Quote:
Originally Posted by BruceH
I make my payments and by the time I retire, my house will have value, and then I will only be paying taxes, insurance and up keep for a whole lot less than a 1 bedroom apartment. As I get older, I can sell the house and use the proceeds to live out my final years where I want
|
most are making that same bet. That the % of their income that goes into their home (above the cost to rent) will perform better going to the bank each month, than going into the investment account(s). And they're making that bet based on a real estate market that once existed but is no longer the case. Today equity-killing ownership costs are much higher, while the only thing that drives up real estate prices,
rising incomes -- in a sustainable way (not a bank-fueled credit bubble) -- will not be there like it once was. A new math is required and most home buyers are still using the old math.
Also, if you look at the performance of real eastate vs most asset classes it contradicts that very bet over most time periods. Now subtract the costs involved in holding investments in each asset class from the performance and the rationale for shoveling that extra income into the bank's TBTF grubby mitts, for 30 years, becomes even more perplexing.
My guess: rent, invest the income you are saving in not working for the bank and the local tax authorities (a home owner's second job they don't know they have) into different asset classes, keep your investments out of actively managed mutual funds or all other types of managed funds and if you must own actual physcial real estate in your portfolio, do so with income properties in low property tax zip codes so that you can cut the bank out of the partnership ASAP and start collecting that rental income (or buy a primary residence that is also a multi-unit income property). Over the course of 30 years, you'll be able to buy twice the home you'll be living in now with a four car garage and you can write the property tax, utility, HOA and insurance checks without even looking at the amounts....because you'll be a millionaire.