Question for Millionaire Mommy...

[Marquette]

I try and keep Jante Law in mind whenever I visit a new place... it's easier than whipping out the "you hate me because I'm <fill in the blank>" card.

 

[SecondCor521]

Wow, people, have I jumped into a pool of women-eating sharks? Is everyone subject to this hazing period (as referenced in a PM to me from Rich in Tampa)?

No and no, respectively.

We have, in general, a great deal of tolerance for everyone except those people who come across as obnoxious. And here I am defining obnoxious to explicitly include people who volunteer to help me before determining whether (a) I think I want or need help, and (b) I respect and trust them enough to ask for help.

A successful woman makes some of you shudder?? What's up with that? Is this forum filled with male chauvinists? What is the female/male ratio here? I can handle differences of opinion, but not blatant chauvinism and disrespect. I have better things to do with my free time. Please advise. Am I in the wrong place?

Again, no, N/A, and no.

I don't know what the female to male ratio is here, but of the people I like and respect on the board I know that several are female -- Want2Retire, Sarah in SC, Martha, and kaudrey to name a few. If you really want to know the board has a poll feature.

We can handle differences of opinion as well.

Whether you're in the wrong place or not is for you to decide, not anyone here. If you came hear to learn, I think the answer will be that you've come to a good place. If you came here thinking you know a lot and are here to teach us all, then maybe not.

2Cor521

 

[W2R]

A successful woman makes some of you shudder?? What's up with that? Is this forum filled with male chauvinists? What is the female/male ratio here? I can handle differences of opinion, but not blatant chauvinism and disrespect. I have better things to do with my free time. Please advise. Am I in the wrong place?

I haven't experienced any gender problems or conflicts here, that I can recall, other than what you seem to be attempting to stir up. I make no secret of being female, and I am quite aware of gender discrimination and do not feel this is a difficult place at all for an intelligent, thoughtful woman to exchange ideas and viewpoints. There may be more men than women here, but for the most part they are intelligent, charming, and have some fascinating ideas and opinions (as are/do the women here!!!)

As to whether or not you are in the wrong place, I think that may depend on what sort of attitude you bring to the forum. So far, the possible tendency towards bragging and towards a lack of interest in learning from others seems to be putting off a lot of people. You seem miffed that nobody is especially impressed. You seem to have little to no interest in any substantive discussion (I suppose that is related to the "learning" issue).

 

[dex]

This is a numbers analysis. So let's look at the numbers. I used the numbers from the blog; except for two. Which I think are required for proper analysis.

How do you post an excel spread sheet?

Assumptions



1. A house physically equal in either scenario
2. Owning and Renting in the same location

3. Utilities the same under both assumptions
4. For 10 year analysis - rent increases 2% per year - apx $65 - 75/mo











300,000 Paid off house









Owning Calculations

30,000 Opportunity Cost 10.0%

3,000 Property Taxes 1.0%

1,500 Home Ins



4,500 HOA/Repairs 1.5%

39,000 Total Expense Of Owning

6,000 Avg Annual Growth Rate 2.000%

33,000 Net Cost of Owning


2,750 Avg. Monthly Cost Of Owning














Cost of Renting - For One Year

3,250 Monthly Cost of Renting

39,000 Annual Cost of Renting








For One Year


(6,000) Incremental cost of Renting Vs Owing
(500) Incremental cost of Renting Vs Owning







Ten Year Analysis


330,000 Net Cost of Owning


420,211 Net cost of Renting


90,211 Higher cost of renting


9,021 Avg higher cost of renting/year

 

[Notmuchlonger]

Well Im impressed it only took 2 pages for the melt down to start.

 

[twaddle]

Ah, the ER Welcome Wagon strikes again.

She's successful, articulate, enthusiastic, full of ideas. Cut her some slack.

She's not the first person to want to share her enthusiasm with a wide audience. Do you guys hold ESRBob to this same scrutiny? The Kaderlis? Nords? Sgeeee? (Oops, bad example.)

 

[W2R]

Ah, the ER Welcome Wagon strikes again.

She's successful, articulate, enthusiastic, full of ideas. Cut her some slack.

She's not the first person to want to share her enthusiasm with a wide audience. Do you guys hold ESRBob to this same scrutiny? The Kaderlis? Nords? Sgeeee? (Oops, bad example.)

Yes, I think we do.

 

[bbbamI]

Yes, I think we do.

Yeah, I think everyone gets ripped a new one every once in a while. I guess that's why I've been posting cat pics lately.

 

[RunningBum]

Dex, to be fair, in her blog the $3250 rental house is totally different, and much, much nicer. She uses $1300 as the rental figure for the same $300,000 house.

Maybe that's possible in some markets, but I know for sure you can't rent a $300K house for $1300 in mine.

I'd feel much more comfortable with the blog if the headline was "Renting can beat owning" rather than the black-and-white "Renting beats owning" because I'm pretty certain it wouldn't beat it in my market. Plus a lot of people won't tolerate the risk to get 10% return on their investment.

So maybe the headline should be "Renting beats owning, if you live in a goofy real estate market and are willing to take big chances on your money."

 

[Fireup2020]

I haven't experienced any gender problems or conflicts here, that I can recall, other than what you seem to be attempting to stir up. I make no secret of being female, and I am quite aware of gender discrimination and do not feel this is a difficult place at all for an intelligent, thoughtful woman to exchange ideas and viewpoints. There may be more men than women here, but for the most part they are intelligent, charming, and have some fascinating ideas and opinions (as are/do the women here!!!)

As to whether or not you are in the wrong place, I think that may depend on what sort of attitude you bring to the forum. So far, the possible tendency towards bragging and towards a lack of interest in learning from others seems to be putting off a lot of people. You seem miffed that nobody is especially impressed. You seem to have little to no interest in any substantive discussion (I suppose that is related to the "learning" issue).

Another successful female here - who seconds WTR's posted opinion. We are here for sharing ideas - not hopping on to someone else's bandwagon. Sorry you are not getting lots of takers. Knock off the pompous 'tude, and you will find this is a warm and welcoming bunch!

 

[cute fuzzy bunny]

Its an analysis, but not necessarily the only one. I guess I'm not getting the immediate jump to a gender discrimination presumption on questioning the ideas.

I live in a pretty spiffy area but my costs to own are a lot less. The costs seem very inflated in the presented analysis.

Over the last 15 years, I've made enough on my primary residence to pay for my current house. So its essentially free, excepting the loss of investment opportunity on the money involved. Which would have done well in the late 90's but rather poorly in the early 2000's.

And the house is absolutely a source of income. I can sell it later and rent, I can mortgage or reverse mortgage all or part of it, I can take a home equity line of credit on it, I can rent a room, or I can rent out the entire house. Frankly I can get cash flow out of my house with less trouble and paperwork than selling some allegedly more liquid investment products.

My $500k house will probably be worth $1.5-3M+ in 40-50 years when I'm 80 or 90. A reverse mortgage is my backup-backup-emergency plan should we run out of money due to a long bear market around that time.

In some areas, it may be better to rent than own. I'd probably not choose to live in one of those areas.

As far as momentum investing, that works great until it stops working. Most people tend to highlight that period that it worked between the times it didnt work or data mine a longer series that showed how they would have done it to always make money, but the facts are that nobody's figured out how to make the shifts using currently available data for future investment returns.

Oh, and for all I care everyone involved in the discussion could have two sets of both sex organs. :

 

[dex]

Dex, to be fair, in her blog the $3250 rental house is totally different, and much, much nicer. She uses $1300 as the rental figure for the same $300,000 house.

Maybe that's possible in some markets, but I know for sure you can't rent a $300K house for $1300 in mine.

I'd feel much more comfortable with the blog if the headline was "Renting can beat owning" rather than the black-and-white "Renting beats owning" because I'm pretty certain it wouldn't beat it in my market. Plus a lot of people won't tolerate the risk to get 10% return on their investment.

So maybe the headline should be "Renting beats owning, if you live in a goofy real estate market and are willing to take big chances on your money."

I would have to agree that the 5.2% rental rate is low - should be closer in the 8-10% range - expecially when you take into account agency fees.

So here is another analysis. It is called break even analysis - When does the cost of renting equal the cost of owing - it is at $2,553/mo of renting.

I would still come down on the side of owning

Assumptions







1. A house physically equal in either scenario




2. Owning and Renting in the same location





3. Utilities the same under both assumptions




4. For 10 year analysis - rent increases 2% per year - apx $50 - 60/mo






















300,000 Paid off house

















Owning Calculations





30,000 Opportunity Cost 10.0%





3,000 Property Taxes 1.0%





1,500 Home Ins







4,500 HOA/Repairs 1.5%





39,000 Total Expense Of Owning





6,000 Avg Annual Growth Rate 2.000%





33,000 Net Cost of Owning






2,750 Avg. Monthly Cost Of Owning


























Cost of Renting - For One Year





2,553 Monthly Cost of Renting





30,636 Annual Cost of Renting
















For One Year






2,364 Incremental cost of Renting Vs Owing




197 Incremental cost of Renting Vs Owning















Ten Year Analysis






330,000 Net Cost of Owning






330,092 Net cost of Renting






92 Higher cost of renting






9 Avg higher cost of renting/year

 

[haha]

Dex, to be fair, in her blog the $3250 rental house is totally different, and much, much nicer. She uses $1300 as the rental figure for the same $300,000 house.

Maybe that's possible in some markets, but I know for sure you can't rent a $300K house for $1300 in mine.

You could here, but you couldn't get an occupancy permit as there would be a hole in the roof and rats running around in the backyard.

Ha

 

[toofrugalformycat]

Wow, people, have I jumped into a pool of women-eating sharks?

As a female relative newbie, I would say defiinitely not.
What you have jumped into is a very big pond, and you aren't necessarily the biggest fish.
Some of these people have enormous egos, and some have enormous IQs, and some have enormous nest eggs, and many have all three.
Sex is irrelevant.
Verbal sparring is sport.
I've learned a lot, and I thought I knew everything!

 

[twaddle]

You could here, but you couldn't get an occupancy permit as there would be a hole in the roof and rats running around in the backyard.

$1300/mo would get you a $600,000 waterfront cottage in my area.

 

[brewer12345]

$1300/mo would get you a $600,000 waterfront cottage in my area.

Crappy 2BR apartment near me for $1300, if you are lucky, have a deposit, and no pets.

 

[TickTock]

Some of these people have enormous egos, and some have enormous IQs, and some have enormous nest eggs, and many have all three.

Amen. And many enjoy spirited debate!

 

[laurence]

$1300/mo would get you a $600,000 waterfront cottage in my area.

Wow, the bubble hasn't burst in your area yet?

Here in San Diego you could rent my house for more than our mortgage, it took 5 years of holding it to get to that point, though.

 

[Nords]

Wow, people, have I jumped into a pool of women-eating sharks?

Good counteroffensive!

This isn't a gender issue or a "new-poster-hazing" issue. It's not a race or religion or occupational issue, either. We ask these kinds of questions for anyone who makes such flat assertions about subjects like rent vs own. Investors have to consider points of view that affect their psychology and their comfort zones-- otherwise they just won't follow through on the financial mechanics.

Rich (a contraction of his full name, not his financial status) was trying to get the rest of the posters over to this thread. You'd finished introducing yourself and this thread's subject was being discussed in two different threads, which was perhaps causing some confusion. It's not about you.

I have to admit to a bit of cynical suspicion when a poster responds to a bunch of questions with a counterattack instead of a bunch of answers. If you're interested in asking questions or subjecting your opinions (and your assertions) to analysis & discussion then you won't find a better place. But if you're planning to develop any sort of credibility then you'd better be willing & able to answer questions with data or studies or other links that support your assertions. Hence the Kiyosaki comment.

If you're thin-skinned or easily offended then you're definitely on the wrong board. If you're just here to raise a fuss and direct more traffic to your website then you're the latest of a long line of misinformed posters who were also on the wrong board. If you're here to deliver a lecture... well... good luck with that.

 

[haha]

$1300/mo would get you a $600,000 waterfront cottage in my area.

Actually, I wasn't at all clear. There are likely liveable $1300 houses here too; but they could not be bought for $300,000.

I guess these rent/buy comparisons are diagnostic of a speculative housing market.

Ha

 

[twaddle]

Crappy 2BR apartment near me for $1300, if you are lucky, have a deposit, and no pets.

Well, "waterfront cottage" is a euphemism for a crappy 2-BR place near a navy base, but the price/rent multiple is still crazy.

 

[Texas Proud]

Me thinks Mommy is saying a lot of the good things that some of the people were saying about California real esate prior to it crashing... or investing in internet companies (they used 'technology') prior to their crashing... but they do not stand the test of time...

MMND.... NOBODY that I know of that has any real training in portfolio analysis would be in equities 100%... and nobody would use a 10% rate of return for their calculations. Can you get 10%... why yes... but I would not bet my future on that kind of return...

And tell me, what is YOUR return since Oct or Nov of last year? OR, what is your YTD return?

Don't get me wrong... I am glad you changed your ways and are living the good life... but some of what you say just does not stand up to analysis in the long run.

 

[W2R]

On checking Craigslist, I found that a house in my neighborhood that would now rent for $1500/month, would cost no more than about $185K.

That doesn't make renting seem like much of a wealth builder to me. Again, these things are REGION SPECIFIC and it's very difficult to generalize.

 

[twaddle]

On checking Craigslist, I found that a house in my neighborhood that would now rent for $1500/month, would cost no more than about $185K.

That doesn't make renting seem like much of a wealth builder to me. Again, these things are REGION SPECIFIC and it's very difficult to generalize.

That implies a cap rate of around 9%. You should buy as many of those as you can find. Forget the stock market.

 

[brewer12345]

That implies a cap rate of around 9%. You should buy as many of those as you can find. Forget the stock market.

Heh, you forgetting about vacancy rate, maintenance, insurance (that must be interesting in NOLA), tenant damage, etc.?