Renting and reinvesting the savings from renting, will outperform owning and building equity

[At30wecashout]

Telling (Black) people Not to buy homes and rent and “invest” is terrible advice especially since no one ITT has explained what the alternative should be except vague references to stock and buying commercially/multi family properties (which require much more income/effort/time than a home)

if you’re going to say don’t buy home you should at least detail what people should do instead

Actually, buying a home is investing in a stable home and a neighborhood to live in. Its not investing in a return, though American finance deems home as part of you worth. OP was speaking in terms of getting returns , which seems to have been completely lost in this thread, not tied in an asset where the barrier to entry is higher than others and the “payoff” window is way off. Now if you are investing in a place to live, thats the way to think about it, but dont expect it to be the kind of asset that will make you money.
For the purposes of putting down roots, you cant beat it, but if one is going to invest in real estate for wealth building, commercial or multi family is better.

 

[At30wecashout]

again you’re fixated on “constantly paying into” a mortgage....I already laid out how that is a silly thing to be fixated on when you’ll have housing costs no matter which route you take. feel free to read that post, broken down with real actual numbers.




Hilariously bad take. Housing is a long term investment. Only way you lost in the 2007 “crash” is if you were trying to sell during that brief period.

And I put the word crash in quotes because if you look at the data I linked about the median house prices over the years you’ll see that the “crash” in the housing market was not nearly the same magnitude as the hit stocks took during that time.

Mortgage isnt the only cost associated with home ownership which is the point. Renting is generally reliable in terms of how much you are going to pay because the bulk of the risk is on the owner and not the renter. Even if month to month rent matches a mortgage payment, homes require upkeep. Again, if we are not respecting a return other than having more control over our living space and the future of it, homes are amazing for that. However as the OPs point goes, there are additional costs for housing that could instead by put into investments that dont require a hard-asset like a home that can also yield an actual return. Unless one itemizes from the day you acquire till they day you leave, most people are simply living in a home rather than turning it into some sort of investment vehicle.

 

[CBalla]

I was conceding that point so we could go deeper. What is the expectation of an investment?

Or dont answer. Whateva, its Christmas.

Im not here to educate you on anything beyond “a house is an investment”.

If you can barely understand that, fukk I look like trying to teach you anything complex?

 

[MasterOfAllHeSurveyz]

Men lie. Women lie. Numbers don't.

I modified the infamous Buy vs Buy Calculator and made Hannah's monthly expenses as 16.6% less than Morgan's based on the average difference between buying vs. renting costs nationwide historically. I kept their monthly budgets the same and took Hannah's down payment and put it in the S&P500 from the onset. After their monthly expenses, the rest was invested in the S&P500. The 2019 net worth formula is the sum of the home value and the S&P500.

If Hannah didn't take her savings and invest them in the S&P, only reinvesting her dividends, her net worth would be $471,863.73. That's more than Morgan's home value.

 

[At30wecashout]

Im not here to educate you on anything beyond “a house is an investment”.

If you can barely understand that, fukk I look like trying to teach you anything complex?

Thats fine, hoe. Just trying to converse and you on this bullshyt.

 

[TRFG]

Using that logic, buying stock in apple isnt an investment either if you dont sell

not all stock pay dividends

 

[Deuterion]

Men lie. Women lie. Numbers don't.

I modified the infamous Buy vs Buy Calculator and made Hannah's monthly expenses as 16.6% less than Morgan's based on the average difference between buying vs. renting costs nationwide historically. I kept their monthly budgets the same and took Hannah's down payment and put it in the S&P500 from the onset. After their monthly expenses, the rest was invested in the S&P500. The 2019 net worth formula is the sum of the home value and the S&P500.

If Hannah didn't take her savings and invest them in the S&P, her net worth would be $471,863.73. That's more than Morgan's home value.

What does Morgan’s net worth look like in 2008?

 

[CBalla]

Thats fine, hoe. Just trying to converse and you on this bullshyt.

Calling names is the goat way to show you lost

not all stock pay dividends

We can both agree to this statement

 

[CBalla]

What does Morgan’s net worth look like in 2008?

^^^
This is someone who fails to understand that the prices on stocks “crashed” in 08

 

[dora_da_destroyer]

A good half of these posts would not be made in this thread if this was Jewish, Chinese, or white board...

I wish y’all much success

 

[R.E.N. Spells Ren]

Mortgage isnt the only cost associated with home ownership which is the point. Renting is generally reliable in terms of how much you are going to pay because the bulk of the risk is on the owner and not the renter. Even if month to month rent matches a mortgage payment, homes require upkeep. Again, if we are not respecting a return other than having more control over our living space and the future of it, homes are amazing for that. However as the OPs point goes, there are additional costs for housing that could instead by put into investments that dont require a hard-asset like a home that can also yield an actual return. Unless one itemizes from the day you acquire till they day you leave, most people are simply living in a home rather than turning it into some sort of investment vehicle.

I included taxes and maintenance in my analysis


Your last sentence is complete ignorance. As many people have pointed out in here, the successful efforts to block black folks from buying homes is a HUGE reason for the wealth gap we see today. I highly recommend you watch “Explained” on Netflix; the first episode touches on this subject.

 

[dora_da_destroyer]

Men lie. Women lie. Numbers don't.

I modified the infamous Buy vs Buy Calculator and made Hannah's monthly expenses as 16.6% less than Morgan's based on the average difference between buying vs. renting costs nationwide historically. I kept their monthly budgets the same and took Hannah's down payment and put it in the S&P500 from the onset. After their monthly expenses, the rest was invested in the S&P500. The 2019 net worth formula is the sum of the home value and the S&P500.

If Hannah didn't take her savings and invest them in the S&P, only reinvesting her dividends, her net worth would be $471,863.73. That's more than Morgan's home value.

Why is Hannah’s rent held steady over 30 years rent certainly isn’t the same in Oakland right now as it was even 5 years ago, certainly not 30...I get what you’re trying to prove, but this example doesn’t work due to you cutting out real variables and the wide range of assumptions throughout the rest of their finances.



Edit: after looking it up, albeit starting in 1984, and using your budget of $2000, Hannah would have been homeless by 2003/2004 when rent crossed the $2000/month mark

Prices for Rent, 1984-2019 ($1,000)
According to the U.S. Bureau of Labor Statistics, prices for rent of primary residence were211.51% higher in 2019 versus 1984 (a $2,115.10 difference in value).

Between 1984 and 2019: Rent experienced an average inflation rate of 3.30% per year. This rate of change indicates significant inflation. In other words, rent costing $1,000 in the year 1984 would cost $3,115.10 in 2019 for an equivalent purchase. Compared to the overall inflation rate of 2.61% during this same period, inflation for rent was higher.

 

[At30wecashout]

I included taxes and maintenance in my analysis


Your last sentence is complete ignorance. As many people have pointed out in here, the successful efforts to block black folks from buying homes is a HUGE reason for the wealth gap we see today. I highly recommend you watch “Explained” on Netflix; the first episode touches on this subject.

My man, I understand wealth gap. I also mentioned a term called “cash poor” where people have assets which equate to wealth but in the case the case they need capital for something else, it is all tied into the home.

If one is going to pay off a home and stay for decades, it is a great investment in that eventually the costs will only be taxes and maintenance. However, most people lose out. In any case im cool on this convo cause to really talk about it would require even longer paragraphs.

 

[CBalla]

Why is Hannah’s rent held steady over 30 years rent certainly isn’t the same in Oakland right now as it was even 5 years ago, certainly not 30...I get what you’re trying to prove, but this example doesn’t work due to you cutting out real variables and the wide range of assumptions throughout the rest of their finances.

does that thing say $589 in maintenance every month

 

[At30wecashout]

Calling names is the goat way to show you lost

You spend the whole time saying if people dont know x, they shouldnt talk about x. I ask you for information about x and you give me abc and say “fukk I need to educate you for.” Dont pretend you didnt come like that.

A good half of these posts would not be made in this thread if this was Jewish, Chinese, or white board...

I wish y’all much success

You mean the demographics that are knee deep in investing and pioneer a bunch of the stuff we are discussing? Reddit is full of cacs right? They all over this topic. On youtube as well. That talkin point is tired, Dora.