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First, when you buy a home, you’re tying up your money - and your down payment.
Here’s what I challenge you to think of: The Opportunity Cost Of Your Money. How much is your down payment worth to you, if you just invested it, instead? Having money tied up in a home means less money you can invest ELSEWHERE, at a potentially higher return…
Second, you shouldn’t buy a home if you’ve only budgeted for your mortgage payment.
First of all, you have property taxes…this varies throughout the United States, but it can range anywhere as low as 0.18% annually in Louisiana… all the way to nearly 2% annually in New Jersey.
Secondly, you’ll have insurance charges …You’ll usually need, at minimum, home owners insurance that covers your property against certain risks. And then, depending on where the property is located, OTHER insurances could be required - like flood insurance, fire insurance, or earthquake insurance…
Third…your extra payments don’t just stop there, because as a home owner, you’re going to be responsible for all the repairs and maintenance that were previously taken care of by the landlord.
This could be as minor as paying for utilities that your landlord would previously pay for, like maybe your water bill, or paying for the gardener to come every other week….all the way to replacing a roof, a water heater, a cracked waterpipe, repairing a broken air conditioner, the list goes on.
Fourth, buying and selling real estate comes with a VERY large transaction cost.
First, when you’re buying - you’ll have to pay for home inspections, escrow charges, title fees, and loan origination charges - not to mention a whole bunch of other miscellaneous things that come up during the process. Between all of this, you could easily expect to pay 1-2.5% of the homes value upfront when you buy a property. In addition to that, the transaction costs are MUCH higher when you sell - this is because there’s often real estate agent commissions involved, transfer taxes, escrow charges, more title fees, and more random crap that continually adds up. When everything is said and done, selling a home can easily cost you another 4-6% of the homes value by the time you’re done.
And fifth, when buying a home - unless you’re doing it specifically as a long term investment, chances are, you won’t be gaining a lot of equity within the first few years.
Don’t get me wrong, if you buy the right place at the right time and sell after a few years, there’s the possibility of making a decent amount of money while also getting a place to live for free. But assuming the market DOESN’T go up, or stays relatively flat - and if you decide to sell after a few years - chances are, that’s going to cost you more than you would’ve just spent renting instead.
And all of that really comes down to determining the true cost of ownership for everything you don’t initially think about, and then running the numbers to determine which is better for your own situation.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness @gmail.com
The YouTube Creator Academy:
Learn EXACTLY how to get your first 1000 subscribers on YouTube, rank videos on the front page of searches, grow your following, and turn that into another income source: https://bit.ly/2STxofv $100 OFF WITH CODE 100OFF
Get 2 Free Stocks on WeBull when you deposit $100 (Valued up to $1000): https://act.webull.com/k/Vowbik9Tm5he/main
My ENTIRE Camera and Recording Equipment:
https://www.amazon.com/shop/grahamstephan?listId=2TNWZ7RP1P1EB
First, when you buy a home, you’re tying up your money - and your down payment.
Here’s what I challenge you to think of: The Opportunity Cost Of Your Money. How much is your down payment worth to you, if you just invested it, instead? Having money tied up in a home means less money you can invest ELSEWHERE, at a potentially higher return…
Second, you shouldn’t buy a home if you’ve only budgeted for your mortgage payment.
First of all, you have property taxes…this varies throughout the United States, but it can range anywhere as low as 0.18% annually in Louisiana… all the way to nearly 2% annually in New Jersey.
Secondly, you’ll have insurance charges …You’ll usually need, at minimum, home owners insurance that covers your property against certain risks. And then, depending on where the property is located, OTHER insurances could be required - like flood insurance, fire insurance, or earthquake insurance…
Third…your extra payments don’t just stop there, because as a home owner, you’re going to be responsible for all the repairs and maintenance that were previously taken care of by the landlord.
This could be as minor as paying for utilities that your landlord would previously pay for, like maybe your water bill, or paying for the gardener to come every other week….all the way to replacing a roof, a water heater, a cracked waterpipe, repairing a broken air conditioner, the list goes on.
Fourth, buying and selling real estate comes with a VERY large transaction cost.
First, when you’re buying - you’ll have to pay for home inspections, escrow charges, title fees, and loan origination charges - not to mention a whole bunch of other miscellaneous things that come up during the process. Between all of this, you could easily expect to pay 1-2.5% of the homes value upfront when you buy a property. In addition to that, the transaction costs are MUCH higher when you sell - this is because there’s often real estate agent commissions involved, transfer taxes, escrow charges, more title fees, and more random crap that continually adds up. When everything is said and done, selling a home can easily cost you another 4-6% of the homes value by the time you’re done.
And fifth, when buying a home - unless you’re doing it specifically as a long term investment, chances are, you won’t be gaining a lot of equity within the first few years.
Don’t get me wrong, if you buy the right place at the right time and sell after a few years, there’s the possibility of making a decent amount of money while also getting a place to live for free. But assuming the market DOESN’T go up, or stays relatively flat - and if you decide to sell after a few years - chances are, that’s going to cost you more than you would’ve just spent renting instead.
And all of that really comes down to determining the true cost of ownership for everything you don’t initially think about, and then running the numbers to determine which is better for your own situation.
For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness @gmail.com
What I don't understand is that your anyways spending that money to pay someones rent, so in either case scenario that money can't be used for investing.
I live in Ireland and I'm currently paying 900 euros for a room in a rental property, I could spend about the same to buy my own house and actually invest that money in a property that will be mine.
Only thing that comes to mind is the additional expenses, but I think its better than spending 900 euros on someone else's property
I guess I'll just stay in a rented place even tho I plan to have a wife and children.
Downpayment is irrelevant for people who take a loan for the downpayment which is the part of the whole price of the home anyway. Thankfully here in Europe insurance and property taxes are low, a couple hundred €/year. Not sure how it's in the US but here, utilities are included in the rent so renters pay for them anyway. Thankfully all the costs of selling/buying are also included in the price of the home including the real estate agency commission. So everything besides the repairs, depends on the country and applies mostly to the US
Renting is waaaay better than owning. Hands down.
Smash the like button on this comment Graham!
My cousin is single and just purchased a million dollar home. It's his decision but i honestly think it's crazy
I dunno…I bought a home a couple of years ago. And am paying less on a monthly mortgage than for a 1 bedroom apartment in my area.
Fast forward to post pandemic….Boy dat rent sho is a b…h!
amazing video but most commenters did not watch what you said and did the maths to find real cost. They here to say buying a house for yourself to live in using loan is a good idea. No wonder most are slave to jobs since they buy liabilities.
I will buy a home go fk yrself
Are you rich or no?
It's hilarious reading the comments. People are getting so defensive over buying a home and attacking the video lol. Buying a home for most people, is an emotional decision rather than a financial one which proves the video correct.
I bought my modest home25 years ago., I don't any regrets other then , I have to come up with 12grand for a new roof. Hgh.
What happens when you live in a crappy state like Connecticut…. you can’t get a decent rent for under $1900…. or, modest small homes like an average cape will run you $250k or more.
I Never want to buy a home unless it is in good school district .
Problem is rent keeps going up and I lock in my mortgage otherwise I would definitely rent forever
You Fuckin wrong completely
Notice Graham is using potential a lot. You guys keep justifying living above your means by renting. When you are wealthy housing cost does not matter. When you are building wealth it matters. It’s your biggest bill. Why not get the cheapest house you can get since you have a job and you’re poor. Now you have become a homeowner with your lump sum 100,000 and conquered housing now you can become rich by investing most of your income. Also you gotta run this out over a lifetime not just 30 years. So really 2000 rent x 50 years is 1.2 million so a 150,000 plus taxes is only 250,000. Let’s throw another 100,000 for repairs. So on the first day after 70 years old you are homeless unless you sign a lease
else where ,,, like where?
There isn't much inventory of homes to rent and the rent for a home in a good area is much higher than what a mortgage payment would be.
Good Lord. So much about that alarm!
Just don’t be poor
what is that big gold light thing in the background?
What if we are buying as a rental
Brilliant explanation.
You should consult for the prison system. Your homes are a vault 🙂
Let's say u paid rent for a number of years and invested ur savings. Lets say something bad happens and u lose ur job/business and u can't pay the rents anymore and also can't work due to medical issues. Ur investments aren't big enough to pay monthly rent and will exhaust in a few months if withdrawn.
Now ur kids and elderly parents who were dependent on u and were unemployed, will be asked to leave the premises. What will u do now?
Simply safe commercial is too long…
You also have to pay for move in fees and security deposits before renting a place
I just want to make it clear: The content of the video is about the pros and cons of Renting vs Buying a home, and how to decide which would be the best route given the situation, cost, timeframe, etc.