The TERRIFYING TRUE Cost of Owning a Home
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- Опубликовано: 5 сен 2024
- Sooo many people nowadays are weighing whether it makes more sense to rent or buy a home. But the truth of the matter, it can be a more complicated decision than most people realize. In this video, I will help cut through the noise and give some real world examples and arguments for renting vs buying as well as revealing the true cost of owning a home.
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We WISH WE COULD SELL! But Our Interest Rate Is Too Low
Not to mention if you sell you'd be better off moving out of the country to Spain or Portugal or something.
Rent it out
@@Zp00kie as european i really not reccomened it. portugal is one of the poorest country of europe. and spain have 50% unemployment rate under 25yo.
and whole western europe folded with illegals. most mayor cities like london or paris is dangerous like chicago or other shitholes. sweden is arape capital with gang wars when real military weapons like grenades, rpg-s used... and becuase there is no other media here only liberal, what owned "people" like who owned the newyork times or similars its a neoliberal opinion terror. those media destroy all patriotic white leader (like how the destroyed trump in the usa). and the whole eu is driven by collaborators and turned it into a liberal soviet union. similar trash like what the russian one was an ideology driven madness full of lying political attacks and corrupt judges. at least the russians was not gays and idiots. and they didn't want to make it so....
they don't care about the interests of eu citizens, only about immigrants and gay propaganda. only central european countries resist to this but we r under continuous political and economical attack. like the food inflation is 45% in this year in hungary (12-22% in other eu countries) when the 10million populated country producing food for 25million peoples. just becuase the food chains is in german hands and they try to coup the government in this way.
so europe lost the controll pretty long ago and its dead. and there is no chance to change it.
Same boat we're in. Guess we're stuck for a long time.
Michael, what are your thoughts on the homes baby boomers are beginning to phase out as they downsize or move into ALFs and or SNF?....will there eventually be an influx of available homes, flipping the supply and demand....ie Japan's birth rate has dropped so low they have many home sitting empty because there are not enough young people to move into them.
Things will look quite interesting by 2030🤔
Even if rents are cheaper than owning, rent costs are still ridiculous.
Depends on your market. Live where you can afford.
This is true
@@DIVISIONINCISION the bushes lol
@@robertromero8094 😂
Yep. I've said it before, but we are traveller's. The rent for places is WAY more expensive than the mortgage payments. Whatever numbers he's looking at are lying.
I realize most home owners have a mortgage, but i'd like to note that i know of myself and other friends that own their home outright with no mortgage and STILL are not making it and forced to sell, as it is getting more difficult to make ends meet of paying insurance and property taxes, gas, utilities, food alone. many people going to tents and vans and rvs.
And rip off associations in your pocket and business!...
Rip off mechanics, pollution testerings, insurance, registrations..e t al....compliance demaders need another covid shot and ids????..
If you can’t afford to own a home outright then you can’t afford rent.
✔️
I agree with Josef on this. If you can't afford to own a home and all that is incorporated, you are going to struggle no matter where you go!
Those cities you mentioned where rent is decreasing are all high crime areas. Chicago and Austin and Memphis has a lot of crime. Safety is first. Location, location, location
Renting is cheaper until this crash. If you get a 30,000 dollar roof leak where they're short people to get to you so you gotta wait months for the fix, you're screwed. I got out. I'd say if you dont have kids, save money and move to mexico until the crash is at its peak or something. Live in a van and do delivery work with it. Get a tiny house or camper. Live with family or friends. Just get out of this system right now until housing drops 50% at least.
$800 month invested over 30 years at 8% comes out to $1.2 million. Rent, invest, and come out $1 million better off without the headaches of home ownership.
Maybe it's my generation but saving money for me was always based on having the sum in order to buy a house. What is the point of a million dollars otherwise? How many vacations can you take?
Only problem with that is you need to be investing by 35 Years old. I started saving late now have to sack away 1800$ a month but fingers crossed will be just over a million by time I retire.
@@Hooper-DrivesTheBoat no, the last place I would want to be is senile and forgetting to pay my tax bill so the government can repo my overpriced house. I owned for many years and sold on 2021. If I buy again it will be for investment. I prefer traveling and changing scenery when I can. The thought of being stuck in one place with the anchor of home ownership around my neck makes me cringe.
@@siouxrose7766 the problem is that even if you pay cash, your taxes and insurance will be close to what a rental would be in many areas anyway.
where do you get a guaranteed 8% return though?
The extra cost of owning a home is still worth it me. I dont have to worry about rent increases and moving and more importantly I am building equity instead of paying rent which makes other people rich.
high property taxes and u are paying double for a home once u pay all the rip off in interest pleeeeease
Same here rent is only increasing. For me it is one of my strongest retirement investments. Nothing is cheaper than a paid off home to live in.
@@janityythen pay it in Bi-weekly payments it pays the home off faster and saves that interest amount. Right now it is close to $1000 cheaper for me to own each month when I bought it was $200. I bought new 0% down
@@janityy Hey you do you boo-boo. All rent does is make guys like me rich. If you have retirement money like a pension, 401k, or social security it’ll go to the landlord. If you like that fine, just know that is what you choose. 🥂
I can definitely see both sides of it and there's definitely a non-financial aspect to which choice you make as well
You can't rent the avg family home. The inventory to rent is more apartments than single family homes
Duh...
Depends on your market. In my area, houses in the nice areas are going for about $2K/mo. and you are wrong, plenty of people rent homes. Apartments are small and most don't want people that close to them.
Renting is like buying the landlords house for them these days. Makes no sense.
I have given up on the housing market. I'm from Ohio. I am just going to rent for a year or two and keep saving my money.
Here's a pro tip: move out of Ohio and find a nice area and you'll thank yourself immensely. There is nothing there but blight, it's the rustbelt.
Nothing wrong with that, opportunities will come.
The fact that that house was 2.5 million is crazy. That same house is on average 300k-400k in Texas
@@Ryan-jc7qh this was the dumbest comment I’ve ever seen dude stfu
@@Ryan-jc7qh guess your mama never told you how to shut up
Long term renter (30+ years) in super expensive city but have well below market rent. When younger I had romantic hopes to meet someone to buy a home with (as I was raised to believe would happen) and it didn't happen. Despite the fact that I saved/invested over 1.5 mill (no one's business but my own and is basically average in my city), I am subjected to continual judgement from mortgage holders, even those who own homes outright via divorce, condescension, unsolicited questioning and advice about my life choices. "You're still in THAT APARTMENT? OMG, HOW LONG are you going to LIVE THERE?" I do not judge home "owners" regarding their bloated mortgage, conspicuous consumption, weight, eating habits, smoking/pot/drinking habits, choice in partner, etc but as a renter so many feel entitled to look down their nose at me and to judge me TO MY FACE. Would I ever tell my morbidly obese relative that she's been huge for a long time and how long does she plan to be FAT for? No, that would be incredibly rude. But this same woman feels she has the right to judge me for years being a renter.
I am too thin skinned for this world of greedy, judgmental arrogant "homeowners" who are now all bragging about how much their houses are "worth" or how much they are gouging their tenants in rent. The whole situation is disheartening. I am tired of being told I"m throwing my money away and paying someone else's mortgage and despite being WEALTHY, treated like a second class citizen, and being judged OVER MY POSSESSIONS and my personal choices in this life.
Talk about depressing. Housing, a basic human need, is now a BLOOD SPORT and the current situation reveals the true nature of most people. For this reason, I wish I had bought long ago when prices were relatively reasonable and I can only hope for a significant correction so I can buy a small place in which I can retire, age and die somewhat peacefully. But I'm sure these same housing Karens won't stop with the judgement over what I FINALLY decide to buy!
I live near Disney and there was a lot of big Disney news today. First, their star wars hotel is a failure and will be closing in September. It was $6,000 for 2 nights at the hotel. Secondly, Disney was going to transfer 2,000 jobs from California to Lake Nona area near Orlando. They were going to build a campus and create 13,000 jobs. It was a billion dollar deal. Disney cancelled this plan today. So the city of Orlando lost a big business deal. The mayor of Orlando was not happy. I bet the houses in Lake Nona will go down in price. I just know that this will impact the local economy here.
@D Lake Nona ... it's a place to "catch a fool", with the presence as a neighbor of an international airport,
you have noise from morning to night!
do you know that it is impossible to solve a problem in maths or physics in an environment > at thirty decibels,
do you know that a human being cannot have a deep sleep in an environment > at 30 decibels?
I’m from that area. Let’s be honest this is a good thing for Lake Nona. It’s so over populated and homes are so inflated. Trust me 2,000 from California would have 100% change that city forever and not for the good. I say best new news that’s happened. If Disney wants this they can build on their own land and build homes for the Cali’s on that side of town. 2000 more to the circus traffic.
One thing no one ever mentions about renting, is that if you like an activity or have a hobby that requires more space, you're out of luck in a smaller dwelling. I like woodworking and that doesn't go in an apartment. Doing your own car maintenance and repairs is the same, as are many other activities.
400K in prop tax over 30 years?!? wow. I think this is the biggest factor in whether to buy in a certain area or rent. because property taxes alone can be higher than rent in certain areas. if youre gonna buy, choose a location with low tax, and get enough land to get some type of ag exempt tax.
I remember back in the day when I was in college, I shared a 3 bedroom apartment with 2 roommates and my portion of the rent was less than 250 bucks a month. sigh.
mine was $300
I remember when apartments went for $250 a month, no roommates, or you could rent a house for $300.
At one point in college, myself and two roommates paid $66/mo each because we signed a year long lease for a 50% discount for the year. Beautiful 2br/2ba first floor apt. This was the mid-80s and that was crazy cheap then. Those were the days in more ways than I can count!
Mine was $60 in the late 1980's. I had two roommates, and it was in Boston. I kid you not. It went up to $100 each after a few years. I saved a ridiculous amount of $$$. Those days are LONG GONE and GREED rules the day.
2 million $$$$$$$ home with 400$ window AC'S in Miami is precious 😂
I wasted 260,000$ on rent for 10 years. Let that sink in! I now own and it provides stability and reduces anxiety. Every year I was nervous the owner was going to decide to sell and put us out. Next home I buy will be my retirement home and I’ll rent this one out.
I hear you and relate. We were kicked out in 2019, the owner gave us less than a month to move because he sold the house. We were left to find whatever we could last minute and were miserable. We started looking to buy in 2020-2021 and were outbid every time. Good time (sarcasm)
@Kevin , I wasted the same on payments for a house that I ultimately had to walk away from because because the entire neighborhood had underwater valuations for an entire decade. Let that sink in. The amount of collective stress that places upon the home "owner" for the duration is immense. Still friends with my neighbor, homes that were built and bought in 2002 didn't fully recover until 2021... and even then my buddy said, "yeah, I can finally sell... but everywhere else went up in price too, so where would I live?"
I can totally relate to that, especially when it comes to the anxiety of not knowing where you're going to live from year to year. That's why it doesn't always boil down to only the financial side.
@@spliffboothSame. I bought in 05' and sold in 2017 underwater. It was stressful. But it's more stressful renting all these years. I have moved 5 times since. It takes a toll on your mental health. Stability and shelter are basic human survival.
BEING A LANDLORD IS NOT WORTH THE MONEY
What I don’t understand is how on earth are city councils penniless if they are getting that much from property taxes ?
Just like all government they have no accoubtability. Property and income taxes could double tomorrow and they would still be out of money. Its unfortunate that the public is the victim.
I don't understand how people have the money to pay for property taxes. It's insane.
I know. I pay 7k a year and I thought that was bad
I’m at $9k a year. My parents were at 3.5k before they sold and they thought they had it bad
Here I sit, watching how others live. I fell off the ladder of success years ago, threw in the towel and now live well within my means, only bills are utilities, low property taxes, food fuel, insurance, monthly credit card which I keep paid off. Rent vs own? If ur handy with a saw and hammer and don't mind swinging a paint brush, and keep a mower running, it's still possible to own the roof over ur head.
Settle down, Roscoe. The difference between you and I is that I got up after I fell off the ladder. Life is about overcoming adversity, not giving in to it. I pay a landscaper to mow and sculpt my lawn. I pay tradespeople to fix things. All the other minor stuff I can take care of.
@@DIVISIONINCISIONren't you a hero, bozo? Everyone's path is different, we don't know what adversities he had to overcome, and in the end it sounds like he's doing just fine - no debt, honest, responsible, albeit modest, way of life. You, on the other hand - we kinda know, or can deduce, what route you took... Millions of impoverished knuckleheads, usually minorities, lower class youths, often new immigrants from Latin America - join the military service and fight someone else's (often unjust) wars on the other side of the globe supposedly "for our freedom" LMAO, all in exchange for all those VA benefits, free college, zero down on the house, etc. So, shut your mouth and don't you disrespect hard-working ppl earning honest living!
Excellent information as usual, Michael! I had the good fortune to sell my Neapolitan home two months ago, but I've opted to invest the money elsewhere and rent for the next year while I wait and see what happens. Right now, the real estate market is a little too volatile for me right now.
@@frederickhoff I'd be glad to get the help of one, but just how can one spot a reputable one? How did you spot this Heather?
@@frederickhoff Interesting. I am on her page now doing my due diligence. She seems proficient. I wrote her an email and scheduled a phone call. How long do you think it will take before she replies?
Neapolitan home? What's your chocolate, vanilla, and strawberry
And what about when you are done paying the mortgage? all you are paying after that is insurance, taxes and repairs....If you decide to rent, you need to continue to pay rent after the 30 years and you own nothing.
Thats true, but the point isnt to rent forever. Its to rent for now, in order to save to buy
With war and social unrest developing I prefer mobility of renting
It isn’t that mobile. When you look at spending thousands sending out applications that is competing with hundreds of other renters and you will never see that money again.
If there is civil unrest and looting, you will be less safe in an apartment than those of us living in houses. A house has more space for weapons and ammo!
Way back in the day, when I studied Mortgage Law, the bank I worked for had “Home Owner Classes”. We would invite professionals from bankers, utilities, builders, repair techs, etc. If the participant finished all of the classes, we offered 1% off the down payment (and other offers from the companies who taught each class) and none of the participants foreclosed or ever had one late payment. Interest rates were 9.5% with 2 points! But that was DOWN from 14% to 18%!
Mine were10.25 +2 points x FIVE BUT numbers worked. Good courses to have But few do them .locals laugh at Me but retired at 51..ALOHA😁😁😁
Thank you for reminding everyone of the high cost of property taxes. How much longer will it be when your property taxes exceed the cost of the mortgage? Money grab. All that money not going into the economy.
I am passing my properties to the next generation. I save money to fix things. Very pretty neighborhood.
Ok, are we supposed to send you donations or something? I dont understand your comment. What? Nobody cares about your junk. Why do people waste space on this comment board just bragging about themselves?
"Very pretty neighborhood" for now
Plus..here in lala land, they are assessing a special fee for gas in a condo complex depending on your unit. Assessment ranges from $650 to $1,200...lol.
What a joke...
@Michael Bordenaro exactly..but people pay this bs..just dumb
you need to file a restraining order on that leaf blower guy 😉
The dudes just trying to do his job 😂
😆
I wish they would make those illegal. I feel like all lawn equipment should be electric. I feel like all motors should be electric actually and I do understand that unsustainable. I’m not in the dark about that. But the noise pollution I really feel like contributes to a lot of peoples anger and anxiety. This world is very very noisy. And just try taking a walk or ride your bike get out of your car and hear the world. It’s loud as hell.
@@Commonsenseisnotcommon8 the noise pollution and the air pollution from those things, ugh
LOL utpharmboy2006, you made me laugh.
I been crying but you made me stop. Thank you
Miami-Dade should have a helluva budget surplus in their coffers due to all this housing selling and massive increases in property taxes.
No kidding!
Yeah I know in St. Pete they’re using it to expand on infrastructure and other initiatives to make the city even more enticing to prospective buyers on the commercial and residential side. It’s funny how few new home owners know that taxes go off your purchase price down here.
I agree the cost of ownership is higher than 1 percent. I'm looking at 6k plumbing bill in my 208k house purchased in 2007. I have had to fix or replace things ranging from 2k to 12k just about every othe year. BUT my house will be paid for in 2028 or sooner. I will have a paid for home in my retirement years and i cant really a financial value on that. Just the ease of mind of knowing i will have a roof over my head regardless of how cost of living increases in my senior years. Also in my first 10 years of retirement i plan to rent my house, put my things in storage and travel. So thag will be additional passive income for me in retirement that helps to fund my travel in the go go years
Paying off the house is best. My costs to live are only property taxes utilities and groceries yearly
There is no guarantee that your landlord is going to keep up the maintenance of the property you are renting…lots of of slum lords out there….
That's when it's nice to just be able to move
Yes yes but the problem is when u retire u still pay your rent.... but the retirement money is not enough to cover all u need... thats why most ppl want house ownership .
30k a year for property taxes with cracked old roads!?
In Ohio my mortgage is 465 dollars which includes taxes and insurance. My rental property is 324 dollars per month and rents for 995 but could be more. Live below your means and invest. I am about to rent both properties out and have the proceeds pay my rent. I plan to a buy an investment every year until I reach 6/7 investment properties
Great content as always Michael! I was fortunate to sell my house in Naples 2 months ago but have decided put the money to work elsewhere and rent for the next year and see what happens, the real estate market is a bit too volatile for me right now.
Smart move ditching the sewer state.
Joe Colby, you are spot on! Wait to see what happens after this crash. Florida has the absolute highest prices for renting or owning a home in the entire US.
Good thinking. Florida is over priced now.
You weren't smart to sell this late. You would have made much more if you'd have sold a year ago or so. Why did you wait?
Thank you! It sure is volatile and I'm sure you got a nice chunk of change for that property
I was born and raised in San Jose, CA, which is south of San Francisco and in Silicon Valley. I live here for proximity to family and friends, year round beautiful weather, and amazing places to cycle even on a work night 🚲. I'm happy to rent because cost of renting is 2-3x less than the cost of owning. I hope to one day move to the southern US to buy, but I'll never own in San Jose, the cost is stupid.
You are also wasting money by renting in San Jose, too. Comparing rent prices to ownership in California is a pointless argument. The cost of living in California is prohibitive.
I don't blame you one bit. It makes no financial, since it seems to own a property there.
How about discussing renters who buy a home but decide to continue living in their affordable rental and rent out the home they own? That's what we did. We bought a new home at pre-construction pricing with the intention of moving in after it was completed. However, when the day came we ran the numbers and decided that it made more financial sense to continue renting and rent it out. This has worked out very well for us, as the rental income has now paid off our mortgage and now pays our rent and all other living expenses. Our rental is also in a nicer area than where we bought. An additional bonus is that we no no longer suffer the stress of being 'homeless' as we now have a house to move into should ever have to leave our rental.
Keep up the good work. Love your neighborhood tours.
I did this too, it was a great financial decision.
Yes i have the plan b too, displacing the tenant could be tough though
Awesome!
You must live in a red state. Blue states are hard to force a tenant out, especially if they decide to squat in your house.
This doesn't add up. The rental income pays for: the mortgage, your rent, AND all other living expenses?
But if you invest the difference between renting and owning I think you would end up with more money in the end.
Compound interest!
I live with a roommate in Charlotte but will be moving to the country soon where the avg rent is just $650 - all the chain stores are on the main highway and the next big town (average rent $850) is 10 minutes away with smaller towns in between - metropolitan areas are annoying and overpriced.
which towns? Im in Charlotte too
At the end of the day, the headaches of dealing with all the repairs and maintenance and others things that are associated with owning is not worth it to me. I still think at the moment, that it is more beneficial to rent then to buy. I invest just over $2,000 a month while renting and if I were to buy, the $2,000 I am investing would drastically decrease. Boise ID is expensive when you compare it to the wages being earned. Also, my rent did not change and stayed the same. Just my 2 cents.
Boise is one of those COVID bubbles that burst when employers called remote workers back in to the office. Talk about a housing bubble.
@@DIVISIONINCISION I am waiting for it to bust but not sure if it is going to. There are too many dummies still buying in Boise.
Thank you. As an older female with a permanent disabling injury (long story, will spare details) I do not feel physically able to own a home by myself so I continue to rent to the dismay of others. I will admit the future fills me with fear. It's also a horrible time to buy where I live. As a renter who made this choice of YOUR OWN VOLITION, do you find you're constantly being forced to defend your choice by those savvy, virtuous home or loanowners who think they are better than you?
@michael: wise. Where do you invest?
@@Thisismeofcourse I have government job so I invest in the TSP and also M1 Finance.
The main difference is that if you pay a mortgage for 15-30 years you have an asset at the end. If you rent you have nothing. Renting only wins if you can be disciplined enough to save the extra money you save to buy later or invest to make up for the value of the asset you don't get. If you're the kind of person who spends the cash available, and most of us are, renting can be a disaster.
The solution is to just invest the difference. If you're not disciplined enough to do that then you're a professional useless person.
So you save money in rent ...but you spend more , instead of saving it .......that's a looser...!!!
Here's the thing... I have no one to leave any excess $$$ to, and the humane society has pissed me off enough that I won't leave it to them either. So, who cares.
Speak for yourself here, young Ash. I saved money on cheap rent ($450/mo.) after retiring from the military and was able to purchase at the dip in 2019 with a 3% fixed 30 year VA with no money down. It can happen, but you have to live like no one else today to live like no one else tomorrow.
@@kookietherapy9398you can leave it to me😁
If you rent for $3000/ mo for 30 years that equals $1,080,000. That does not include any rental increases. If you rent a house the landlord is going to pass on the cost of repairs.
If you refinanced in 2021 or 2022 @ 2.75% or less, it's definitely cheaper to own my house right now. Not moving for awhile lol.
Of course, this is based on todays numbers
The cost of replacing an A/C Unit today would probably scare your typical Drug Zombie straight.
No joke! And the roof replacement cost!
@@armondlevinia9221 That would push the poor soul back to drugs.
I’m learning a lot from this channel.
So happy to hear that
I'm unsure where this quote came from. "It's 2030 I own nothing and have never been happier". Maybe it is a 30-40 year home loan. Owe from age 25 until age 55-65. Maybe feeling trapped in the same location. Maybe it is the extra expenses. In 30 to 40 years some areas will get worse. Maybe another investment would be a better idea. It is like getting married to your house. It is a long term commitment!
After 5-10 years, you need a big renovation to bring up the value of the house to keep it up with 4% appreciation. 😅
I rented a house for $1550.00 a month and was there for 7 years... I paid $130,000 for a home I didn't own and they sold it forcing me to move. I bought my house in Feb 2021 with a 2.75% int rate. Stress eliminated...
I got a 15 year refi at 2.1 before shit went crazy
They did you a favor selling
@@Ryan-jc7qh you really live the lowest most miserable life jumping comment to comment. You are the definition of misery loves company lol
@@maplenook Yes, they did. I totally didn't realize how much money I wasted until I moved and did the calculations.
@MC-rr3ew Thats awesome. Congrats 👏!
You mentioned to invest saved money but where could we possibly invest in right now? Everything is so uncertain right now that I feel like I’m lost when it comes to deciding where to invest my money. I’m a real person and not a bot.
Tesla. Read this response again in five years.
Open an acct with any reputable brokerage place fidelity etc. open a Roth IRA and invest it in S&P 500 index funds like ticker symbol VOO. Roth contributions can be withdrawn in retirement tax free.
Everyone has their own opinion on this. I like Gold and silver Carl below likes tesla, some people like investing in startups, the possibilities are endless, but you have to invest in something you know about and feel comfortable with.
@@Kevinw4040 I have a bad feeling that the S&P 500 is about to take a nosedive in the next couple of months.
@@MichaelBordenaro agreed. My first several years of investing basically landed me at break even. But that's still a win as it's kinda like forced savings and you build the habit of both putting money away and learning about the world of investing. Eventually the vapors coalesce and you're off and running.
Michael I have to tell you something.
I watch each of your videos more than once. Just to make sure I don't miss anything. So that's why my comments are edited lol I add more to my comment the 2nd time 🤗💗
These videos are so helpful!
Hi Lisi 🙂How are you?
Thank you very much!!
Arizona is not cheap to rent. Unless you want to live in a dump. Just sayin, I have 2 family members who rent and both of the complexes have raised the rent another 500 dollars they are at the end of their lease! That’s 2200 for a 2 bedroom going up to 2700. I’m a native.. Arizona is wrecked from the influx from Cali. Period.
You have no clue! My family moved to Mesa when most of Mesa was orange groves (1988). Back then the only people who could afford custom homes out there were transplants from California, Illinois and New York. Most of my neighbors were from out of state. We are the ones who made those areas nice and increased the value. This was back when Gilbert was just a ranching town. I lived in Phoenix metro about 20 years, but left before it became the cesspool it is now. When I visit family, I encourage them to leave as it's just become more crowded, and more dangerous.
@@DIVISIONINCISION I hear you. I was there to see Bell Road in 1978 it was just plain desert. Now everything north of there is built up way past Anthem, east and west. It’s out of control down there I will never live in Phoenix again it’s like LA. Here in Northern AZ .. Sedona is horribly crowded & Prescott is becoming a booming Phoenix all over again. Traffic in Prescott is a nightmare. This time the locals are being pushed out.
You always have the BEST thoughts and information.
Thank you Michael for another great video today.
Blessing’s, Carlos ✝️🙏❤️😊❗️
Thats so nice of you Carlos, thanks man!!
On that rent versus ownership spreadsheet from Justin, the cost of renting was lower until you factor in the amount of equity you have after 30 years, which was over $900k. So the total cost of ownership in his example, for 30 years of living there, is only a couple hundred thousand dollars.
Also important to note it’s Texas property tax rates.
@@Bobthebuilder42069 Homestead and cap on property taxes in Texas. Being a veteran helps.
I did explain that in the end, and really the point is to save $$ now so you can buy later. Not really to rent forever.
I think it really depends on the location. If it is in Detroit or even rural California there is no appreciation and even depreciation. There are many small towns in Texas a house cost less than $50k and most likely cost less later on.
Most advanced economies have cheaper rents vs purchase costs. That trend is even stronger in other countries due to various rent controls policies.
In the Navy a friend stationed in West Germany told me that his monthly rent was his cigarette ration---three cartons a month. For a two bedroom apartment in about 1972.
It's a relatively new phenomenon here in the US
Those other countries have supply shortages as a result of gov't manipulation of the market through price controls of rents. This is an unescapable law of supply and demand.
This is one of your best videos Micheal, of contrast / compare for renting vs. buying, and takes the place of the dinnertime family discussion which would hopefully occur between partners, or enlightening siblings about financial planning with regards to real estate and living expenses. Great teaching class video!
Thank you very much!
I take exception to the guys spreadsheet. I live in Houston and finding an apartment for $950/month means you're living in a really crappy apartment. He mentioned a cap of 7% which I've never heard of. This is Texas, the land of the free and gun toting republicans. He must live in a government subsidized housing unit? To live in anything you wouldn't need a gun to get to our front door would mean you'd have to spend a minimum of $1300 and that's still pretty low. Also, I didn't see anywhere the tax consequences of writing off interest and taxes against income. Last, who wouldn't refi a 7% interest rate and wherever you invest this $800 will probably be deemed as taxable income. I'm also shocked at property taxes in Florida. I live in a $365,000 house in a gated community, have the homestead and over 65 exemption and pay $3600/year for property taxes.
An associative living wiseguy realtor broker?
@@MR..181 Nope, just somebody who invested very well and very early on, blew off working spending my time playing racquetball and travelling the world.
Plus he calculated, but then didn't subtract, the residual value of the home after 30 years. So the total cost of ownership actually came to about $300k after 30 years of living in the home.
When you compare cost of owning is buying and renting where you want to live. I can find homes cheaper than where I live but I would not want to live there renting or buying. I can rent a $950 apartment 3 bedroom that is the same price as my mortgage but it is extremely small.
Michael, as a fellow Texan, your first and most important mistake is living in Houston. Criminals in Houston travel. They don't care about your gated community. They will follow you to Spring, Katy, The Woodlands to rob you in your own driveway. You aren't safe in a gated community because they can follow someone else in. Houston is a city I stay away from at all costs. Why you'd want to retire there, I have no idea.
If renting is cheaper than owning, then that means that landlords must be losing money. There is a limit to how long landlords will allow that to happen. They will eventually either have to sell or raise the rent significantly. Renters think that rents are high now, just wait. All these increasing costs (taxes, HOA fees, insurance, interest rates, maint. costs) will always flow down to renters in the end. I think a 20% to 30% increase in rent is going to happen in the next year to two.
ALSO very glad to see your numbers growing and GROWING 😊
Me too!
I rent in ON, Canada. The money I pay in rent is less than my average investment income (and then some) so in a way it costs nothing out-of-pocket. However, homes increased a lot post 2010. If I had bought back then I would be ahead now net-worth wise. You also don't have the "nest stability" that females really desire, so as a man you also sacrifice wife quality if that's your thing. So I'll keep renting and hoard my money, but if you're a young guy who wants a family, for god sakes stretch for your down payment and buy as soon as you can. Women always want stability of ownership, and men always want women. Just like the S&P 500, detached houses with land will always increase over the long run. Get yourself into one as soon as you can.
32 acres in nyc suburbs owned 50 plus years and not a space for a mobile trailer yet paying 18 % sale sold value prices in taxes yearly on 12 acres..surrounded by debtors who vote..
Everything comes with a price, including women. In my forties now, I'm glad I didn't get married. Life is so smooth now. I own a house, but it as nothing to do with a woman.
Years ago I bought a few fixer uppers and at that time it was a worthy endeavor since these homes were around 85K. I fixed each one up over the years and made money selling them (i did it 3 times: Idaho, Missouri and Texas). I fear those days are long over sadly! Also, now that there are far few skilled workers, if I had a home I would be struggling to find people to do plumbing and electrical.
Rents continuously increase over time. The interest portion of my mortgage is about 400 each month for 3 bdrms in a town where 1 bdrm apartment rents go for 1500 easy
Yup
Love the serene views. I'm a little jelly :)
These differences represent the price differential were a person to buy today. A lot of people who rent property bought that property a long time ago when the price was much lower. Still, it's interesting to see these gaps.
That's correct this is based on buying right now today. Of course if you bought a long time ago, this doesn't apply to you
Only in the very long term. We have had an unusual market the past decade of increasing market values. In previous decades there were long periods of price stagnation, if not depreciation.
I used to go to a hotel called San Souci in Jamaica. Wow same name same type of beautiful landscape. San Souci in Jamaica is a luxury old school hotel- it is gorgeous.
We actually did refinance our house at a lower rate (5%) about 2 years into our loan 20 years ago which had been at 7% and we took out a 15 year loan on $110,000. We put a large downpayment down and paid it off as fast as possible.
Love these places you walk through! ❤
Me too!
I bought a house in 1987 for 139,000. I refinanced it 3 times, the first refi, I moved from a 30 year loan to a 15 year loan. The second refinance, I moved to a 10 year loan. It was mortgaged for about 16 years total. The drop in interest made the cost on the monthly relatively similar, and early/mid career raises made the small increase manageable. Once the mortgage was paid off, that money I had spent on a mortgage went into college expenses for my 2 children. I sold the house in 2019 for 360,000. During that time, I put on 2 roofs, 2 hvac systems, replaced the deck, and remodeled the 2.5 bathroom and the kitchen. The house got repainted every 3-4 years, I did that myself. One of the big tradeoffs in home ownership is trading time for money, like repainting myself instead of hiring a painter.
If the houses get to be more reasonably priced, while the interest rates are still high, planning on being able to refinance to reduce the term can help reduce interest costs over time. The one caveat is that you can’t refinance if the value of the home has dropped, so that’s another reason not to buy at the peak. Unfortunately, I don’t see the salaries going up as much for current younger adults as I experienced, plus the homes have greatly increased in price making it much harder to replicate my boomer experience.
30 to 15 then paid off in 12 Total.U did a good job !!😁😁😁
You got to LOVE Michael!!!!
Thank you Keith!
If anyone in Miami wants the debris off of their property, they just need to invite you to come & do a walkabout down their street. Within moments, a leaf blower guy will magically show up! 😂 🌴
Haha I know Cindy! They follow me around 😄
Always nice views on your walks. No hills! Home ownership is expensive and fun.
Rained today here at high mountain desert forest plateau hideout NM....no ocean!
You'll definitely save alot of you work on your own home. My roof replacement only coat 3k in materials vs 10-15k from a roofer. Most of what you pay goes to hiring undocumented laborers and lining the businews owners' pockets.
I got a new roof in 2020 had3 people come by to give quotes. I went with the last guy he said I didn’t need to pay my 1k deductible as long as I keep his sign in my yard for a month. The roof was 10k. That’s the only major work I have done to my house since living there for 18 years. I purchased a new construction and it’s in pretty good condition. Praise the Lord
Rentals are very high in Austin Texas . I guess it depends on when you bought and what price bracket you bought .
Pay attention. Rent and housing is actually going down in the Austin area. Down about 30% YOY right now. In fact, people are leaving Austin because their homes are losing value, they are trying to cash out before a dip.
When comparing cost of ownership vs. rent, please be sure to calculate after tax cost.
Not to mention the shear amount of time and effort that goes into finding, owning, and selling a home has value as well.
Property tax increases of less than 3 percent a year in a Texas metro. That’s very unlikely. Taxes on my Texas home increased about 10 percent a year. Texas property taxes are among the worst. My current home in Albuquerque is locked in at 3 percent for property taxes. I’ll take a state income tax of 5 percent over that so called no income tax state.
Buyers are flocking to florida.. lower income taxes..now increases demand and prices go up.
People thought I was nuts renting for so long. In 1984 I was paying $430 a month for a 2 br, one bath apartment over looking the pool. I left in 2011 and bought my house when my rent hit $875 plus utilities and insurance. At that point buying a home was a lot better deal since I was buying it outright. Utilities, taxes and insurance runs around $700 a month in 2023. Rent on my old apartment is running around $1,300 a month. BTW this in Pittsburgh.
Redfin report for April just came in, i live on the west side of Indianapolis and checked out 3 cities (Plainfield, Avon and brownsburg) Plainfield is now 12% year over year decline! Avon and brownsburg are still positive (i believe like 3 or 6 percent year over year) but those are high demand areas and eventually they'll follow suit, crash baby crash
Great video! Loving the new areas! Keep up the great work, Michael!
Thanks Jeannie, me too! Nice to go to new places.
If your handy and can tdo fixes yourself and just buy the parts, then a house is cheaper than renting
Here is the issue. Is it that way comparing same size rent and home your buy? Comparing a 900sqft 3 bedroom is not the same as a 1500sqft 3 bedroom home. When I bought with a 0% down home in 2014 (when everyone was calling for a second crash as home sales fell.) then my rent was $200 over the price of a new home. Now it is $900 and that includes taxes and insurance. 1% a year is very much normal for repairs.
I have lived in the same house for 43 years. It was not purchased new. In that time, I have replaced the roof, the sewer line, the electrical, the plumbing, the appliances, painted the inside and out. The bid this year to repaint the interior was $10,800. So, I did it myself with the aid of two guys (a half day each) and accomplished the job for about $1300,
The roof cost only $10,000 in 2008 and the sewer line replacement about 10 years ago was $13,000. Three or four years ago, the outside was painted for $5000.
The house is in move-in condition. However, it is also a tear down. I am not forgetting that I do not live in a part of the country where the property taxes can be raised an unchecked amount every year. That increase is limited by law.
Been in my house 26 years from new construction. 1850 sq ft, single family, 3br/2.5 bath.
Furnace & AC system: $3,500 (replacing original from new build, my brother does this line of work, and replaced mine for no labor, saved us a crap-ton)
New roof: $13,500 (replaced mine 2 yrs ago, luckily? never had an insurance claim to replace it for us)
New flooring: $10,000 (doing the work ourselves, tearing out 18-yr old pergo that cost $5,000 when we put that in ourselves after carpet wore out from dogs, replacing with nice LVP)
New water heater: $500 (50-gal natural gas, replaced it ourselves, this is the 2nd time we've replaced it)
These all-in averages to around $106 per month, or $1,270 per year in these maintenance items. There are always others. We've gone through 2 dishwashers now on our 3rd, recently on our 2nd stove and 2nd refrigerator. We do regular maintenance to our house and appliances, and save a lot by doing the labor we can handle by ourselves. It is not unreasonable to think at least double this for hiring it out. Plus our 1850 sq ft is probably smaller (or larger) than the average in other communities.
We are currently doing replacements so $5000 for new water heaters, 22G for the new HVAC system, and about 4G out of pocket for floor repairs after insurance paid the rest (45 K). All unexpected costs.
There you go!!
Own vs rent discussion is spot on. My goal is to own my home in retirement.
Love those Semi-circular driveways..sooo nice!
When you rent a home, you are paying a mortgage. It’s just not your mortgage. You’re paying your landlords mortgage. You are paying for the maintenance, taxes and insurance and then some. All the things you think you’re avoiding, you’re not.
Yes and no, many landlords bought their properties years ago, so you are paying their low mortgage vs your new high mortgage today
@@MichaelBordenaro I bought a duplex in 2021. The tenants are, in fact, paying the entire mortgage, taxes, maintenance etc and then some. I bought it with a VA loan 0% down. Not that long ago
Absolutely correct.
@@savoy6 I payoff my mortgage ASAP and only have property taxes utilities and groceries yearly. Living off 10k basically per person
It depends. If the landlord purchased the home recently...depending on the city..they are out 1-4 k monthly. Rent won't cover.
I’ve been in Florida since 2012 and have bought so many properties and none of the realtors told me or explained to me how property taxes will be based on purchased price. I dont trust realtors to “watch out for my best interest”. That used to be the case back in 2001 when I was younger where I totally trusted my realtor because she educated me about budget in future when purchasing a home.
I love your honesty and the knowledge that you share. Thank you.
Of all the 5 properties I have owned …I never paid over $80k for them….
Tried that at 25,000
Did you calculate capital gains taxes on that sale; and if you invest the difference you can almost always come out ahead while being able to move whenever you want. Also, make sure you adjust for inflation at the time of the sale--you will quickly realize that you really did not do as well as you thought. Once you do ALL THE MATH, most people leave something out, if you live in the house as your primary residence you do not beat the renter next door. The win with single family homes has always been being able to rent them out. If you live in it the entire time you almost always loose to a disciplined renter who know how to invest. Sorry forgot to mention that this only applies to those who use conventional mortgages to purchase the home--if you pay cash then you win.
Win..? With the printup of 38 times the borrowers debt in competing currency destroying the value of your savings and being spent without regards to value or the stress and struggle to attain $...by idiots?
I am.closing at a high interest rate and inflated property but I will be still ahead..Rent in NJ too high.
Congrats! I'm from Jersey and I know rents are insanely high, the whole northeast is. It's def not what was on the screen, I don't know where Zillow got their data, I don't trust that company. They manipulate.
Don't forget, though, that your interest on your home is tax deductible. You can now get a mortgage tailored to your wants. So, let's say you refinance at the 5 yr mark of the original mortgages. You can have the new mortgage written for 25 yrs. Home prices will appreciate and it still is a hedge against inflation but these aren't ordinary times.
Great breath control on these videos. I been binge watching and learning a ton. Being a 1st time buyer.
I had FOMOitis and put down EMD on new construction. I started to realize how bad of a time it is to buy after and how it made zero sense to move forward. Currently hunkering down to recoup my loss.
But at the end of the 30 years, you need to take into consideration the value of the paid off home.
Yep an if he gets the house and just rent it out and stay with mom he gets both sides of the coin. LOL
Houston housing market has been competitive. By the time the man renting is ready, the prices could be higher, and everyone, including grandma, is out to have bid wars on desirable homes. It's not enough to have the money in hand at that point. Besides that, families do pass homes down generation to generation. You can't do that with a rental and can be forced out if it is sold to a new owner.
Mike, you are correct regarding home maintenance costs. We just had our roof replaced (last done in 2004). The cost was OVER 3 times what it was then. I think a LOT of people fear an eminent financial cataclysm and are trying to maximize their income before the proverbial house of cards comes crashing down.
I am 67, been renting since age 18.
I like to be foot loose.
Guy I know my age did buy a condo 10 year ago...sais there is always a dude knocking at the door
telling him he has to pay $135 for this, $225 fo that, $430 for this, $235 for that.
NON STOP.