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> A house has a more important primary purpose Aren't houses purchased for the intent of renting them out investments? This would argue that they are not. Se

> A house has a more important primary purpose Aren't houses purchased for the intent of renting them out investments? This would argue that they are not. Seems to be proving too much. Despite the title, this section of the article is actually about how illiquid houses are. Which, again, proves too much - old bonds are also extremely illiquid, but no one says they aren't investments. > A house can’t be an investment if you never plan to sell it I buy plenty of VFINX that I don't intend to ever sell. I buy them for the dividends (incidentally, the same reason I would buy a house). > Thinking of your house as an investment can lead to equity stripping This says that thinking of your house as an investment leads to poor decisions, not that it is wrong. Sure, maybe it does, but that's a completely different argument. > The carrying costs of a house are too high for it to be an investment The carrying costs of a house are typically negative, unless you conveniently forget that a house covers a short position and is thus paying you back (in the form of covering your rent). Which the article does. > Your house won’t generate cash flow Again, it is covering a short position. It saves you from paying rent, which is mathematically identical to forcing you to continue paying rent but paying you the same amount. > Price appreciation is the magic ingredient, but it’s not guaranteed This is true of all investments.

nommm-nommm 10y ago
>Aren't houses purchased for the intent of renting them out investments? Those are investment properties which is a different thing than we are talking about. We are talking about a primary residence bought to live in. Yes, some investments are illiquid, I have some personally, but its stupid to have your entire portfolio in illiquid assets. >I buy plenty of VFINX that I don't intend to ever sell. I buy them for the dividends (incidentally, the same reason I would buy a house). A house doesn't provide dividends. Unless you are talking about investment properties, which, again, isn't what we are talking about here. >The carrying costs of a house are typically negative Doubtful. Very, very, few people are going to spend as much on rent as they would a house. Houses have a way of eating away at your money in a way renting does not. The carrying cost of my house is certainly not negative. Of course, "you have to live somewhere" muddles the water a little bit. But its designed to get you to think about your house as more "somewhere to live" rather than "something to build wealth." >This is true of all investments. Which is why we diversify, to minimize risk. The American mindset is "buy a house because your house will make you rich." So people overspend on houses neglecting any other investments or savings in the process. That's the real problem.
- thedufer 10y ago
  > A house doesn't provide dividends. Unless you are talking about investment properties, which, again, isn't what we are talking about here. A house pays you by saving you rent, which as I pointed out farther down is mathematically indistinguishable from renting it to someone else and continuing to pay rent (although this is muddied a bit by tax laws that care about whether the owner is also the tenant). > Very, very, few people are going to spend as much on rent as they would a house. This can only be true if you're not comparing similar housing - like, yeah, if I buy a house twice as big as the one I was renting I've lost money. But if you're comparing like for like, this assertion implies that investment properties are a net loss. It's a bit curious how those rental companies stay in business. I agree with most of your responses, though. But they are all arguments that your house is a _bad_ investment, which is different from it not being an investment at all.

nommm-nommm 10y ago

>Aren't houses purchased for the intent of renting them out investments? Those are investment properties which is a different thing than we are talking about. We are talking about a primary residence bought to live in. Yes, some investments are illiquid, I have some personally, but its stupid to have your entire portfolio in illiquid assets. >I buy plenty of VFINX that I don't intend to ever sell. I buy them for the dividends (incidentally, the same reason I would buy a house). A house doesn't provide dividends. Unless you are talking about investment properties, which, again, isn't what we are talking about here. >The carrying costs of a house are typically negative Doubtful. Very, very, few people are going to spend as much on rent as they would a house. Houses have a way of eating away at your money in a way renting does not. The carrying cost of my house is certainly not negative. Of course, "you have to live somewhere" muddles the water a little bit. But its designed to get you to think about your house as more "somewhere to live" rather than "something to build wealth." >This is true of all investments. Which is why we diversify, to minimize risk. The American mindset is "buy a house because your house will make you rich." So people overspend on houses neglecting any other investments or savings in the process. That's the real problem.

thedufer 10y ago
> A house doesn't provide dividends. Unless you are talking about investment properties, which, again, isn't what we are talking about here. A house pays you by saving you rent, which as I pointed out farther down is mathematically indistinguishable from renting it to someone else and continuing to pay rent (although this is muddied a bit by tax laws that care about whether the owner is also the tenant). > Very, very, few people are going to spend as much on rent as they would a house. This can only be true if you're not comparing similar housing - like, yeah, if I buy a house twice as big as the one I was renting I've lost money. But if you're comparing like for like, this assertion implies that investment properties are a net loss. It's a bit curious how those rental companies stay in business. I agree with most of your responses, though. But they are all arguments that your house is a _bad_ investment, which is different from it not being an investment at all.