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Excuse Number Five: who is going to pay my mortgage for the next 18 months? Unfortunately, the Western world's mindset of house ownership means that most peop

Excuse Number Five: who is going to pay my mortgage for the next 18 months? Unfortunately, the Western world's mindset of house ownership means that most people who want to do something different generally can't do so until their 50s. Solving that might stimulate innovation and start-up creation. Imagine an environment where basic accommodation and sustenance was available to everyone. People would have the freedom and opportunity to do exciting, novel things.

cpursley 13y ago
"Imagine an environment where basic accommodation and sustenance was available to everyone" It is; it's just most of humanity is confused about needs vs. wants.
jaf12duke 13y ago
I'm 34. Married. And don't own a house, nor will anytime soon. It would've been much harder to stomach the risk of starting 42Floors if I had a mortgage. Getting locked into debt, whether that be school loans, credit cards, a high priced lifestyle, or a mortgage are certainly barriers to doing a startup. But they're all choices.
- deleted 13y ago
  [deleted]
mason240 13y ago
Replace mortgage with rent and the issue is still the same. If you are single you can probably move in with parents or a friend to save on costs, but that is almost impossible if you have a spouse and kids. There is a very good reason behind home ownership: After 30 years of mortgage payments, you own a house. After 30 years of rent, you have nothing.
- netcan 13y ago
  One difference is flexibility. People who rent can sometimes scale down without too much difficulty. Also, people who rent choose a place that meets their current needs. When people buy, they often buy what they think they need/want in the future, so they are usually paying for more house.
  - jurassic 13y ago
    Yeah, but rent costs go up year after year while your mortgage is locked in at the purchase price. What will SF rents be in 2030? The mortgage payment on your 2013 house purchase might not look so bad in comparison, and often for a lot more space. You can also regain some flexibility by renting out your home and temporarily staying somewhere cheaper. This probably isn't doable if you've got kids, but getting a cheap apartment and AirBnBing your old place might be what you need to do to keep the house without sinking your financial ship. That said, if you're going to start a business while buying a house, better to buy a smaller house and have a working spouse who can carry all/most of the payment for a couple of years. I wouldn't probably wouldn't do it unless I had a reliable high-earning spouse willing to share that responsibility.
- refurb 13y ago
  The thing that a lot of people ignore in this equation is that you might end up owning the house, but you paid a lot more for housing than you would have if you just rented.
  - Killswitch 13y ago
    Not sure about anywhere else, but where I am (Midwest USA), I can pay $800/mo for a nice 3+ bedroom house, a nice plot of land, 2 car garage, etc in a nice neighborhood, or I can pay $700 for a 2 bedroom apartment. Sure I'm saving $100 a month, but in the end, the house is worth more and goes back to what was stated earlier. After 30 years you own a house.
    - refurb 13y ago
      Of course location makes a big difference. If you're in a market where the house price to rent ratio is favorable, then it can make sense. Of course, when you sell your house you're on the hook for the 7% commission, plus all maintenance items. The sort of stuff a renter never pays. I'll just say that I ended up renting when all my friends were telling me I was stupid not to buy. Three years later I walked away from my rental after paying $30K total in rent, while my friends ended up losing more than $30K when the price of houses dropped (only 10%). That doesn't even include the mortgage payments they made as well. All in all, they paid twice what I did for a place to live. Also, home owners often forget to include the cost of their down payment. If you put $100K down and your house appreciate 2% per year (which is pretty decent) you're out the extra 3-4% the renter made by keeping that money invested in the market. I think we can agree that owning a house sometimes is a good thing, but it certainly isn't the best financial move for everyone.
      - Killswitch 13y ago
        Definitely agree with you. There's pros and there's cons. Just gotta figure out if the pros outweigh the cons for you in your particular circumstance. I am a renter and get the same thing said to me "Why rent when you can buy?!" I don't know if I want to spend the next 30 years living in this area, so that's why I haven't bought yet... Although I am thinking of buying a house in the next year.
- tlogan 13y ago
  The key part is "30 years"....
  - mason240 13y ago
    Even after 5 years you are still going to have more equity in something then if you are just renting.
- bluedino 13y ago
  >> After 30 years of mortgage payments, you own a house. After 30 years of rent, you have nothing. You also haven't spent 30 years landscaping the yard, paying for plumbing, appliances, carpet, 2 asphalt roofs, new windows, a furnace or three, a septic tank... A house can be a very, very expensive asset to maintain. And if your neighborhood goes downhill or the market in your area goes down you can lose a lot of money quickly.
- mtviewdave 13y ago
  >Replace mortgage with rent and the issue is still the same. Seconded. I've have owned a 3 bed/2.5 bath condo in Mountain View for 14 years. Right now my total monthly cost is about the same as a 2 bed/1 bath apartment in one of the major apartment complexes in M.V. The thing about mortgages is that ideally the way it should work is that you buy something that fits within your budget, and your payment remains mostly stable while your salary increases due to inflation and/or promotions. The first few years I owned my condo, my finances were indeed tight, but eventually that eased. The idea that a mortgage is incompatible with being a startup founder seems to be based in the misconception that because a new mortgage is expensive and burdensome today, it will be expensive and burdensome forever. When in reality, after a few years the equation can change quite dramatically. Of course, everyone's experience is different, and one can make choices that indeed keep a mortgage expensive and burdensome. But you can do that with renting, too. The question in both cases is simply "can I cover my housing costs for a year or two without a salary?". Personally, when I contemplate becoming a first-time founder (and yeah, I'm in my 40s), the fact that I own rather than rent isn't a big consideration.
moonlighter 13y ago
You can create such an environment for yourself, if you're willing to do so. Who says that you HAVE to have a mortgage? The whole notion of "having to own a house" as a means to build wealth seems quite antiquated to me. In many cases it's not that you own the house... it's more like the house owns you (and your actions, mobility, flexibility, etc).
gr3yh47 13y ago
you could solve it with a startup. get cracking.
slaxman 13y ago
I am not too sure that would work. in my experience having something hanging over your head tends to make you go harder at your startup once you have made the decision to do it. on the other hand, when things are comfortable, you are okay with things not working out. while this might encourage you to try new things you may give it only a half hearted try. thus, the number of successful companies may actually fall.
johnrob 13y ago
It depends on the price of the mortgage. In silicon valley, they are insanely high and absolutely a barrier to starting a company. However, there are other parts of the country where mortgages are less than San Francisco parking spots.

cpursley 13y ago

"Imagine an environment where basic accommodation and sustenance was available to everyone" It is; it's just most of humanity is confused about needs vs. wants.

jaf12duke 13y ago

I'm 34. Married. And don't own a house, nor will anytime soon. It would've been much harder to stomach the risk of starting 42Floors if I had a mortgage. Getting locked into debt, whether that be school loans, credit cards, a high priced lifestyle, or a mortgage are certainly barriers to doing a startup. But they're all choices.

deleted 13y ago
[deleted]

mason240 13y ago

Replace mortgage with rent and the issue is still the same. If you are single you can probably move in with parents or a friend to save on costs, but that is almost impossible if you have a spouse and kids. There is a very good reason behind home ownership: After 30 years of mortgage payments, you own a house. After 30 years of rent, you have nothing.

netcan 13y ago
One difference is flexibility. People who rent can sometimes scale down without too much difficulty. Also, people who rent choose a place that meets their current needs. When people buy, they often buy what they think they need/want in the future, so they are usually paying for more house.
- jurassic 13y ago
  Yeah, but rent costs go up year after year while your mortgage is locked in at the purchase price. What will SF rents be in 2030? The mortgage payment on your 2013 house purchase might not look so bad in comparison, and often for a lot more space. You can also regain some flexibility by renting out your home and temporarily staying somewhere cheaper. This probably isn't doable if you've got kids, but getting a cheap apartment and AirBnBing your old place might be what you need to do to keep the house without sinking your financial ship. That said, if you're going to start a business while buying a house, better to buy a smaller house and have a working spouse who can carry all/most of the payment for a couple of years. I wouldn't probably wouldn't do it unless I had a reliable high-earning spouse willing to share that responsibility.
refurb 13y ago
The thing that a lot of people ignore in this equation is that you might end up owning the house, but you paid a lot more for housing than you would have if you just rented.
- Killswitch 13y ago
  Not sure about anywhere else, but where I am (Midwest USA), I can pay $800/mo for a nice 3+ bedroom house, a nice plot of land, 2 car garage, etc in a nice neighborhood, or I can pay $700 for a 2 bedroom apartment. Sure I'm saving $100 a month, but in the end, the house is worth more and goes back to what was stated earlier. After 30 years you own a house.
  - refurb 13y ago
    Of course location makes a big difference. If you're in a market where the house price to rent ratio is favorable, then it can make sense. Of course, when you sell your house you're on the hook for the 7% commission, plus all maintenance items. The sort of stuff a renter never pays. I'll just say that I ended up renting when all my friends were telling me I was stupid not to buy. Three years later I walked away from my rental after paying $30K total in rent, while my friends ended up losing more than $30K when the price of houses dropped (only 10%). That doesn't even include the mortgage payments they made as well. All in all, they paid twice what I did for a place to live. Also, home owners often forget to include the cost of their down payment. If you put $100K down and your house appreciate 2% per year (which is pretty decent) you're out the extra 3-4% the renter made by keeping that money invested in the market. I think we can agree that owning a house sometimes is a good thing, but it certainly isn't the best financial move for everyone.
    - Killswitch 13y ago
      Definitely agree with you. There's pros and there's cons. Just gotta figure out if the pros outweigh the cons for you in your particular circumstance. I am a renter and get the same thing said to me "Why rent when you can buy?!" I don't know if I want to spend the next 30 years living in this area, so that's why I haven't bought yet... Although I am thinking of buying a house in the next year.
tlogan 13y ago
The key part is "30 years"....
- mason240 13y ago
  Even after 5 years you are still going to have more equity in something then if you are just renting.
bluedino 13y ago
>> After 30 years of mortgage payments, you own a house. After 30 years of rent, you have nothing. You also haven't spent 30 years landscaping the yard, paying for plumbing, appliances, carpet, 2 asphalt roofs, new windows, a furnace or three, a septic tank... A house can be a very, very expensive asset to maintain. And if your neighborhood goes downhill or the market in your area goes down you can lose a lot of money quickly.
mtviewdave 13y ago
>Replace mortgage with rent and the issue is still the same. Seconded. I've have owned a 3 bed/2.5 bath condo in Mountain View for 14 years. Right now my total monthly cost is about the same as a 2 bed/1 bath apartment in one of the major apartment complexes in M.V. The thing about mortgages is that ideally the way it should work is that you buy something that fits within your budget, and your payment remains mostly stable while your salary increases due to inflation and/or promotions. The first few years I owned my condo, my finances were indeed tight, but eventually that eased. The idea that a mortgage is incompatible with being a startup founder seems to be based in the misconception that because a new mortgage is expensive and burdensome today, it will be expensive and burdensome forever. When in reality, after a few years the equation can change quite dramatically. Of course, everyone's experience is different, and one can make choices that indeed keep a mortgage expensive and burdensome. But you can do that with renting, too. The question in both cases is simply "can I cover my housing costs for a year or two without a salary?". Personally, when I contemplate becoming a first-time founder (and yeah, I'm in my 40s), the fact that I own rather than rent isn't a big consideration.

moonlighter 13y ago

You can create such an environment for yourself, if you're willing to do so. Who says that you HAVE to have a mortgage? The whole notion of "having to own a house" as a means to build wealth seems quite antiquated to me. In many cases it's not that you own the house... it's more like the house owns you (and your actions, mobility, flexibility, etc).

gr3yh47 13y ago

you could solve it with a startup. get cracking.

slaxman 13y ago

I am not too sure that would work. in my experience having something hanging over your head tends to make you go harder at your startup once you have made the decision to do it. on the other hand, when things are comfortable, you are okay with things not working out. while this might encourage you to try new things you may give it only a half hearted try. thus, the number of successful companies may actually fall.

johnrob 13y ago

It depends on the price of the mortgage. In silicon valley, they are insanely high and absolutely a barrier to starting a company. However, there are other parts of the country where mortgages are less than San Francisco parking spots.