Why you should buy a home as early as possible.

[Antifragile]

85 percent here in Singapore lives in public housing. The way it operates here is different.

99% here in Canada don’t live like the remaining 1% do.

Just saying…

 

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[Kevin88660]

99% here in Canada don’t live like the remaining 1% do.

Just saying…

Public housing price range here : 1M and below
Private housing here 1.2M and above typically.

So 1M is dividing line.

 

[Kevin88660]

First, thanks for answering and trying to help us understand.

So if I understand this correctly, you cannot purchase public housing until you reach 35 years old? Does the public housing ever appreciate? This doesn't make sense to me, if you can buy it at $400k, then someone who is 25 years old can buy it at $400k in 10 years? The price must increase each year right? What's the point of purchasing it if there is no appreciation. It's not hedging inflation at all.

A single person at any age can buy a place for $200k, and after 5 years can rent it out for $2k a month? 12% return? The downside is waiting 4 years after you pay $200k? Or just waiting 4 years with a deposit? Do these $200k places ever go up in price? Why wouldn't you have chosen this option? You said and I quote. "Insane yield and impossible to lose money." THIS WAS YOUR UNSEEN OPPORTUNITY that you were saving your money for. You just turned your $200k into a $24k salary.

So due to this, you have been trying to save up all your money so that when you reach 35 you can purchase a home without a loan? Was this your strategy all along?

Public housing is only available to married couple or single people aged 35 and above. You can either buy resale or new flat. New flat has higher appreciation potential since you will be the first owner, buying from the government (housing development board). But the downside is that you have to be on a waiting list that will take 3-4 years.

But TBH saving for housing hasn’t been high on my priority either.

I have a friend who went through the ballot process (single after 35 scheme) and got a new flat in a mediocre location rather quickly. He has to pay around 150k, and after living for five years (a rule on renting out), he could rent it out for 2k a month. Downside is that he has to wait for four years. It is not even constructed yet and he will pay for it after it is done. So it will take nine years before he can rent out or sell it.

He got it within a few weeks because he wasn’t greedy and balloting for prime location (higher appreciation potential), where a few hundred applicant was fighting for one unit. I didn’t save money for this specifically. The way it works you can keep trying to ballot but you can just get one unit. I just heard about him getting it 2-3 months ago. Getting such a good deal definitely is something I am open to, provided the supply and demand didn’t change when I am eligible to ballot.

The public housing is being bought and sold in the market as well. You just need to be a local (citizen or permanent resident).

A common strategy used by local is to queue for new public housing unit in good location (paying more for that as well). The bet is as more immigrants come to Singapore and get converted into citizens they get to sold it at higher price in the future.

So basically there are two housing markets in Singapore. One is public housing that only locals (with criteria on age or marriage) could participate. The other is private property market that everyone could participate.

 

[Feuertaufe]

Exactly. And I will gripe about inflation being a huge scam to the people as much or more than anyone, but we have to remember that it's not just the prices that inflate, but also all of our incomes (and the prices we can charge for our businesses' products and services).

So those monthly payments are fixed, but what you are earning stays the same. It's a great deal.

And THEN when you get into long term rental mathematics, it's even better...

And then SBA loan and biz real estate... there are just a lot of options.

100% agreed. And for the doom and gloom fraction. At least you can grow your own food.

 

[Jrjohnny]

I know that this may be a controversial topic, but I want to give you a few examples of people that I know that are slowlaners but are actually doing very well vs. some aspiring "fastlaners" that aren't anywhere in the same position. This topic came to mind when another friend was shocked when he learned that one of our mutual friends had a decent net worth despite having a low paying job.

Example 1: I had a friend who we will call Amy who made $7/hr back in 2008. Back then a city in the Phoenix area had a first time homebuyers program. The city would pay up to $50,000 down payment for a home, but the catch was that when she sells the home, the first $50,000 is returned to the city. She qualified for the program due to her low salary.

So she bought a home for $100,000. With a $50k down payment from the city, she got a loan of $50,000 at something like 4.5%. She was able to qualify for a house on a salary of under $15,000 a year!

Today her home is worth $375,000. Her house equity is probably $170kish and she is lucky to have a nice fixed $500 mortgage payment on her current home until its paid off. If she had continued renting, she wouldn't be able to afford anything today!

Example 2: I have another friend who we will call Julie. I have known her since 2008. She has never made more than $35k per year. She bought a house for $88k in 2000. Today her house is almost paid off (she's been making an extra $100 payment per month). Today her house is worth $340k. Her equity is $330k. There is no way she could have saved that amount in 20 years on $35k a year.

These are two examples of people who would have huge issues in surviving today if they had not purchased a home years ago. Rents in their areas are $2500 a month for a home in their area. They would have been priced out a long time ago. But because of their purchase, they are paying $500 and $450 a month in mortgage payments.

I contrast this to others I have known who consistently make $75k-$150k per year but never buy a home. They lived the digital nomad life or the lifestyle business life of renting a nice loft in the city. 5-10 years later, their net worth is close to zero and they cannot afford a home any more due to the prices and interest rates.

I can already hear the naysayers saying, but if you reinvest everything back into your business, that's a much higher ROI. I agree. But this is assuming your business is successful. What I would tell any 20 year old aspiring entrepreneur is that if your business is doing well, invest into a home first, then the rest into your business.

See, I noticed this, but I cant do anything. I’m 13… for example, I know someone who built their house in 2011 for like 1 million, now its worth 3-3.5 million, now each 1k sq ft is 1m$, which is weird. Like what am I supposed to do? What about my sister? By the time im 20, a 3 thousand sqft house is going to be like 9 million!

 

[Tiago]

Yes I think that’s the MAIN advantage with real estate. You can lock in your “rent” payment for 30 years if you want to. Yes taxes will go up but that is minimal. HOA is a different story though.

If I stayed in my house I bought in 1999 I would be paying $1200/mo right now for a 4br/3ba house.

Literally, every other expense in the world will go up except your fixed 30 year mortgage payment!

I've been looking at buy my house too.

It's literally the same argument for solar, the industry I'm in. You can lock in your payments, protect yourself against inflation, and funnel that money into an asset instead of a liability.

 

[Guest-5ty5s4]

See, I noticed this, but I cant do anything. I’m 13… for example, I know someone who built their house in 2011 for like 1 million, now its worth 3-3.5 million, now each 1k sq ft is 1m$, which is weird. Like what am I supposed to do? What about my sister? By the time im 20, a 3 thousand sqft house is going to be like 9 million!

I would look at other areas (in most places on the planet, houses do NOT cost $1,000 per square foot), but like @biophase said, you should worry about other stuff at 13. You can't even legally own a house for 5 more years. Have you done any work? What skills are you cultivating? Have you sold anything? Focus on that.

 

[Guest-5ty5s4]

Scenarios like these are exactly why I made this post…

From the article MJ linked:

Excerpt…

View attachment 49516

They had years and years to purchase something.

Excerpt…

I mean 40 years old? Come on. Who’s to blame?

View attachment 49517

Btw, I’m not immune to this either. There’s a neighborhood in Phoenix that I wanted to live in and since home prices were stagnant from 2013 to 2020, I was just waiting and monitoring the area for the perfect home. I wanted a 2 acre property and I could and should have bought a tear down for $500k and built the perfect home. Unfortunately I waited too long and a 2 acre tear down would go for $1.5M today.

Who’s to blame? Governments and central banks. The govs for their low down payment house programs driving up the prices fast and central banks driving them up long term by creating money out of thin air. We know this already but I’m just reiterating.

 

[Kak]

I don't think a correction is going to happen, only moderation... which means prices will remain elevated.

High interest rates stopped prices from rising, but for the most part they are still elevated and I don't see any economics in which they come down 20 or 30%.

"70% can't afford homes" represents pent-up demand, which means those people become buyers as housing costs attempt to move lower, keeping prices high.

There’s also the “I have a low interest rate” effect.

People are staying put to keep their rate. Supply of listed homes is down. Limited supply keeps prices up.

Affordability due to interest rates is still a headwind. We shall see.

 

[MJ DeMarco]

In Aspen CO, just short of $10M, you can live in a house that is slightly larger than the studio apartment I used to live in.

 

[FullTimePreneur]

I've been going back and forth on whether to buy a home in my area. I'm curious to hear anyone with experience in higher-cost-of-living areas.

For example, I live in NYC Area (Jersey City, right along the Hudson waterfront). We currently rent and have been debating making the move to purchasing a home. But every time I run the numbers, it seems that if we were to buy something that's about the same as what we live in currently (~750 sf 1Br + Den), the HOA + Interest + Property Taxes add up to be about what we pay in rent. But then we're locked into a higher payment because you have the principal payment that's forced to go into the home, which would otherwise be free to invest in any asset I choose.

I haven't convinced myself yet that it's worth buying in my area. Because the rent is going down the drain, and the HOA + Interest + Property Taxes, which seems to be about the same, is also going down the drain.

Instead of buying in my area, I thinking about following the article below with purchasing cash-flowing real estate in lower-cost-of-living areas and just continuing to rent in a more luxury area. So instead of buying a property here in NYC, purchase the equivalent magnitude of RE exposure in a higher cap area and attempt to make the spread when renting in a lower cap area.

The Real Estate Investing Rule To Follow: Buy Utility, Rent Luxury

If you plan to invest in real estate, there's a key real estate investing rule you should follow. It's called Buy Utility, Rent Luxury or BURL for short. Using the BURL method, you increase your chances of making a higher return on your real estate investment while also maximizing your capital...

www.financialsamurai.com

What are my blind spots with this?

 

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[Tiago]

I've been going back and forth on whether to buy a home in my area. I'm curious to hear anyone with experience in higher-cost-of-living areas.

For example, I live in NYC Area (Jersey City, right along the Hudson waterfront). We currently rent and have been debating making the move to purchasing a home. But every time I run the numbers, it seems that if we were to buy something that's about the same as what we live in currently (~750 sf 1Br + Den), the HOA + Interest + Property Taxes add up to be about what we pay in rent. But then we're locked into a higher payment because you have the principal payment that's forced to go into the home, which would otherwise be free to invest in any asset I choose.

I haven't convinced myself yet that it's worth buying in my area. Because the rent is going down the drain, and the HOA + Interest + Property Taxes, which seems to be about the same, is also going down the drain.

Instead of buying in my area, I thinking about following the article below with purchasing cash-flowing real estate in lower-cost-of-living areas and just continuing to rent in a more luxury area. So instead of buying a property here in NYC, purchase the equivalent magnitude of RE exposure in a higher cap area and attempt to make the spread when renting in a lower cap area.

The Real Estate Investing Rule To Follow: Buy Utility, Rent Luxury

If you plan to invest in real estate, there's a key real estate investing rule you should follow. It's called Buy Utility, Rent Luxury or BURL for short. Using the BURL method, you increase your chances of making a higher return on your real estate investment while also maximizing your capital...

www.financialsamurai.com

What are my blind spots with this?

I agree with that 100%.

Right now, the apartment I live in, makes absolutely NO sense to buy.

I'm renting it for $2,200/month, while the buying price for the apartment is $1,2m. In this case, it's not good being the landlord, and I'm renting it dirt cheap comparing the price of the apartment.

But, I do believe in buying a home. It won't be this one.

I'll probably buy a smaller, $500K apartment that I'm able to rent at a higher relative cost and use that as a stepping stone.

 

[Tiago]

In that case, the landlord probably bought it a long time ago and has fixed rate debt. His/her cost basis is likely low enough to cash flow with what you are currently paying in rent. And today's prices make your rent more affordable compared to buying a similar property today, so your logical decision is to pay him/her to rent their place while he/her profits from the wise decision they made years ago.

But you could buy something today and in some amount of time, rents will likely go up unless there is a huge market crash, an Andrew Jackson style populist in office who ends the Fed, or you screw up with some crazy ARM, etc.

Real estate investing!

Yep, that's why I'm looking to buy as well. It probably won't be the property I'm going to be living in, since this apartment I'm in right now has a great rent price.

 

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[biophase]

I'm 19 and currently I am trying to build my clientele as a Realtor, it's not easy and I have a decent part time job for now but by next year (when I'm 20) I should have enough for a down payment. Originally i was thinking of using it to try to find a rental property should I still do this or maybe something else with my money?

I don’t know why you would think you should do something else with your money based on all the posts in this thread. Why is this thread making you second-guess purchasing real estate?

 

[Saint]

@biophase I'm not really disagreeing with your original post. It makes a lot of sense and you made a lot of great points to consider. My overall reading of the sentiment in the thread though is that it's such an obvious no-brainer to buy RE, but I see a lot of very valid pros and cons, and for many people it's heavy con or heavy pro depending on their situation.

Seems like everything out there mentions trouble with mortgage payments as a major cause of bankruptcy. This one put it at 45%. In a recession it may be much higher, 3 years ago it may be much lower. Another interesting stat - "More than three-fourths of U.S. homeowners who purchased in the prior year expressed regret about their decision" according to this article from NAR, which seems to be incentivized IMO to promote homebuying.

I 100% agree people blowing all their money moving around and taking expensive vacations instead of buying a house or building wealth are foolish. I was fortunate/made some decent decisions to be able to both move around a bit, travel, and still save pretty effectively since I had good jobs and was also a pretty hardcore slowlaner besides the RE piece. I guess I've just seen many people in the "their house owns them" scenario. It's been one of the biggest barriers to pursuing dreams like starting a business, leaving NJ, Chicago, middle of nowhere, etc. that I've observed.

 

[Guest-5ty5s4]

I'm kind of surprised to see the love of RE here. I thought the point of FL was to get to a point that whether a decent house goes up by a few hundred thousand is immaterial.

It totally makes sense to me to buy RE once you have the cash from a great business, but I could almost take the overall message here as prioritize RE over starting a FL business. Maybe the idea is that RE is a more sure thing than a business? Or just a no-brainer?

I have seen a lot of issues with RE that aren't always there, but when they are it's a major, major problem in life. RE can easily erode monogamy - if I rent, I don't have to worry about maintenance, major repairs, regulations, tenants, lawsuits, etc. I've known many people who have had to spend enormous amounts of time and drop an additional $20K, $50K or more on things like foundation repair, plumbing, or evicting a tenant. That plus basic weekly upkeep seems like a lot of time sacrificed that could go to a business. You could also get too happy with the belief that RE will go up forever, overleverage yourself, then wind up erasing your whole net worth in one bad market situation. Maybe everyone here is too smart to let that happen, but it has happened to numerous people. Almost 50% of bankruptcies have something to do with being unable to make a mortgage payment.

What people really seem to be saying is "buy in a market that will always go up (and make sure you always have a job that pays well in that time), it's a no-brainer way to make a few $100K extra every year". Austin probably was that way 10 years ago, but it's becoming unfashionable, not to mention the massive tech layoffs. Prices down 15% already even with low inventory. Same with SF. Or the numerous places where prices just never went up. Maybe places like Phoenix or South Florida won't face that for a long time, but there's no guarantee. This doesn't seem much different to me than saying "Buy early in a bubble and sell before it pops". Sure, Bitcoin at $20K may not be a bubble, and RE in London may not be either, but Bitcoin at $70K was, and how do you ever know where you're at?

I'm one of those who couldn't imagine not moving around a bit in my 20s. I'm sure I would've regretted it more if I hadn't had that experience. I'm probably not as wealthy as people I know who bought a house in a mid-tier city 10 years ago, especially those that have popped for now, but most I can think of are also still in awful jobs that they wish they could get out of, never lived or explored places they dreamed of, and have no end but slowlane retirement in sight. Unless they "Went Fastlane" with their RE, which just means they were an entrepreneur earlier than me, I think they still missed out on a lot despite that part of their portfolio looking good.

I plan to buy a house as soon as I can for the many reasons mentioned here, but it seems like there are many strong reasons not to do it too. Mainly just getting my thoughts down here because this was a very interesting read and got me thinking as I'm finally settled and seriously contemplating RE. Welcome any criticism of my points!

“A few hundred thousand” - if you have more than two brain cells, you will always care about “a few hundred thousand” no matter how rich you get. Even Jeff Bezos noticed that kind of money. It’s not like he just ignores his bank account. Far from it.

The problem with stocks compared to real estate is there’s no leverage

Someone with 15k saved can buy a house for 150k and earn 8% a year on 150k in appreciation

Someone with 15k in stocks is making 8% on that 15k

“The real estate market doesn’t go up all the time” neither do stocks this is just over simplified

“You have to pay the mortgage” yeah well you’d have to pay rent either way too

2 other advantages

You won’t be tempted to trade or worry or panic like you would in stocks. You can’t check your home price daily. You can’t panic sell your home.

2, as you pay down the mortgage the payments become lower, meanwhile rent generally goes up.

kiyosakis Cashflow game is great for this. The game encourages you to start with stocks, grow a bit, then move to real estate, then make some bigger money, then start buying businesses. Obviously not everyone should follow the real estate path and there are other good paths but this is a nice little financial game…

 

[340PLOX]

Taxes, debt, expenses; all of this trickles down to renters in your rent payment ... so you can pay it as a renter, or as an owner. There's no escaping it unless your plan is to live in a cardboard box under a bridge, which as I understand, is becoming quite popular in today's "you'll own nothing" culture.

Right now my mortgage is 2.25%. US Treasuries pay 5.25% and money I would have spent on a house is now earning a net 3% -- in other words, not only is the US government paying my mortgage, they are also paying me a premium to do so.

Because I took debt on my house, my bank is now the slave, and they hope I pay off early. And I get free money.

With respect, your take is 100% false from a Fastlaner's perspective. Hold a 7.5% mortgage for 30 years, and yea, you might have some valid points.

The OG himself.

Right im not shunning people who secured a mortgage when interest rates weren’t bad but 7.5% 30 yrs IS the new norm. Also im not ignorant to the fact of how much money im wasting dropping 30% of my earned income to my rent, but it does provide me more freedom at same time.

- someone who plans on using real estate as an investment vehicle

 

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[andrea532]

Not sure what you are asking here.


This post was mainly aimed at people who started a business, or had a decent job, but decided to rent in order to not be tied down, or wanted to be digital nomads.


In the US, the amount is about 33% of your salary also. Yes, I would recommend taking out a mortgage vs paying cash. By paying cash, you probably waited too long to purchase your first home.

I'm loosely making up an example based on a generalization of people I've met in the past. Imagine you are a single guy 25 years old, making $150k a year. You want to live where the action is so you rent a nice downtown apartment in Austin $4,000/mo. What you should have done is buy a nice home for $500k a few miles outside of downtown and commute to the clubs and bars.

perfect now I understand thank you very much

 

[NervesOfSteel]

This is a two-sided question.
A house is a personal expense for most people. It's like a consumable. It's expensive to maintain and gives limited benefits back other than a place to live -- until you sell it.
On the other hand, for most middle-class people, it will end up being their biggest asset that is paid for over most of their lifetime.
My mentor taught me that you should live in your smallest house or apartment -- and rent the rest. I have known people who have lived in one room in the back of their businesses. Living over the store was very common in the past. Businesses used to be in physical buildings. Your question is part of the process of rethinking the different options.

No one can solve the riddle of buying vs renting a house as this is more of a "economical life" vs "quality life" question. Some might enjoy living decades behind the store in a small compartment while others may prefer to raise a family in a warm comfortable house.

"One must sacrifice the quality of life in order to be rich" - Its a myth !

 

[andrea532]

Here's a fact: If you buy a house and plan to live in it for the rest of your life, it doesn't matter what happens to prices. And by no means does this mean you can't travel and go on a month long cruise.

Afterall, isn't this what Buffet and Munger like to preach? That they've lived in the same damn house for 9,000 years? I wonder if they are fretting over the price they paid for their house last century.

Hi MJ DeMarco.
I would like to have my say on this topic and then tell me if I'm wrong or not.
I speak mainly for the Italian context but I believe the same method can be used all over the world.

If your plan and fastline there must be very specific conditions to purchase your first home, unless you have already purchased it.

First of all you must have a lot of liquidity available which allows you to create both your future business and which allows you to give the mortgage advance, the famous 20% if this is also the case in other states.

Another condition could be the support of this 20% from your parents, so that you can use your savings for your future business.

According to once the mortgage is made the installment must be 25% of your salary, I understand that it is very little for some but if you follow a fastline you cannot afford for the mortgage installment to hinder your plans such as rent.
So on 1000 euros your mortgage should be 250 euros.

As written in MJ's books it is a short sacrifice for a better future, because once you have started your business and saved the money for passive income for life you will be able to close your mortgage or renovate this house if and what you want and much more.

I hope this answer was helpful to all those people who read this post thinking that the message was to just buy the house.

I thank MJ de Marco for his books if it weren't for him I would still be here saving 10% to retire in 40 years.

I thank everyone who every day reading your posts motivates me in creating my e-commerce.

 

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[EvanOkanagan]

I thought this was kind of interesting.

I was of the impression that buying with cash now is a great opportunity to get a good deal before they drop rates and home values go crazy again, but now I'm starting to think the bubble hasn't truly burst.

I've been casually looking around at homes because we need something bigger, and I'm truly in awe at how many multi-million dollar homes there are. Are there really that many "wealthy" people? One after another after another. Hundreds hundreds of homes. I've always been of the impression that most Americans were flat broke.

On the other hand, every home being expensive isn't a new thing to people from a lot of other states and Canadians... and the market stays incredibly expensive.

I live in a medium-size city in Canada. "Average" home price here is still hovering around 1m.

Even if you put 200k down, interest alone is about $4,000 on the mortgage. With principal, insurance, and taxes in you're about $7,000/mo. That's $84,000/year in house payments for someone to live in an "average" home here if they buy right now. Not very sustainable with these elevated rates, and if they don't see a sharp reversal going to be some further issues this year IMO.

 

[Kak]

I actually did a short radio show on the affects of interest rates on home affordability a while back.

SHORT: Rate Hike Effects on Real Estate Markets

Listen to this episode from Kyle Keegan Radio Show on Spotify. I explain what increasing interest rates does to the affordability of real estate. If rates keep rising, real estate will keep falling.Become a supporter of this podcast...

open.spotify.com

 

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[wanttogofaster]

Does anyone have advice for a 24 year old husband and father of one making $66k/year on this topic given the current economic environment?
My wife and I want to buy a house within the next few years, but I'd honestly rather have the start of a Fastlane business and pay for a house that way instead of buying a house in need of renovation and then selling it for profit. Wherever our next home is, it is going to be permanent.

It depends. If you are in a high-cost-of-living area, you may not even be able to afford anything with that salary.

If you are in a medium or low-cost-of-living area, I would buy something and have a manageable monthly payment for the next few years. If interest rates increase, you can still afford a place to live. If interest rates drop, you can always refinance and have an even lower monthly payment.

The good news is that according to this article, most of the US (assuming you are in the US) is a medium to low-cost-of-living area!

How does 'the least affordable housing market in recent memory' look in your area? Check our map

California has the top four counties with the highest median home values, nationwide. Explore housing market prices across the US with these maps.

www.usatoday.com

If you do not have any business experience, you should not spend a lot of money starting one. In most cases, you should be able to start something with next to nothing. So whether you start a business or not should not impact your house-buying decision.

Also, at 24, I doubt your first home is going to be your "permanent home". Things change, you may need to move for whatever reason, you could have more kids and need extra space, you may want a smaller home or you may not want to maintain all that acreage, after all, just to name a few.

 

[Dark Water]

I've never gotten an FHA loan so I don't know if those closing costs will be different than a normal loan.

With that said, you would be looking at things like title insurance, appraisals, paperwork fees and loan origination fees. My guess is somewhere around $5k-$10k in closing costs. This will all be rolled into the loan.

Looks like your payment for $240k loan at 7% is around $1700.

You will have to find out what your real estate taxes will be, and HOA fees, if any. And don't forget your homeowners insurance. These can easily add up to past $800/mo.

Thanks a lot for this info. It was really useful at the time, and I now have a quick update on my situation.

Ended up moving out, locking down a 14 month lease in a cheaper one bedroom. To my surprise, about a week later, loan officer came back and said I was preapproved for up to $285k, with another $15k coming from down payment assistance and getting rolled into the cost of the loan, so my only costs would be the costs of closing, so maybe around $10k if I understand correctly.

I'm not sure if I would be overextending myself if I purchase a home while still renting, and what the costs/time commitment might be in turning that around quickly to rent out ASAP, knowing nothing about landlording. Could get a cheap place in western MA by UMass and rent it out to students pretty easily though, since greater boston area is royally f*ed.

Seems like a good opportunity, but my back would be against the wall in a way I've never experienced before, for better or worse. I'm still super cash tight atm but high income, think I'd be in a much better place while still within the confines of this 3 month (extendable to 4 months) preapproval.

 

[OMDA]

I think I got lucky to get the timing right.

When I moved back to FL from Europe/west coast I still had some savings. My rent was at 1450 a month downtown starting in 2020. My renewal this year would've been 2200 a month. That was for a <700 sqft place, but right where I didn't really need to drive for most things.

But, was able to find in a very tight housing market a <500k place at just under 6%. Mortgage and HOA is ~2600 a month. But it's over 2000 sqft with garage. I'm just glad I had the savings to make a move on that when I did. Housing is so tight here it was hard to find anything sub 500k. I don't see housing prices dropping soon either with inflation and with how many people are moving here. Rent seemed to be going into a hole and I had to work in my living room which was packed with crap. Now, I have all my sports gear out in the garage and my own office with lots of space.

And bonus I'm on a bike trail. We can bike to a lake, a few small towns, and a bunch of other stuff on offroad paved trails. I can also get to one beach in a 10min drive. Others are further. And it's a relatively nice area. Still think it was a lucky move.

 

[Feuertaufe]

Bought a small house this year and renovated it. It was definitely cheaper then renting a house/appartement. Either way we had to move, because with a family member more we needed more space.

 

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[REV5028]

Congratulations. I think there is some comfort in knowing that your payment ("rent") will stay at $1750 for the next 30 years if you don't move at all. 20 years from now, when rents are $10,000/mo. You'll be sitting pretty like my friends who are paying $400 a month now.

Thank you! Our "rent" is ~$2100, but I'll still take that over $10,000/mo. And it definitely helps to see your friends example - in even just five years from now I'm sure $2100 will seem low compared to now. In 20 years (or less) our $2100 will be the new $400.

I know that for me, once I had my first property paid off in Arizona. I knew that if I ever f*cked up royally I always had a place to live and all I needed to do was pay the HOA and taxes which amounted to $250/mo. This gave me alot of confidence to be more aggressive in my business.

That's awesome! I hadn't really thought about what it will feel like to have it paid off, other than one less stressor. A confidence boost to take more chances is another great feeling to look forward to.

 

[James90]

Agreed.

I missed out on 300k opportunity cost selling my property in 2019 to fund my failed business.

My significant partner and I are still on our entrepreneurial journey, but we are making it a priority to purchase property here in Hawaii within a year or so.

 

[Hassassin]

My personal view is that for someone just leaving school and starting out working, in their early or mid-20s the best investment is cash.

Stack as much as cash as you can, after buying million-dollar term insurance for hospitalization, critical illness and accident. Invest in 10 percent gold and silver bars if you are really paranoid about hyperinflation.

It is rather unorthodox, of course.

You must be very comfortable watching your cash getting eroded by inflation year by year while resisting the temptation of "investing to beat inflation". Not everyone can do that. Most could not.

Only extreme events matters in life. The same is true in personal finance. The business opportunity or once-in-a-lifetime investment that can turn your life around. The sudden cancer diagnosis despite the fact that you do not smoke or drink.

Nobody gets broke due to inflation (If you get paid in a trustworthy major currency). If you talk to people getting broke or miss a great opportunity, it is always a cashflow problem.

Your cash reserve is as important as a national defense for a country. Nations spent billions to keep and train their army during peacetime.

Inflation is the necessary price to pay for future opportunity and protection against a future cashflow crisis that leads to bankruptcy.

If I pay rent, and anytime I don't feel like paying, I pick up my phone and call my friends or parents to squeeze in with them. If I have a mortgage I have no choice.

In chess you are in a favourable position when you have more options. If you found yourself being forced to make only a certain move everytime it is almost on the road to losing the game.

By loving cash I am both hyperoptimistic about the opportunities that are yet to be seen in the future and also hyper paranoid about the threats of the lack of cash that we always see happening to others.

I'm 27 and paying £900 rent p/m while earning approximately 70k in the UK with a wife and child. I have 15k saved, which is enough for a deposit here, but I want to keep cash liquid for an upcoming venture and to get something fastlane of the ground. The fact is I have a family and I'm not getting any younger, so my deadline is 29-30 years old: if i'm not doing anything fastlane/extremely high earning by that age, I'll bite the bullet on a mortgage - something that feels like nightmare fuel and scares the heck out of me with my current financial horsepower.

 

[REV5028]

If I pay rent, and anytime I don't feel like paying, I pick up my phone and call my friends or parents to squeeze in with them. If I have a mortgage I have no choice.

Idk man... there's something super satisfying about not needing to piggyback off of what others have that I am more than capable of having myself. I see my mortgage as two things. 1) a long-term investment that is likely to pay off well and 2) motivation to increase my income. As for preparing for possible catastrophes before developing significant income streams, we have mortgage insurance, life insurance through our 9-5s, we can rent our house if needed, or we can sell and downsize if needed. Only as a last resort will we rely on friends and family, but I'm thinking it would have to be a pretty severe natural disaster or economic crisis for us to do that, and in that case, everyone is going to be shizz outta luck.