3K a month for Rent.
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PostPosted: Mon Oct 01, 2018 12:38 am    Post subject:

couldnt see myself burning that much in rent a month. If I just had to be in a certain high cost area I'd roommate up and save aggressively.
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PostPosted: Mon Oct 01, 2018 6:26 am    Post subject:

LongBeachPoly wrote:
Aussiesuede wrote:
Paying rent is basically taking a match to money and burning it. Once it leaves your hands, you are guaranteed never to have use of that money again. It has truly been spent and you'll never be able to utilise the benefit of the earnings you've just spent on rent at any point in the future.

With a mortgage, if you chooses to live in the home, then you''re basically residing in a piggy bank. Every cent that you pay towards that mortgage remains in your pocket. You're engaged in what is basically a forced savings plan where you retain the value of the income you utilise to pay the mortgage to be repurposed and used again at a later date. Even if the unthinkable happens and the value of the property doesn't increase in value over the 15 year term of the mortgage, you still have retained the value of the income that you spent on the mortgage over that term.

So paying $3000/mo for rent over 15 years means you're taking $540,000 of income you've earned and lighting a match to it.

Paying $3000/mo into a mortgage over 15 years means you are RETAINING at least $540,000 in income value since you'll have the ability to spend that $540,000 at a point in the future of your choosing.

So the OP's choice is to either take a match to $36,000 over the course of a year, OR retain that income by instead purchasing.


Ok, let’s take your scenario to paying a mortgage of $3,000 a month for 15 years.

Let’s say that house is in Southern CA. Let’s say you get a job in Northern CA now you have to move, but you want to keep your house. So you rent your house out, let’s say for $3,000/month and you move to Northern CA where you now rent an apartment for $3,000/month

Are you now taking a match to money and burning it because now you are “renting”?


Yes. Because you could have purchased the home in Northern CA and allowed your living cost there to work for you in addition to the rental income you're generating in the Southern CA home.

Let's break it down more simply:

When you rent
Amount You Pay to Someone Else (landlord): $3,000/mo
Amount You Keep For Yourself: $0/mo

When you buy
Amount You Pay to Someone Else (bank): $2,275/mo
Amount You Keep For Yourself: $775/mo

... and that's only in the first year. If this was LA County over the past 7 years, then in the 7th year (34% increase in rental pricing), it would look like this.

When you rent
Amount You Pay to Someone Else (landlord): $4,000/mo
Amount You Keep For Yourself: $0/mo

When you buy
Amount You Pay to Someone Else (bank): $2,000/mo
Amount You Keep For Yourself: $1,000/mo

... if we assume the same rate of increase in rental pricing over the next 7 years after that, it looks like this:

When you rent
Amount You Pay to Someone Else (landlord): $5,400/mo
Amount You Keep For Yourself: $0/mo

When you buy
Amount You Pay to Someone Else (bank): $1,600/mo
Amount You Keep For Yourself: $1,400/mo

And over time, with renting, the amount you pay to someone else keeps going up, while with buying, the amount you pay to someone else keeps going down.

You are right in that there is always an opportunity cost to live in a home, since, you cannot generate rental income off a home in which you live. But that doesn't mean buying one home and renting another, is better than buying one home and buying another. It's not.
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Aussiesuede
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PostPosted: Mon Oct 01, 2018 8:56 am    Post subject:

LongBeachPoly wrote:
Aussiesuede wrote:
Paying rent is basically taking a match to money and burning it. Once it leaves your hands, you are guaranteed never to have use of that money again. It has truly been spent and you'll never be able to utilise the benefit of the earnings you've just spent on rent at any point in the future.

With a mortgage, if you chooses to live in the home, then you''re basically residing in a piggy bank. Every cent that you pay towards that mortgage remains in your pocket. You're engaged in what is basically a forced savings plan where you retain the value of the income you utilise to pay the mortgage to be repurposed and used again at a later date. Even if the unthinkable happens and the value of the property doesn't increase in value over the 15 year term of the mortgage, you still have retained the value of the income that you spent on the mortgage over that term.

So paying $3000/mo for rent over 15 years means you're taking $540,000 of income you've earned and lighting a match to it.

Paying $3000/mo into a mortgage over 15 years means you are RETAINING at least $540,000 in income value since you'll have the ability to spend that $540,000 at a point in the future of your choosing.

So the OP's choice is to either take a match to $36,000 over the course of a year, OR retain that income by instead purchasing.


Ok, let’s take your scenario to paying a mortgage of $3,000 a month for 15 years.

Let’s say that house is in Southern CA. Let’s say you get a job in Northern CA now you have to move, but you want to keep your house. So you rent your house out, let’s say for $3,000/month and you move to Northern CA where you now rent an apartment for $3,000/month

Are you now taking a match to money and burning it because now you are “renting”?


Yes. ANY Income that you spend that you will never get the opportunity to retain the value of has been burned. When you get that job in Northern Cal, you do the same thing you did in LA and obtain another piggy bank. You're now in an even better situation since the renters in your LA house are now paying off your LA piggy bank for you.
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PostPosted: Mon Oct 01, 2018 10:09 am    Post subject:

Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
Paying rent is basically taking a match to money and burning it. Once it leaves your hands, you are guaranteed never to have use of that money again. It has truly been spent and you'll never be able to utilise the benefit of the earnings you've just spent on rent at any point in the future.

With a mortgage, if you chooses to live in the home, then you''re basically residing in a piggy bank. Every cent that you pay towards that mortgage remains in your pocket. You're engaged in what is basically a forced savings plan where you retain the value of the income you utilise to pay the mortgage to be repurposed and used again at a later date. Even if the unthinkable happens and the value of the property doesn't increase in value over the 15 year term of the mortgage, you still have retained the value of the income that you spent on the mortgage over that term.

So paying $3000/mo for rent over 15 years means you're taking $540,000 of income you've earned and lighting a match to it.

Paying $3000/mo into a mortgage over 15 years means you are RETAINING at least $540,000 in income value since you'll have the ability to spend that $540,000 at a point in the future of your choosing.

So the OP's choice is to either take a match to $36,000 over the course of a year, OR retain that income by instead purchasing.


Ok, let’s take your scenario to paying a mortgage of $3,000 a month for 15 years.

Let’s say that house is in Southern CA. Let’s say you get a job in Northern CA now you have to move, but you want to keep your house. So you rent your house out, let’s say for $3,000/month and you move to Northern CA where you now rent an apartment for $3,000/month

Are you now taking a match to money and burning it because now you are “renting”?


Yes. ANY Income that you spend that you will never get the opportunity to retain the value of has been burned. When you get that job in Northern Cal, you do the same thing you did in LA and obtain another piggy bank. You're now in an even better situation since the renters in your LA house are now paying off your LA piggy bank for you.


I think everyone is oversimplifying a bit. First of all, the equity you build in your home early one is miniscule. The amount that's paying down the principal is nothing and nobody here is factoring the costs of maintenance and other costs that go into owning your own home.

You can't even realize your equity until you sell the house and that depends on timing. Homes tend to perform worse than equities in the long term, so there's any opportunity cost there. There's an opportunity cost for preparing your 20-30% down payment on the home as well. You could have invested that money in a much smarter way.

The simplification of "buying a house is no longer wasting money" is just way too simple. I make over 350k a year gross and don't even own a home yet. The only reason I would buy one is to have a place that I can call my "own" i.e. emotional reasons. Sure, if I'm in a market for a potential for greater capital appreciation then I'd jump on the opportunity, but in all likelihood I will be better off investing smartly in other asset classes for now.

My opinion is a bit different for investing in properties I am not living in. As long as I can get a stable and good yield it's a good way to have some diversification in your investments. But the argument of living in one's home that they won vs. renting... it's not that simple and in many cases people may just be better off renting with 0 risk. You're only better off if you don't re-invest a lot in your house and that there's a pretty good guarantee that you can realize your equity, which isn't a sure shot. And if you consider the alternatives of what you can do what your money, then it makes it a toss up, in my opinion, between renting and living in the home you own.
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PostPosted: Mon Oct 01, 2018 10:49 am    Post subject:

Quote:
I make over 350k a year gross


Well done.

Well done.
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PostPosted: Mon Oct 01, 2018 12:09 pm    Post subject:

methdxman wrote:


I think everyone is oversimplifying a bit. First of all, the equity you build in your home early one is miniscule. The amount that's paying down the principal is nothing and nobody here is factoring the costs of maintenance and other costs that go into owning your own home.

You can't even realize your equity until you sell the house and that depends on timing. Homes tend to perform worse than equities in the long term, so there's any opportunity cost there. There's an opportunity cost for preparing your 20-30% down payment on the home as well. You could have invested that money in a much smarter way.

The simplification of "buying a house is no longer wasting money" is just way too simple. I make over 350k a year gross and don't even own a home yet. The only reason I would buy one is to have a place that I can call my "own" i.e. emotional reasons. Sure, if I'm in a market for a potential for greater capital appreciation then I'd jump on the opportunity, but in all likelihood I will be better off investing smartly in other asset classes for now.

My opinion is a bit different for investing in properties I am not living in. As long as I can get a stable and good yield it's a good way to have some diversification in your investments. But the argument of living in one's home that they won vs. renting... it's not that simple and in many cases people may just be better off renting with 0 risk. You're only better off if you don't re-invest a lot in your house and that there's a pretty good guarantee that you can realize your equity, which isn't a sure shot. And if you consider the alternatives of what you can do what your money, then it makes it a toss up, in my opinion, between renting and living in the home you own.


You are speaking to the equation of personal investment strategy. We've addressed a separate equation, the fact that any time you pay rent you are literally burning income that will never be available to you again. Each home purchase situation will be unique to an individual, but the basic point is: With rent, there is a ZERO percent chance of retaining ANY potential to retain any of the income you spend on rent. Whereas with purchasing, there is an almost zero chance of losing 100% of the income you spend on a mortgage. If you pay $3000/month in rent over the equivocating period of a 15 year mortgage, you've successfully burned through $540,000 of earned income. Even if you choose not to sell a home at the end of a 15 year mortgage, you've still retatined (GENERALLY) the overwhelming majority of that $540,000 in earned income which will become realised upon disposal of the asset.

Now as far as short term investment strategies? Sure a case can be made in individual situation to pay rent for a short period of time (which is especially true for those living in markets with low real estate appreciation rates - which is not the case for the OP) But even from an investment perspective, spending income on rent is the equivalent of burning it. Can it still be a smart decision for a small number of individuals in specific individual circumstances? Sure. But in General? No.
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PostPosted: Mon Oct 01, 2018 1:52 pm    Post subject:

methdxman wrote:

You can't even realize your equity until you sell the house and that depends on timing. Homes tend to perform worse than equities in the long term, so there's any opportunity cost there. There's an opportunity cost for preparing your 20-30% down payment on the home as well. You could have invested that money in a much smarter way.


Had a moment to look at the $3,000/mo payment example with $540,000 in total mortgage payments. Assuming current rates of 4.2% for a 15 year fixed, that works out to a mortgage of $400,000. At 80/20 LTV, one can purchase a home valued up to $500,000 in SoCal(!?) with a down payment of $100,000. The interest paid, closing costs, commissions, insurance, maintenance, utilities, (any HOA fees), property taxes should be also considered.
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PostPosted: Mon Oct 01, 2018 3:07 pm    Post subject:

methdxman wrote:
Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
Paying rent is basically taking a match to money and burning it. Once it leaves your hands, you are guaranteed never to have use of that money again. It has truly been spent and you'll never be able to utilise the benefit of the earnings you've just spent on rent at any point in the future.

With a mortgage, if you chooses to live in the home, then you''re basically residing in a piggy bank. Every cent that you pay towards that mortgage remains in your pocket. You're engaged in what is basically a forced savings plan where you retain the value of the income you utilise to pay the mortgage to be repurposed and used again at a later date. Even if the unthinkable happens and the value of the property doesn't increase in value over the 15 year term of the mortgage, you still have retained the value of the income that you spent on the mortgage over that term.

So paying $3000/mo for rent over 15 years means you're taking $540,000 of income you've earned and lighting a match to it.

Paying $3000/mo into a mortgage over 15 years means you are RETAINING at least $540,000 in income value since you'll have the ability to spend that $540,000 at a point in the future of your choosing.

So the OP's choice is to either take a match to $36,000 over the course of a year, OR retain that income by instead purchasing.


Ok, let’s take your scenario to paying a mortgage of $3,000 a month for 15 years.

Let’s say that house is in Southern CA. Let’s say you get a job in Northern CA now you have to move, but you want to keep your house. So you rent your house out, let’s say for $3,000/month and you move to Northern CA where you now rent an apartment for $3,000/month

Are you now taking a match to money and burning it because now you are “renting”?


Yes. ANY Income that you spend that you will never get the opportunity to retain the value of has been burned. When you get that job in Northern Cal, you do the same thing you did in LA and obtain another piggy bank. You're now in an even better situation since the renters in your LA house are now paying off your LA piggy bank for you.


I think everyone is oversimplifying a bit. First of all, the equity you build in your home early one is miniscule. The amount that's paying down the principal is nothing and nobody here is factoring the costs of maintenance and other costs that go into owning your own home.

You can't even realize your equity until you sell the house and that depends on timing. Homes tend to perform worse than equities in the long term, so there's any opportunity cost there. There's an opportunity cost for preparing your 20-30% down payment on the home as well. You could have invested that money in a much smarter way.

The simplification of "buying a house is no longer wasting money" is just way too simple. I make over 350k a year gross and don't even own a home yet. The only reason I would buy one is to have a place that I can call my "own" i.e. emotional reasons. Sure, if I'm in a market for a potential for greater capital appreciation then I'd jump on the opportunity, but in all likelihood I will be better off investing smartly in other asset classes for now.

My opinion is a bit different for investing in properties I am not living in. As long as I can get a stable and good yield it's a good way to have some diversification in your investments. But the argument of living in one's home that they won vs. renting... it's not that simple and in many cases people may just be better off renting with 0 risk. You're only better off if you don't re-invest a lot in your house and that there's a pretty good guarantee that you can realize your equity, which isn't a sure shot. And if you consider the alternatives of what you can do what your money, then it makes it a toss up, in my opinion, between renting and living in the home you own.


It doesn't matter if you make 350K gross or 40K gross, that doesn't change whether or not purchasing the home that you live in, is better financially than renting the same home that you live in.

Now there may be other reasons to not buy, such as, you want flexibility, or you don't want to deal with the upkeep, etc.

But the consequence of prioritizing those things is effectively burning money unless you're willing to live on the street or in Mom's basement at a very low or no charge.
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PostPosted: Tue Oct 02, 2018 10:36 pm    Post subject:

Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
Paying rent is basically taking a match to money and burning it. Once it leaves your hands, you are guaranteed never to have use of that money again. It has truly been spent and you'll never be able to utilise the benefit of the earnings you've just spent on rent at any point in the future.

With a mortgage, if you chooses to live in the home, then you''re basically residing in a piggy bank. Every cent that you pay towards that mortgage remains in your pocket. You're engaged in what is basically a forced savings plan where you retain the value of the income you utilise to pay the mortgage to be repurposed and used again at a later date. Even if the unthinkable happens and the value of the property doesn't increase in value over the 15 year term of the mortgage, you still have retained the value of the income that you spent on the mortgage over that term.

So paying $3000/mo for rent over 15 years means you're taking $540,000 of income you've earned and lighting a match to it.

Paying $3000/mo into a mortgage over 15 years means you are RETAINING at least $540,000 in income value since you'll have the ability to spend that $540,000 at a point in the future of your choosing.

So the OP's choice is to either take a match to $36,000 over the course of a year, OR retain that income by instead purchasing.


Ok, let’s take your scenario to paying a mortgage of $3,000 a month for 15 years.

Let’s say that house is in Southern CA. Let’s say you get a job in Northern CA now you have to move, but you want to keep your house. So you rent your house out, let’s say for $3,000/month and you move to Northern CA where you now rent an apartment for $3,000/month

Are you now taking a match to money and burning it because now you are “renting”?


Yes. ANY Income that you spend that you will never get the opportunity to retain the value of has been burned. When you get that job in Northern Cal, you do the same thing you did in LA and obtain another piggy bank. You're now in an even better situation since the renters in your LA house are now paying off your LA piggy bank for you.


But you have to live somewhere right?

Because the original scenario was that, you buy a house w/ a $3k mortgage and LIVE in it... which was considered saving money.

But if you decide not to live in it and rent it out, and use that rental money to live somewhere else, now you are wasting money. How does that make sense? Financially, you are in equal positions. You have a place to live and you pay $3k a month mortgage. Seems like the logic is - live in the place you bought is good. Rent it out and go live somewhere else is bad.

But what no one explains to me is, why is it better to live in the home you bought, vs. renting that home out and then renting another place. What's the actual difference?

1) I buy House A, pay $3k mortgage and I live in it

2) I buy House A, pay $3k mortgage and I rent it out for $3k. Then I go rent House B for $3k and I live in it

Why is scenario (1) considered better than scenario (2)?

Now that we see that House A can fetch $3k a month rent, isn't CHOOSING to LIVE in House A effectively paying $3k rent? Why does it matter if you end up living in House A or House B?
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PostPosted: Tue Oct 02, 2018 11:37 pm    Post subject:

^ Something to consider when weighing the scenarios: when you buy a house and rent it out, you might miss out on the home sale tax exclusion of $250,000 ($500,000 for married couples) if you haven’t lived there for 2 of the last 5 years prior to selling the property [info].

Also, during the time when the rental is in service, you’ll be required to take a tax deduction for depreciation (straight-line over 27.5 years) of the structure. Sounds good, right? Not really. Upon disposition, the IRS will require you to pay back a portion of the aggregate deduction via a deprecation recapture, along with any capital gains. Having rentals is fine, but there are some details like the above that may affect the bottomline.
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PostPosted: Wed Oct 03, 2018 9:22 am    Post subject:

LongBeachPoly wrote:
Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
Paying rent is basically taking a match to money and burning it. Once it leaves your hands, you are guaranteed never to have use of that money again. It has truly been spent and you'll never be able to utilise the benefit of the earnings you've just spent on rent at any point in the future.

With a mortgage, if you chooses to live in the home, then you''re basically residing in a piggy bank. Every cent that you pay towards that mortgage remains in your pocket. You're engaged in what is basically a forced savings plan where you retain the value of the income you utilise to pay the mortgage to be repurposed and used again at a later date. Even if the unthinkable happens and the value of the property doesn't increase in value over the 15 year term of the mortgage, you still have retained the value of the income that you spent on the mortgage over that term.

So paying $3000/mo for rent over 15 years means you're taking $540,000 of income you've earned and lighting a match to it.

Paying $3000/mo into a mortgage over 15 years means you are RETAINING at least $540,000 in income value since you'll have the ability to spend that $540,000 at a point in the future of your choosing.

So the OP's choice is to either take a match to $36,000 over the course of a year, OR retain that income by instead purchasing.


Ok, let’s take your scenario to paying a mortgage of $3,000 a month for 15 years.

Let’s say that house is in Southern CA. Let’s say you get a job in Northern CA now you have to move, but you want to keep your house. So you rent your house out, let’s say for $3,000/month and you move to Northern CA where you now rent an apartment for $3,000/month

Are you now taking a match to money and burning it because now you are “renting”?


Yes. ANY Income that you spend that you will never get the opportunity to retain the value of has been burned. When you get that job in Northern Cal, you do the same thing you did in LA and obtain another piggy bank. You're now in an even better situation since the renters in your LA house are now paying off your LA piggy bank for you.


But you have to live somewhere right?

Because the original scenario was that, you buy a house w/ a $3k mortgage and LIVE in it... which was considered saving money.

But if you decide not to live in it and rent it out, and use that rental money to live somewhere else, now you are wasting money. How does that make sense? Financially, you are in equal positions. You have a place to live and you pay $3k a month mortgage. Seems like the logic is - live in the place you bought is good. Rent it out and go live somewhere else is bad.

But what no one explains to me is, why is it better to live in the home you bought, vs. renting that home out and then renting another place. What's the actual difference?

1) I buy House A, pay $3k mortgage and I live in it

2) I buy House A, pay $3k mortgage and I rent it out for $3k. Then I go rent House B for $3k and I live in it

Why is scenario (1) considered better than scenario (2)?

Now that we see that House A can fetch $3k a month rent, isn't CHOOSING to LIVE in House A effectively paying $3k rent? Why does it matter if you end up living in House A or House B?


It's simple. When you choose to pay RENT you are choosing to forever part ways with the income you spend each month. When you buy, you are choosing to have the chance to KEEP some or all of that income each month. Doesn't matter if you live in the home or not. Renting is choosing to forever part with that income. Renting is putting your income in a garbage can. Buying is putting your income in a piggy bank.

In your scenario of buying a house then renting another? Buy the second house as well. Renting it is a guarantee of putting your income in a garbage can. Buying it gives you a chance of keeping some,or all, of that income.
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PostPosted: Wed Oct 03, 2018 9:46 am    Post subject:

Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
Paying rent is basically taking a match to money and burning it. Once it leaves your hands, you are guaranteed never to have use of that money again. It has truly been spent and you'll never be able to utilise the benefit of the earnings you've just spent on rent at any point in the future.

With a mortgage, if you chooses to live in the home, then you''re basically residing in a piggy bank. Every cent that you pay towards that mortgage remains in your pocket. You're engaged in what is basically a forced savings plan where you retain the value of the income you utilise to pay the mortgage to be repurposed and used again at a later date. Even if the unthinkable happens and the value of the property doesn't increase in value over the 15 year term of the mortgage, you still have retained the value of the income that you spent on the mortgage over that term.

So paying $3000/mo for rent over 15 years means you're taking $540,000 of income you've earned and lighting a match to it.

Paying $3000/mo into a mortgage over 15 years means you are RETAINING at least $540,000 in income value since you'll have the ability to spend that $540,000 at a point in the future of your choosing.

So the OP's choice is to either take a match to $36,000 over the course of a year, OR retain that income by instead purchasing.


Ok, let’s take your scenario to paying a mortgage of $3,000 a month for 15 years.

Let’s say that house is in Southern CA. Let’s say you get a job in Northern CA now you have to move, but you want to keep your house. So you rent your house out, let’s say for $3,000/month and you move to Northern CA where you now rent an apartment for $3,000/month

Are you now taking a match to money and burning it because now you are “renting”?


Yes. ANY Income that you spend that you will never get the opportunity to retain the value of has been burned. When you get that job in Northern Cal, you do the same thing you did in LA and obtain another piggy bank. You're now in an even better situation since the renters in your LA house are now paying off your LA piggy bank for you.


But you have to live somewhere right?

Because the original scenario was that, you buy a house w/ a $3k mortgage and LIVE in it... which was considered saving money.

But if you decide not to live in it and rent it out, and use that rental money to live somewhere else, now you are wasting money. How does that make sense? Financially, you are in equal positions. You have a place to live and you pay $3k a month mortgage. Seems like the logic is - live in the place you bought is good. Rent it out and go live somewhere else is bad.

But what no one explains to me is, why is it better to live in the home you bought, vs. renting that home out and then renting another place. What's the actual difference?

1) I buy House A, pay $3k mortgage and I live in it

2) I buy House A, pay $3k mortgage and I rent it out for $3k. Then I go rent House B for $3k and I live in it

Why is scenario (1) considered better than scenario (2)?

Now that we see that House A can fetch $3k a month rent, isn't CHOOSING to LIVE in House A effectively paying $3k rent? Why does it matter if you end up living in House A or House B?


It's simple. When you choose to pay RENT you are choosing to forever part ways with the income you spend each month. When you buy, you are choosing to have the chance to KEEP some or all of that income each month. Doesn't matter if you live in the home or not. Renting is choosing to forever part with that income. Renting is putting your income in a garbage can. Buying is putting your income in a piggy bank.

In your scenario of buying a house then renting another? Buy the second house as well. Renting it is a guarantee of putting your income in a garbage can. Buying it gives you a chance of keeping some,or all, of that income.
Aus, i hear what you're trying to say but that can't be true for the simple fact when you rent you are getting something for the money you're paying out. now is renting an investment? NO. there is no way around that NO.

Is owning an investment? Could be. But if you never move and you never use the equity in your home and you wont be giving it to your kids later on in life/or you dont have kids to give it to. Then there is little difference in renting and owning except for ...and this is the big one THESE DAYS(especially in high rent areas(states/cities). The rent can keep going up and up and up. The upping of the rent with a lot of these apt/condos etc. will exceed the upping of the property taxes. which then goes back into the "i should've bought my home even if all I'm doing is living here and I will never use the equity to keep my RENT stable." That last part has only recently become a serious thing you have to worry about.So in todays market. you are correct when saying buying is by far the best option assuming you have the funds to buy. But i cant throw my money in the trash if I get a roof over my head for the money i'm paying out.
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governator
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PostPosted: Wed Oct 03, 2018 10:01 am    Post subject:

splashmtn wrote:
Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
Paying rent is basically taking a match to money and burning it. Once it leaves your hands, you are guaranteed never to have use of that money again. It has truly been spent and you'll never be able to utilise the benefit of the earnings you've just spent on rent at any point in the future.

With a mortgage, if you chooses to live in the home, then you''re basically residing in a piggy bank. Every cent that you pay towards that mortgage remains in your pocket. You're engaged in what is basically a forced savings plan where you retain the value of the income you utilise to pay the mortgage to be repurposed and used again at a later date. Even if the unthinkable happens and the value of the property doesn't increase in value over the 15 year term of the mortgage, you still have retained the value of the income that you spent on the mortgage over that term.

So paying $3000/mo for rent over 15 years means you're taking $540,000 of income you've earned and lighting a match to it.

Paying $3000/mo into a mortgage over 15 years means you are RETAINING at least $540,000 in income value since you'll have the ability to spend that $540,000 at a point in the future of your choosing.

So the OP's choice is to either take a match to $36,000 over the course of a year, OR retain that income by instead purchasing.


Ok, let’s take your scenario to paying a mortgage of $3,000 a month for 15 years.

Let’s say that house is in Southern CA. Let’s say you get a job in Northern CA now you have to move, but you want to keep your house. So you rent your house out, let’s say for $3,000/month and you move to Northern CA where you now rent an apartment for $3,000/month

Are you now taking a match to money and burning it because now you are “renting”?


Yes. ANY Income that you spend that you will never get the opportunity to retain the value of has been burned. When you get that job in Northern Cal, you do the same thing you did in LA and obtain another piggy bank. You're now in an even better situation since the renters in your LA house are now paying off your LA piggy bank for you.


But you have to live somewhere right?

Because the original scenario was that, you buy a house w/ a $3k mortgage and LIVE in it... which was considered saving money.

But if you decide not to live in it and rent it out, and use that rental money to live somewhere else, now you are wasting money. How does that make sense? Financially, you are in equal positions. You have a place to live and you pay $3k a month mortgage. Seems like the logic is - live in the place you bought is good. Rent it out and go live somewhere else is bad.

But what no one explains to me is, why is it better to live in the home you bought, vs. renting that home out and then renting another place. What's the actual difference?

1) I buy House A, pay $3k mortgage and I live in it

2) I buy House A, pay $3k mortgage and I rent it out for $3k. Then I go rent House B for $3k and I live in it

Why is scenario (1) considered better than scenario (2)?

Now that we see that House A can fetch $3k a month rent, isn't CHOOSING to LIVE in House A effectively paying $3k rent? Why does it matter if you end up living in House A or House B?


It's simple. When you choose to pay RENT you are choosing to forever part ways with the income you spend each month. When you buy, you are choosing to have the chance to KEEP some or all of that income each month. Doesn't matter if you live in the home or not. Renting is choosing to forever part with that income. Renting is putting your income in a garbage can. Buying is putting your income in a piggy bank.

In your scenario of buying a house then renting another? Buy the second house as well. Renting it is a guarantee of putting your income in a garbage can. Buying it gives you a chance of keeping some,or all, of that income.
Aus, i hear what you're trying to say but that can't be true for the simple fact when you rent you are getting something for the money you're paying out. now is renting an investment? NO. there is no way around that NO.

Is owning an investment? Could be. But if you never move and you never use the equity in your home and you wont be giving it to your kids later on in life/or you dont have kids to give it to. Then there is little difference in renting and owning except for ...and this is the big one THESE DAYS(especially in high rent areas(states/cities). The rent can keep going up and up and up. The upping of the rent with a lot of these apt/condos etc. will exceed the upping of the property taxes. which then goes back into the "i should've bought my home even if all I'm doing is living here and I will never use the equity to keep my RENT stable." That last part has only recently become a serious thing you have to worry about.So in todays market. you are correct when saying buying is by far the best option assuming you have the funds to buy. But i cant throw my money in the trash if I get a roof over my head for the money i'm paying out.


At the very least after mortgage is paid in say 30 yrs, you have no more 'payment' (there's always upkeep) while you'll still be paying rent.
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PostPosted: Wed Oct 03, 2018 10:26 am    Post subject:

Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
Paying rent is basically taking a match to money and burning it. Once it leaves your hands, you are guaranteed never to have use of that money again. It has truly been spent and you'll never be able to utilise the benefit of the earnings you've just spent on rent at any point in the future.

With a mortgage, if you chooses to live in the home, then you''re basically residing in a piggy bank. Every cent that you pay towards that mortgage remains in your pocket. You're engaged in what is basically a forced savings plan where you retain the value of the income you utilise to pay the mortgage to be repurposed and used again at a later date. Even if the unthinkable happens and the value of the property doesn't increase in value over the 15 year term of the mortgage, you still have retained the value of the income that you spent on the mortgage over that term.

So paying $3000/mo for rent over 15 years means you're taking $540,000 of income you've earned and lighting a match to it.

Paying $3000/mo into a mortgage over 15 years means you are RETAINING at least $540,000 in income value since you'll have the ability to spend that $540,000 at a point in the future of your choosing.

So the OP's choice is to either take a match to $36,000 over the course of a year, OR retain that income by instead purchasing.


Ok, let’s take your scenario to paying a mortgage of $3,000 a month for 15 years.

Let’s say that house is in Southern CA. Let’s say you get a job in Northern CA now you have to move, but you want to keep your house. So you rent your house out, let’s say for $3,000/month and you move to Northern CA where you now rent an apartment for $3,000/month

Are you now taking a match to money and burning it because now you are “renting”?


Yes. ANY Income that you spend that you will never get the opportunity to retain the value of has been burned. When you get that job in Northern Cal, you do the same thing you did in LA and obtain another piggy bank. You're now in an even better situation since the renters in your LA house are now paying off your LA piggy bank for you.


But you have to live somewhere right?

Because the original scenario was that, you buy a house w/ a $3k mortgage and LIVE in it... which was considered saving money.

But if you decide not to live in it and rent it out, and use that rental money to live somewhere else, now you are wasting money. How does that make sense? Financially, you are in equal positions. You have a place to live and you pay $3k a month mortgage. Seems like the logic is - live in the place you bought is good. Rent it out and go live somewhere else is bad.

But what no one explains to me is, why is it better to live in the home you bought, vs. renting that home out and then renting another place. What's the actual difference?

(1) I buy House A, pay $3k mortgage and I live in it

(2) I buy House A, pay $3k mortgage and I rent it out for $3k. Then I go rent House B for $3k and I live in it

Why is scenario (1) considered better than scenario (2)?

Now that we see that House A can fetch $3k a month rent, isn't CHOOSING to LIVE in House A effectively paying $3k rent? Why does it matter if you end up living in House A or House B?


It's simple. When you choose to pay RENT you are choosing to forever part ways with the income you spend each month. When you buy, you are choosing to have the chance to KEEP some or all of that income each month. Doesn't matter if you live in the home or not. Renting is choosing to forever part with that income. Renting is putting your income in a garbage can. Buying is putting your income in a piggy bank.

In your scenario of buying a house then renting another? Buy the second house as well. Renting it is a guarantee of putting your income in a garbage can. Buying it gives you a chance of keeping some,or all, of that income.


But you never addressed my question, which is better, scenario (1) or (2)

--------------------------------------------------------------------------------

Also, what's the difference between choosing to pay rent vs. choosing to forgo rental income?

-----------------------------------------------------------------------------------

And in your scenario of buying House A and House B, where do you end up living then? House B?

So you're saying:

1) Buy House A, pay $3K mortgage, then rent it out for $3K
2) Buy House B, pay $3k mortgage, using the $3k rental income from House A, then live in House B.

You're saying this is the optimal solution right? So, total, you own both House A & House B, you pay $3k mortgage and you get to live in a House.

------------------------------------------------------------------------------------
So, how about I change it up again.

1) Buy House A, pay $3K mortgage, then rent it out for $3K
2) Buy House B, pay $3k mortgage, using the $3k rental income from House A. Then, rent out House B for $3k rent
3) Rent House C using the $3K rent, and live in House C

So, total, you own both House A & House B, you pay $3k mortgage and you get to live in a House.

Now, isn't this scenario the same as your optimal scenario? Or will you tell me to go buy House C as well?

We could go on and on and on, but at some point, you've got to live somewhere right?

-----------------------------------------------------------------------------

Or here, I'll even illustrate with an even simpler example for you

Let's say I buy House A. My neighbor owns House B. House A & B are the exact same House except they are different colors. House A is white, House B is gray.

Scenario 1) So, for House A, I pay $3k a month mortgage and I decide to live in it.

Scenario 2) I decide I like House B more, I want to live in House B. I convince my neighbor to swap houses, so I move into House B and he moves into House A.

Scenario 3) My neighbor doesn't want to move into my House A, but he's willing to move somewhere else. So, I rent my House A to someone else for $3k rent. Then I use that $3k rent to move into House B, paying $3k rent


Financially speaking, are there ANY DIFFERENCES between these 3 scenarios? If so, please explain to me what the differences are?

In all 3 scenarios, I own House A, I pay $3k rent and I have a house to live in.


Last edited by LongBeachPoly on Wed Oct 03, 2018 10:48 am; edited 2 times in total
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PostPosted: Wed Oct 03, 2018 10:48 am    Post subject:

I'm lost
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Aussiesuede
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PostPosted: Wed Oct 03, 2018 10:48 am    Post subject:

LongBeachPoly wrote:
Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
Paying rent is basically taking a match to money and burning it. Once it leaves your hands, you are guaranteed never to have use of that money again. It has truly been spent and you'll never be able to utilise the benefit of the earnings you've just spent on rent at any point in the future.

With a mortgage, if you chooses to live in the home, then you''re basically residing in a piggy bank. Every cent that you pay towards that mortgage remains in your pocket. You're engaged in what is basically a forced savings plan where you retain the value of the income you utilise to pay the mortgage to be repurposed and used again at a later date. Even if the unthinkable happens and the value of the property doesn't increase in value over the 15 year term of the mortgage, you still have retained the value of the income that you spent on the mortgage over that term.

So paying $3000/mo for rent over 15 years means you're taking $540,000 of income you've earned and lighting a match to it.

Paying $3000/mo into a mortgage over 15 years means you are RETAINING at least $540,000 in income value since you'll have the ability to spend that $540,000 at a point in the future of your choosing.

So the OP's choice is to either take a match to $36,000 over the course of a year, OR retain that income by instead purchasing.


Ok, let’s take your scenario to paying a mortgage of $3,000 a month for 15 years.

Let’s say that house is in Southern CA. Let’s say you get a job in Northern CA now you have to move, but you want to keep your house. So you rent your house out, let’s say for $3,000/month and you move to Northern CA where you now rent an apartment for $3,000/month

Are you now taking a match to money and burning it because now you are “renting”?


Yes. ANY Income that you spend that you will never get the opportunity to retain the value of has been burned. When you get that job in Northern Cal, you do the same thing you did in LA and obtain another piggy bank. You're now in an even better situation since the renters in your LA house are now paying off your LA piggy bank for you.


But you have to live somewhere right?

Because the original scenario was that, you buy a house w/ a $3k mortgage and LIVE in it... which was considered saving money.

But if you decide not to live in it and rent it out, and use that rental money to live somewhere else, now you are wasting money. How does that make sense? Financially, you are in equal positions. You have a place to live and you pay $3k a month mortgage. Seems like the logic is - live in the place you bought is good. Rent it out and go live somewhere else is bad.

But what no one explains to me is, why is it better to live in the home you bought, vs. renting that home out and then renting another place. What's the actual difference?

(1) I buy House A, pay $3k mortgage and I live in it

(2) I buy House A, pay $3k mortgage and I rent it out for $3k. Then I go rent House B for $3k and I live in it

Why is scenario (1) considered better than scenario (2)?

Now that we see that House A can fetch $3k a month rent, isn't CHOOSING to LIVE in House A effectively paying $3k rent? Why does it matter if you end up living in House A or House B?


It's simple. When you choose to pay RENT you are choosing to forever part ways with the income you spend each month. When you buy, you are choosing to have the chance to KEEP some or all of that income each month. Doesn't matter if you live in the home or not. Renting is choosing to forever part with that income. Renting is putting your income in a garbage can. Buying is putting your income in a piggy bank.

In your scenario of buying a house then renting another? Buy the second house as well. Renting it is a guarantee of putting your income in a garbage can. Buying it gives you a chance of keeping some,or all, of that income.


But you never addressed my question, which is better, scenario (1) or (2)

--------------------------------------------------------------------------------

Also, what's the difference between choosing to pay rent vs. choosing to forgo rental income?

-----------------------------------------------------------------------------------

And in your scenario of buying House A and House B, where do you end up living then? House B?

So you're saying:

1) Buy House A, pay $3K mortgage, then rent it out for $3K
2) Buy House B, pay $3k mortgage, using the $3k rental income from House A, then live in House B.

You're saying this is the optimal solution right? So, total, you own both House A & House B, you pay $3k mortgage and you get to live in a House.

------------------------------------------------------------------------------------
So, how about I change it up again.

1) Buy House A, pay $3K mortgage, then rent it out for $3K
2) Buy House B, pay $3k mortgage, using the $3k rental income from House A. Then, rent out House B for $3k rent
3) Rent House C using the $3K rent, and live in House C

So, total, you own both House A & House B, you pay $3k mortgage and you get to live in a House.

Now, isn't this scenario the same as your optimal scenario? Or will you tell me to go buy House C as well?

We could go on and on and on, but at some point, you've got to live somewhere right?


The point isn't where you choose to live. The point is when given the choice between purchasing and renting, renting is ALWAYS a guarantee of putting the income you've worked hard to earn into a garbage can,vs buying gives you the opportunity to keep some,or all, of the money you've worked so hard to earn into a piggy bank.

That paycheck you receive every 2 weeks? When you pay rent,that money is gone forever. When you pay a mortgage, you are putting that money in your pocket. You are KEEPING that hard earned money. When you sell the house, you get all of the money from those paychecks back to do with as you wish. Buy another home with it. Purchase a home in Thailand and stop working and live off that money. Anything you choose to do with ALL that money you earned. When you pay rent, NONE of those options exist because that income you worked so hard to earn is GONE FOREVER.

Once you've paid off your mortgage, when you sell the home, ALL of those years you lived in it were rent free. It cost you ZERO dollars. Every single cent you paid (or in bad real estate economies Most of the money you paid) get's returned to you upon sale - making the cost of keeping a roof over your head zero (and in many case - you get paid to have kept a roof over your head if the home appreciates considerably)
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Last edited by Aussiesuede on Wed Oct 03, 2018 10:55 am; edited 1 time in total
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PostPosted: Wed Oct 03, 2018 10:49 am    Post subject:

governator wrote:
I'm lost


Try this example, it's the simplest:



Let's say I buy House A. My neighbor owns House B. House A & B are the exact same House except they are different colors. House A is white, House B is gray.

Scenario 1) So, for House A, I pay $3k a month mortgage and I decide to live in it.

Scenario 2) I decide I like House B more, I want to live in House B. I convince my neighbor to swap houses, so I move into House B and he moves into House A.

Scenario 3) My neighbor doesn't want to move into my House A, but he's willing to move somewhere else. So, I rent my House A to someone else for $3k rent. Then I use that $3k rent to move into House B, paying $3k rent


Financially speaking, are there ANY DIFFERENCES between these 3 scenarios? If so, please explain to me what the differences are?

In all 3 scenarios, I own House A, I pay $3k rent and I have a house to live in.
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LongBeachPoly
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PostPosted: Wed Oct 03, 2018 10:52 am    Post subject:

Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
Paying rent is basically taking a match to money and burning it. Once it leaves your hands, you are guaranteed never to have use of that money again. It has truly been spent and you'll never be able to utilise the benefit of the earnings you've just spent on rent at any point in the future.

With a mortgage, if you chooses to live in the home, then you''re basically residing in a piggy bank. Every cent that you pay towards that mortgage remains in your pocket. You're engaged in what is basically a forced savings plan where you retain the value of the income you utilise to pay the mortgage to be repurposed and used again at a later date. Even if the unthinkable happens and the value of the property doesn't increase in value over the 15 year term of the mortgage, you still have retained the value of the income that you spent on the mortgage over that term.

So paying $3000/mo for rent over 15 years means you're taking $540,000 of income you've earned and lighting a match to it.

Paying $3000/mo into a mortgage over 15 years means you are RETAINING at least $540,000 in income value since you'll have the ability to spend that $540,000 at a point in the future of your choosing.

So the OP's choice is to either take a match to $36,000 over the course of a year, OR retain that income by instead purchasing.


Ok, let’s take your scenario to paying a mortgage of $3,000 a month for 15 years.

Let’s say that house is in Southern CA. Let’s say you get a job in Northern CA now you have to move, but you want to keep your house. So you rent your house out, let’s say for $3,000/month and you move to Northern CA where you now rent an apartment for $3,000/month

Are you now taking a match to money and burning it because now you are “renting”?


Yes. ANY Income that you spend that you will never get the opportunity to retain the value of has been burned. When you get that job in Northern Cal, you do the same thing you did in LA and obtain another piggy bank. You're now in an even better situation since the renters in your LA house are now paying off your LA piggy bank for you.


But you have to live somewhere right?

Because the original scenario was that, you buy a house w/ a $3k mortgage and LIVE in it... which was considered saving money.

But if you decide not to live in it and rent it out, and use that rental money to live somewhere else, now you are wasting money. How does that make sense? Financially, you are in equal positions. You have a place to live and you pay $3k a month mortgage. Seems like the logic is - live in the place you bought is good. Rent it out and go live somewhere else is bad.

But what no one explains to me is, why is it better to live in the home you bought, vs. renting that home out and then renting another place. What's the actual difference?

(1) I buy House A, pay $3k mortgage and I live in it

(2) I buy House A, pay $3k mortgage and I rent it out for $3k. Then I go rent House B for $3k and I live in it

Why is scenario (1) considered better than scenario (2)?

Now that we see that House A can fetch $3k a month rent, isn't CHOOSING to LIVE in House A effectively paying $3k rent? Why does it matter if you end up living in House A or House B?


It's simple. When you choose to pay RENT you are choosing to forever part ways with the income you spend each month. When you buy, you are choosing to have the chance to KEEP some or all of that income each month. Doesn't matter if you live in the home or not. Renting is choosing to forever part with that income. Renting is putting your income in a garbage can. Buying is putting your income in a piggy bank.

In your scenario of buying a house then renting another? Buy the second house as well. Renting it is a guarantee of putting your income in a garbage can. Buying it gives you a chance of keeping some,or all, of that income.


But you never addressed my question, which is better, scenario (1) or (2)

--------------------------------------------------------------------------------

Also, what's the difference between choosing to pay rent vs. choosing to forgo rental income?

-----------------------------------------------------------------------------------

And in your scenario of buying House A and House B, where do you end up living then? House B?

So you're saying:

1) Buy House A, pay $3K mortgage, then rent it out for $3K
2) Buy House B, pay $3k mortgage, using the $3k rental income from House A, then live in House B.

You're saying this is the optimal solution right? So, total, you own both House A & House B, you pay $3k mortgage and you get to live in a House.

------------------------------------------------------------------------------------
So, how about I change it up again.

1) Buy House A, pay $3K mortgage, then rent it out for $3K
2) Buy House B, pay $3k mortgage, using the $3k rental income from House A. Then, rent out House B for $3k rent
3) Rent House C using the $3K rent, and live in House C

So, total, you own both House A & House B, you pay $3k mortgage and you get to live in a House.

Now, isn't this scenario the same as your optimal scenario? Or will you tell me to go buy House C as well?

We could go on and on and on, but at some point, you've got to live somewhere right?


The point isn't where you choose to live. The point is when given the choice between purchasing and renting, renting is ALWAYS a guarantee of putting the income you've worked hard to earn into a garbage can,vs buying gives you the opportunity to keep some,or all, of the money you've worked so hard to earn into a piggy bank.

That paycheck you receive every 2 weeks? When you pay rent,that money is gone forever. When you pay a mortgage, you are putting that money in your pocket. You are KEEPING that hard earned money. When you sell the house, you get all of the money from those paychecks back to do with as you wish. Buy another home with it. Purchase a home in Thailand and stop working and live off that money. Anything you choose to do with ALL that money you earned. When you pay rent, NONE of those options exist because that income you worked so hard to earn is GONE FOREVER.


So I guess you're just not going to answer my question then? Which is better? Can you at least answer that before we continue? It's not like I haven't asked 4 times or so. And it's the whole basis of my point. I mean, what's the point of a discussion when you're just going to ignore a basic question.


Last edited by LongBeachPoly on Wed Oct 03, 2018 10:55 am; edited 1 time in total
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PostPosted: Wed Oct 03, 2018 10:55 am    Post subject:

Another consideration would be to purchase a duplex, rent out 1 unit and live in the other.

In *some* areas, the rental income from the tenant(s) is enough to cover the mortgage, so you'd be in a decent situation. You'd still have to cover the maintenance, move-outs, property taxes, but once the mortgage is paid off you'll have rental income and full equity of the house.

Btw, it's not necessarily true that you're never going to realize the equity unless you sell, home equity loans can access that when the place has appreciated in value or after a re-finance. They can be a headache when interest rates go up or when they reset after a certain number of years.
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PostPosted: Wed Oct 03, 2018 10:59 am    Post subject:

LongBeachPoly wrote:


So I guess you're just not going to answer my question then? Which is better? Can you at least answer that before we continue? It's not like I haven't asked 4 times or so. And it's the whole basis of my point. I mean, what's the point of a discussion when you're just going to ignore a basic question.


Your Question:

Quote:
(1) I buy House A, pay $3k mortgage and I live in it

(2) I buy House A, pay $3k mortgage and I rent it out for $3k. Then I go rent House B for $3k and I live in it


My Answer:

Quote:
Or will you tell me to go buy House C as well?


Yes

That paycheck you receive every 2 weeks? When you pay rent,that money is gone forever. When you pay a mortgage, you are putting that money in your pocket. You are KEEPING that hard earned money. When you sell the house, you get all of the money from those paychecks back to do with as you wish. Buy another home with it. Purchase a home in Thailand and stop working and live off that money. Anything you choose to do with ALL that money you earned. When you pay rent, NONE of those options exist because that income you worked so hard to earn is GONE FOREVER.

Once you've paid off your mortgage, when you sell the home, ALL of those years you lived in it were rent free. It cost you ZERO dollars. Every single cent you paid (or in bad real estate economies Most of the money you paid) get's returned to you upon sale - making the cost of keeping a roof over your head zero (and in many case - you get paid to have kept a roof over your head if the home appreciates considerably)
_________________
I'm On point, On task, On message, and Off drugs. A Streetwise Smart Bomb, Out of rehab and In denial. Over the Top, On the edge, Under the Radar, and In Control. Behind the 8 ball, Ahead of the Curve and I've got a Love Child who sends me Hate mail.
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LongBeachPoly
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PostPosted: Wed Oct 03, 2018 11:04 am    Post subject:

Aussiesuede wrote:
LongBeachPoly wrote:


So I guess you're just not going to answer my question then? Which is better? Can you at least answer that before we continue? It's not like I haven't asked 4 times or so. And it's the whole basis of my point. I mean, what's the point of a discussion when you're just going to ignore a basic question.


Your Question:

Quote:
(1) I buy House A, pay $3k mortgage and I live in it

(2) I buy House A, pay $3k mortgage and I rent it out for $3k. Then I go rent House B for $3k and I live in it


My Answer:

Quote:
Or will you tell me to go buy House C as well?


Yes

That paycheck you receive every 2 weeks? When you pay rent,that money is gone forever. When you pay a mortgage, you are putting that money in your pocket. You are KEEPING that hard earned money. When you sell the house, you get all of the money from those paychecks back to do with as you wish. Buy another home with it. Purchase a home in Thailand and stop working and live off that money. Anything you choose to do with ALL that money you earned. When you pay rent, NONE of those options exist because that income you worked so hard to earn is GONE FOREVER.

Once you've paid off your mortgage, when you sell the home, ALL of those years you lived in it were rent free. It cost you ZERO dollars. Every single cent you paid (or in bad real estate economies Most of the money you paid) get's returned to you upon sale - making the cost of keeping a roof over your head zero (and in many case - you get paid to have kept a roof over your head if the home appreciates considerably)


Ok, thank you.

Now that I've bought House C, do I need to live in it too?

Where exactly do I end up living?

In your scenario of never ending buying up houses, you never address the issue, where the heck do you end up living at?

Also, about this quote of yours:

Quote:
Once you've paid off your mortgage, when you sell the home, ALL of those years you lived in it were rent free. It cost you ZERO dollars.


Let's say you own a mansion. You own it outright, mortgage paid off. It's an expensive mansion. People would pay you $20k to rent it.

If you choose to live there by yourself, is that still considered "rent free" to you?

You do understand that you're choosing to give up $20k in rent a month right?


Last edited by LongBeachPoly on Wed Oct 03, 2018 11:11 am; edited 1 time in total
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Aussiesuede
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Joined: 27 Jul 2005
Posts: 10044

PostPosted: Wed Oct 03, 2018 11:11 am    Post subject:

LongBeachPoly wrote:
Aussiesuede wrote:
LongBeachPoly wrote:


So I guess you're just not going to answer my question then? Which is better? Can you at least answer that before we continue? It's not like I haven't asked 4 times or so. And it's the whole basis of my point. I mean, what's the point of a discussion when you're just going to ignore a basic question.


Your Question:

Quote:
(1) I buy House A, pay $3k mortgage and I live in it

(2) I buy House A, pay $3k mortgage and I rent it out for $3k. Then I go rent House B for $3k and I live in it


My Answer:

Quote:
Or will you tell me to go buy House C as well?


Yes

That paycheck you receive every 2 weeks? When you pay rent,that money is gone forever. When you pay a mortgage, you are putting that money in your pocket. You are KEEPING that hard earned money. When you sell the house, you get all of the money from those paychecks back to do with as you wish. Buy another home with it. Purchase a home in Thailand and stop working and live off that money. Anything you choose to do with ALL that money you earned. When you pay rent, NONE of those options exist because that income you worked so hard to earn is GONE FOREVER.

Once you've paid off your mortgage, when you sell the home, ALL of those years you lived in it were rent free. It cost you ZERO dollars. Every single cent you paid (or in bad real estate economies Most of the money you paid) get's returned to you upon sale - making the cost of keeping a roof over your head zero (and in many case - you get paid to have kept a roof over your head if the home appreciates considerably)


Ok, thank you.

Now that I've bought House C, do I need to live in it too?

Where exactly do I end up living?

In your scenario of never ending buying up houses, you never address the issue, where the heck do you end up living at?


Live in either house A, B, or C. Your choice. It doesn't matter, because when you sell the house, the end result is you will have lived in it all those years for free (or near free), something that's impossible to accomplish when you instead choose to rent.
_________________
I'm On point, On task, On message, and Off drugs. A Streetwise Smart Bomb, Out of rehab and In denial. Over the Top, On the edge, Under the Radar, and In Control. Behind the 8 ball, Ahead of the Curve and I've got a Love Child who sends me Hate mail.
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LongBeachPoly
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Joined: 14 Jul 2012
Posts: 3081

PostPosted: Wed Oct 03, 2018 11:13 am    Post subject:

Aussiesuede wrote:
LongBeachPoly wrote:
Aussiesuede wrote:
LongBeachPoly wrote:


So I guess you're just not going to answer my question then? Which is better? Can you at least answer that before we continue? It's not like I haven't asked 4 times or so. And it's the whole basis of my point. I mean, what's the point of a discussion when you're just going to ignore a basic question.


Your Question:

Quote:
(1) I buy House A, pay $3k mortgage and I live in it

(2) I buy House A, pay $3k mortgage and I rent it out for $3k. Then I go rent House B for $3k and I live in it


My Answer:

Quote:
Or will you tell me to go buy House C as well?


Yes

That paycheck you receive every 2 weeks? When you pay rent,that money is gone forever. When you pay a mortgage, you are putting that money in your pocket. You are KEEPING that hard earned money. When you sell the house, you get all of the money from those paychecks back to do with as you wish. Buy another home with it. Purchase a home in Thailand and stop working and live off that money. Anything you choose to do with ALL that money you earned. When you pay rent, NONE of those options exist because that income you worked so hard to earn is GONE FOREVER.

Once you've paid off your mortgage, when you sell the home, ALL of those years you lived in it were rent free. It cost you ZERO dollars. Every single cent you paid (or in bad real estate economies Most of the money you paid) get's returned to you upon sale - making the cost of keeping a roof over your head zero (and in many case - you get paid to have kept a roof over your head if the home appreciates considerably)


Ok, thank you.

Now that I've bought House C, do I need to live in it too?

Where exactly do I end up living?

In your scenario of never ending buying up houses, you never address the issue, where the heck do you end up living at?


Live in either house A, B, or C. Your choice. It doesn't matter, because when you sell the house, the end result is you will have lived in it all those years free, something that's impossible to accomplish when you instead choose to rent.


Cool, thank you. So you're telling me, buy up all 3 houses and live in one. That's the most optimal financial strategy.

But, if I decided to rent them all out and use the rental income to live in Apt D, then that would be a waste of money?

As long as I live in a house that I own, it's saving money?

------------------------------------------------------------------------------------

So let's get back to the original scenario of owning 1 house, House A

So if I buy House A for $3k mortgage and then I live in House A, you're ok with that?

But if I buy House A for $3k mortgage and rent it out for $3k, use that $3k to go rent House B for $3k, you're not ok with that?

Am I correct?

As long as I'm living in House A, I'm not wasting money because I'm living in the house that I bought, right?


Last edited by LongBeachPoly on Wed Oct 03, 2018 11:16 am; edited 1 time in total
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Aussiesuede
Franchise Player
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Joined: 27 Jul 2005
Posts: 10044

PostPosted: Wed Oct 03, 2018 11:16 am    Post subject:

LongBeachPoly wrote:


Cool, thank you. So you're telling me, buy up all 3 houses and live in one. That's the most optimal financial strategy.

But, if I decided to rent them all out and use the rental income to live in Apt D, then that would be a waste of money?

As long as I live in a house that I own, it's saving money?


Optimal financial strategy? Buy a Box Truck and turn it into a studio apartment. Rent out all three houses, and pay zero rent for yourself. Financially, That would be Optimal.

Box Truck
_________________
I'm On point, On task, On message, and Off drugs. A Streetwise Smart Bomb, Out of rehab and In denial. Over the Top, On the edge, Under the Radar, and In Control. Behind the 8 ball, Ahead of the Curve and I've got a Love Child who sends me Hate mail.


Last edited by Aussiesuede on Wed Oct 03, 2018 11:18 am; edited 1 time in total
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LongBeachPoly
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Joined: 14 Jul 2012
Posts: 3081

PostPosted: Wed Oct 03, 2018 11:17 am    Post subject:

Aussiesuede wrote:
LongBeachPoly wrote:


Cool, thank you. So you're telling me, buy up all 3 houses and live in one. That's the most optimal financial strategy.

But, if I decided to rent them all out and use the rental income to live in Apt D, then that would be a waste of money?

As long as I live in a house that I own, it's saving money?


Optimal financial strategy? Buy a Box Truck and turn it into a studio apartment. Rent out all three houses, and pay zero rent for yourself. Financially, That would be Optimal.


Ok, scratch optimal financial strategy then. Can you just answer my question? I'm trying to have a discussion with you.

So let's get back to the original scenario of owning 1 house, House A

So if I buy House A for $3k mortgage and then I live in House A, you're ok with that?

But if I buy House A for $3k mortgage and rent it out for $3k, use that $3k to go rent House B for $3k, you're not ok with that?

Am I correct?

As long as I'm living in House A, I'm not wasting money because I'm living in the house that I bought, right?
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