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biophase
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I can see your point. Generally the more people make the more they spend. If someone that made $75k a year bought the same house that my friend did on a $35k income. They could have saved the additional $40k a year. If they did the same life that my friend did, they could save $400k in 10 years and be well ahead of my friend today.To be honest I think that's an apples to oranges comparison. These people are living beyond their means. Same as the person who finances a multi-million $ home with a 3-car garage on $75k-$150k a year.
The purpose of my original post was to highlight the benefits of a fixed mortgage coupled with a down payment assistance plan. To show how someone at the lower income level could have afforded something years ago and is benefiting from it now.
As a pure investment, yes you can do index funds. But in my opinion real estate is a better option if you can afford it. This is just my opinion. I have friends that are 100% in stocks and hold no real estate and they do well. I’m real estate heavy but trying to balance out my portfolio to add more stocks.Ok, if it is not about personal home ownership but rather real estate as an investment, why not use a simple index fund investment strategy (besides the business), starting in your 20's? @fastlane_dad wrote a great thread about that.
Of course you need discipline for that, but you mentioned that the real estate owner also needs that (to safe up the down payment rather than blowing the money).
My original post was to purchase as a primary residence. I like having the option of converting the primary over into a rental later. The option of converting into a rental was a reply to others who worried about locking in a payment for 30 years.
I purchased the book above and wanted to finish it before I replied. Your argument above sounds like everything from this book.Especially for those who earn very little (and don't have other investments) a financed house is a huge "cluster risk". There is zero diversification.
That's even more important for entrepreneurs than for example a school teacher.
I am not sure about the US, but in Germany school teachers NEVER lose their job, unless they do something exceptionally bad. They know what they are going to earn for the next 30-40 years, so there are no issues being locked into a mortgage.
But what about someone who started out with his or her Fastlane business just a few years ago? Most likely it's not a multi-national enterprise yet, but either a local business which is heavily depended on the local economy or a small online business which has at least some control-risk involved.
Worst case one has to go back to a job, but a well-paying job is 3 hours away by car and at that time the housing market in ones region is in a crisis.
Lastly, people often forget to add up all the hours they spent on all the stuff that comes with home ownership or being a landlord. How much is 1 hour of ones time worth?
If something breaks in my rented apartment, I call the landlord and they get someone to fix it. I don't spent my Saturdays at the hardware store, buying stuff for the next home-DIY project.
I don't worry about finding a plumber who does not overcharge me.
[URLThe Wealthy Renter: How to Choose Housing That Will Make You Rich: Avery, Alex: 9781459736467: Amazon.com: Books
The Wealthy Renter: How to Choose Housing That Will Make You Rich [Avery, Alex] on Amazon.com. *FREE* shipping on qualifying offers. The Wealthy Renter: How to Choose Housing That Will Make You Richwww.amazon.com
Honestly listening to the book, I just don’t agree with the author’s premise. There are so many fluff chapters in the book, it’s hard for me to get through it. He is so anti real estate but guess what? He owns and is/was a landlord. Lol
Found this on an interview from 2017.
‘Renting is a beautiful thing’: The case against home ownership
Home ownership is traditionally viewed as the only sensible choice – but that may not be true in today’s housing market. Here’s why
www.theglobeandmail.com
Interviewer: Finally, I have to ask this. Are you a renter?
Book Author: I've been a renter, an owner and a landlord. My wife and I rented for 15 years and now we own. We bought after we had kids.
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