5 ms·
Because it means you don't have to pay rent after you retire.
by jschwartzi 11y ago
Because it means you don't have to pay rent after you retire.
- refurb 11y agoBut you're not paying rent because you have hundreds of thousands of dollars locked up in tye house? The real question is, how much money would you have made if all that equity was in the stock market? Sometimes that can be more than what rent would be.
- reverend_gonzo 11y agoAnd sometimes the stock market crashes and takes everything with it. See: every ten years. At least with a house, even if the value goes down, you still have a home.
- kspaans 11y agoYou say "stock market crashes", I say "dividend yields go way up!". The losses are usually paper losses (hello tax-loss harvesting!), which don't bother long-term investors (whether they are home owners or stock investors). (I don't think you can tax-loss harvest a home though...)
- deegles 11y agoOnly after you own enough homes to create a publicly traded REIT :)
- drudru11 11y ago... If you can still swing the mortgage
- refurb 11y agoTrue, but what is more risky? Having most of your money in a single, non-liquid asset with a very local market or having most of your money in a diversified, liquid asset? I'm not saying owning a home is a bad idea, just having 80%+ of your money in it.
- Domenic_S 11y agoDiversification can include real estate. Besides, it's the leverage. You can buy $625,500 of house with 2.5% down + a monthly payment with a ~4% vig. Nowhere else can you get that kind of money at that kind of rate with ~$16k down. Then if you're smart you invest other money other places to diversify. You can live in house, unlike Vanguard funds. But you should have both.
- scurvy 11y agoWhere can you buy with 2.5% down? Those days are long gone. Skin in the game and all that.
- refurb 11y agoYou are correct, but with leverage comes risk. Here is my nightmare scenario: I live in the Bay area and if I wanted to buy a single-family house, I'd be looking at $900K at a minimum (if you avoid the really run-down/dangerous areas of the city). Let's say I have the down payment of 20%. That's $180K. I buy the house and I can swing the $6000 per month in PMI, utilities, maintenance, etc. Then the market takes a dip of 20%. If you own a $200K home, the hit would be $40K. That would suck, but with a good paying job, you could handle it. In SF, a 20% drop (still within the realm of possibility) means you just lost $200K (if you include the other costs of closing on the home). $200K would be 5+ years of savings down the tubes.
- 11y ago
- mywittyname 11y agoEverything? When was the last time the stock market went to zero? Every market crash in the US has been follow by a even bigger boom.
- OldSchoolJohnny 11y agoThere are untold retired people who have been forced to move due to rising property taxes. Many of the benefits of owning evaporate when you take into account everything.
- deleted 11y ago[deleted]