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Not true. All theory here depends on one thing - monthly mortgage is higher than rental fees.
your maths has a fetal floor, roger the renter will be paying a fixed 2,120 for 25 years, however owen the owner will not. The amount he pays each month will reduce as he is paying interest and the principle. the interest he pays is calculated based on the remaining principle left, so in the final 5 to 10 years of the mortgage the payments will be very low, maybe a third, so he could also use the extra cash to invest each month.
Chances are Roger the Renter will spend the $1100 on cars, clothes and eating out. Then on that day when Roger the Renter becomes Roger the Retiree, he may just wish he wasn't spending half his pension on rent.
I only wish"ed" that my great grand father, grand father and father would have bought more houses before me.
Interesting from across the pond - but here in UK , as an example - in 1969 a small terrace house =£4500. In 2000 =£95000 in 2019 c.£250000.
I like the part where owen and Roger met up and talked about moving to Cuba and living for a 10th of all those figures lol
It is basic mathematics. If you can afford to rent, you can afford to buy something modest that you can make payments on and pay the taxes, insurance, and upkeep. If you are smart, you will forego the lavish vacations and luxuries and get that modest roof over your head paid off in half the time. You will still be young enough to enjoy the fruits of your labor without worrying that the landlord is going to turn your apartment into a condo.
How in the world the renter increased his self worth close to the house owner magically? What is this voodoo?
My unit in Sydney has gone from 325k to 630k in 10years, so i'm happy i bought it:)
Get the rope
By and large, it's a big waste to be a long time renter.But then again, it also depends on your particular circumstances, desires, and real estate market.
This video misses so many factors. I assume you are at no point determining that the renter can borrow to magnify his returns?The only reason the property owner wins is because they have the capacity to borrow 80% of the assets worth. As soon as the renter can get the ability to borrow, the figures change dramatically.
Your are missing out some point that some people don't even have a coin despite having a business mind. So teach us how to start from zero to being a millionaire
After some internetting, I read that repairs such as repairing holes, fixing leaky faucets, and even carpet shampooing are tax deductible expenses if you're a homeowner. Plus you get to deduct capital depreciation. Two more positives for owning a house in Canada.
Owen's children get to inherit a house. Roger's won't.
No capital gains tax on a million dollar home sale in Canada? Nice.
As far as I am concerned , the rental thing is bulls. Everyone should own a house, but the system is so set that most of us will never own a house and therefore will be filling the coffers of those who own. I am certain that the 1% who own 99% of the worlds wealth do not rent anything, while the rest of us who fight over the scraps will always have to rent. Here we are speaking basically about the WEST. What about Africa and the eastern section of the planet who live in squalid conditions while nearly trillions are spent on war and every other form of murder. Seriously, questions like these reek of dishonesty in a world where no one has to pay rent
"we assume rent increases with inflation"LOL, it most certainly does not in the US. Renting has outpaced inflation for the last 15 years by a hefty margin. Also nobody rents a $500,000 home for $2100. Most rent values will be at about 0.6% of the house value if you're getting a good deal so more like $3,000 for this to be comparable.
Thanks. I learn nothing. Hahahaha
fuck it im living in a tree house
In some European country, you can borrow 125% of total purchasing value, government encourages young people to purchase, will even give some money every month to support paying back the bank...case by case... Buying a property is not bad idea
i donno about way back but last few decades housing have grown by way more than 3% per year.
dude.....u left out so much information...nice try. People don't get rich of mortgaging a house n paying it off. Nothing beats stocks. Transaction cost for selling stocks is way cheaper with discounted brokers. The renter wins, with all things being equal. Not even close. Also, stocks can compound with interest and a house cant. 7 to 12% is a more accurate measure of the overall stock market
Go to somewhere you can buy outright, get the capital appreciation, and perhaps a rental yield
Roger doesn't have a mouth, nose and eyes. Roger has bigger problems than finances.
Housing markets collapse every 15 odd years. Then your in negative equity, then interest rates rise and force you to foreclose, then your running the risks over a 40 year loan. Not to mention as a renter I don't pay for repairs, or white goods replacement or council fees or water fees or land tax or capital gains tax which for a 300k increase in asset value you'll pay 60k. Fuck owning a house.
Putting a 5% down on a house?
The best is live At your parents home no need for rent or buy if everyone pay for a big enough house...
Wow, the fees and taxes in Canada will kill you.
Let me just say this: Just fucking ridiculous...what everyone is now expected to pay...to live in anything decent. such a world. take your $500,000 home...and Loan, and million pages of documents and paperwork and 'agreements'...and liabilites.....and stick 'em all in your Ass. Nothin' doin. enjoy the madness, and trying to 'feel'...like your playing the game of life...with your big, gorgeous, expensive, 'look at me i'm doing so well!'Bullshit Lie...that's both...'draining your bank account'...and that could get taken away from you at any second... and take a flying leap. good god.... so glad i'm not one of the millions of dummies...who feel a need to 'play this stupid game'. Just rent. it's so much simpler. screw your 'big money'...or, 'capital gains...at the end. some get it; but...some get a divorce. minimalize. live simple. and don't end up a slave to the banks. what a laugh... not in this day and age, anyway....
Did I miss the part where rent goes up every year?
It’s true Torontonians make 35k and buy $500,000 place. Because tiny condos in Toronto cost around $500k. You either take that deal or you live in the outskirt, and the commuting will take 6 hours of your time daily. Also renting is crazy, some places at $500k houses rent $3500/m. The only other option is living in your vehicle, however, in the winter that is not an option too. So this analysis is almost to the point even after 4 years.
Where does one get 5 percent anymore
This was all great until 2008
You're missing the interest paid on the mortgage , 100's of thousands
ASS out of U and ME = ASSUME a lot, % of return, Rent going up, over time. interesting but not practical. too many variables which are unknown, just like this will never be read
This is so dumb to factor in the $1,100 invested every month and it turns into $1 million. That percentage is so low that it will happen it was a pointless variable. They should've been honest and just look at what the renter lost by renting vs what the owner gained by owning.
Rent on that house would be closer to $4,166.67 a month
Also Owen probably has put many thousands of dollars into renovations over those years, not just necessary repairs! Jimmy.
discipline is the most important component. Make a plan and stick to it gets you furthest the safest.
Great vid but 1 thing ... I believe you forget first last and security for the renter... Ive been through this and never found a place that didnt want at least first and security up front
Rent keeps going up faster than inflation rate or economic growth, it has been the fact forever.It even accelerates if it's left uncontrolled.It has to be regulated artificially in one way or another because landlords has ALWAYS advantage over the tenants.There has been no shortage of horror stories between landlord and the peasant in the history.Rent control is one of such artificial control and the first one was tried by Julius Caesar in ancient Rome.Another is public housing.Both are very unpopular among the landlords for obvious reason, they want to keep the tenants in desperate situation.Another way of control the rising rent issue is progressive property tax which hasn't been tried in many countries or cities. This makes it first time buyers easier to buy and big landlords hard to keep up the business(eventually leads to selling the house).In the current situation, there's no question owning is better option, because there's there's no restriction including the samples above.Why there's no restriction?Lobbying.
The first money making strategy owen could have made is getting a fixed rate over an adjustable one. Owen also picked the wrong house if theres a comp renting for cheaper than his mortgage. Furthermore, owen could move but never sell and eventually rent to roger and continue that process. In either scenario presented both characters are ignorant on how money is acquired.
How did buying a house turn into borrowing money? Give an example for people who pay off the house with cash. There are land deals for under $10k all over the country. Wake up people! Own your land!
The average loan interest rate is higher than average increase in house prices
Amazing hand writing
Why the hell are we even bickering about such a superficial thing as Renting Vs Owning when we have enough resources to house everyone. Money is pitting us all against each other. Money is restricting technological progress and public well-being. Why do you think all our infrastructure is crumbling while billionaires break profit records every year? And the saddest thing is the vast majority of us around the world suffer so needlessly -- whether it's depression, illness, or starvation -- because we live in a monetary system. Start getting informed about CHANGING OUR ENTIRE SOCIAL SYSTEM.Resource-based economy: ru-clip.com/video/Yb5ivvcTvRQ/video.htmlm59sHousing of the Future: ru-clip.com/video/T0F_H4vq9qg/video.html"GDP VS Public Health": ru-clip.com/video/7yQ7K8ISjxc/video.htmlm41smoneyfreepartyusa.com/
Yeh but what about the rise in rent? Home owner pays $2300 a month on mortgage but 20 years later its still $2300. Renter maybe paying $1600 a month now but 20 years later he will be paying $2800 a month and only going up
@Gamyuiii no way? Death and taxes.
No tax on selling your first home sir!
Yea. But what about the tax the home owner has to pay once he sells the home? Usable capital is infinitely more useful than useless asset like a house.
renting propaganda bs. Renters are the sir.land-lords cotton picking slaves. They can be evicted at the master's pleasing and always have the rent increased by greed and speculation only( inflation is just a pretext to squeeze more milk from the udder ). Good luck owning stuff when you rent and have them on the streets when u can't pay rent anymore. Getting old? sleep in homeless shelters or on the streets, have children? they'll have the same fate too. There's a reason why real-estate is so profitable for those who own.
Renting = transfer of riskWhen the housing markets crash again, renting will give the renter the flexibility to move for work if necessary without a short sale/abandoning the house. The owner is affected by the market that they can't control.
Weird. The others have commented what I thought. To add, at the end of it, the house belongs to you, late in your age. Where would you find money to rent for the rest of your life? You need to consider medication too (hey let's face it. You're old, your body will fail eventually). Any drawings for this?
To determine the cost of renting vs owning in under 10 seconds use the Sunk Cost Rule - ru-clip.com/video/cU2Sfr_4Dpc/video.htmlThe video gives you a comprehensive shortcut to make the rent vs buy decision by giving you the total unrecoverable costs of renting vs buying.
What is a GST tax on sale of property? What is a land transfer tax? What is a 5-year mortgage? You guys are really getting ripped on taxes.
Your income is 35K.. you should not be looking at a 500k house. Fire your loan officer! Front end DTI should not be over 33%
Renting sucks no matter how the numbers are. When you commit your self to a house loan and able to pay it on monthly basis, go for it and NEVER RENT. You know why? As time passes, you brain grows stronger to find other ways of making money and you can easily cut those 25 years with top ups. In my country, if I die. The insurance pays for the house and my kids will take the house even without completing the loan payments. Buying a house is great security for everything. If you are planning to rent for the rest of your life then know that you are a coward. Afraid of commitments. That’s what you are. I would respect some one who would go and buy his own cardboard house than doing renting.
The person making this video either has never rented or is being disingenuous. You know about title transfer fees and mortgage insurance, but not about a security deposit? And that rent is hella low. And likely underestimating how much rent goes up at renewal. But ok
Greetings from the states. 1. Can y'all get a 3% fixed with only 5% down on a house you definitely can't afford?2. If you have literally 0 liquid assets after buying a home, you're in for a world of hurt. 3. Who the hell buys a $500000 house when they only have 35k in the bank?4. Owen can expect to spend another $10000 a year on maintenance. Which, even if that difference wasn't invested, radically skews things towards rodger. 5. It's unclear if you accounted for rodger investing his 35k for an illiquid apples to apples.
u forgot their salary double in 25 years
Never put 5% down...this video is idiotic
All bullsh.. All based on assumptions, all variable. We bought our new home in 1970 and added 400 sq. ft. in 1973. We can repaint and make modifications without having to ask permission. The home mortgage is paid off. Our property tax (monthly rate) is only $20 more than our month mortgage used to be. We live in our valuable asset but we can't live in a stock/bond portfolio. Our neighborhood is still a very good neighborhood after 49 years. We explored the option of moving a few times but any more would not have been an improvement, it would have been only an expensive change . . .
Where is the part leaving something behind for your (grand)childern?
Michiel1972 not necessary if you aborted your kids.
What a stupid calculation!!!Too many subjective assumptions lead no reasonable result. Still want to drive a nail into the wall for my kids art without constraint.
Now are you ready for this? All of the house prices are flawed. Literally inflated, like an invisible baloon. Having to rent means you are a slave and having a mortgage means you are a slave who also pays for an invisible inflated baloon coming out of your own arsehole. Someone worked hard to design our world
Those are general costs. Renting, there is no maintenance cost; hone owning, there is maintenance...
Very unrealistic!! Most people who rent have no investment, no capital gains and all those big words you are tossing around to confuse us local folks. Bottom line, you always come out better if you buy in the long run, cause renting is just putting that money in the landlord's pocket. Thanks, I needed this bit of inspiration!!!
No debate here ladies and gentlemen. The advantages of owning your own home far exceed those of renting, especially in the long run. Just imagine how much money one throws down the drain, when they have rented from the age of 21 to 65 years? Not to mention that you will pass away with nothing for your children to inherit. The problem is that housing prices are so ridiculously high, that many people simply can't afford to buy their own homes. In such a huge country like Canada, surely everyone should have their own home of some sort, but hey... that is perfect world thinking.
That is, if Owen buy the house, live in and then sell after 25 years. In reality, I would prefer not to live in the house. Instead, rent it out and buy more houses for rental purposes using other people's money or a bank, depending on the deal. That way, Owen can accumulate wealth in no time. 25 years is a lifetime. LOL