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Posted on 05/13/2025 6:31:45 AM PDT by where's_the_Outrage?
-snip-
Short of bringing up politics, it seems there's no surer way to start a fight than to take a stance on real estate as an investment.
There are diehard believers on either side of the argument. Many people fervently believe that real estate is not just a good investment, but the best investment an average person can make.
Meanwhile, many others point out that real estate is an illiquid asset that typically requires taking on a massive debt load to acquire — and between inflation and housing markets that can boom or bust at any time, earning a return on that purchase is anything but a sure bet.
As for me? I can see both sides of this debate; there is plenty of anecdotal evidence that will support whichever belief you want to promote. Some people have reached financial independence by acquiring properties and running them as rentals. Other families have fallen into financial ruin, tugged under by underwater mortgages or fixed costs they could no longer afford.
That being said, I do have a definitive stance: Single-family homes that you own and live in yourself and that produce no rental income are more like utilities than investments. This is why I tell my financial planning clients to ignore advice that suggests they consider their home an investment that will one day produce a meaningful return.
Real estate can be an investment; flipping homes can provide a return, and owning rental properties can provide income streams.
However, homes are illiquid and require a lot of money to maintain over time. They can pose higher risks than other investments, like a globally diversified stock market portfolio. And a fixer-upper that you flip, or a home you rent out to tenants, is not the same as a single-family home
(Excerpt) Read more at msn.com ...
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I plan to sell my home for $400K+ in several years moving into another home I have. I'm either going to enjoy spending it or leave it as inheritance, I don't need it for retirement.
Rent will forever increase, but your mortgage will not and you’ll pay the same property taxes in both cases.
Well it’s a hell of a lot better than paying someone to live on their property that’s for sure.
The house across the street from me recently rented for 3 times what my mortgage is.
My home will be paid off next year which means I’ll be keeping an extra $1,400 a month in my pocket.
Dunno, man, I bought my house for $99k 12 years ago, it’s almost paid, and it’s worth $400k now.
This IS Business Insider, after all, and they are all in on the “You will have nothing and you will love it” approach.
They are globalists and WEF through and through.
Look at it this way.....
In the long run, are you better off renting or buying?
Answer: Buying.
They are wholly anti-property. It is actually pretty funny that they call themselves “Business Insider”.
Tell that to Donald Trump and every wealthy person out there with a real estate portfolio!
I would agree that multi-million dollar mansions are a huge risk as an investment. The pool of buyers is very limited, so millions can be lost when one needs to sell one of those.
We sold the house we raised our family in last summer, and it gave me the opportunity to compare the purely financial counter-factual question of “would I have been better off in financial terms renting, vs owning this house all these years”.
We saw a substantial capital gain, some of which was subject to federal taxation, had some sales expenses, which yielded the base “ownership” rate of return.
The counter-factual was a little harder, but I had some data on rental rates, and hard data on portfolio returns in the 401K. If one assumes that you had the discipline to put all of the “excess” income into the same portfolio mix as everything else in the 401K, it turned out, for us, that we would defiantly have had a better financial return by renting.
But that ignores the quality of life issues that come along with that more expensive mortgage. As the children grew older, we updated the back yard to better suit our summertime activities, we had the kitchen set up exactly the way we wanted it, added a mother-in-law unit when it was time to take care of an elderly family member etc etc etc.
There’s more to life than the amount of cash you have at the end.
So, this article isn’t wrong, per se, but it really does leave out a big part of the decision making process when it comes to how people decide where they’re going to live and raise a family.
Thanks.
I bought my first house in 1982 for $38,500.
When I sold it in 1990 I was lucky to get $29,000 for it. The housing market dropped significantly due to large manufacturing plants closing.
That said, every other home I’ve purchased has increased in value since then. And I did live in the house so the loss was similar to what rent would have been.
I am a number cruncher—but I would tell anyone that quality of life issues are much more important than numbers.
You need to decide what your “quality of life” priorities are—and make decisions based on those.
We bought our current place in 2010. It’s paid off and tripled in value. My Grandad told me long ago “They make all kinds of stuff, but they make ain’t making more land, son.”
>That said, every other home I’ve purchased has increased in value since then. And I did live in the house so the loss was similar to what rent would have been.
My dad bought a house in Huntington Beach for 230k in 1995, sold it for 650k in 2005, and now it’s worth 1.3 mil.
The Cali market is going to crash soon, though.
It used to be, your first home was a “fixer upper”.
Nowadays a “fixer upper” will be in a crime-ridden neighborhood, so it’s simply not worth it.
Rent will forever increase, but your mortgage will not and you’ll pay the same property taxes in both cases.
~~~
Right.
Sure, homeownership can have additional costs and monetary risks when compared to ‘other investments’, and even when compared to renting. However, once you put it into the context of renting versus owning, then all the money (despite the lack of risks) spent is lost. There is no equity gained. So the risk argument falls on it’s face, because you are trading lower risk for zero reward.
If you own your home you have the peace of mind that you can live in your home for as long as you desire.
On the other hand, if you rent your home you are at the mercy of the landlord as to how long you can live in your rented home.
Rent it out. I was in the same position as you are. Some 8 years ago I moved from our fully paid for home in the city out to a log cabin in the country. Had I sold then, I would not have realized a $75,000 increase in value.
I turned over the management to a property leasing company who collects 10% of the rent and they take care of everything else including qualifying the tennants, collecting the rent and providing upkeep and repairs as necessary. Taxes, insurance and maintenance eat up a little more than four months of the income I get, but who's complaining? And the property continues to appreciate in value.
Rent it out.
This guy might have a point if you rent a bare-bones apartment, then aggressively invest the rest in a quality stock index mutual fund.
However, that takes a discipline many renters just do not have. Plus there’s the quality of life thing. Sitting on your own back porch does have a certain charm.
That doesn’t mean you should not rent. Some apartments are located in great areas. And there’s no grass to mow. So add up the pluses and minuses for yourself.
It’s all about the land.
When someone purchases a property in Palm Beach, they will tear down the current house and build what they want.
The classic example of what not to do was what Michael Jordan did. He built a huge mansion in an area that wasn’t as desirable from a land perspective, and he wound up selling it at a huge loss.
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