[Cedric]

My thoughts on home ownership as a “home owner”. I put in quotations because the bank owns it until paid off.

Cons:

– Home ownership is a pretty crappy investment

– There is a huge opportunity cost with the down payment on a home.

The money could have generated higher returns if
just left in the sp 500 fund or something else

– Lots of hidden cost associated: Property tax, Maintenance, Capital Expenditure, Insurance, interest etc

– Mortgage conditions are not in your favour. You will be paying more towards the interest in the beginning

– The rate of appreciation is basically offset by the added fees + inflation

Pros:

– Stability ( just as long as you can make the payment). No landlord that will just sell the house and ask you to leave

– Rent can keep going up. At least for a mortgage if you are on a fixed rate you can budget accordingly

– Once paid off you basically will have one of your basic needs met and one of your biggest expense removed.

That’s at least the goal when you are retired to not have huge shelter costs

– You have a lot more control on what happens in the house

– Depending where you live the house values can increase quite rapidly

Would I purchase a home again if I could go back in time. I most likely would as I do value stability.

[Christina]

If you own for 10 years and the house appreciates 2% per year that is quite a bit of appreciation at the end of 10 years.

If you rent for 10 years, all that money spent on rent is gone.

You have to live somewhere.

Why would you spend that money and have no return when you can spend that money and get more back in time?

[Sunny]

Buying my house has been a love/hate relationship. I love my house. But I’ve had tremendous home repairs.

Just last 3 years alone, about $60k to fix foundation issues. Now I see the basement is taking on water.

The love part is that I’ve been able to rent out to housemates. I was able to stuff my 401k because of the extra rents.

At one point, between 2 tenants, they’d pay 70% of my mortgage, taxes and insurance!

My house is very popular area of town.

My zillow estimate has increased 250% over my buying price.

I had refi and got a 15 year fixed at 2.375%. I’ve got 4 more years to paid off.

[Constance]

as we get closer to retirement, its a pretty nice feeling having a paid off home.

especially in these times where rents are higher than alot of mortgages.

[Ken]

The main thing about real estate gains is that they are so leveraged. I have a rental that I put like $20k down 8 years ago, and based on appreciation I’ve made $280k of that $20k and that’s not even accounting for cash flow from rent and tax advantages.

My primary I also rent out the extra bedrooms so that is also giving me a return way more than the stock market.

It’s the extremely leveraged gains in real estate you have to account for.

[Sneha]

Cons : lot of things need be replace 10 -15 years. Have to save for those. Repairs are often expensive.

Cons of not buying, ppl often lack the desiplane to save the mortgage- rent.

They usually spent it.

Imo, buying a home is not often an investment strategy but quality of life

[Aaron]

Not sure if there’s a difference in how homeowner mortgages are discussed in your area as opposed to mine but here many of those costs such as insurance and taxes, and interest are discussed clearly and up front.

Some things I think people don’t have a good sense of are:

1. The fact that their piti will go up overtime

2. Capital expenditures Wich you mentioned.

[Sean]

I’d just add for mortgage costs the principal and interest is fixed if you have a fixed rate mortgage, although my understanding is those are pretty rare outside the United States, but the taxes and insurance can and will go up.

With rising home values comes rising property taxes, insurance rates have also sky rocketed in many parts of the country.

[Dave]

On average, the stock market has delivered stronger returns compared to real estate housing appreciation.

Some people like to share the neighborhood they live in, which has appreciated substantially more than the S&P.

The stock people could bring specific stocks which have gone to the moon, like Microsoft, Nvidia, etc.

[Wayne]

I don’t understand why people think renters aren’t paying for taxes, maintenance, insurance, etc….

It’s all factored in the rent payment.

The landlord isn’t paying these things with their money.

The difference is a renter gets 0% of the future benefit.

Renting can make sense in plenty of situations but home ownership almost always wins out in the long run.

[Mark]

I own a dozen properties..have literally me millons! I’m a believer.

[Aaron]

A landlord has all the costs of homeownership built into the rent, so even though you may think you’re not paying for them, you are.

[Anna]

I bought a home on a single, moderate income and I regretted it hugely for the first two years.

I’m definitely house poor at the moment and trying to catch up. Would I do it again?

Probably bc we need to “make mistakes” in life.

Would I recommend it to others, most likely not the only way I’m winning in owning a house rn is having roomies!

[Megan]

I own a house that has had the same renter in it since 1980. She faithfully pays her rent on time.

Had she purchased it at any time, it would be well paid off.

We purchased it in 2018.

She will be 96 in December. Her rent is $395 for a 2200 sqft house with a beautiful back yard that she continues to maintain.

She will live there as long as she wants because we love her and I can financially afford it.

How many other investors would do the same?

Where else could she live for $395? Buy a home, people.

[Ken]

Also a 30 year mortgage will become almost free money if you keep it the whole time.

Like those who bought 30 years are paying like 10% of the rental cost now.

[Author]

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