3 ms·
I believe the smartest thing you can do if you are reading this in America is to buy a house that you can afford in an area you would like to live in for more t
by endisneigh 5y ago
I believe the smartest thing you can do if you are reading this in America is to buy a house that you can afford in an area you would like to live in for more than a few years with more than 1 bedroom and rent out the additional bedrooms.
Setting aside appreciation, doing this is the closest thing to a guaranteed success imaginable. Leverage lowers your start-up costs, renting enables all your house work to be deductible, the rent itself allows you do pay down your principle faster, and most importantly you were going to live there anyway so your opportunity cost is 0.
- gruez 5y ago>your opportunity cost is 0. not really, you still need to factor in the cost of capital (ie. downpayment) and the risk that the housing market might collapse.
- endisneigh 5y ago> not really, you still need to factor in the cost of capital (ie. downpayment) and the risk that the housing market might collapse. I disagree - if you're talking about bubbles collapsing that's true no matter how you store your money, e.g. inflation ruining savings, stock market correction, etc. You need a place to live anyway and government incentives will reduce your cost of living far below renting anyway. What is true is that you drastically reduce your liquidity but I already presumed that in the scenario anyway by saying staying a few years (any housing correction historically will be resolved in a few years), if applicable
- cma 5y agoWhy not buy securities with inflation protection? The treasury offers them.
- np_tedious 5y agoI think you're training about i bonds, and they are capped at 10k / person / year
- cma 5y agoNo, but good to buy those too. You can buy these uncapped: https://www.treasurydirect.gov/indiv/products/prod_tips_glance.htm https://www.treasurydirect.gov/indiv/products/prod_tips_glan...
- hiptobecubic 5y agoAnd the fact that you have some other asshole living in your house now.
- hackerfromthefu 5y agoThere can be massive opportunity cost lost to dealing with the various interpersonal interaction (ie work) thats required to rent a room in a house you are personally living in. If you're making a good salary, thats probably not worth it.
- endisneigh 5y agoI don't see it any differently than having a roommate, which is something a lot of people who have good salaries have anyway.
- josephcsible 5y agoWhat do you mean exactly by "a lot"? I don't think having roommates is very common for people who can afford not to.
- endisneigh 5y agoIn NYC, Bay Area, Boston, LA and Hong Kong I know people making top 15% income and have roommates. They don't necessarily need to, though.
- nine_k 5y agoHaving a roommate has two purposes, I suppose. One is freeing up $1-2k of disposable income that you can afford to spend on living in the most desirable place, but maybe would rather not. Another is to feel less alone. Also, having somebody in the apartment when you're away, who could take care of a delivery or a pet may be important.
- bradlys 5y agoThe people I know who have roommates do it because they’re cheap and they don’t like being alone. This includes people making $400k+/yr. Even people in 7-figure territory. They’re pennywise pound foolish types usually tho.
- symlinkk 5y agoMore realistically this would look like “get married, buy a house, split the mortgage”.
- urda 5y ago> your opportunity cost is 0. This is not true, and paints an unfair and unrealistic viewpoint.