is kind of strange that you are paying over $2000 a month in rent in the bay area when the numbers you gave in this video, make more sense to go ahead an buy a $200K house. Are you planning to make that desition one day?
@BeatTheBush7 жыл бұрын
Since this video I actually announce that amount is actually mortgage payment. So the decision was made many years ago.
@RC-qb1dz7 жыл бұрын
How would inflation come into play in regard to holding for an extended period of time? Wouldn't inflation work to the benefit of the borrower And against the lender in this case? If so, your 4% APR interest rate would functionally be reduced to depending on the rate of inflation for the given year. Would you take that into consideration when weighing the pros and cons of each living option?
@merhaba11887 жыл бұрын
It depends where you live, I guess. Here in the Netherlands, I would say you should buy instead of renting an apartment. The interest is very low at the moment, rental prices go up every year, depending on the inflation. If I was able to buy a house, I could save 200 or more euros each month and I would have more space. My mortgage would be the same for the next 20 or 30 years depending on the type of mortgage. Rental prices will go up every year, so the difference of 200 euro each month would only get bigger over the long run. And that's money that I can actually use to invest in stocks. Renting is only for people who choose to stay at a place for a short while. People who don't own a house are usually people who are not eligible to get a mortgage to buy one. Everyone needs a roof over their head, so why not buy? Owning something is mostly better than renting or leasing an asset.
@areyouserial7 жыл бұрын
Love your channel! I've seen data showing that - on average - homes have not appreciated when you account for inflation. Considering wages have been stagnant for decades, if homes - on average - had actually appreciatrd that much, wouldn't most people be unable to afford a house by now? Thanks
@BeatTheBush7 жыл бұрын
I think a lot of factors impact home prices including inflation. However, prices went up more than that and it seems to stem from low interest rates. This makes people able to afford more with the same income.
@williamfigueroa23126 жыл бұрын
Hey bro, I am planning to stay in one location for 3 years. With the realtor fees, is it worth it to buy for a 3 year period?
@darkmanx2g6 жыл бұрын
For areas like CA. Inventory is very low. Rent keeps going higher and higher. The tax breaks is nice and owning a home u have more flexibility. When you build equity you can take out money and invest in another unit and rent that out to increase your cash flow.
@BeatTheBush6 жыл бұрын
That's a possibility but the possibility of even owning one is easily slipping away from the increasing house prices.
@mikebreken96987 жыл бұрын
Hey...i have quick question leasing vs buying a car...what's ur option on that...please help...
@BeatTheBush7 жыл бұрын
I have a video on that right here: kzbin.info/www/bejne/momZh3mJlryNe5o
@luxeprivae55687 жыл бұрын
nice video. only thing I would change is the info about investing the 40k and only getting %8-10 that is a really low ROI. Thats only 4k in 12 months..... terrible. There are other ways to get much higher returns with managed risk upfront. before you even put any money into. Is not for everyone tho.
@BeatTheBush7 жыл бұрын
There are indeed ways to get higher returns but at the cost of extra risk. The more risk you take on the more returns. Now, if you are skillful, perhaps you can even get 20% return. If you can do this consistently for 30 years, you would be a billionaire.
@luxeprivae55687 жыл бұрын
Hello BeatTheBush** I have read your comments. I really enjoy these types of conversations. Extra risk is a matter of perception as well as a matter of management. Even 20% is low. I will be more specific. On one particular deal 20% is not bad. On an annual basis it is super low. If your money is making less than that annually it is not working hard for you at all and I would question the investment. In order to get those types off returns one must be prepared to put in some serious work, apply the knowledge gained and learn from mentors.(personally I get info from people doing what I want to do and are successful) Not to mention removing the commonly held false assumptions about money and taxes That knowledge alone is enough to boost ones income. Fact of the matter is most people won't do those things based on fear. That is why one must surround oneself with smart people on their team. In one of your other videos you actually touched upon one of the methods I am talking about regarding streams of income and generating additional capital. **This is for information purposes only, not advice, nor a solicitation additionally the contents of these comments should not be relied upon for financial, legal, investment, business, tax, accounting or any other advice. In no event shall I be liable for any damages, claims, expenses, costs or other losses arising from the use of these comments.
@punkvirusboi7 жыл бұрын
Do you think Bay Area housing prices will decrease anytime in the future?
@BeatTheBush7 жыл бұрын
If there is some large event on the scale of dot com bust or housing crisis then yes it will come down again.
@bsm67766 жыл бұрын
Rent for short term, Buy for long term
@BeatTheBush6 жыл бұрын
There is the timing and which market that matters too.