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Huge difference is that wealthy/landlords buy properties with debt and operate with cash-flow while for them liability creates wealth. For working people prope

Huge difference is that wealthy/landlords buy properties with debt and operate with cash-flow while for them liability creates wealth. For working people properties on mortgage are just expense. https://www.singsaver.com.sg/blog/robert-kiyosaki-advice-on-financial-statement https://www.singsaver.com.sg/blog/robert-kiyosaki-advice-on-...

RobertoG 5y ago
Until you pay the mortgage. Then, your bigger expense, rent, disappear and you can start saving. Also, the thread of homelessness disappear from your life. That's something never will happen if you keep just renting.
- chii 5y ago
  > rent, disappear and you can start saving. that's not true. At any point in time, the cost of the capital is going to be comparable to rent. If you owned 100% if equity in the house, what you're "losing" is the potential rental income from the house, in exchange for the free rent you don't have to pay, plus the difference in the income from investing in the stock market (assume a maximally diversifed portfolio). AKA, imputed rental income. The only bit you save is the tax that you didn't have to pay, if you actually earned the imputed rental income from your own property. It's an illusion that living can be free. Renters pay in straight hard cash, so it's easy to count that cost. Owners pay in opportunity cost lost in the locked up capital in the house, or the interest payment (or some combination of interest and lost opportunity cost of capital).
  - RobertoG 5y ago
    Well, I suppose that Warren Buffet and similar are all renting then. I think that part of the problem is thinking of your home only in terms of an financial investment. A home is a place for living, you are always going to need a place for living. Despite appearances, you don't need a maximally diversified portfolio for living.
- effie 5y ago
  Germans and Swiss are renting the most and do not have a dread of homelessness. The dread comes in when you can't find work that will pay for rent. Not when you don't own a house.
  - RobertoG 5y ago
    Yes, but then, people get all puzzled and surprised when they read that, median household wealth, is bigger in Italy or Spain than Germany.
- twobitshifter 5y ago
  I would say threat of homelessness fades but does not disappear completely. In the US you are taxed on home ownership, and in some houses may have to pay HOA fees. There can still be a sizable carrying cost for a house that you own outright.
- NiceWayToDoIT 5y ago
  I was pointing to something else, landlords have advantage as they can borrow money using (10x) leverage created on cash-flow, in that way landlords do not use "their own money" but operate on huge debt. Crude example is that for your mortgage bank will shake last penny and do XX number of checks, and then you will pay that money as your major expense paying with your salary. For you home is not an asset, it will become asset only when you pay it out, until then it is expense a burden, so for you debt is bad thing. For landlords on the other hand debt is good, as more debt they have more properties they have and they can create larger cash-flow. While you pay huge taxes on your salary 40-55%, landlords can pay no taxes at all as they are constantly in debt. (Trump's way) But government cannot do anything about it because if they do something crash will be worse than the 2008 one, any new policy could impact landlords with portfolios in billions. Now, if they are in debt how they make fortunes someone may ask? Property prices grow with time, and with different loopholes if you mass let say 100 properties over 10-20 years, and then you sell only ten you will probably get out money enough to pay out initial debt of first 50. (figures are rough just to get point at least in London they are very close to true figures). Also it is worth mentioning, that cash-flow is paying salaries, expenses, dividends ... and there are multiple other known tax loopholes how to get the money out ...
veltas 5y ago
Exactly, wanting to own your own home is not the issue, point the finger at housing not keeping up with populations and the people buying up the limited housing that exists.

RobertoG 5y ago

Until you pay the mortgage. Then, your bigger expense, rent, disappear and you can start saving. Also, the thread of homelessness disappear from your life. That's something never will happen if you keep just renting.

chii 5y ago
> rent, disappear and you can start saving. that's not true. At any point in time, the cost of the capital is going to be comparable to rent. If you owned 100% if equity in the house, what you're "losing" is the potential rental income from the house, in exchange for the free rent you don't have to pay, plus the difference in the income from investing in the stock market (assume a maximally diversifed portfolio). AKA, imputed rental income. The only bit you save is the tax that you didn't have to pay, if you actually earned the imputed rental income from your own property. It's an illusion that living can be free. Renters pay in straight hard cash, so it's easy to count that cost. Owners pay in opportunity cost lost in the locked up capital in the house, or the interest payment (or some combination of interest and lost opportunity cost of capital).
- RobertoG 5y ago
  Well, I suppose that Warren Buffet and similar are all renting then. I think that part of the problem is thinking of your home only in terms of an financial investment. A home is a place for living, you are always going to need a place for living. Despite appearances, you don't need a maximally diversified portfolio for living.
effie 5y ago
Germans and Swiss are renting the most and do not have a dread of homelessness. The dread comes in when you can't find work that will pay for rent. Not when you don't own a house.
- RobertoG 5y ago
  Yes, but then, people get all puzzled and surprised when they read that, median household wealth, is bigger in Italy or Spain than Germany.
twobitshifter 5y ago
I would say threat of homelessness fades but does not disappear completely. In the US you are taxed on home ownership, and in some houses may have to pay HOA fees. There can still be a sizable carrying cost for a house that you own outright.
NiceWayToDoIT 5y ago
I was pointing to something else, landlords have advantage as they can borrow money using (10x) leverage created on cash-flow, in that way landlords do not use "their own money" but operate on huge debt. Crude example is that for your mortgage bank will shake last penny and do XX number of checks, and then you will pay that money as your major expense paying with your salary. For you home is not an asset, it will become asset only when you pay it out, until then it is expense a burden, so for you debt is bad thing. For landlords on the other hand debt is good, as more debt they have more properties they have and they can create larger cash-flow. While you pay huge taxes on your salary 40-55%, landlords can pay no taxes at all as they are constantly in debt. (Trump's way) But government cannot do anything about it because if they do something crash will be worse than the 2008 one, any new policy could impact landlords with portfolios in billions. Now, if they are in debt how they make fortunes someone may ask? Property prices grow with time, and with different loopholes if you mass let say 100 properties over 10-20 years, and then you sell only ten you will probably get out money enough to pay out initial debt of first 50. (figures are rough just to get point at least in London they are very close to true figures). Also it is worth mentioning, that cash-flow is paying salaries, expenses, dividends ... and there are multiple other known tax loopholes how to get the money out ...

veltas 5y ago

Exactly, wanting to own your own home is not the issue, point the finger at housing not keeping up with populations and the people buying up the limited housing that exists.