Here are 10 bullet points summarizing the transcript of the RUclips video by InstituteofTrading titled Anton Kreil - Rent to Own - Define Assets & Liabilities Properly: Misunderstanding Assets vs. Liabilities: Many people confuse what constitutes an asset and a liability, often misjudging their financial decisions as a result. Difference Between Debt and Equity: In capital markets, debt and equity have distinct implications. Debt requires scheduled payments, creating liabilities, while equity can sometimes act as an asset by bringing value to a company. Personal vs. Company Debt: Debt in a company is limited liability, affecting only the company and not the individual. However, personal debt exposes an individual directly, risking insolvency if payments are missed. Mortgages as Liabilities: A mortgage is the largest liability most people will take on in their lifetime. Although it helps purchase property, the payments over time can lead to paying much more than the original value. Renting vs. Buying on Mortgage: Wealthy people understand that renting provides freedom, which is an asset. Unlike mortgages, renting offers flexibility without the risk of long-term debt liabilities. Principle of Buying in Cash: Wealthy individuals prefer to buy assets outright with cash to avoid liabilities. Renting until enough savings accumulate to buy outright is considered financially wiser than getting trapped in debt. Mistake of Financing a Lifestyle: Many people finance their lifestyle through borrowing (credit cards, car loans, mortgages) rather than paying upfront in cash, which creates continuous liabilities. The Freedom Asset: The freedom to walk away from renting or any non-debt commitment is viewed as an asset because it provides financial flexibility and avoids the trap of scheduled payments. Infrastructure of Debt in the Western World: The financial infrastructure in the Western world, which promotes borrowing to eventually own assets, primarily benefits those who own the lending systems rather than the borrowers themselves. Building Personal Infrastructure: To achieve financial freedom, the key is to build your own infrastructure by owning assets outright, without accumulating liabilities in the process.
This is so powerful. FREEDOM IS AN ASSET! People have no idea. Now, look how many comments are here? But if this was a Logan Paul Video it would be in the thousands. They dont get it.
You are right, I'm watching this in 2020. People are gladly giving away their freedom's and civil liberties. For a virus, and being manipulated by their governments. Just saying.
I do the same thing, but to remind myself of what life was like in NY (no symbolic masks, people mingling together) and across the nation prior to 2020, and I yearn for society to return to the level of freedom we seem to have relinquished over the past year. Sweden got it right. The rest of us rolled over like sheep for the perception of "safety".
Thats exactly the point and i guess most people dont realize how important freedom is. Especially when its taken away.... Anton is so so straight to the point. @@Ben-zn8pe
Single thing I have been following my whole life is, BUY IN CASH IF I CAN, if not, I DONT BUY IT! Hearing the same from Anton made me more clear on this! FREEDOM IS THE most important ASSET! I am renting an apartment right now working my way towards wealth creation and hopefully will achieve the same in upcoming years. Thank you so much Anton for these advice. This is GOLD! Lot of Blessings to you and your Family from INDIA! God bless you all and keep you safe and healthy! Cheers!
I love the RUclips algorithm. I was trying to think of this video the other day and I couldn’t remember for 30 minutes and now I find it one week later amazing just so grateful for this clip actually because I know so much about freedom and the difference between assets and liabilities is changed my life, but my first home and now in the process of buying my second home and a little bit closer to that financial freedom that he talked about all those years ago
Never understood people who throw tens of thousands into a wedding that lasts a day, when they don't even make enough to pay that much for a car that will last them years
Amazing take on Anton on mortgage and renting. I would also add to that that buying a house requires a large deposit these days of around 40k and that's money that's gone. Now if you know what you are doing, 40k is actually a nice size capital that you can grown within few years and be able to buy property in cash. This being my problem with buying house with mortgage, to return is small compared to initial deposit size.
It wasn't until I became bankrupt and lost my freedom, that I wish I had understood that earlier. You must strive for freedom like your life depends on it, because it does. I had two home mortgages before being made bankrupt by BNZ. Now that I am bankrupt the government keeps my financial history in the public domain for life. They have taken away my freedom forever.
Now more than ever we must strive for freedom like our lives depend on it, because they do. If we don't fight harder to regain the freedom we have lost in the last year, it will be gone forever. I fear that we hit peak freedom in 2019.
If you take on a mortgage, never buy a primary residence. Always buy income producing properties. For example, the mortgage interest rate is 6% buying an investment property return rate that's over 6% then you'll come out ahead.
Wrong. It can still be beneficial to buy a primary residence if the market in which you buy is favourable. Equity and appreciation can still give you superior returns. Granted, income Producing properties is a smart choice but it’s not as simple as one thinks to purchase a property that produces positive cash flow each month whilst not having a tenant(s) who give you grief. Further to that, owning your own home is still something people desire irrespective of whether it is an asset or a liability. There is peace of mind that comes with not being at the mercy of a landlord and working towards having something that belongs to you and eventually your offspring.
This dude spits straight fire... Essentially, you have to drop your pride to turn everything into an asset, especially if you aren't born into wealth. If you chose to bank with a major institution, the first step is having and holding the minimum amount in your Chequing/Savings account (for the entire calendar month) to NOT be charged a monthly "maintenance fee". It's not easy to begin if you're undisciplined with money. Then, after you're clear, move some additional money into a Savings account and collect the interest. Your bank is now paying you every month, even if it's a tiny amount. Abracadabra, you've now turned a liability into an asset.
Anton- if you write a book, I will read the shit out of it. This lesson straight up inspired me to keep renting and then put my reserve cash (which I had been saving for a down-payment) into index funds and blue-chip REITS (I follow the channel even though I don't trade)- definitely a good call.
Considering how indexes have behaved so far, this is not a wise choice. Without active management, you can actually lose money that way. It's better to wait and buy the dip or dollar cost average it.
@@ezprogramming7887dollar cost averaging is just delaying the risk to a later time. There is no proof that this method outperforms buying in one transaction
been about 2 and a half years since I started my personal financial and trading education I found Anton's videos and his videos helped me to understand how important it is to get your money in order first before you can make jack shit, wise dude when it comes to money and markets, hope to learn so much more from you dude!
I stick to this principle. Words can't express how good it feels to have zero liabilities. By adding value to others for in return I get more currency to buy superior products and services. No better feeling in the world.
Some of the most insightful views I've ever heard. Unfortunately most just don't get that liabilities are a poison on ones ability to accrue real assets and net worth. Well done sir!
@@kozmik4848 Yes, use leverage, except within a business structure where the liability is on the company, not you personally (as mentioned in the video)
@@CoachPursuit the liability of owning a house with mortgage can turn into profit when you sell for a higher value and pay off the outstanding debt. Can’t do the same with renting
There is no right or wrong to buying a house or renting. It comes down to individual preferences. However, the majority will tell you they are glad they bought a house over renting.
When I saw one of your videos yesterday I was skeptical at first. There are a lot of "trading gurus" out there. However, what you say here about liabilities is quite a reflected examination, so I just subscribed. Have a great day. Kind regards, Michael
Our mortgage payment is more or less equal to what we were previously paying for rent and equates to about 55% of the value of our home. We could pay the balance in cash but prefer to keep the money invested. This way we have the benefits of the appreciation of the asset while still remaining invested.Our mortgage is a 30 year and we have the option to refinance if the interest decreases and also tax relief on a portion of the loan interest. There is opportunity loss at having some capital locked in the house, but it has worked for us.
It's still a liability. If people move out and you have no one to rent your house then you have to make the payments and then you're paying rent + mortgage. If interest rates on your mortgage rise you have to take the hit. If the housing market crashes and your property value drops in half people aren't going to want to rent it for more, and guess what, you're still going to be paying 2x of what is WAS worth in the long run. Debt isn't good unless you're getting a monthly income from an asset which you incurred debt to buy it from, like a business with real positive cash flow. If you're only just making repayments from renting then that's not counted as income.
Mortgages are actually high risk unless you know what the heck you're doing and understand markets very well but the average Joe doesn't have the financial education for it, the middle class see mortgage as an asset but for most people it ends up being a liability only the smart ones can turn it into an asset, I see life from a trading perspective economically speaking, it's all about learning how to manage risk, so based on my perspective it's actually risky, I prefer to build a solid foundation of multiple streams of income with less risk, build your nest of wealth first then later you won't even need a mortgage you can just buy the property in one shot, that's how I think.
I agree with pretty much everything Anton says except this, unless he is implying you rent a cupboard under somebodies stairs for 15 years for £50 in order to build your asset base. You need somewhere to live, fact. In the UK rent is higher cost than a mortgage, if you rent for 15 years before you buy, you have essentially helped pay off somebody else's mortgage, If you rented a measly 2 bedroom house for 15 years, at £600 a month, that would cost you £108,000. If that money went towards a mortgage id have 60,000 of that to my name, id rather that than nothing. In my opinion, if you have a liability like a mortgage, take on the smallest one possible, at the lowest cost and pay it off asap. Buy a run down house, renovate it, take on a lodger, all things you can do to reduce liability, You need somewhere to live and nowhere is free, but paying your own mortgage off is better than somebody else's. As for 'trap' within 4 weeks i could have a Tenant and switched my mortgage over to a buy to let. I agree with all other points made in the video however.
When you buy a house, you have to pay upfront from your savings. By doing so, you are losing all possibility of making profit from your lost asset by investing and are bound now for ever to pay a monthly sum of money with the only probable return, a house. I think that's what he's getting at. Also a lot of buyers don't understand how much more expensive buying can be. There are annual/monthly fees, housekeeeping, plus a loooot of time.
@@pithikoulis you buy a depreciated asset (house) that's worth more than market value - now you are already in profit. You're not bound forever - you can sell it in the future. You could even own it by taking all your money out once you get it revalued. Essentially recycling your money.. Buy the asset at depreciated value. Live elsewhere ( home with parents) . Renovate cheaply, sell or either let it out. 🙏
@@masudsaeediphysiotherapy8689 You are still a slave to that house by having it maintained. You have to pay attention to the house for repairs from use. Just buy REIT stock with the down payment money for the house and don't have to worry about watching the stock everyday or month. Just collect the Dividends and sell it when it rise by a good amount. and buy back in when it goes down during a downturn or when it drops enough.
@@bruce7244 lol 100.000 cmon man, banks are giving out loans at 1, 2 % interest rates nowadays. Get real. But hey if you prefer paying rent that IS indexed to inflation for the rest of your life as opposed to never paying for housing again after 20 years of monthly mortgage payments, by all means knock yourself out
Big fan of Anton Kreil, agree with almost everything he says on some level. Now what becomes of renting i might agree that it depends highly on where you live if it is in your interest or not, also what plans for the future you have and if you have come to terms with not living forever too. Renting also means, atleast where i live that you will pay someone elses mortgage/loan on the investment property, and their interest + whatever the market is willing to give them in profit for it.
Just sold my flat in London and cleared £100K profit. Had a mortgage on it for 3 years. Seems like a good liability to have taken on. But yeah, how are you supposed to save to buy a house cash, when rent is so expensive?
How much was the total interest which you had to pay for the duration of the the mortgage, and did it restrict you from doing anything else in your life? Also you had the mortgage for 3 years, so I assume you still have another 20 or so years left to pay it off. Also are you sure you made £100k profit in 3 years, that is an increase well above inflation, and so I'd say you must have bought the house well under market value in the first place.
You are also talking about one of the most expensive Real Estate markets in the world. If you have the capital or good position getting in then obviously there are exceptions. Consider his assumption a bit broader. 100k is awesome though. Congrats.
Liam Ward lol now that uve sold the house u now hav to buy at a higher price to hav a roof over your head. U will lose money if you dont wait for the market to dip lol
I'm assuming that that's for when you intend on living in the house. How about purchasing a rental property? If I put money on a down payment and find a tenant to pay off my mortgage, I'm eventually left with a fully paid off property that's probably worth more than when I signed the mortgage. How does your view change on that?
@@Harte105 he is not the bank in that situation, if he has to secure a mortgage the bank still owns the home, making it the banks asset. he would just be leveraged, if thats what he wants to do he should have a cash reserve for that property, to cover months of no occupant, months of skipped rent, damages that occur to the property, etc. some people advise against being leveraged on rental properties, other encourage it.
So true renting is paying a little more now and saving for the future. Taking out a mortgage means your are paying less now but paying much more over time. A house is a liability if you don’t fully own it.
This man is very sane and realistic about making long-term financial decisions. I couldn't agree more with him on investing money in assets, and then relying on these assets to take care of you when you get older. By the way, if you can afford buying a piece of land, no matter how small that piece of land is, just buy it, build a house on it while you can because you might need it.
I love this part so much that when I shared this to my girlfriend, she was super excited by the idea and how she's never thought about it before. Thanks to Anton, as a couple, we plan to rent rather than buying a condo now, which would save up a load of money!
Showed this to my mother who will be 60 when her house is paid for. Her opinion: "I would've never been able to own this house when I had only rented befor. Rents have exceeded what I'm monthly paying for mortgage." She doesn't understand the message. I'm a believer in renting a home while you are building assets, but it's quite impossible to make the concept 'click' in other people's head 😕
Renting sometimes costs as much as the mortgage and often even more. And you're not locked for life with your mortgage, no need to afraid that much. You can sell freely as long as prices went up and that's what prices usually do in the long run. Short sale is less fun of course but not the end of the world either, if it happened because of the job loss, in 2 years you could get a mortgage again. Plus, technically you are the owner of the asset and you can even rent it out if you need. Credit cards have lot of perks, cashback, fraud protection and ability to get some additional interest from savings while you're in a grace period are few to mention. With smart approach you only gain more money from your credit card. Cars - more complex thing. Newer cars might have better fuel economy, better safety (why saving on safety idk, you've only got one life). Require less repairs. Unless you are a mechanic yourself, getting a car loan for a new car might be more cost-effective than buying some older car for less money. And another point is inflation. Money now - more expensive than money in future. Income gets adjusted to the inflation, not as quick as we want but still, if you took 100k mortgage 15 years ago this seems funny now. Of course, if you're a wolf from the wall street like Anton, you would think completely differently. Like why borrow if you have enough cash now. But that can't apply to everyone.
I think the comments here discussing rent v buy of housing are missing Anton's point. He's talking from the perspective of people who are interested in wealth creation. Almost everyone who follows the IoT has to believe themselves to be a reasonably high investment compounder. Otherwise, why listen to an investment expert? His point is that whilst anyone has a mortgage they can't ever invest in other assets that produce dividends. When you have paid off say 400K of a 500K loan over 15-20 years, how much income does the 400K that's paid generate? None. There is still interest bearing debt that demands you work and pay off and no income other than arguably the imputed rent saved can be realised. Your personal revenue stream is the same it always was - your salary. If, however 400K had been invested, then it could compound and pay dividends that improve your income. It really comes down to your rate of return, if you're able to make 10-15% pa then reinvest for 10 years and you'll be earning a significant income. This is turn can be reinvested into hopefully ever more productive companies. Somewhere along the line if you have ambitions of wealth, there has to be something done to save money so that investments can be started. One option for this is to rent a cheap place and then invest any surplus to generate income. For most citizens however, a mortgage is a good thing as it means they end up owning a home because, to be blunt, they'll never make decent money investing. The best outcome for them is to end up in a fully paid for house which is hopefully worth way more than their purchase price plus all the interest paid over the life of the loan. Then with the mortgage payments gone, they can start to invest. Not an easy call, but if you have ambitions to make big money then you want capital invested and not servicing debt. If you want to own a house outright then get a mortgage and pay it off over 25 years so you can have certainty that you'll have a place to live
I'm guessing this advice varies country by country. Of course it's never smart to use credit for buying everyday stuff or a new iphone or a fancy car etc. But in my case my mortgage interest rate is 1% (i.e lower than inflation) and if I would rent the same property that I have now bought I pay about 25% more every month to the owner than I pay now for bank (and in the end I own it outright, instead of just paying the owner and getting nothing permanent back). In this scenario I see no reason not to take a mortgage to buy a property (or even pay it off early, as I can get 10x higher return if I just invest this money compared to paying off my 1% mortgage). Again, I'm guessing it varies a lot by country and I'm sure he's right for UK market.
what about leasing a car? so you can still be within warranty and not get stuck with an old depreciated beater once youre out of the leasing period and choosing to purchase.
Exactly my strategy, I bought a house when it was easy to do so, still a mortgage but I have matching investments, which bring more than the 1% interest on the mortgage. The hamster wheel he is referring to is people overly indebted and not enjoying life because of too big apartments, cars etc. Also limits your risk taking in your career or business because you must pay those debts…
Of course I can see when much risk is involved it is better to pay cash because then you don't get in the trap to be stuck in a mortgage. But there are other cases where company ceos can save taxes by paying a mortgage so this is a point where a liability becomes an asset because it lets them reinvest while saving taxes and at the same time he can use the new building/machine for production or service already and hopefully make it pay.
You left out an important aspect of how to make the liability of a mortgage become an asset: you mortgage a property then rent it out. The tenants then pay the debt in exchange for the landlord taking on the exposure and risk. That's how you build an asset. Also the richest people in the world are the ones who have the most debt. The goal is to keep as much money liquid as possible to be ready to invest. You can always sell a house to recoup losses, you'll never recoup money put into rent. If renting was the ideal solution then landlords wouldn't be a thing.
Where the rent to own gets you is the down payment. But that 5k downpayment could be worth it if you're free to move somewhere else to get a 20-30k raise and you get the benefit of a house.
The only thing that matters is the downpayment. If you can generate high returns outside of your home, then renting is better. There are lifestyle advantages to owning your own home though. Also, buying a house gives you access to cheap debt. This is great if you make a good purchase.
In addition to everything that everyone else said, if you live in a metropolitan area with high rent like the Bay Area, New York, LA in the States, or London, Beijing, and more, the down payment on a house is astronomical. And even if you have whatever downpayment is technically sufficient, whether it's 10%, 20% or 25%, it's highly likely that some wealthy person will come in with a bid much much higher than the asking price (and there are plenty of those rich folks in these areas), so that down payment you saved up is a moot point.
What is in my pocket is money.Electronic money issued by central banks and exchanged between banks is money.But when public borrows from commercial banks,credit is issued by these banks.Mostly this credit circulates in the economy while payments for goods and services are done.We all directly or indirectly pay intrest rate for this credit to the commercial banks.For them this credit is an asset ,but for us a liability.No escape from it under current monetary system.
This would make sense if interest rates weren't so low and property so expensive and LTV% requirements low enough that most people can make loads of money from increasing property prices. Where else can they leverage themselves 20/1? Apart from the costs etc you can make enough and sell up and then rent with the profits. Or pay down mortgage and finally have that security. I mean yes it's a risk but you're 100% not going to win by renting for about the same as mortgage and not being able to save to buy a house outright. And if you save to buy a house outright in a rising market you're getting screwed
I think he is mainly referring to a big £400k+ morgage that drowns you in interest over time. But I'm sure that if you buy a small flat that can be paid off in 10 years that's good. You don't waste money on a landlord and build equity on a small asset that doesn't limit much of your freedom.
There is a million videos on youtube that breaks down all the varibles of paying a mortgage and renting long term. If you just care to look it's very simple, it's not always a "no brainer" to own a home with a mortgage. Sometimes you actually come up on top with more money to retire after 30 years if you rented. All you gotta do is do the math. People tell you owning is ALWAYS better. Only true 50% of the time.
Anybody telling you something is "always" better in anything financial is talking out of their ass. It's what worked for them and maybe the people around them, so they believe it will work for anybody, in any place, in any scenario.
Really depends. If you own a property, you can use it to leverage cash out to do other investment. In addition to that, assuming you bought a decent property, it’s price will go up with inflation. So it really depends…
if you add the additional expenses associated with own ownership it's not insurance rates fluctuations in interest rates this could be different depending on your location of course
Of course rents are more expensive than mortgage payments. What do you think buy to let mortgage is? What landlord would take out take out a mortgage and charge less than their costs? Rents will always be higher than the net costs of owning a house. If they weren't, rents would rise until they are. That's how the free market works.
The page is littered with comments that nominal rent is higher than nominal mortgage payments month by month, but Anton did say get roommates if needed, to lower the monthly payment. Nothing is perfect. I personally can't do roommates, i hate the notion of not having my space all to myself, or some fucker thinking it's "no big deal" to help himself to my last piece of "x". So, i would never do the roommate thing. The point is you must find a way--plain and simple--. That's just how it is. Great video!
How can someone paying rent in London save money when rents are so ridiculously expensive? This situation mostly applies to wealthy people. In many cases, paying a mortgage in London can actually be cheaper than renting, and it brings the added benefit of having your own space-a home-without being pressured by constant rent hikes or needing your landlord's permission for every little change. For the middle class living in London, homeownership often feels like a distant dream, forcing many to share spaces, which can be draining, unless you're willing to spend half your salary on a cramped, subpar place. Renting doesn’t necessarily mean you can save more money. The poor and middle class don’t have the freedom of choice that wealthy people enjoy. We often find ourselves just striving to survive, prioritizing peace and stability.
He's making the wrong point on debt vs equity. Issuing equity on the whole costs more than issuing debt because there are no assurance made to stockholders when they buy. The increased risk of buying equity means the equity holders will want a greater return on investment. A stockholder get the "residual" from net income after all creditors are paid and after the company decides how much they want to keep as retained earnings. A debt holder, on the other hand, takes a much smaller risk because they have interest that they are promised to be paid. Most bonds also come with covenants both negative and positive that decreases risks even more by limiting what the management of the company may do, or demanding the management to do particular things. Debt is also often collateralized, securing an even greater probability of capital recovery. For these reasons, debt tends to be cheaper.
That's why I bought my flat with full down-payment. But was made fun of by people saying "never heard of anyone buying real estate for cash... why didn't you get a loan?"
I was worth it to me to buy. I don't get rental increases, with refinancing I get payment reductions, I get tax deductions, I don't have a landlord telling me I can't live here anymore. Fuck that. Oh yeah, equity appreciation, let's not forget that.
"When you rent you have freedom". Well, that's only if you landlord doesn't ask you to move away. You also don't have the freedom to make improvements/changes to the place where you live.
It’s a long term plan with a mortgage. Rents go up. Fixed Mortgage payment stays the same. At the end of 20 or 30 years, your property should have increased in value. Asset value increases as the liability decreases, the net of which would be a gain if sold. Interest is a write off. I can’t wrap my head around how renting is a better solution when rent increases so much over time, you don’t build any equity and you don’t get the write off. I can do what I want in my home. Decorate etc. I can rent it out. I don’t answer to a landlord. That is freedom for me. But I am in family land. I could see how mortgages and home ownership could be an obstacle for someone who needs to move on a dime. Love the talks!
Being able to return to your home from a long stressful work day has an incomparable value. London rents are ridiculous high and you are often bullied every year by payment more and more every year.
i dont understand.. he says it's better to rent for 10 years then buy a home in cash.. So in 10 years I can accumulate 1,000,000 EUR ? meaning every year I would make 100,000 EUR and set it aside.. That's the price of a decent home in my country.
If you invested all your spare cash and paid rent would the value of your investment ( for a pension ) be around the same as somebody selling a house after 25 yrs, based on the similar returns on investments and mortgage payments
But would it not also be better to leverage debt with a bank to buy a property on a mortgage, rent the property out (in some cases for more than the mortgage payments), while you continue to work and earn money and also have that minor stream of income? Surely missing out on that opportunity to build up cash, while renting your own living space (for a considerable sum of money) is only worth doing if you have solid liquid investments in other areas that can yield higher returns? I suppose house prices aren't as solid as people think and index funds don't do so well (particularly at this period in time where everything has fallen). I understand what he is saying but maybe I don't know how to weight it against the idea I have been fed by people who build property empires to rent out, who go by a money now is better than money later principle where having the room to take on more investments, while being riskier, can have greater rewards.
I would somewhat disagree that a mortgaged property is a liability in comparison to renting. Obviously from a balance sheet perspective your asset position is the market value of the property less the outstanding balance of your mortgage. You should have a very clear idea in your mind before you take on a mortgage how you are going to make the payments, not just over the next few months but over the term of the loan and how much it will cost you. Just paying a few £hundred extra a month will likely save you tens of thousands over the life of a mortgage. Bear in mind that most residential leases will have a minimum term so you will pay if you need to break the lease before the contractual end date. On the other hand if you own a desirable property you can rent it out in the long, medium or short term possibly even covering your scheduled mortgage payments with some positive cashflow. The real key to investing in real estate is understanding potential for capital growth which is how you create equity beyond simply repaying debt. And the more equity you have the more you can borrow and buy more cash flow generating assets. If you have knowledge and skills to add value to real estate, even better.
There is a show in the Americas that caters to high end realestate market and very rarely does anyone own their home outright. They are constantly moving and re-buying in other markets or upgrading to a home where only one person lives in. It's insane, 1 person living in a 20k sqft home. They are so mad they haven't made 20% or more on their home. Even in New York selling an entire floor of a condo or a BrownStone town home with 5 floors of living. I guess it's a way to keep up with the jones's and brag you just sold and bought a home in such and such building only to move 4 years later to another section of New York.
Yes but if the real estate market crashes you will get paid less because rent can drop while still owning the same money to the bank, it's all about supply and demand, you can invest that money in different ways, most people choose the mortgage route because that's what the middle class thinks is best.
@@kevinchavarria6792 And what do you think would be better? How high class thinks? What do you think. I am on the edge do to almost the same thing with renting etc....whats the better way? Thanks in advance!
if you have that deal with ur landlord then yeah. just make sure to write a new rental agreement before u move out. if ur making money through non traditional methods like businesses or stocks. one month ur in Dubai, next you want to be in Sydney. No problem
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Here are 10 bullet points summarizing the transcript of the RUclips video by InstituteofTrading titled Anton Kreil - Rent to Own - Define Assets & Liabilities Properly:
Misunderstanding Assets vs. Liabilities: Many people confuse what constitutes an asset and a liability, often misjudging their financial decisions as a result.
Difference Between Debt and Equity: In capital markets, debt and equity have distinct implications. Debt requires scheduled payments, creating liabilities, while equity can sometimes act as an asset by bringing value to a company.
Personal vs. Company Debt: Debt in a company is limited liability, affecting only the company and not the individual. However, personal debt exposes an individual directly, risking insolvency if payments are missed.
Mortgages as Liabilities: A mortgage is the largest liability most people will take on in their lifetime. Although it helps purchase property, the payments over time can lead to paying much more than the original value.
Renting vs. Buying on Mortgage: Wealthy people understand that renting provides freedom, which is an asset. Unlike mortgages, renting offers flexibility without the risk of long-term debt liabilities.
Principle of Buying in Cash: Wealthy individuals prefer to buy assets outright with cash to avoid liabilities. Renting until enough savings accumulate to buy outright is considered financially wiser than getting trapped in debt.
Mistake of Financing a Lifestyle: Many people finance their lifestyle through borrowing (credit cards, car loans, mortgages) rather than paying upfront in cash, which creates continuous liabilities.
The Freedom Asset: The freedom to walk away from renting or any non-debt commitment is viewed as an asset because it provides financial flexibility and avoids the trap of scheduled payments.
Infrastructure of Debt in the Western World: The financial infrastructure in the Western world, which promotes borrowing to eventually own assets, primarily benefits those who own the lending systems rather than the borrowers themselves.
Building Personal Infrastructure: To achieve financial freedom, the key is to build your own infrastructure by owning assets outright, without accumulating liabilities in the process.
My man, No financial advisor will tell you this. Well done Sir
This is so powerful. FREEDOM IS AN ASSET! People have no idea. Now, look how many comments are here? But if this was a Logan Paul Video it would be in the thousands. They dont get it.
That's why the elite rules over the masses
You are right, I'm watching this in 2020. People are gladly giving away their freedom's and civil liberties. For a virus, and being manipulated by their governments. Just saying.
Thefunksoulbro crazy..
@Nig BKD it's better to be alone than in a bad company
This is me in 2023 learning.
I keep rewatching this over and over again to remind myself of this. Incredibly powerful video.
I do the same thing, but to remind myself of what life was like in NY (no symbolic masks, people mingling together) and across the nation prior to 2020, and I yearn for society to return to the level of freedom we seem to have relinquished over the past year. Sweden got it right. The rest of us rolled over like sheep for the perception of "safety".
Freedom is an asset ❤
@@KayFabe87Yeah. That whole thing was fun. Right? 😬 To think. Some want to bring all of that back.
Thats exactly the point and i guess most people dont realize how important freedom is. Especially when its taken away.... Anton is so so straight to the point. @@Ben-zn8pe
Who else would have loved the camera man's job?... The guy is learning so much just by being with him daily...
Freedom is an Asset. Never forget that. Well said Anton 👌. Guess thats what most people dont realize.
Single thing I have been following my whole life is, BUY IN CASH IF I CAN, if not, I DONT BUY IT! Hearing the same from Anton made me more clear on this! FREEDOM IS THE most important ASSET! I am renting an apartment right now working my way towards wealth creation and hopefully will achieve the same in upcoming years. Thank you so much Anton for these advice. This is GOLD! Lot of Blessings to you and your Family from INDIA! God bless you all and keep you safe and healthy! Cheers!
Did u achieve it
I love the RUclips algorithm. I was trying to think of this video the other day and I couldn’t remember for 30 minutes and now I find it one week later amazing just so grateful for this clip actually because I know so much about freedom and the difference between assets and liabilities is changed my life, but my first home and now in the process of buying my second home and a little bit closer to that financial freedom that he talked about all those years ago
I'm so grateful for this guy... Freedom is an asset....
Anton - you should do one about young people paying for "the big wedding day" and then the potential future liability of a costly divorce!
Never get married if you do not have the amount of money for putting it aside if you are going to do it. The alternative, don't do it.
Marriage is an asset for a woman and a liability to a man.
if you have it she will take it so whats the point
Never understood people who throw tens of thousands into a wedding that lasts a day, when they don't even make enough to pay that much for a car that will last them years
Having children is for sure the most common / significant liability
morgages are good if you use it to leverage it and make moeny as assets
Amazing take on Anton on mortgage and renting. I would also add to that that buying a house requires a large deposit these days of around 40k and that's money that's gone. Now if you know what you are doing, 40k is actually a nice size capital that you can grown within few years and be able to buy property in cash. This being my problem with buying house with mortgage, to return is small compared to initial deposit size.
It wasn't until I became bankrupt and lost my freedom, that I wish I had understood that earlier. You must strive for freedom like your life depends on it, because it does. I had two home mortgages before being made bankrupt by BNZ. Now that I am bankrupt the government keeps my financial history in the public domain for life. They have taken away my freedom forever.
Now more than ever we must strive for freedom like our lives depend on it, because they do. If we don't fight harder to regain the freedom we have lost in the last year, it will be gone forever. I fear that we hit peak freedom in 2019.
Why didn’t you sell those homes?
Etymology of the word "mortgage": From Od French: "mort gage" = "death pledge".
If you take on a mortgage, never buy a primary residence. Always buy income producing properties. For example, the mortgage interest rate is 6% buying an investment property return rate that's over 6% then you'll come out ahead.
Wrong. It can still be beneficial to buy a primary residence if the market in which you buy is favourable. Equity and appreciation can still give you superior returns. Granted, income
Producing properties is a smart choice but it’s not as simple as one thinks to purchase a property that produces positive cash flow each month whilst not having a tenant(s) who give you grief.
Further to that, owning your own home is still something people desire irrespective of whether it is an asset or a liability. There is peace of mind that comes with not being at the mercy of a landlord and working towards having something that belongs to you and eventually your offspring.
Thank you sir! . Newbie here.! I've been watching a lot of videos about finance and this one so far is the best.
This dude spits straight fire... Essentially, you have to drop your pride to turn everything into an asset, especially if you aren't born into wealth. If you chose to bank with a major institution, the first step is having and holding the minimum amount in your Chequing/Savings account (for the entire calendar month) to NOT be charged a monthly "maintenance fee". It's not easy to begin if you're undisciplined with money. Then, after you're clear, move some additional money into a Savings account and collect the interest. Your bank is now paying you every month, even if it's a tiny amount. Abracadabra, you've now turned a liability into an asset.
Anton- if you write a book, I will read the shit out of it. This lesson straight up inspired me to keep renting and then put my reserve cash (which I had been saving for a down-payment) into index funds and blue-chip REITS (I follow the channel even though I don't trade)- definitely a good call.
Considering how indexes have behaved so far, this is not a wise choice. Without active management, you can actually lose money that way. It's better to wait and buy the dip or dollar cost average it.
@@ezprogramming7887dollar cost averaging is just delaying the risk to a later time. There is no proof that this method outperforms buying in one transaction
Watching this 10 times over and over again. To imprint it in my mind. Thanks for that wisdom Anton! :)
I lost count.
been about 2 and a half years since I started my personal financial and trading education I found Anton's videos and his videos helped me to understand how important it is to get your money in order first before you can make jack shit, wise dude when it comes to money and markets, hope to learn so much more from you dude!
How is the education progressing?
this video changed my mindset im going to become wealthy
I love it how people in my closest circle love to argue in this topic but complain constantly about not being able to travel or move somewhere else. 😂
You give great advice. You are an incredible asset!!!
I stick to this principle. Words can't express how good it feels to have zero liabilities. By adding value to others for in return I get more currency to buy superior products and services. No better feeling in the world.
Some of the most insightful views I've ever heard. Unfortunately most just don't get that liabilities are a poison on ones ability to accrue real assets and net worth. Well done sir!
You dont accrue assets and wealth without risk a.k.a liabilities. Its called leverage. Play safe and use it correctly.
@@kozmik4848 Yes, use leverage, except within a business structure where the liability is on the company, not you personally (as mentioned in the video)
@@CoachPursuit the liability of owning a house with mortgage can turn into profit when you sell for a higher value and pay off the outstanding debt. Can’t do the same with renting
There is no right or wrong to buying a house or renting. It comes down to individual preferences. However, the majority will tell you they are glad they bought a house over renting.
This advice I'll take rest of my life 👍
"Freedom is an asset "
So relieved to watch this. I’ve been doing all of this for 10 years (halfway through the cycle) and it is getting easier now.
This video is Gold 🙏
When I saw one of your videos yesterday I was skeptical at first. There are a lot of "trading gurus" out there. However, what you say here about liabilities is quite a reflected examination, so I just subscribed. Have a great day. Kind regards, Michael
Our mortgage payment is more or less equal to what we were previously paying for rent and equates to about 55% of the value of our home. We could pay the balance in cash but prefer to keep the money invested. This way we have the benefits of the appreciation of the asset while still remaining invested.Our mortgage is a 30 year and we have the option to refinance if the interest decreases and also tax relief on a portion of the loan interest. There is opportunity loss at having some capital locked in the house, but it has worked for us.
Debt is good as long you have somebody else make the payments. Buy a house/apartment and rent it out and continue to rent your own place.
It's still a liability. If people move out and you have no one to rent your house then you have to make the payments and then you're paying rent + mortgage. If interest rates on your mortgage rise you have to take the hit. If the housing market crashes and your property value drops in half people aren't going to want to rent it for more, and guess what, you're still going to be paying 2x of what is WAS worth in the long run. Debt isn't good unless you're getting a monthly income from an asset which you incurred debt to buy it from, like a business with real positive cash flow. If you're only just making repayments from renting then that's not counted as income.
@@joshuaking6004 its a liability if not done corectly
Agreed, bought an apt. Back in 2002...got some tenants that are paying for my mortgage...it is 2020 and they still do.
Mortgages are actually high risk unless you know what the heck you're doing and understand markets very well but the average Joe doesn't have the financial education for it, the middle class see mortgage as an asset but for most people it ends up being a liability only the smart ones can turn it into an asset, I see life from a trading perspective economically speaking, it's all about learning how to manage risk, so based on my perspective it's actually risky, I prefer to build a solid foundation of multiple streams of income with less risk, build your nest of wealth first then later you won't even need a mortgage you can just buy the property in one shot, that's how I think.
2nd property tax, maintenance, insurance, dead time if the tenants move out. = Liability
I agree with pretty much everything Anton says except this, unless he is implying you rent a cupboard under somebodies stairs for 15 years for £50 in order to build your asset base.
You need somewhere to live, fact. In the UK rent is higher cost than a mortgage, if you rent for 15 years before you buy, you have essentially helped pay off somebody else's mortgage, If you rented a measly 2 bedroom house for 15 years, at £600 a month, that would cost you £108,000. If that money went towards a mortgage id have 60,000 of that to my name, id rather that than nothing.
In my opinion, if you have a liability like a mortgage, take on the smallest one possible, at the lowest cost and pay it off asap. Buy a run down house, renovate it, take on a lodger, all things you can do to reduce liability, You need somewhere to live and nowhere is free, but paying your own mortgage off is better than somebody else's.
As for 'trap' within 4 weeks i could have a Tenant and switched my mortgage over to a buy to let.
I agree with all other points made in the video however.
When you buy a house, you have to pay upfront from your savings. By doing so, you are losing all possibility of making profit from your lost asset by investing and are bound now for ever to pay a monthly sum of money with the only probable return, a house. I think that's what he's getting at. Also a lot of buyers don't understand how much more expensive buying can be. There are annual/monthly fees, housekeeeping, plus a loooot of time.
@@pithikoulis you buy a depreciated asset (house) that's worth more than market value - now you are already in profit.
You're not bound forever - you can sell it in the future. You could even own it by taking all your money out once you get it revalued. Essentially recycling your money..
Buy the asset at depreciated value. Live elsewhere ( home with parents) . Renovate cheaply, sell or either let it out.
🙏
@@masudsaeediphysiotherapy8689 You are still a slave to that house by having it maintained. You have to pay attention to the house for repairs from use. Just buy REIT stock with the down payment money for the house and don't have to worry about watching the stock everyday or month. Just collect the Dividends and sell it when it rise by a good amount. and buy back in when it goes down during a downturn or when it drops enough.
no. You aren't including the interest also paid for that mortage. add an extra 100k. Fucking waste of money
@@bruce7244 lol 100.000 cmon man, banks are giving out loans at 1, 2 % interest rates nowadays. Get real. But hey if you prefer paying rent that IS indexed to inflation for the rest of your life as opposed to never paying for housing again after 20 years of monthly mortgage payments, by all means knock yourself out
"So how do you do that Anton?" *Runs for the cab*
Best lesson for university students like myself, in fact best lesson I’ve heard in years
Watching this again in 2024😊
Big fan of Anton Kreil, agree with almost everything he says on some level. Now what becomes of renting i might agree that it depends highly on where you live if it is in your interest or not, also what plans for the future you have and if you have come to terms with not living forever too.
Renting also means, atleast where i live that you will pay someone elses mortgage/loan on the investment property, and their interest + whatever the market is willing to give them in profit for it.
Just sold my flat in London and cleared £100K profit. Had a mortgage on it for 3 years. Seems like a good liability to have taken on.
But yeah, how are you supposed to save to buy a house cash, when rent is so expensive?
How much was the total interest which you had to pay for the duration of the the mortgage, and did it restrict you from doing anything else in your life?
Also you had the mortgage for 3 years, so I assume you still have another 20 or so years left to pay it off. Also are you sure you made £100k profit in 3 years, that is an increase well above inflation, and so I'd say you must have bought the house well under market value in the first place.
@Max Smith London property increases at rates far above inflation
You are also talking about one of the most expensive Real Estate markets in the world. If you have the capital or good position getting in then obviously there are exceptions. Consider his assumption a bit broader. 100k is awesome though. Congrats.
Liam Ward lol now that uve sold the house u now hav to buy at a higher price to hav a roof over your head. U will lose money if you dont wait for the market to dip lol
My dad owns 15 properties in Central London
I'm assuming that that's for when you intend on living in the house. How about purchasing a rental property? If I put money on a down payment and find a tenant to pay off my mortgage, I'm eventually left with a fully paid off property that's probably worth more than when I signed the mortgage. How does your view change on that?
That’s a different situation. You become the bank, therefore an asset. In a leveraged position.
@@Harte105 he is not the bank in that situation, if he has to secure a mortgage the bank still owns the home, making it the banks asset. he would just be leveraged, if thats what he wants to do he should have a cash reserve for that property, to cover months of no occupant, months of skipped rent, damages that occur to the property, etc. some people advise against being leveraged on rental properties, other encourage it.
KCkoolaidking ok, it was figuratively speaking. It would be an income generating asset with debt facility...secured against the property...
Amen , this was a 300k lesson for me but im glad I know now -
So true renting is paying a little more now and saving for the future. Taking out a mortgage means your are paying less now but paying much more over time. A house is a liability if you don’t fully own it.
This man is very sane and realistic about making long-term financial decisions. I couldn't agree more with him on investing money in assets, and then relying on these assets to take care of you when you get older. By the way, if you can afford buying a piece of land, no matter how small that piece of land is, just buy it, build a house on it while you can because you might need it.
100% agree, if I cannot buy it for cash now I cant afford it.
Words worthy of being inscribed in gold.
I love this part so much that when I shared this to my girlfriend, she was super excited by the idea and how she's never thought about it before. Thanks to Anton, as a couple, we plan to rent rather than buying a condo now, which would save up a load of money!
Poor move
Anton Kreil you are my master ....
Amazing advice! Seriously!
Showed this to my mother who will be 60 when her house is paid for.
Her opinion: "I would've never been able to own this house when I had only rented befor. Rents have exceeded what I'm monthly paying for mortgage."
She doesn't understand the message. I'm a believer in renting a home while you are building assets, but it's quite impossible to make the concept 'click' in other people's head 😕
Pretty sure you don't understand the mechanics of renting / mortgages
Renting is not a liability, spot on. You can't be liable for something you do not own. For certain people, this is key.
You can just be homeless
Renting sometimes costs as much as the mortgage and often even more. And you're not locked for life with your mortgage, no need to afraid that much. You can sell freely as long as prices went up and that's what prices usually do in the long run. Short sale is less fun of course but not the end of the world either, if it happened because of the job loss, in 2 years you could get a mortgage again. Plus, technically you are the owner of the asset and you can even rent it out if you need.
Credit cards have lot of perks, cashback, fraud protection and ability to get some additional interest from savings while you're in a grace period are few to mention. With smart approach you only gain more money from your credit card.
Cars - more complex thing. Newer cars might have better fuel economy, better safety (why saving on safety idk, you've only got one life). Require less repairs. Unless you are a mechanic yourself, getting a car loan for a new car might be more cost-effective than buying some older car for less money.
And another point is inflation. Money now - more expensive than money in future. Income gets adjusted to the inflation, not as quick as we want but still, if you took 100k mortgage 15 years ago this seems funny now.
Of course, if you're a wolf from the wall street like Anton, you would think completely differently. Like why borrow if you have enough cash now. But that can't apply to everyone.
my role model
I think the comments here discussing rent v buy of housing are missing Anton's point. He's talking from the perspective of people who are interested in wealth creation. Almost everyone who follows the IoT has to believe themselves to be a reasonably high investment compounder. Otherwise, why listen to an investment expert?
His point is that whilst anyone has a mortgage they can't ever invest in other assets that produce dividends. When you have paid off say 400K of a 500K loan over 15-20 years, how much income does the 400K that's paid generate? None. There is still interest bearing debt that demands you work and pay off and no income other than arguably the imputed rent saved can be realised. Your personal revenue stream is the same it always was - your salary. If, however 400K had been invested, then it could compound and pay dividends that improve your income.
It really comes down to your rate of return, if you're able to make 10-15% pa then reinvest for 10 years and you'll be earning a significant income. This is turn can be reinvested into hopefully ever more productive companies.
Somewhere along the line if you have ambitions of wealth, there has to be something done to save money so that investments can be started. One option for this is to rent a cheap place and then invest any surplus to generate income. For most citizens however, a mortgage is a good thing as it means they end up owning a home because, to be blunt, they'll never make decent money investing. The best outcome for them is to end up in a fully paid for house which is hopefully worth way more than their purchase price plus all the interest paid over the life of the loan. Then with the mortgage payments gone, they can start to invest.
Not an easy call, but if you have ambitions to make big money then you want capital invested and not servicing debt. If you want to own a house outright then get a mortgage and pay it off over 25 years so you can have certainty that you'll have a place to live
I'm a year too late, but i couldn't agree more with your comment. I think many people misunderstood a bit what Anton was trying to say here.
I'm guessing this advice varies country by country. Of course it's never smart to use credit for buying everyday stuff or a new iphone or a fancy car etc. But in my case my mortgage interest rate is 1% (i.e lower than inflation) and if I would rent the same property that I have now bought I pay about 25% more every month to the owner than I pay now for bank (and in the end I own it outright, instead of just paying the owner and getting nothing permanent back). In this scenario I see no reason not to take a mortgage to buy a property (or even pay it off early, as I can get 10x higher return if I just invest this money compared to paying off my 1% mortgage). Again, I'm guessing it varies a lot by country and I'm sure he's right for UK market.
Awesome video! Keep dropping more value Anton.
It depends on your earnings and your potential to earn ,a lot of people are not financially capable, this video should be aimed at cash rich people
No, be inspired to become cash rich. Its information for us all 🙏🏾
Damn he is so spot on every time.
what about leasing a car? so you can still be within warranty and not get stuck with an old depreciated beater once youre out of the leasing period and choosing to purchase.
Wow! Amazing insight, valuable information right there
this guy is dropping game for free
Exactly my strategy, I bought a house when it was easy to do so, still a mortgage but I have matching investments, which bring more than the 1% interest on the mortgage. The hamster wheel he is referring to is people overly indebted and not enjoying life because of too big apartments, cars etc. Also limits your risk taking in your career or business because you must pay those debts…
Of course I can see when much risk is involved it is better to pay cash because then you don't get in the trap to be stuck in a mortgage.
But there are other cases where company ceos can save taxes by paying a mortgage so this is a point where a liability becomes an asset because it lets them reinvest while saving taxes and at the same time he can use the new building/machine for production or service already and hopefully make it pay.
You left out an important aspect of how to make the liability of a mortgage become an asset: you mortgage a property then rent it out. The tenants then pay the debt in exchange for the landlord taking on the exposure and risk. That's how you build an asset. Also the richest people in the world are the ones who have the most debt. The goal is to keep as much money liquid as possible to be ready to invest. You can always sell a house to recoup losses, you'll never recoup money put into rent. If renting was the ideal solution then landlords wouldn't be a thing.
I don't really get the renting situation . Atleast we own the property eventually if we're paying a mortgage .
you HAVE to make those payments if you're paying a mortgage & you're not trapped if you rent.
Where the rent to own gets you is the down payment. But that 5k downpayment could be worth it if you're free to move somewhere else to get a 20-30k raise and you get the benefit of a house.
The only thing that matters is the downpayment. If you can generate high returns outside of your home, then renting is better. There are lifestyle advantages to owning your own home though. Also, buying a house gives you access to cheap debt. This is great if you make a good purchase.
As Divineslaughter said YOU do not fix the price of the house the MARKET does it. Having a house does not mean PROFITS.
In addition to everything that everyone else said, if you live in a metropolitan area with high rent like the Bay Area, New York, LA in the States, or London, Beijing, and more, the down payment on a house is astronomical. And even if you have whatever downpayment is technically sufficient, whether it's 10%, 20% or 25%, it's highly likely that some wealthy person will come in with a bid much much higher than the asking price (and there are plenty of those rich folks in these areas), so that down payment you saved up is a moot point.
I am building mine, now.
Not if the property is positive cashflow
@Anton Zuykov Then what is guaranteed in life? People need a place to live and you can offer them that..it's at close to guaranteed as you can get
What is in my pocket is money.Electronic money issued by central banks and exchanged between banks is money.But when public borrows from commercial banks,credit is issued by these banks.Mostly this credit circulates in the economy while payments for goods and services are done.We all directly or indirectly pay intrest rate for this credit to the commercial banks.For them this credit is an asset ,but for us a liability.No escape from it under current monetary system.
This would make sense if interest rates weren't so low and property so expensive and LTV% requirements low enough that most people can make loads of money from increasing property prices. Where else can they leverage themselves 20/1? Apart from the costs etc you can make enough and sell up and then rent with the profits. Or pay down mortgage and finally have that security. I mean yes it's a risk but you're 100% not going to win by renting for about the same as mortgage and not being able to save to buy a house outright. And if you save to buy a house outright in a rising market you're getting screwed
I think he is mainly referring to a big £400k+ morgage that drowns you in interest over time. But I'm sure that if you buy a small flat that can be paid off in 10 years that's good. You don't waste money on a landlord and build equity on a small asset that doesn't limit much of your freedom.
There is a million videos on youtube that breaks down all the varibles of paying a mortgage and renting long term. If you just care to look it's very simple, it's not always a "no brainer" to own a home with a mortgage. Sometimes you actually come up on top with more money to retire after 30 years if you rented. All you gotta do is do the math. People tell you owning is ALWAYS better. Only true 50% of the time.
Anybody telling you something is "always" better in anything financial is talking out of their ass. It's what worked for them and maybe the people around them, so they believe it will work for anybody, in any place, in any scenario.
Really depends. If you own a property, you can use it to leverage cash out to do other investment. In addition to that, assuming you bought a decent property, it’s price will go up with inflation. So it really depends…
Tough when rent is greater than mortgage payments
if you add the additional expenses associated with own ownership it's not
insurance
rates
fluctuations in interest rates
this could be different depending on your location of course
Of course rents are more expensive than mortgage payments. What do you think buy to let mortgage is? What landlord would take out take out a mortgage and charge less than their costs? Rents will always be higher than the net costs of owning a house. If they weren't, rents would rise until they are. That's how the free market works.
The page is littered with comments that nominal rent is higher than nominal mortgage payments month by month, but Anton did say get roommates if needed, to lower the monthly payment.
Nothing is perfect. I personally can't do roommates, i hate the notion of not having my space all to myself, or some fucker thinking it's "no big deal" to help himself to my last piece of "x". So, i would never do the roommate thing. The point is you must find a way--plain and simple--. That's just how it is.
Great video!
How can someone paying rent in London save money when rents are so ridiculously expensive? This situation mostly applies to wealthy people. In many cases, paying a mortgage in London can actually be cheaper than renting, and it brings the added benefit of having your own space-a home-without being pressured by constant rent hikes or needing your landlord's permission for every little change. For the middle class living in London, homeownership often feels like a distant dream, forcing many to share spaces, which can be draining, unless you're willing to spend half your salary on a cramped, subpar place. Renting doesn’t necessarily mean you can save more money. The poor and middle class don’t have the freedom of choice that wealthy people enjoy. We often find ourselves just striving to survive, prioritizing peace and stability.
Thanks 🏆
But what about the appreciation of the value of the property you own...?
He's making the wrong point on debt vs equity. Issuing equity on the whole costs more than issuing debt because there are no assurance made to stockholders when they buy. The increased risk of buying equity means the equity holders will want a greater return on investment. A stockholder get the "residual" from net income after all creditors are paid and after the company decides how much they want to keep as retained earnings. A debt holder, on the other hand, takes a much smaller risk because they have interest that they are promised to be paid. Most bonds also come with covenants both negative and positive that decreases risks even more by limiting what the management of the company may do, or demanding the management to do particular things. Debt is also often collateralized, securing an even greater probability of capital recovery. For these reasons, debt tends to be cheaper.
That's why I bought my flat with full down-payment. But was made fun of by people saying "never heard of anyone buying real estate for cash... why didn't you get a loan?"
I was worth it to me to buy. I don't get rental increases, with refinancing I get payment reductions, I get tax deductions, I don't have a landlord telling me I can't live here anymore. Fuck that. Oh yeah, equity appreciation, let's not forget that.
Great vid
"When you rent you have freedom". Well, that's only if you landlord doesn't ask you to move away. You also don't have the freedom to make improvements/changes to the place where you live.
And the stress that comes with renting doggy places for ridiculous prices in London...
I love these discussions wow! #mindblown
It’s a long term plan with a mortgage. Rents go up. Fixed Mortgage payment stays the same. At the end of 20 or 30 years, your property should have increased in value. Asset value increases as the liability decreases, the net of which would be a gain if sold. Interest is a write off. I can’t wrap my head around how renting is a better solution when rent increases so much over time, you don’t build any equity and you don’t get the write off. I can do what I want in my home. Decorate etc. I can rent it out. I don’t answer to a landlord. That is freedom for me. But I am in family land. I could see how mortgages and home ownership could be an obstacle for someone who needs to move on a dime. Love the talks!
Being able to return to your home from a long stressful work day has an incomparable value. London rents are ridiculous high and you are often bullied every year by payment more and more every year.
This is class man!
Golden nuggets!
i dont understand.. he says it's better to rent for 10 years then buy a home in cash.. So in 10 years I can accumulate 1,000,000 EUR ? meaning every year I would make 100,000 EUR and set it aside.. That's the price of a decent home in my country.
If you invested all your spare cash and paid rent would the value of your investment ( for a pension ) be around the same as somebody selling a house after 25 yrs, based on the similar returns on investments and mortgage payments
Absolutely life changing.
Brilliantly said. I salute you!
But would it not also be better to leverage debt with a bank to buy a property on a mortgage, rent the property out (in some cases for more than the mortgage payments), while you continue to work and earn money and also have that minor stream of income? Surely missing out on that opportunity to build up cash, while renting your own living space (for a considerable sum of money) is only worth doing if you have solid liquid investments in other areas that can yield higher returns? I suppose house prices aren't as solid as people think and index funds don't do so well (particularly at this period in time where everything has fallen).
I understand what he is saying but maybe I don't know how to weight it against the idea I have been fed by people who build property empires to rent out, who go by a money now is better than money later principle where having the room to take on more investments, while being riskier, can have greater rewards.
Exactly what I have been telling my friends & family. Sound advice! 👍
I agree. But the downside is that you would spend half your life saving to buy the property and living in a not so good place...
I would somewhat disagree that a mortgaged property is a liability in comparison to renting. Obviously from a balance sheet perspective your asset position is the market value of the property less the outstanding balance of your mortgage.
You should have a very clear idea in your mind before you take on a mortgage how you are going to make the payments, not just over the next few months but over the term of the loan and how much it will cost you. Just paying a few £hundred extra a month will likely save you tens of thousands over the life of a mortgage.
Bear in mind that most residential leases will have a minimum term so you will pay if you need to break the lease before the contractual end date. On the other hand if you own a desirable property you can rent it out in the long, medium or short term possibly even covering your scheduled mortgage payments with some positive cashflow.
The real key to investing in real estate is understanding potential for capital growth which is how you create equity beyond simply repaying debt. And the more equity you have the more you can borrow and buy more cash flow generating assets. If you have knowledge and skills to add value to real estate, even better.
Great explanations. I really want to take your class. Thank you so much.
What is first video in this series called?
How do I apply to get on one of your programmes?
Thanks. I thought you were going to preach the same old story about buying early. Thankfully I was wrong.
What a guy!
I like this guy .
There is a show in the Americas that caters to high end realestate market and very rarely does anyone own their home outright. They are constantly moving and re-buying in other markets or upgrading to a home where only one person lives in. It's insane, 1 person living in a 20k sqft home. They are so mad they haven't made 20% or more on their home. Even in New York selling an entire floor of a condo or a BrownStone town home with 5 floors of living. I guess it's a way to keep up with the jones's and brag you just sold and bought a home in such and such building only to move 4 years later to another section of New York.
the last line is the most accurate.
What about renting the property out and have someone else paying the mortgage for you?
might aswell invest that money into something else with possibilities for greater returns
Yes but if the real estate market crashes you will get paid less because rent can drop while still owning the same money to the bank, it's all about supply and demand, you can invest that money in different ways, most people choose the mortgage route because that's what the middle class thinks is best.
@@kevinchavarria6792 And what do you think would be better? How high class thinks? What do you think. I am on the edge do to almost the same thing with renting etc....whats the better way?
Thanks in advance!
Very good advise.
If you rent you cannot just walk out the next month. You need a place to live.
Please explain what he’s trying to say…
if you have that deal with ur landlord then yeah. just make sure to write a new rental agreement before u move out. if ur making money through non traditional methods like businesses or stocks. one month ur in Dubai, next you want to be in Sydney. No problem