Quote:
Originally Posted by Irace86.2.0
Well, initially I said live in a cheap rental, which could be an apartment or whatever. In general, a rental is cheaper than owning with even the same amenities. The difference can be invested in a diversified account. Depending on the savings, this can lead to the generation of more wealth for retirement, which should be on everyone’s agenda. And of course a house is an investment. It shouldn’t be the only investment, nor should people assume it is a guaranteed investment or that a renter is not making a sound decision to rent and not buy. I’ve demonstrated that renters could live a quality life, while reaching retirement at a similar or even a higher financial level than a buyer. Renting isn’t inherently wasteful.
I leave rental properties better than when I moved in. That isn’t the typical case, but it really depends on the home and the type of occupants. Even if the home isn’t maintained well cosmetically, at the end of 30 years the cosmetics can be taken care proportionally cheaply relative to the gains from this strategy.
I listen to a few finance channels. One guy rents, but he owns seven different rental properties. Renting affords him more flexibility, saves him money and fits his lifestyle. Buying a home doesn’t need to be for everyone, even if they could afford it.
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Hypothetical situation:
You buy a house, you pay mortgage, insurance, and maintenance on it. You rent that house out. That rent income is equivalent to 90% of your mortgage. You rent a house for yourself, let's say same amount as what you are getting in rent for the house you own. You now pay out all of the rent you are being paid to someone else, while still having to cover the mortgage, insurance, and maintenance on the house you don't get to live in.
Renting that other house is certainly cheaper than owning it too, but you are already paying for a house you own. And you are already incurring risk on that house as well, while avoiding such risk is a primary reason for renting in the first place.
The situation allowing you to invest extra money only works if you buy a really nice house, and rent yourself someplace dirt cheap, such that the 10% mortgage + insurance + maintenance + your rent is less than the 90% of the mortgage paid to you by renters. Anything less than that is paying into the house as an investment in itself. And if all I am going to do is break even, I sure as hell want to live in the nice house while doing it.