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I have half a million I can liquidate, because I bought instead of rented. Many friends said it was a 'bad investment', but when the money gets spent either way

I have half a million I can liquidate, because I bought instead of rented. Many friends said it was a 'bad investment', but when the money gets spent either way, even a bad investment is better than none. It has never been easier to buy a home that you can afford thanks to loan programs and historically low rates, although now rising... But yeah, even though in many ways a home is a liability, it has equity you can leverage. In many countries, homeownership conveys other perks. In the usa, homeownership is also a strong sign of being a 'good neighbor' as you have skin in the game, while renters see little reward or penalty for being poor neighbors. There are of course shades of grey and other factors, but in general, the modern marketing to milennials that homeownership is futile or worthless is partly its own downfall.

argv_empty 7y ago
when the money gets spent either way* The core of the "bad investment" argument is that the money doesn't necessarily all get spent either way. renters see little reward or penalty for being poor neighbors "We have chosen not to renew your lease."
- patrick5415 7y ago
  > The core of the "bad investment" argument is that the money doesn't necessarily all get spent either way. Yes but that is part of the problem with the argument: it basically assumes perfectly rational actors who never cheat contributing to their index fund so they can go do/buy whatever. It’s a lot harder to just not pay your mortgage one month.
unityByFreedom 7y ago
A home is an investment, and depending on the market, it may make more sense to rent and invest the rest in an index.
- vturner 7y ago
  It definitely it, I'm shocked at the never ending cycle of costs. If you can't buy new, don't buy something middlebofbthe road, too much sunk costs.
- Falkon1313 7y ago
  Right, but it's really only an investment property if you already have somewhere else to live. It's more of a consumable asset with a tightrope walk between transaction costs, upkeep costs, depreciation, and inflation vs market price increases. And if you live there, it's different because to sell it you have to become homeless and/or use the money for new accommodations. Assuming that your investment has done well because housing prices have risen, then your new accommodations will likewise be more expensive too. It might pay off a bit if you can see it through, especially if you can then move to a lower cost-of-living area, but it's hard to tell 30 years in advance whether you'll be able to keep that commitment and if it will pay off better than investing in index funds or other investments. Certainly some people found out the hard way in 2008 it doesn't always work out that well. In general, it may sometimes slightly beat inflation if you're lucky but under-performs the stock market. - https://www.investopedia.com/ask/answers/052015/which-has-performed-better-historically-stock-market-or-real-estate.asp https://www.investopedia.com/ask/answers/052015/which-has-pe... - https://www.cbsnews.com/news/history-says-home-real-estate-is-a-bad-investment/ https://www.cbsnews.com/news/history-says-home-real-estate-i...
  - JamesBarney 7y ago
    The best real estate investment you can make is your own home. 100% guaranteed occupancy, no property management, 0% turn over, deductions on property tax, federal taxes, etc...

argv_empty 7y ago

when the money gets spent either way* The core of the "bad investment" argument is that the money doesn't necessarily all get spent either way. renters see little reward or penalty for being poor neighbors "We have chosen not to renew your lease."

patrick5415 7y ago
> The core of the "bad investment" argument is that the money doesn't necessarily all get spent either way. Yes but that is part of the problem with the argument: it basically assumes perfectly rational actors who never cheat contributing to their index fund so they can go do/buy whatever. It’s a lot harder to just not pay your mortgage one month.

unityByFreedom 7y ago

A home is an investment, and depending on the market, it may make more sense to rent and invest the rest in an index.

vturner 7y ago
It definitely it, I'm shocked at the never ending cycle of costs. If you can't buy new, don't buy something middlebofbthe road, too much sunk costs.
Falkon1313 7y ago
Right, but it's really only an investment property if you already have somewhere else to live. It's more of a consumable asset with a tightrope walk between transaction costs, upkeep costs, depreciation, and inflation vs market price increases. And if you live there, it's different because to sell it you have to become homeless and/or use the money for new accommodations. Assuming that your investment has done well because housing prices have risen, then your new accommodations will likewise be more expensive too. It might pay off a bit if you can see it through, especially if you can then move to a lower cost-of-living area, but it's hard to tell 30 years in advance whether you'll be able to keep that commitment and if it will pay off better than investing in index funds or other investments. Certainly some people found out the hard way in 2008 it doesn't always work out that well. In general, it may sometimes slightly beat inflation if you're lucky but under-performs the stock market. - https://www.investopedia.com/ask/answers/052015/which-has-performed-better-historically-stock-market-or-real-estate.asp https://www.investopedia.com/ask/answers/052015/which-has-pe... - https://www.cbsnews.com/news/history-says-home-real-estate-is-a-bad-investment/ https://www.cbsnews.com/news/history-says-home-real-estate-i...
- JamesBarney 7y ago
  The best real estate investment you can make is your own home. 100% guaranteed occupancy, no property management, 0% turn over, deductions on property tax, federal taxes, etc...