In the US, the mortgage markets are propped up by the government and are basically subsidized as good investment vehicles. You can pretty much guarantee that governments aren't going to get their act together and make housing affordable (change zoning laws etc) so it makes sense to buy ASAP.
>In the US, the mortgage markets are propped up by the government and are basically subsidized as good investment vehicles. You can pretty much guarantee that governments aren't going to get their act together and make housing affordable (change zoning laws etc) so it makes sense to buy ASAP.
I have some thoughts on this. Not because owning a home is a bad idea, but because you should really factor what you're buying and why. None of this is to say your premise is incorrect, but merely there should be more nuance when thinking about this.
Buying a place you want to live in is fundamentally different than buying an investment vehicle.
I currently rent an apartment, but also own multiple investment properties. Why? Because it makes more sense for my situation, where I myself may need to move more often and therefore some aspects of being in a home that isn't turning profit into my pocket are undesirable, where as buying a house where I am going to live has a very different set of checkboxes, namely between economic issues in the macro and personal health stuff where myself or my wife have to travel a bunch, we're regionally limited and have determined we may or may not want to live in our current metro long term.
That said, I absolutely did buy one of the properties with the future intent of living there myself, I simply am delaying that to make money on the property rather than letting it sit empty. I'm easily a few years away from permanently moving into it myself, but in the advent I decide to live elsewhere long term than where I am right now, I at least have the income stream.
and absolutely, the regulations (and there by, the law) favors home owners every time. Renters get screwed in this I even tell this to young renters who rent from me. You simply can't get a break on the ever growing rise of rent vs a fixed rate mortgage, but you gotta understand what you're buying and why, and don't conflate the difference between a home and an investment vehicle, as many people do.
This is really good advice - the "your home is an investment" is realtor talk to get you to overspend.
A house is a depreciating thing you can live in, and is expensive! Once you correctly account for ALL the expenses (not just mortgage, insurance, and property tax!) you discover that renting may be advantageous.
But they do often go up in value over time (ignoring maintenance keeping them together) and sometimes beat inflation (especially when leveraged).
I'd go so far as to say - though this is based on my experience, keep that in mind - in saying that your first home should be seen as an investment vehicle so you can understand the mechanics of owning a home while reaping the upside of another income
This helped us tremendously. Rental income while not game changing when you own only 1-2 properties, does help build up your assets. It also allows you to offset some expenses as business expenses, which is nice.
There is overhead of course, and we pay a property management company to do things on our behalf and they get a small percent of the rent every month, but overall it taught us a ton and we did it without incurring significant additional expenses thankfully.
Now we are up to our 6th rental property and things are going smooth so far.
This is building true wealth via real estate in my opinion. Assuming we keep going, we'll likely own 12+ properties eventually, which we will sell down the road many years from now likely for significant upside, all the while having steady income coming in from them until we sell.
The danger in real estate investing is that 80% of the time it's (moderately) easy money, 10% of the time it's annoyingly break-even, and 10% of the time it's absolute soul-crushing, bankruptcy-inducing devastation.
And since you're usually in one or two properties to start, if your first one is the tenant from hell in a downmarket, you're going to feel it.
There is truth to this, you have to structure yourself a certain way.
The best thing you can do is structuring everything through a corporation. This also allows some additional avenues when considering financing too. It also gives you the liability shield in case things go sideways.
There's overhead here though, for sure, and plenty of ways to go about it the wrong way, many footguns exist. Its not stress free.
If you want truly passive investments, index funds are the way to go. Which is why I think buying a home for living should fundamentally have different criteria
All renting gets you is the "privilege" of paying someone else's mortgage. The entire point of homeownership is to build equity and pay off the mortgage.
That way, when you retire, your nest egg can go further because you only have to pay the property taxes, and when you die, you can pass the value along to your heirs and build generational wealth.
Houses are not index funds; ideally they should only appreciate at the rate of inflation. But they are absolutely long-term builders of generational wealth through the equity in the home. Heirs can sell them and then invest the proceeds, or live in them themselves without a mortgage.
They can be great, but you need to really run the numbers and check the assumptions.
Housing where it is "affordable" (read: median salary can afford a house) is a great way to get a leg up on the pile - though remember that the average age of a person RECEIVING and inheritance is 60.
But in places were buying a house is $2m but renting the same one is $3k a month, it's hard to ever make the numbers work.
>All renting gets you is the "privilege" of paying someone else's mortgage. The entire point of homeownership is to build equity and pay off the mortgage.
Where I live, what renting currently gets you is an enormous discount compared to the cost of a mortgage and the opportunity cost of parking your cash into a downpayment. Renting and investing downpayment level money is literally a better deal than buying a house.
Why do I care if I'm "paying someone else's mortgage"? The interest payments to the bank aren't building me equity either! It's all money, going one way or another, equity is just more money, and sometimes buying a house means more money goes out than in compared to renting, even if it's more intuitively satisfying.
You care when you're 60 years old, trying to figure out how to live the rest of your life on a fixed income, and still either have to pay rent for the rest of your life or spend a big chunk of cash on a house, because you didn't spend 20-30 years paying a mortgage.
