• The Entrepreneur Forum | Startups | Entrepreneurship | Starting a Business | Motivation | Success
  1. Join 40,000+ entrepreneurs
    who are kicking butt and
    winning their dream life.

    Unscripted™ Entrepreneurship:
    A Business That Pays More Than Money, It Pays Time.

    "Fastlane" is an entrepreneur discussion forum based on The Unscripted Entrepreneurial Framework (TUNEF) outlined in the two best-selling books by MJ DeMarco (The Millionaire Fastlane and UNSCRIPTED™). From multimillionaires to digital nomads, the forum features real entrepreneurs creating real businesses.

    Download (Unscripted) Download (Millionaire Fastlane)  Register
    Registering for the forum removes this block!

Convince me to Not Buy a Home

Discussion in 'Real Estate Investing' started by HelpAndProsper, May 15, 2018.

  1. JScott
    Offline

    JScott Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

    Messages:
    3,751
    Likes Received:
    5,894
    Joined:
    Aug 24, 2007
    Rep Bank:
    $42,537
    Wage growth has been interesting to watch. Apparently up 2.7% last month, which is finally inline with what I would be expecting...

    Here is how I expect this cycle to play out over the next few months (based on basic economic theory and history):

    1. We are at full employment;

    2. Companies can't find as many workers as they need to fill their open positions, so they start to offer more money to lure workers from other companies. It took longer than I expected, but we're now seeing this wage growth starting last month;

    3. This wage growth is good for employees (they make more money), but also increases costs for companies, so companies raise prices on their goods and services. We're starting to see this, and the Fed is warning it will get worse;

    4. Increased prices means inflation (literally). Products and services costs more. And typically the real inflation from wage growth is higher than the wage growth itself, as employers have to pay additional overhead costs when they pay salaries (FICA taxes, insurance, etc). So, employees find that their paycheck isn't going as far as it previously was;

    5. This leads to increased debt, lower spending by consumers and reduced earnings by companies. Which leads to layoffs, higher unemployment, lower GDP, etc.
     
  2. MJ DeMarco
    Offline

    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    26,722
    Likes Received:
    83,466
    Joined:
    Jul 23, 2007
    Gender:
    Male
    Location:
    Phoenix, AZ
    Rep Bank:
    $352,767
    Admin Post
    This has turned into an interesting economic discussion...

    But I'm also leaning toward a significant event downward. My prediction is it begins at the end of August with October being absolutely brutal.

    As such, I've reduced my option sales and short exposure, assuming my dates are off.

    Among other things mentioned by @JScott, I come to this conclusion based on that 1) the market has been unable to recover the February correction and 2) Large up days in the S&P is accompanied by below average volume (no conviction) and 3) Netflix is a 350 stock with a 250 PE.
     
    Bottomsouth, JScott, topherea and 2 others like this.
  3. HelpAndProsper
    Offline

    HelpAndProsper Contributor I've Read UNSCRIPTED

    Messages:
    54
    Likes Received:
    67
    Joined:
    Apr 1, 2018
    Gender:
    Male
    Location:
    Boston
    Rep Bank:
    $337
    I really like your philosophy. I've thought about this...I have the cash to buy a crappy, very small house or I could buy a condo outright.

    That way, I'm paying 0 interest to a bank while having a mortgage.

    I can immediately probably rent the place with no mortgage.

    Or, I can live with no rent/mortgage payment.

    So the real question, am I willing to live in a less-than-ideal home for a while knowing that I owe nothing, but taxes/insurance/repairs.

    I think your philosophy may be the best advice mentioned on this thread.
     
  4. ryanbleau
    Offline

    ryanbleau Bronze Contributor Speedway Pass

    Messages:
    159
    Likes Received:
    380
    Joined:
    Jun 22, 2014
    Gender:
    Male
    Location:
    Lake Havasu City , Az
    Rep Bank:
    $2,215
    If your going to bootstrap a new business you make sure the constants in your life are taken care of cant be repossessed. My car is paid for, my suv is paid for. I have no loans on anything they can take if I fail. I also have growing equity in my home if sh*t hits the fan.
     
    topherea likes this.
  5. MJ DeMarco
    Offline

    MJ DeMarco Raving Lunatic Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

    Messages:
    26,722
    Likes Received:
    83,466
    Joined:
    Jul 23, 2007
    Gender:
    Male
    Location:
    Phoenix, AZ
    Rep Bank:
    $352,767
    Admin Post
    And I will add that Lululemon (a freaking Yoga pants company) is now a $125 stock with a PE of 55.
     
  6. LaraJF
    Offline

    LaraJF Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

    Messages:
    17
    Likes Received:
    49
    Joined:
    Apr 1, 2017
    Gender:
    Female
    Location:
    Silicon Valley, California
    Rep Bank:
    $268
    I'm happy I bought my house for similar reasons (noise).

    But you wanted the negatives. You're responsible for paying for everything. Leaky pipe in the wall? the plumber charges you to open a hole, repair it, and then you need to find someone else to repair the dry wall and paint.

    You pay property taxes usually (check NH...it may be different then California aka Tax You To Death State). I also have homeowner's insurance and earthquake insurance. It adds up.

    Appliance dies? Yup, have to buy a new one.

    Rat dies squeezing out between the house & the chimney? Guess who gets to remove it or pay $175?

    Owning a home feels like "if it's not one thing, it's another." (yet I'm glad I bought when I did even though the interest rates were around 11% in 1995 if I recall correctly)

    So, time to make a pro's & con's sheet.

    IMG_6954.JPG

     
    Bora.s and Tommo like this.
  7. HelpAndProsper
    Offline

    HelpAndProsper Contributor I've Read UNSCRIPTED

    Messages:
    54
    Likes Received:
    67
    Joined:
    Apr 1, 2018
    Gender:
    Male
    Location:
    Boston
    Rep Bank:
    $337
    But I have some maroon Lululemon pants/slacks and they are some of my favorite pants of all time...True story....:)
     
  8. HelpAndProsper
    Offline

    HelpAndProsper Contributor I've Read UNSCRIPTED

    Messages:
    54
    Likes Received:
    67
    Joined:
    Apr 1, 2018
    Gender:
    Male
    Location:
    Boston
    Rep Bank:
    $337
    thanks for the advice,

    You seem like a nice person. I'm sorry you live in California. I lived there for 12 years and will never go back now that it's a haven for everything indecent and unAmerican in the Universe. Did I mention how much I detest the coastal Cali culture?

    :)
     
    LaraJF likes this.
  9. DustinH
    Offline

    DustinH Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    138
    Likes Received:
    206
    Joined:
    May 24, 2017
    Gender:
    Male
    Location:
    Nashville
    Rep Bank:
    $1,138
    I am curious to why you are against a mortgage. You're paying the government for the right to "own" the property (property taxes). You're paying an insurance company for replacing anything that gets damaged (homeowners insurance). You pay the neighborhood for god-knows-what (homeowners association fees). That probably adds up to $500-$700 a month, anyways. So, is a mortgage really that bad?

    The tax advantages for a mortgage are there (FYI I'm not a mortgage broker).
    Mortgage Principal - not deductible
    Mortgage Interest - Tax Deductible
    Property Taxes - Tax Deductible (up to $10,000/yr)

    Insurance - not deductible
    HOA fees - not deductible
    Rent - not tax deductible

    On a 30-yr fixed mortgage you will pay more in interest in the first 15 years than principal. So, the tax advantage is there. Especially in the first few years.

    Also, calculate how much money you have to make to pay your rent vs paying a mortgage.

    Let's say your effective tax rate is 25%. So, when you make $100, $25 go to taxes and you keep $75.

    Rent = $2,000 then you have to make $2,667 to pay your rent.

    Mortgage = $2,000 (principal = $500, interest = $1,500 in the beginning with 30yr fixed)
    then you have to make $667 to pa your principal and $1,500 to pay your interest
    So, you have to make $2,167 to pay your $2,000 mortgage

    The $2,167 you need to make to pay your mortgage compared to the $2,667 to pay your rent sounds like a better deal to me.

    Then, if you add in the fact that the $500 principal goes into your equity, which is money you will get back if you sell it. Rent is money you will never get back.

    A mortgage loan is setup as an advantageous tool. The tax advantages and the incredibly long financing term are impossible to find anywhere else. You can't borrow money to buy stocks or a business and have 30 years to pay it back at the lowest interest rate available amongst the entire consumer debt spectrum.
     
    HelpAndProsper likes this.
  10. LaraJF
    Offline

    LaraJF Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

    Messages:
    17
    Likes Received:
    49
    Joined:
    Apr 1, 2017
    Gender:
    Female
    Location:
    Silicon Valley, California
    Rep Bank:
    $268
    I know!!!!!

    I was born & raised here and still wonder what the heck happened.

    Some day I'll escape and pray people in another state don't discriminate against me because I came from California.

     
    HelpAndProsper likes this.
  11. Seeker
    Offline

    Seeker Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

    Messages:
    40
    Likes Received:
    69
    Joined:
    Dec 21, 2015
    Gender:
    Male
    Location:
    Germany
    Rep Bank:
    $485
    Just out of pure curiosity: What exactly is the coastal Cali culture you're refering to? To me California always has been as american as it gets. We went there on our honeymoon and to me it's one of the nicest places on earth with all the nature, great Canyon roads, beach, all that Tech and StartUp in Silicon Valley, .... I always considered living there and sometimes still dream about it. Is my Picture completely wrong? Is it actually nothing like I imagine it to be? What makes living there so horrible in your opinion, that you're even afraid of getting discriminated? As a German I really have not idea. Asking both of you @HelpAndProsper @LaraJF
     
  12. W0rkb3nch
    Offline

    W0rkb3nch New Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

    Messages:
    14
    Likes Received:
    15
    Joined:
    May 30, 2018
    Gender:
    Male
    Rep Bank:
    $177
    I don't think it's as black and white as that. You can leverage low interest mortgage loans to benefit from increasing house prices. When you have solid equity, if you really wanted to sell up and downsize to buy your home outright then you can, hand the difference back to the bank.
     
  13. JScott
    Offline

    JScott Legendary Contributor FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

    Messages:
    3,751
    Likes Received:
    5,894
    Joined:
    Aug 24, 2007
    Rep Bank:
    $42,537
    I lived there for about 10 years. It was the most entrepreneurial place I've ever been, the people are super smart, the scenery is beautiful, the weather is great and the access to new technology is unmatchable anywhere else. There are certainly downsides, but I don't really understand the "indecent and unAmerican" comment either...
     
  14. LaraJF
    Offline

    LaraJF Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

    Messages:
    17
    Likes Received:
    49
    Joined:
    Apr 1, 2017
    Gender:
    Female
    Location:
    Silicon Valley, California
    Rep Bank:
    $268
    I could tell you about potholes, about the incredible closed-minded people (agree with me or else), the actual costs of sanctuary cities and "undocumented workers." The people who vote for Bond Issues thinking they're making things wonderful when they're raising taxes. Then they move because it's too expensive to live here and leave us holding the tax burden.

    But, this thread isn't about that. So I won't. I could write a book about the reality of this "paradise." I've lived in Silicon Valley since 1976. I've seen the changes, good and bad.
     
    Seeker likes this.
  15. MTEE1985
    Offline

    MTEE1985 Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    339
    Likes Received:
    915
    Joined:
    Jun 12, 2018
    Gender:
    Male
    Rep Bank:
    $3,375
    If I were to comment on a location standpoint alone and having grown up 10 minutes away from the OP (in Durham, NH) Portsmouth is a beautiful town and becoming a nice little hotspot for companies not wanting to set up shop in Boston so any top of the market fears would be of little concern to me, especially if you plan on being there long term.
     
  16. HelpAndProsper
    Offline

    HelpAndProsper Contributor I've Read UNSCRIPTED

    Messages:
    54
    Likes Received:
    67
    Joined:
    Apr 1, 2018
    Gender:
    Male
    Location:
    Boston
    Rep Bank:
    $337
    Thank You. The state has the most violent, anti-American hateful population I've ever seen. If you like burning American flags, spitting on American veterans, high taxes, elitist Hollywood idiots with gates around their houses telling you to not own a gun, shouting down and violently attacking any speaker on a Cali college campus that doesn't believe in socialism then it's a great state for you....

    In addition, compared to the rest of America, people in general are flaky in Cali. They act nice to your face, but are not dependable. The East Coast, Midwest, etc. in USA have much more solid, dependable people IMO.

    The whole state should split off from the USA. The rest of the country mostly despises the state. The weather there is fabulous and San Francisco is a gorgeous city if you can step over the mound of heroin needles and homeless bums. The culture and people are awful for the most part...

    That's my opinion and I'm sticking to it.

    I lived there for 12 years. I feel I have a solid basis for my opinion.
     
    Seeker likes this.
  17. Thoelt53
    Offline

    Thoelt53 Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    271
    Likes Received:
    726
    Joined:
    Dec 8, 2016
    Gender:
    Male
    Location:
    Boston, MA
    Rep Bank:
    $3,728
    Going from Cali to Boston must have been a culture shock...

    The politics aren't much different, however.
     
  18. DustinH
    Offline

    DustinH Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

    Messages:
    138
    Likes Received:
    206
    Joined:
    May 24, 2017
    Gender:
    Male
    Location:
    Nashville
    Rep Bank:
    $1,138
    We have a huge influx of people moving from California into Nashville. Every time I talk to them I ask them why. They say the same reasons: taxes too high, cost of living is ridiculous, real estate unaffordable, the politics are out of touch, the infrastructure is in disrepair, too much traffic, etc. etc.

    The Nashville area’s claim to increase in population by 100 people per day took a hit with the release this week of new population estimates from the U.S. Census Bureau.

    800,000 people are about to flee New York and California because of taxes

    Movement Out of California Was the Most Influential Driver of U.S. Migration Patterns

    Leaving California? After slowing, the trend intensifies
     
    Seeker likes this.
  19. Elif
    Offline

    Elif New Contributor

    Messages:
    62
    Likes Received:
    16
    Joined:
    Jun 25, 2018
    Gender:
    Female
    Rep Bank:
    $91
    How does your cashflow situation change from renting to buying? If its the same I would buy, keep in mind maintenance, taxes, water bill, heat bills, etc...
     

Share This Page