Don't Buy Stay Renting...Thoughts?

[Ankesh]

Hi Duane,

Thanks for starting an interesting thread.

Here is the gist of an article I had read long time back. A research was done on businesses that had closed down.

Businesses that rented space and had closed down made losses. But businesses who owned their shop and had to close down didn't make losses. Because their property appreciated and made up for any loss.

The ezinearticles article you linked to says:

while shockingly the average return of investment on a house is ZERO!

Thats not true for all the regions and all types of real estate.

Prices of ground level shops or road-side real estate almost always appreciate well above the rate of inflation. So do houses in a growing city.

So - should you buy or rent depends on:

1. Your purpose
2. The timing
3. The location

my two cents - you should own something.

if home ownership does not fit your personal situation, max out the 401k plan at work - you own that.

buy a quality used car instead of a brand new one with the $500-600 payments - you own that.

anyone reading posts here has at least a passing interest in an online business, even if it's just selling on ebay to earn $300 mo. - you own that.

Hi Folks, thanks for your thoughtful replies.

Sandi - thanks for pointing out the "other nasties" to consider before renting...Did you say Corned beef? :-<

Margaret: Thanks for Sharing the 2.5-3x Salary Benchmark for mortgages. I have not heard the ratio expressed quite like that before. Makes for EASY mental math

Todd: Thanks for "quoting" one of the flaws in the articles arguement. The stat about ROI being ZERO set my alarm bells off as well.

Michael: Thanks again for the 3 Rules: and the 3 schools of thought post. I gotta come BACK to your statement of "NEVER SELL" at another time.
Same sentiment was echoed by a friend of mine that invests in realestate.

Ankesh: Thanks for "gist" of the article on Businesses. It shows the benefits of appreciation and a Longer term focus. You echoed the same sentiment as Michael did. It begins with 'Your Purpose" or "Your WHY"

C.T.coburn: "Own Something" I understand the value of "owning" things. But it REALLY depends on WHAT YOU are Referring to.

The challenge I have with this line of thinking is that it can STOP people
from moving forward on ideas, because they believe the have to OWN all of the RESOURCES before they begin.

There is an alternate World view that says I DON't Want to Own anything...I just want to "CONTROL IT".

For example: Jim Straw used/uses an Options contract to control assets for a certain amount of time. With minimal to no money of his own in the deal. He then adds value in some way to the asset and
resells it to make himself a handsome profit. (read Jims Snooper report to see how) http://www.businesslyceum.com/snooper.html

Now IF he had the "I gotta own it" mentality it would have COST him a lOt of Money upfront and or Time to raise the money which
could have prevented the deal. By using the option as Leverage he was able to take advantage of an opportunity QUICKLY and profit from it.

I think Jim also mentioned that If he had to do it all again, he would never own his own products. He would work as an affiliate. Similar line of thinking.

Heck examples abound

Michael Ross wrote a great report on the www.artofleverage.com how to start a business with minimal investment

Dien Rice writes REAL WORLD examples of businesses that can be started without having to own everything www.hiddenbusinessideas.com

Hmm I guess it does pay to OWN SOMETHING just depends on WHAT it is you
are referring to that you want to "OWN"

O.K I'm straying from the original topic....

THANKS ALL FOR SHARING YOUR THOUGHTS.

Duane Thoughts:

- It was refreshing to see an article that "went against the grain"and argued FOR renting. You all touched upon most of the points I was thinking.

- It all depends on your circumstance and future circumstances. The best move would be to go to the position that gives you the MOST OPTIONS

- In the long term: Owning because you have more leverage should a catastrophe happen in your income down the road. You can rent it out, borrow against to invest, rent out a garage (Michale Ross mentioned these in his post) etc.etc.

MORE OPTIONS = MORE POWER

BIG BUT!!!

The views we expressed are more than like based on How we are currently living and where we are currenlty living.

If you read The Four Hour Work Week by Tim Ferriss, and let's just say you were able to maintain your present level of (Internet) income while Renting for a LOT Less in another country.

You could potentially SAVE a lot and Reinvest to Make Much More than owning ....

Hmmmm

You can make anything work, as long as you are clear on your WHAT...and your Why? and TAKE ACTION on Both

SOWPUB RULES!!

Originally Posted by Duane Adolph

Hi Folks,

I Just read this article
http://ezinearticles.com/index.php?D...hy!&id=1157441

"Renting is just plain better. It's better because it makes you richer"

He makes an argument for renting vs owning a home. (He obviously has a vested interest as he owns an apartment living site)

I have my thoughts, but I'm curious what you think.

Benefits:

- NO Debt ?

Thoughts?

Duane,

Thanks for adding some more.

I'd like to also add a few things... on Owning, or, shall we say, Buying With A Mortgage.

In Trump's "The Art Of The Deal" he mentions a story about selling a hotel. I think it was the St Moritz. And how Bond over paid because it (the hotel) would only Service a Debt of $X while Bond had paid $X++.

When Bond was sent bankrupt by his financier, he argued with them. Why call the money due when I have Never failed to meet an interest payment.

THERE is the clue. Bond didn't have millions sitting around waiting to Pay Off a hotel. It was all Interest Only.

Trump hasn't borrowed $1.2Billion so he can Pay It Off. Why would he do that? That'd take too much money out of his pocket to pay off the principal. If the debt is serviced by a casino, there is no need to OWN it. Service the debt and pocket/invest the remainder.

I work with a guy who has Bought some cranes. These things sell for around $400k NEW. He has three and another two due in a few months. The other crane drivers he works with call him a Tycoon in a joking manner. But the thing is... Anyone of them Could have done it. Because to buy a crane you do this... Order the crane. The waiting list is two years long. 3 months before the crane is due the crane company will ask for a 10% deposit. So once ordered you know you have 18 months to get your deposit together - wherever it comes from. Your only obstacle is the bank. In his case, they took equity out of an existing investment property as Additional Security for his first crane. For his next two, they didn't because they'd seen how he'd been Making Payments.

Cranes are a little different as the low end are usually sold like vehicles over a five year Lease. But the Principal is there. The WORK the crane does services its debt. All you need is the Mental Strength to Handle Debt of that level.

Tangent - Kind of. There is an Aussie Actor. He does Martial Art films. Lives in Thailand. A country where, depending on where you live, can cost as little as $40 a month to rent a place. When your income is not dependent on where you live, and has a tendency to fluctuate - like a no-name actor people have never heard of - then living in such a place helps you continue acting. Because a single pay check can go a long way. (BTW, foreigners are not allowed to own land in Thailand. The building, yes, but not the land.)

Michael Ross

My advice is to be the “Landlord” and Not the Tennant...

Definitely Get into the Revenue Rental side of things...

The End result is very nice Long term investments that Others continually keep Paying for you...

Real Estate usually goes in 5 year segments or so...

So it's all about a Good business plan and Doing things at the Right economic times...

All you need is 3 to 6 Good revenue properties and you can Enjoy a nice Millionaire retirement...

As I've said before Small towns, waterfront and Up & coming places...

Deals all over the place that are Going to double/triple... And make you Rich...

Keep in mind you Don't have to live where you own real estate...

Too many people Think about real estate as a get Rich Quick idea instead of a well planned Long term investment...

Steve Gillman of Webhiker, who I've mentioned in other posts puts out some Great real estate idea info...

Not only Affordable...

Reviewing the network of Webhiker sites offers some Great ideas & business models to use...

http://www.housesunderfiftythousand.com/
http://www.housesunderfiftythousand.com/sitemap.html
http://www.webhikerllc.com/

Phil