/biz/ - Business & Finance

What are you, 13?

Let us know when you buy your first home in cash, pal

The entire modern economy is debt based. This might answer your question

>>639074
>tfw 1.5% interest on my mortgage

Wouldnt make sense to pay it out in full

>>639074
Not using credit wisely is how you stay poor. With that mentality you will rent forever instead of owning equity.

If you can get a 200k house with a 1.5% (or less) interest rate and a small down payment of 20k, you now own a property faster than you would have been able to afford one with real saving. Now with that spare 180,000 potential, you can do the math on how you can make that accrue greater growth than 1.5 interest on 200k.

For some people, that growth is money. For some it is more equity. Your life, however you want to view it. But without credit, no one except the rich would be able to afford houses.

>Hurr durr bubbles
That is an argument about giving too much credit to people who can't manage their expenses. The idea of credit spending is how we have advanced for decades as a 1st world powerhouse. Even now, retail traders are doing it on margin.

>>639079
I'm about to, pal.

Why the fuck would I take loan from jews to repay them back more?

If you cannot afford to buy in cash, you are not working hard and smart enough.

>>639091
>With that mentality you will rent forever instead of owning equity.
Why the fuck would I rent?
Renting is throwing money away for nothing.
That's dumb as shit as well.

Why can't you just save and buy like a smart person?

>>639097
Where are you supposed to live if you aren't going to rent or buy a house?

>>639105
I live at my parent's apartment and pay the rent and everything.

I'm about to buy a house for my mother so she can live on her own and I have more space.

>>639097
>>639111
>i dont pay rent
>i pay rent

nice bait m8

>>639097
>If you cannot afford to buy in cash
>implying everyone can work and save enough to buy the average priced home in cash.

wow kid, you really must be 12.

>muh equity

Enjoy your white elephant housefags.

OP you are a shining example of white privilege

>>639117
sorry, i meant I pay apartment fees for electricity and stuff, not actual rent.

>implying everyone can work and save enough to buy the average priced home in cash.
If they can't they just have to make more money or not buy the house.

>>639140
>If they can't they just have to make more money or not buy the house.

:^)

It really depends on how fast you can pay off your debt.

>>639074
tl;dr so they can have the home earlier

Imagine it will take 20 years to save up to buy a home and you are 30, about to get married and have kids.

Renting a small apartment gives you 1 quality of life points (QLP) per year while living in the home gives you 3 QLP per year.

The difference between buying and getting a mortgage is the interest, let's say this is worth 1 QLP per year.

So over the next 20 years someone who gets a mortgage will have a house and gain 60 QLP, while someone who rents a small apartment only receives 20 QLP for the apartment and 20 QLP for the luxuries and conveniences they can buy with the money they've saved.

>>639133
gb2 tumblr

>>639161
I would argue that home hurts quality of life because of the extra work to maintain.

>>639169
Depends on the individual, for some people the QLP would be greater then for others.

The answer to OP's question is simple though; taking out a mortgage gives me access to more money which can be increased faster then my debt increases. A sinking fund, for example, would result in me gaining more money over the long term then buying the house straight up with cash.

>take mortgage
>interest rate less than 2%
>S&P yield around 10%
>be Eurofag
>wait for parity, get 20% yield

Why would I not take a mortgage? I would lose money if I sold my positions and bought a house instead of mortgage. Living on rent costs more than paying mortgage.

>>639074
>what is inflation
>what is leverage
>what is equity
>what is record low interest rates
>what is a mortgage interest tax credit

dumbest thread on /biz/?

>>639194
Pretty much.

>>639194
No.
>>639083 is

>>639097
>Renting is throwing money away for nothing.
If you live in an area with high property taxes and a lot of houses for sale for a long time (ie: New Jersey) renting is the way to go.

>>639207
yeah, it really depends. for the average German buying real estate is only worth it after a period of 30 years. and this is only true if nothing happens that makes your property lose value rapidly.

b8 leave him

>>639091
>Not using credit wisely is how you stay poor. With that mentality you will rent forever instead of owning equity.

This

People get wealthy not by using their own money, but l leveraging other people's money(while staying within acceptable risk tolerances)

>>639225
My NJ issues are houses are overpriced, they haven't appreciated significantly in 10 years, and the property taxes are upwards of $12-15k in some instances. I pay $12k a year in rent and invest my money properly. I may not be making that 90s era real estate returns but, neither is anyone else. Most people I know selling their houses are taking a loss. And thats before the real estate agents fuck them in the ass

>>639207
>If you live in an area with high property taxes and a lot of houses for sale for a long time

Taxes
Repairs

Sure, the landlord pays all that for you free when you rent from him. It's not like he's including those costs in the rent...

>>639154
how is that statement not legit

>>639175
Because your S&P growth is not guaranteed, moron

>>639189
How does that make taking a loan on % not dumb?

>>639133
>>>/r/srs
Get the fuck out of here.

>>639074

Because you have to live somewhere. When you rent, you're basically equity-financing your house, meaning that the REIT or landlord who owns the property is getting 7-10% ROI, at your expense. By contrast, when you buy with a mortgage you're debt financing your home, meaning you pay 3-5% ROI, AND you get the home at the end.

Buying with cash is obviously a better choice, but unless you have somebody to live with for free/are homeless, or inherit a bunch of money, then you have to rent while doing so, meaning you're paying more while you accumulate capital.

Since ~4% < ~8%, buying with debt is usually better than renting.

>2015
>not having a well paying job or save your money
>not investing in an apartment building
>not living in said building
>not collecting rent from every
>not making money from where you live
>not doing maintenance yourself or paying someone

the dream of home ownership is a scam, they want you to sink your capital. Invest in real estate and live the dream

>>639291
are roi for real estate really that high?

>>639301

Yeah. The NAREIT All REIT index posted an annualized total return of 9.8% from 1972 to today, and that's after all the expenses (salaries to managers, taxes, etc.) are paid.

>>639263
OP you're a fucking retard

2.5% mortgage and 8% stock market equities... HMMM

>>639291
>Because you have to live somewhere.
Well I live in 3 bedroom apartment with my granny and mom. What's the problem? I pay for rent and upgrades and gf is fine with it.

I will be buying an additional house for us now, because by saving frugally I was able to accumulate cash for this.

Like, literal cash. We will have to literally hand over the owner a briefcase of cash and whoala - now we have 2 properties, fully paid.

>>639298
lol, apartment building costs several millions. good luck saving for that lol

>the dream of home ownership is a scam, they want you to sink your capital. Invest in real estate and live the dream
Did you just contradict yourself?

>>639318
>8% stock market equities
HURR DURR IT'S GUARANTEED TO GO UP INDEFINITELY RIGHT GUISE???

>>639322
Well, REITs are more diversified than a single house.

>>639326
How long does a mortgage last you fucking dumbshit


You are actually so stupid, I am glad I can take free money from people like you in commissions

>>639074
I bought my home outright Op. You know how I did it? I have no debt and I have never owned a credit card. I simply decided early in life to not overextend myself financially. That meant paying for everything up front and in full.

>why doesnt everyone just live in someone else's place for free
forever alone

>>639074
Yeah, I get it...

I mean, the idea of me loaning out my $200k savings to earn a pitiful 3% return a mortgage would bring in would make me a jew

As opposed to not loaning money so cheaply and earning a much better return

Wait what

There is no point in buying a house unless you want to start a family imo. Counting interests, fees, maintainance cost and opportunity costs (have to repair your roof vs enjoying a nice vacation) its simply to worth it.

>>639321
> commits 100% of his money briefcase to a single house
> will have nothing more than a single house after 30 years

Me:
Use briefcase capital as down payment on 5 houses
Rent out 5 houses to tenants
Factor rent to cover mortgage, taxes, repairs

>own 5 houses after 30 years on the backs of forever poor pleb renters

>>639394
Difficult to get 5 mortgages?

This isn't for the feint of heart, I managed a couple houses for my parents and it's nothing short of a full time job!

>>639394
>>639397
yeah it's a huge fucking hassle, anyone who says it's passive income is delusional

not to mention delinquent tenant risks..

>>639397
I have 3, but the 5 just an example to show OP how biz-stupid he is with using all his capital on a single all cash property.


But yes, you're right. Managing properties is a pain if unless it's a full time job. I've stopped investing my capital on single unit rentals and have been buying REITs instead. The dividend returns are about 10% with none of the landload/tennant headaches

>>639074
Because renting is for cucks.

>>639411
I think everyone is in agreement that OP is a moron man, your example is just additional proof

>>639175
Because regardless, you have to live somewhere.

If you are on your own, you can live with your parents, then deuces. Otherwise you have to rent. And the cost of renting is greater than that 2%.

So you get a mortgage at 2%. Then you rent the other room out. Suddenly that person is paying half of that asset for you.

Alternatively, anyone with with a partner or family need a place to live. Rent is not financially sound for a family.

>>639260
6% average over 20 years is pretty consistent. Of course you will see some bumps along route.

>>639161

how do QLP's convert to GBP's?

>>639394
I'm using one third of my money and I'm constantly earning more. Where is the problem?

I'm looking to buy under market value, then improve over time, so eventually I can flip the property for more.

>>639394
>Use briefcase capital as down payment on 5 houses
>Rent out 5 houses to tenants
>Factor rent to cover mortgage, taxes, repairs

Yeah, cool except the fact:
>You lose your job and stop earning and can't repay the bank and lose everything
>You can't find the tenants
>You get tenants and they wreck shit up and you can't fix it, because you lost your job
>You end your life in suicide
Great idea!

>>639074

>just earn more

Because it's just THAT easy, right?

>>639661
No, but you can do it and until you do, you don't deserve a house. Learn about delayed gratification.

>>639666

>talking about deserve
>in the real world

toppest of keks

It depends on a lot of variables. You have to do an actual cost analysis to see what your cheapest option is.

Where would you live while paying out a lump sum for a home? Lets say you manage to save $20,000 a year in order to pay for a house that will cost you for $300,000. That's 15 years you will be renting. You're forgoing equity, tax deductions and interest on that $300,000. That's why people take on a mortgage you jackass.

>>639668
toppest really?
I mean kek, maybe, but toppest?
Is this the toppest kek you have encountered?

Taking a lona aka mortgage is pleb tier. Deal with it, lazy procrastinator.

>>639693
Just live with your parents and save them money.

Once they die you get the apartment and have shit load of money saved up and can buy a Bentley our something.

Also, if you save 20k a year, you are doing it wrong. You should be saving 80% of your income and earning more if you cannot live off it.

>>639743
>>639740
>>639666
>>639653
Why are you still here, you're not going to convince anyone. If you want to be a retard with your own money go ahead. Stop fucking posting

>>639752
>not taking loans and paying jews more of your golds
>retard
kek

no, you are the retards

>>639260
Short of a third world war, over time the returns are guaranteed.

>>640235
>jews
I'm pretty sure you're the retard here. The bank owners are most likely not jews, and you'll lose money over time by not leveraging your capital.

>>640261
If you adjust for inflation the stock market hasn't really done anything since the dot com boom.

http://money.cnn.com/2014/05/31/investing/stock-market-highs-inflation-adjusted/

That also doesn't guarantee it'll keep going "up", nothing does.

>>639074
Where I live, houses increase in value approx 5-10% a year.

In the bank, I gain 2.3% interest per year.

Do the maths yourself.

And since I own 2 blocks of land I have a rough idea of what I'm on about. I'm approx $30k up from where I started 2 years ago.

> Bought apartment in Jan 2013
> Apartment cost 139,000€
> Loan 120,000€
> Own money 19,000€
> Rent out apartment
> Rent pays for morgage, taxes, all costs. I pay nothing out of my own pocket

Fast forward to now
> Apartment worth 155,000€
> Loan left 111,000€

I invested 19,000€.
I have now 45,000€
I more than doubled my initial investment in two years without putting one additional euro in

>>640266
>leveraging
This is how people go bust.

>>640294
so you got lucky, gratz on that

if anyone could do that, everyone would be rich

>>639074

Mortgages are only bad if you don't make them top priority to pay them off. The interest is horrendous at first, after paying out for a while it decreases substantially.

Some people don't have the luxury of saving for 5 years before they have enough to buy a house.

>>639263
Interest is nothing. Inflation make the debt and associated with it worth less over time in real terms. You have substantially less money tied up into the home right off which allows you to do something productive with it. Example:

>want to buy $200k home
>have $200k to buy it in full
>decide to only put 15% down and borrow the remaining $170k at 4% interest on a 30/yr. term
>Decide to invest the $170k in equity you still have into various income-oriented funds and like instruments with a net 7% dividend yield (or equivalent).
>the $170k investments pay out $11,900/yr.
>the annual mortgage expense is only $9,744/yr.
>your investments actually pay for mortgage expense every month and you even have $2,156 left over every year


In addition to those, the mortgage interest tax credit lowers the interest expense considerably, you still build borrowable equity in your home over time, and the effect of leverage can boost your realized gain from increases in your home value substantially more in percentage terms.

>>640417
>>Decide to invest the $170k in equity you still have into various income-oriented funds and like instruments with a net 7% dividend yield (or equivalent).
Show me these magical funds with guaranteed 7%.

>>639653
> never heard of having a reserve fund
> thinks your day job pays the mortgage and not your renters
> thinks rent prices don't reflect damages, repairs, vacancy time between renters.
> stays in lower middle class for life so he can say "muhhh fuck banks cuz I buy house with cash"

>>640571
>implying it's easy to find renters
If it was so easy as you make it out to be, then everyone would be making shitton of money with your magic method. DERP

>>640294
Counter-story
>Friend bought house at $450k
>House now only worth $350k
>Mortgage doesn't magically become what the house is worth
>Paying more money for property that has lost $100k in equity
>10 years in house
>Now has to move
>Has tried to rent home, neighborhood is in state of exodus, no bites
>Loss guaranteed

Real estate is not the 100% you will make money thing it used to be. For ever story of some guy making millions there are 10 or more of people stuck in a house they don't want because they cannot afford to 'upgrade' to something better.

>>640571
Why would these people choose your place apart from any other to rent?

What is so special about your property?

>>640294

You don't have it until its realized.

>>640586
> argues "everyone"
> implying everyone has 40k+ saved up for down payments and reserves for investment properties
> implying everyone is stupid enough to buy in areas with no rental demand

>>640587
> Real estate is not the 100% you will make money thing it used to be

Very true, but people who can make it work are the ones who did their research and ran the math and took acceptable risks.

This isn't new - smart people with a good risk tolerances will always make money, been that way throughout history.

>>640598
Oh I agree. What irks me isn't people like yourself who treat property like an investment, its the ones who preach how buying a house is the only thing you should ever do with your income. I work with a bunch of people like that, and every year something's broken, or something needs to be replaced, etc etc, yet they still swear up and down they're making money. Even Zillow disagrees

>>640588
>Why would these people choose your place apart from any other to rent?

because they can't live at the mom's house forever.... One of my rentals is close to a decent sized city with a stable economy of working class folks and businesses.(Lancaster, PA). It's on the outskirts of a safe neighborhood where it's still safe, but has high enough property prices that the lower middle class can't buy(because its close to the city center and safe)

>What is so special about your property?

Nothing, one of my tennants is a single mom who's receiving child support from a wealthy doctor... steady income stream, college educated, doesnt move around(because of the kid),doesn't make any huge demands because the rent is below market prices, but still enough to give me a healthy positive income every month.

>>640610

And it's also it's in a coastal "red state" so the laws are really landlord friendly, which makes getting rid of shit tennants easy and evictions cheap with no cap on the security deposit ammount that you can charge them.

>>640610
>because they can't live at the mom's house forever....

What rule of physics states you cannot?

>>641279
The rule of "your mom will eventually kick your ass out of her house"

>>641280
>The rule of "your mom will eventually kick your ass out of her house"
Why would she give birth to me if she would kick me out?

Why would she kick me out if I pay for most of the stuff?

It's question of me kicking her out.

LOL @ these beta plebs not taking control of your life and listening to what weak, old, poor parents say

I'm not talking about being NEET here, I'm talking about being smart with your money.

>>641327
>Why would she give birth to me if she would kick me out?
Because she's a whore.

>>639246
I can rent a place for 500 euros a month.

Buying the same place would cost me 850 a month assuming i put in around 25000 of my own cash.

Plus buying costs and taxes (about 15000), repairs, annual taxes, insurances... If I leave my spouse or vice versa or if I want to move to a new house I pay a shitload of money again on 'buying taxes' on that new home, whereas moving from a rental home costs nearly nothing.

In the end it's choosing between hoping you have a house worth roughly 200 000 by the time you go on your pension or actually having some freedom in your life but throwing away 500 a month.

Also good luck getting a mortgage for under 4% here

Belgium really sucks.

>>641327
>>641328
because she's your mother
kill yourself you ungrateful sack of shit

children these days, putrid.

>>641338
Explain how he's ungrateful please?

>>640284
>If you adjust for inflation the stock market hasn't really done anything since the dot com boom.
If you're investing for a 10-year period, you're doing it wrong.

>That also doesn't guarantee it'll keep going "up", nothing does.
As long as more people join the consumerist shitfest, companies will continue growing and money will be made. There is no end in sight for this during our lifetime.

>>640302
It's also how people get rich.

>>640294
>tfw i know that feel

>buy apartment $155k
>loan ~110k
>spend 40k on repairs
>2 years later
>could sell for 255k
>tfw interest and taxes for the 2 years: 8k

>mfw