I sold my home and now rent. Invested/saved the proceeds from the sale. You are the first person to refer to proceeds from the sale as “equity” that continues to grow in other types of financial accounts. Thank you.
Such a critical item missed in this video! I'm on the edge of my seat waiting for you to mention this. Hehe. It is all great content but I feel like financial advisors need to emphasize this point. As you approach retirement you need to consider the incredible benefit of possibly doubling your retirement savings overnight by leaving the US. Pick an incredible, colorful, active, welcoming city with close communities where an organic lunch is all around you for 2 to $3, a beer for $0.80, a CT scan for $218 (I just got one a few weeks ago in Mexico compared to $2,400 in Michigan). And since the focus of this video is rent, in many locations around the world you can rent a one-bedroom apartment in an incredible city near the beach for $3-400 a month with a gym, a pool on the 30th floor and personal laundry service. Since you can get a ride anywhere in the city for a dollar, you also save the cost of a car.... registration, insurance, maintenance and headache. By considering non-US options it can make or break your retirement. It can also allow you to retire 10 years earlier. Considering the ridiculous cost of living in the US and its broken medical system, and the incredible options in low cost parts of the world, means that the option of leaving the US should be mentioned in any video about retirement.
This is my plan. Single male, with no kids, no ties, to the US or anywhere else. Figure retire in a place like Vietnam or Philippines easily on just my social security even if I take it at 62.
Hi James, this is Diane and I am so grateful for your review of my question and you have given me great advice on what to consider. I love your podcasts, they are so informative and keep me off Twitter. Again, thank you!
Good luck in your future move! Renting until you find a new place that feels like home (either geographically different or just feeling comfortable) makes sense. If you end up finding an area you like, you could either still rent or get a condo where others takes care of the maintenance.
We’ve just retired and just also recently sold our paid off house. We’re renting now and will be moving to Europe and renting there. We may eventually buy but that’s only after we’re 100% certain of where we’re going to live. Doesn’t make sense to us to buy when we’ve not lived in a certain place for any length of time.
We did the same seven years ago, two years in France and now in Switzerland. We loved France to start with and very nearly bought but it would have been a big mistake. We are not bothered about leaving an inheritance and we can rent a much better place than we could afford to buy.
@@glennet9613 - Our daughter may begin her career in France after graduating college. We have 3 kids and enrolled them in a French immersion program for 6 years when they were young, and later they attended 1 semester of high school in France as part of a high school international family swap program. How was your experience being retired expats in France? I'm curious to learn more about the "mistake" you allude to? Funny enough, neither my wife or I can speak French!
I've been on both sides of the fence with owning and renting. Most videos are against renting. But renting does have its benefits. If something breaks, not your problem. If a crackpot moves in next door, you can either move easily, or if in a complex, report them to management and normally three strikes and they are out. With a home, well.. we've seen the videos of the neighbors shooting each other. I will omit some other situations that some may be able to guess.
Agreed,....I have lived modestly in an apt outside of Annapolis Md for over 30 years,...while quietly amassing enough money to (recently) retire at 57. Even though my girlfriend and I sometimes think about owning our ''own place'',...the reasons you mentioned,...and at least a dozen more scare me too much. Sometimes you need to leave well enough alone.
Well to be fair, if you move into what realtors call an "A class" neighborhood these risks go down dramatically. Another benefit of living in these neighborhoods is these houses can turn into a low(ish)-hassle rental because families with high paying jobs and high credit scores tend to seek these rental homes. These renters tend to come with less drama as compared to people that seek cheap rent in a C or D class neighborhood. This allows you to go from a homeowner to a renter in case you want to be near your kids as they begin their young adult life. You can even sweeten the deal by keeping rent 10% below fair market rate in order to get a flood of applications from highly desirable renters that are most likely to be drama free. This can normally only financially work if you already lived in your home for a long time and your mortgage is ridiculously low, otherwise fair market rent will be less than your mortgage + many related landlord costs.
One of the biggest factors that is rarely mentioned is that rental homes are usually not equivalent to houses you can buy. Most rental homes are old and shabby, as the economic incentives aren’t there for the landlord to improve things. “Nice” rentals that are at the level of something I’d own are usually at a huge premium. If you are the type of person who buys a house and never does any work on it for 20 years it probably makes sense to rent.
Renting can fit the bill in many cases, as it does for me..(single male traveler) but the kicker is, as the video mentions, the trending upwards of rent prices. How high will it go? How fast? This is a growing issue for renters all over the country, and for society as well ...
F- owning a home…too much work. Owning a home is a money magnet! I got dreams and things to do and dreams to fulfill forget anything that has anything to do with keeping up with the maintenance of a damn house! Down size get rid of crap and spend it on doing fun experiences! Hobbies & interests you always wanted to do! Lord have mercy!!!!
The cost/savings of renting is (investment income from sale of house-rent) + (cost of owning: maintenance+tax+insurance). If you assume that rent is about 3% of the value of your home, and that investment income is 5% or more, and that owning a home costs about 3% of its value, then every year, you will save 5% of the value of your home by renting. Even if you break even on the rent vs investment, you still save the cost of owning.
Property taxes are going up more than inflation on rent so renting makes more and more sense. Also, money from the sales of a house may earn more than your monthly rent. Simple living is huge factor as well.
This was my first time to listen to your pod casts. I really enjoyed it. It was far more in depth than your normal channel videos. I haven't listened in the past because they are longer and it is really hard for me to sit and listen for 25 - 30 minutes at a time. This one at least was well worth it. Thank you,
It all depends on how responsibly you live. If you don't want to have the responsibility of home maintenance and you want to spend everything you earn, rent. If you want to take care of a home and build wealth with a hedge against inflation, buy. Savers buy, spenders rent. Retire mortgage free with a nestegg is heaven. Renting with no savings is the other place.
I am single male, I was dating single mothers that already Have houses and children in schools ect? So if we got married, I wud prob have to sell house and move anyway? I Love the area I live in my home town? I cud not afford to buy a house here but. I have rented it for 35 yr! I am Horrified by the mortgages my friends pay for far less and are broke most of the time! Renting Worked well for me!
Can you please answer, what is the threshold of the percentage of cost of buying to renting that one should base a decision to do one or the other. Example, $400,000 median home cost to buy and 2,000 to rent. I came up with 16%. This is not including property taxes on the cost of the home. Which outcome would you recommend?
Another factor that I have been considering is the interest rate being at 7.88%. If I purchase the home with cash, that eliminates the high interest rate, but it takes away the opportunity to grow my savings of $500,000 in the the market factoring a 6% growth.
Don't forget all the hidden costs of home owning too. Insurance rates that go up. Property taxes that increase. Standard maintenance odds and ends. Landscaping labor. Replacing roofs, flooring, decks, furnaces, air conditioners, and appliances. Renovations. Opportunity cost of what the money could have earned if invested instead. Being trapped in the neighborhood if you end up with belligerent neighbors.HOA fees that sky rocket. HOA officials getting in your business So many things that are conveniently left out of the home ownership conversation
I am 61, single and just Retired TODAY🎉 I have never owned a house. I have super low rent $390 No utilities for top half of a house in small safe town I grew up in. I don't lock door or cars, leave car with windows open my rent. Rarely went up. But my old landlord just sold house and my rent did go up already! I'm not sure how long I will stay here or go somewhere else? But why wud I leave? It is now $500 for top half of Safe House? I have $350K IRA Instead of equity in a house?
I’m curious, with rent so low, if you were able to buy your place and then rent out the lower unit? At any rate, think about how much you are willing to pay for this place, and if the rent goes above that, leave.
@dforrest4503 I wanted to stay until I Retire? I plan to go back to work Part-time this for for about 6 months? Then maybe take Soc Sec? So maybe another year and then possibly move to Northern Michigan?
@dforrest4503 my landlord offered me a few times? But I knew how much work this place needs? That is why my rent is so low? I didn't want a "money pit" as I was going into Retirement?
I don't even lock my cars or house doors except at night? How many of You can do that! My town feels like "Happy Days" although as older home owners "leave" sadly the sense of community is fading away here too?
I sold my home and now rent. Invested/saved the proceeds from the sale. You are the first person to refer to proceeds from the sale as “equity” that continues to grow in other types of financial accounts. Thank you.
Such a critical item missed in this video! I'm on the edge of my seat waiting for you to mention this. Hehe. It is all great content but I feel like financial advisors need to emphasize this point. As you approach retirement you need to consider the incredible benefit of possibly doubling your retirement savings overnight by leaving the US. Pick an incredible, colorful, active, welcoming city with close communities where an organic lunch is all around you for 2 to $3, a beer for $0.80, a CT scan for $218 (I just got one a few weeks ago in Mexico compared to $2,400 in Michigan). And since the focus of this video is rent, in many locations around the world you can rent a one-bedroom apartment in an incredible city near the beach for $3-400 a month with a gym, a pool on the 30th floor and personal laundry service. Since you can get a ride anywhere in the city for a dollar, you also save the cost of a car.... registration, insurance, maintenance and headache.
By considering non-US options it can make or break your retirement. It can also allow you to retire 10 years earlier.
Considering the ridiculous cost of living in the US and its broken medical system, and the incredible options in low cost parts of the world, means that the option of leaving the US should be mentioned in any video about retirement.
This is my plan. Single male, with no kids, no ties, to the US or anywhere else. Figure retire in a place like Vietnam or Philippines easily on just my social security even if I take it at 62.
Hi James, this is Diane and I am so grateful for your review of my question and you have given me great advice on what to consider. I love your podcasts, they are so informative and keep me off Twitter. Again, thank you!
Good luck in your future move! Renting until you find a new place that feels like home (either geographically different or just feeling comfortable) makes sense. If you end up finding an area you like, you could either still rent or get a condo where others takes care of the maintenance.
Thanks for your question, Diane! I’m glad this was helpful. Best of luck to you!
We’ve just retired and just also recently sold our paid off house. We’re renting now and will be moving to Europe and renting there. We may eventually buy but that’s only after we’re 100% certain of where we’re going to live. Doesn’t make sense to us to buy when we’ve not lived in a certain place for any length of time.
We did the same seven years ago, two years in France and now in Switzerland. We loved France to start with and very nearly bought but it would have been a big mistake. We are not bothered about leaving an inheritance and we can rent a much better place than we could afford to buy.
Good perspective
@@glennet9613 - Our daughter may begin her career in France after graduating college. We have 3 kids and enrolled them in a French immersion program for 6 years when they were young, and later they attended 1 semester of high school in France as part of a high school international family swap program. How was your experience being retired expats in France? I'm curious to learn more about the "mistake" you allude to?
Funny enough, neither my wife or I can speak French!
What is a step up in basis?
The cost of home repairs has gone up so much in my area. Unless you can do all those things yourself, you need to factor that in to owning.
Agreed
I've been on both sides of the fence with owning and renting. Most videos are against renting. But renting does have its benefits. If something breaks, not your problem. If a crackpot moves in next door, you can either move easily, or if in a complex, report them to management and normally three strikes and they are out. With a home, well.. we've seen the videos of the neighbors shooting each other. I will omit some other situations that some may be able to guess.
Agreed,....I have lived modestly in an apt outside of Annapolis Md for over 30 years,...while quietly amassing enough money to (recently) retire at 57. Even though my girlfriend and I sometimes think about owning our ''own place'',...the reasons you mentioned,...and at least a dozen more scare me too much. Sometimes you need to leave well enough alone.
There are certainly advantages to both
Well to be fair, if you move into what realtors call an "A class" neighborhood these risks go down dramatically. Another benefit of living in these neighborhoods is these houses can turn into a low(ish)-hassle rental because families with high paying jobs and high credit scores tend to seek these rental homes. These renters tend to come with less drama as compared to people that seek cheap rent in a C or D class neighborhood. This allows you to go from a homeowner to a renter in case you want to be near your kids as they begin their young adult life. You can even sweeten the deal by keeping rent 10% below fair market rate in order to get a flood of applications from highly desirable renters that are most likely to be drama free. This can normally only financially work if you already lived in your home for a long time and your mortgage is ridiculously low, otherwise fair market rent will be less than your mortgage + many related landlord costs.
One of the biggest factors that is rarely mentioned is that rental homes are usually not equivalent to houses you can buy. Most rental homes are old and shabby, as the economic incentives aren’t there for the landlord to improve things. “Nice” rentals that are at the level of something I’d own are usually at a huge premium. If you are the type of person who buys a house and never does any work on it for 20 years it probably makes sense to rent.
Renting can fit the bill in many cases, as it does for me..(single male traveler) but the kicker is, as the video mentions, the trending upwards of rent prices. How high will it go? How fast? This is a growing issue for renters all over the country, and for society as well ...
Yes that’s the biggest unknown with rent - how much will prices increase?
F- owning a home…too much work. Owning a home is a money magnet! I got dreams and things to do and dreams to fulfill forget anything that has anything to do with keeping up with the maintenance of a damn house! Down size get rid of crap and spend it on doing fun experiences! Hobbies & interests you always wanted to do! Lord have mercy!!!!
I concur i 73 yrs young living out of carryon bag while exploring the planet
This was an outstanding overview. It covered all the nuances and did not just give a simple one-size-fits-all answer. Thank you.
Glad you think so!
The cost/savings of renting is (investment income from sale of house-rent) + (cost of owning: maintenance+tax+insurance). If you assume that rent is about 3% of the value of your home, and that investment income is 5% or more, and that owning a home costs about 3% of its value, then every year, you will save 5% of the value of your home by renting.
Even if you break even on the rent vs investment, you still save the cost of owning.
Property taxes are going up more than inflation on rent so renting makes more and more sense. Also, money from the sales of a house may earn more than your monthly rent. Simple living is huge factor as well.
Very informative and exhaustive and clearly articulated and very helpful. I'm convinced to seek financial advisor befote retirement Thank you.
I like your videos in person more than the podcast. Keep up the good work.
This was my first time to listen to your pod casts. I really enjoyed it. It was far more in depth than your normal channel videos. I haven't listened in the past because they are longer and it is really hard for me to sit and listen for 25 - 30 minutes at a time. This one at least was well worth it. Thank you,
Thanks Bryan!
Great job James! 👍I was pondering this the other day.🙂
Thank you and I’m glad it was helpful
I found you on RUclips and then subscribed/followed you podcast just now.
Thank you!
Thank you so much!!!
You're welcome!
It all depends on how responsibly you live. If you don't want to have the responsibility of home maintenance and you want to spend everything you earn, rent. If you want to take care of a home and build wealth with a hedge against inflation, buy. Savers buy, spenders rent. Retire mortgage free with a nestegg is heaven. Renting with no savings is the other place.
I am single male, I was dating single mothers that already Have houses and children in schools ect? So if we got married, I wud prob have to sell house and move anyway? I Love the area I live in my home town? I cud not afford to buy a house here but. I have rented it for 35 yr! I am Horrified by the mortgages my friends pay for far less and are broke most of the time! Renting Worked well for me!
Wondering if you have any experience working with Federal employees and their retirement plans?
Yes
Can you please answer, what is the threshold of the percentage of cost of buying to renting that one should base a decision to do one or the other. Example, $400,000 median home cost to buy and 2,000 to rent. I came up with 16%. This is not including property taxes on the cost of the home. Which outcome would you recommend?
Another factor that I have been considering is the interest rate being at 7.88%. If I purchase the home with cash, that eliminates the high interest rate, but it takes away the opportunity to grow my savings of $500,000 in the the market factoring a 6% growth.
Don't forget all the hidden costs of home owning too. Insurance rates that go up. Property taxes that increase. Standard maintenance odds and ends. Landscaping labor. Replacing roofs, flooring, decks, furnaces, air conditioners, and appliances. Renovations. Opportunity cost of what the money could have earned if invested instead. Being trapped in the neighborhood if you end up with belligerent neighbors.HOA fees that sky rocket. HOA officials getting in your business
So many things that are conveniently left out of the home ownership conversation
I am 61, single and just Retired TODAY🎉 I have never owned a house. I have super low rent $390 No utilities for top half of a house in small safe town I grew up in. I don't lock door or cars, leave car with windows open my rent. Rarely went up. But my old landlord just sold house and my rent did go up already! I'm not sure how long I will stay here or go somewhere else? But why wud I leave? It is now $500 for top half of Safe House? I have $350K IRA Instead of equity in a house?
Congratulations on your very recent retirement! 🎉
I’m curious, with rent so low, if you were able to buy your place and then rent out the lower unit? At any rate, think about how much you are willing to pay for this place, and if the rent goes above that, leave.
@dforrest4503 I wanted to stay until I Retire? I plan to go back to work Part-time this for for about 6 months? Then maybe take Soc Sec? So maybe another year and then possibly move to Northern Michigan?
@dforrest4503 my landlord offered me a few times? But I knew how much work this place needs? That is why my rent is so low? I didn't want a "money pit" as I was going into Retirement?
I don't even lock my cars or house doors except at night? How many of You can do that! My town feels like "Happy Days" although as older home owners "leave" sadly the sense of community is fading away here too?
I thought you can avoid capital gains on a sale of your home after a certain age, as long as you dont purchase another home afterward...?
Just live there 2 years and no capital gains if under $250k and single, or $500k if married