Comments on: Never Own A Home Again

By: autotech101

autotech101 — Tue, 04 Mar 2014 07:49:00 +0000

Here is another factor right now you can buy a house for mortgage payment, tax, and insurance payment of $630 a month for a 4 bedroom 2042 sq foot place or I can rent the same house for $1200-$1300 a month. If I pay what I would in rent to a mortgage It would be paid off in 13-14 years

By: Logan Mohtashami

Logan Mohtashami — Fri, 28 Feb 2014 15:32:00 +0000

Housing is the cost of shelter to your own capacity to own the debt, not a investment. However, it’s people own free will and choice in a Free country to make that own decision. As long as it’s looked as the cost of shelter you don’t get yourself in too much trouble.

By: Cameron

Cameron — Sun, 28 Jul 2013 13:52:00 +0000

One very large issue with your concept. If you are purchasing a home to live in, your payments are very reasonably spread out with a decent down payment, however if you do not intended to live in the home and are using it as an investment property, your down payment is substantially higher usually a minimum of 70% of the home’s value. That being said, why would you rent, giving someone who owns the house you are living in money that you gain zero value from, this article emphasizes this whole “cash is king” concept, but that is saying you shouldn’t invest in anything. Sure a home is not liquid compared to many other investments, but you should have a diversified portfolio. Once you have paid of a home (and I am aware, that is no short time period) you own it, and instead of selling your home when you decide to move, if you live within your means, you can make the down payment on a second house, move there, and sit back and rake in the cash… Actually never mind, please do sell your house if you own it, and continue to hand over your money to folks like me.

By: Blissful State

Blissful State — Thu, 21 Jun 2012 02:10:00 +0000

I actually own (most of) a home, but have rented it out as I can’t afford to live in it or sell it. I am using the rental income to pay for something smaller in a rental apartment. My tenant covers her own utilities. I’ve been stalled at this point for about a year now. Truth be told, after 15 years of home ownership, I prefer renting. I think you’re onto something Mr. Altucher.

By: Ian

Ian — Tue, 22 May 2012 16:34:00 +0000

It is nice not having a landlord, and not having anyone to answer to so long as you make your mortgage payment. The independence is of having your little castle where you can retreat and tell the world to fuck-off is quintessentially American. Finances aside, I like that.

By: Luc

Luc — Sun, 19 Jun 2011 23:42:00 +0000

James… if I may ask you, could you write more about REITs? I have been wondering about this for a long time: buy real estate vs buying REIT. I have done well with my Vanguard REIT. I bought at the bottom and it is doing pretty well now. However, the real estate market has not recovered yet so I don’t understand how my Vanguard REIT has done so well.

By: RobbieR

RobbieR — Mon, 30 May 2011 02:39:00 +0000

Just responding to your Japanese point. Owning v. renting is pretty divisive here but even those who prefer ownership tend to argue for it in terms of individual freedom and lifestyle choice rather than financial merit. Ownership was gaining ground with lots of home makeover shows on TV and magazines selling the idea of a beautiful home – a lot of people increasingly wanted to buy into having just that one little corner of their life perfect and untouchable. The tsunami put paid to all that though. A lot of construction companies around here have folded as their clients have pulled out and committed themselves to renting. Some families in Tohoku are out there with $250,000 mortgages with nothing to show for it and an upcoming bill of $400,000 if they want to rebuild. Home insurance doesn’t cover major disasters in Japan so they’re screwed. I’m hoping they get amnesty on the original debts.

By: Ralphfisher

Ralphfisher — Thu, 05 May 2011 17:12:00 +0000

For 99% of the people, James Altucher is correct about the travails of home ownership. However for the sake of argument I’ll take a counter position or two:

I lucked out and bought a house for $40,000 cash in 1995 3km from my office in Lutz, Florida. I bike to work every day and use a Corrolla car only for going to court only and seeing my girlfriend.

In my opinion it costs about 5-10% of the cost of the house per year for upkeep. For me that’s at least $2,000 per year. Since I have a well for water and I use gas for cooking, wood for heating and solar for most of my electricity and hot water, my utilities are only about $50 a month.

Of course I’m paying $500 a year in taxes and $900 a year for insurance. For lawn care, I mow my own lawn instead of belonging to a fitness club.

I agree with Janes that my house isn’t a viable investment. Zillow says my house is worth $80K (after 16 years?). I’ve done much better in stocks and bonds. However I like living there. I particularilly like growing food in my yard (tomatoes and oranges). In sum, ownership is working for me: it costs $500 a month overall for a crib that I own.

Another point for ownership, though a bit cynical: People who own homes with mortgages can stop paying those mortgages, hire a lawyer and bank the mortgage, tax, maint. and insurance cost of home ownership 3 years or more while they are in a foreclosure case. James would appreciate this strategy since its a bit unorthidox and might make up for the insane cost of home ownership for most people.

By: Ind595

Ind595 — Fri, 29 Apr 2011 21:38:00 +0000

I own several rental units, mostly studios or 1 bedroom apartments. Out of the 22 units I now own, all are paid for. The income I generate from my “free & clear” properties covers all my monthly obligations, with money left over for “discretionary” spending, such as fine wining & dining, travel, etc.. I have applied the same logic to owning property as what is being preached here about wealthy stock owners who never ever sell their holdings. I’d probably have to take a substantial loss on some of the properties I bought during the mid-2000s, at the peak of the market, if I was foolish enough to sell at today’s market prices. But guess what? I am not selling. My combined rental income is such that I can ride the current real estate market recession in relative comfort. In fact, I am busy buying more properties at a fraction of the price they fetched 5-6 years ago. In most cases, the properties I bought recently were priced at a 50-60% discount to their previously recorded sale price! In essence, I am dollar-cost-averaging my real estate holdings while at the same time boosting my ROI. The properties I own bring me a tidy 8-10% cash-on-cash return on my investment, not bad in light of what you’d get in a bank CD or savings account these days. Despite all the naysayers, I consider real estate an excellent long-term investment. The cash flow is predictable, the risk is negligible (unless you must sell in a down market) and there is long-term appreciation potential to boot.
It is easy to berate real estate if you are one of those who borrowed too much or over encumbered yourself during the easy-credit-boom-time era. Real estate is a great investment if you use leverage judiciously.

By: Liam42

Liam42 — Fri, 29 Apr 2011 20:00:00 +0000

I have a friend who sold his parents home (after they passed away) for $600,000. Granted, it was in a very expensive East Coast city with an Ivy League college. His parents paid $2,500 for the house in the 1940’s. I calculated that if the new owners held the house for the same time period and they achieved the same return on their $600,000 the house would have to sell for $12 million dollars. I thought at the time, “there is no way that house, or any house would sell for $12m unless inflation was rampant”. The appreciation in housing is over. If there ever was one.