All this video taught me was that I know nothing in relation to money/investments

@MrToolz.

7 жыл бұрын

I know. I wish they taught this stuff in high school. Sucks cause if you want to know about ANYTHING thats useful you have to pay for it in college. Highschool is a complete waste of time. i have no idea what i will do on my own

@NrangeGoDie

7 жыл бұрын

study business and you will know this stuff, or look for cashflow, ROI (Return of Investment) and a little bit of Micro/Macroeconomical stuff, its not that hard if you once understood the system.

@Sammysapphira

7 жыл бұрын

Fourth Hokage They do teach it. you just didn't sign up for it.

@MrToolz.

7 жыл бұрын

benblue3 Yeah i didn't mean college. Im sure they do teach in college, like business classes. but in high school they never mentioned anything useful, not once.

@asliceofcheese7888

7 жыл бұрын

Fourth Hokage I agree, if my parents died all of a sudden, I wouldn't know from who to learn all this complicated shit o.O

When you rent a house you can move whenever you want, life's too short to settle down folks.

@freddiejones9713

7 жыл бұрын

When you buy a house you can move wherever you want and rent it out, so you let the rent pay the mortgage while it appreciates in value. Life's too short not to make smart investments folks.

@Scythe4214

7 жыл бұрын

Except you can't afford the new house because you didn't sell anything.

@freddiejones9713

7 жыл бұрын

Scythe4214 What? Why do you need to buy a new house? Buy 1 house and if you want to move around a lot, just rent a place wherever you want to live while you rent out your own home. Why would you need to buy a new house everywhere you go?

@valentinmarchelebouteil5781

7 жыл бұрын

man don't try to discuss with goats :) let them live like they do, i need some renters :DDDDDD

@freddiejones9713

7 жыл бұрын

Valentin Marche le bouteil haha me too

Moral of the story: Don't buy a house in Toronto.

@JRPGGaming

7 жыл бұрын

It's much, much worse pretty much anywhere in Australia... those taxes are laughably small compared to the shit that goes on over here.

@Palthewall

3 жыл бұрын

Thankfully I bought a house in 2016 after this video. Bought a townhouse in Mississauga for 450k. Sold it in 2020 for 950 k then bought a detached in Ajax for 800k in Aug 2020. Rented out the basement for 1400$ a month. Now thinking of selling now getting over 1 mill. Maybe will do that and move back west.

Your whole premise crumbles like a house of cards once you assume that someone can rent half a million dollar house for only $2100/month. If you used real-life numbers the monthly rent would easily be double that. Roger "the renter" would not only have no money left over to invest, he would die of starvation.

Am I the only one fascinated by how the sharpie syncs with the animation so perfectly?

@Ai2K7

8 жыл бұрын

i was curious about this actually lol

@alaritruuts523

8 жыл бұрын

goanimate.com/

@QSing999

8 жыл бұрын

how do I buy this software PLEASE !!

@alaritruuts523

8 жыл бұрын

Arthur Schopenhauer it's a subscription software (online) can't buy it only use and pay monthly

@cminmd0041

8 жыл бұрын

Ha! Pretty funny that the software for this video is only to rent, not buy!

Are we all going to sit here and not mention that the initial math is WRONG: How can his net worth be $35,000 after year 1, when he would have spent $25,200 in rent the first year. Leaving him with a net worth of $9,800 -Tko

@PreetBanerjee

8 жыл бұрын

Why are you assuming he has no income? Perhaps you are confusing assets and liabilities (net worth) with cash flow.

@TonyaTko

8 жыл бұрын

***** Preet my dear, rent IS a LIABILITY. If you're going to take the money of brother A, from the amount of money he originally had and move it to the column of the money invested into the house - with no external income counted... then you must do the same for brother B. You didn't even subtract the amount of money brother B would have had to place as a deposit on the apartment - 1st month, last month and a month deposit is at least $6k right there... and that money has to come from somewhere. -Tko

@PreetBanerjee

8 жыл бұрын

First month pays for the first month, and hence would be a cash flow expense. Last month is held by the landlord and the landlord is required to pay interest on the deposit, therefore negating part of the opportunity cost. The net difference of one month's rent (as a deposit) over 25 years less interest owed on that amount isn't going to change the long term numbers in any appreciable way. Rent is not a liability. It is a cash flow expense. Whether it's the mortgage, maintenance, taxes, etc. being paid per month, or rent + investment contribution - those amounts are held equal to each other in order to make an equal cash flow comparison. Can you explain: 1. Why $25,200 in rent would not come from income? 2. Where would the investment contributions come from? 3. Why would the owner's monthly expenses from income if the renter's rent doesn't?

@TonyaTko

8 жыл бұрын

***** Rent is calculated on the balance sheet in the the expenses column subtracted from the overall monies brought in. I think its negligent of you to put up this diagram and not let the viewers know how much each brother is bringing in in income and Only state the net worth. For all we know Brother B is making less income than the rent and half of it, (or all of it) has to come out of his net worth. There are too many unknown variables for us to say for certain that his $35K net worth is not touched. Also, I don't know what type of math they're doing in Canada, but if a person has $6K in savings that IS a part of their net worth - so if Brother B has to put down a $6K deposit on the apartment then that would be coming out of his net worth Let me ask you this 1) How much CASH on Hand does Brother B have? 2) When he paid the lump sum deposit for the apt where did this money come from? 3) Why was the money he paid down on the apt not reflected in his original net worth calculation? Thanks in advance for answering -Tko

@PreetBanerjee

8 жыл бұрын

Rent is not a balance sheet item. It is a cash flow item. The reason income is not stated is that it cancels out assuming they have equal incomes which could be used to support either monthly costs of 1. ownership or 2. renting + investing. Assuming otherwise (that they have unequal incomes) would make the comparison completely useless. I would agree that with respect to first and last month rent, that $2,100 should have been deducted from net worth for the renter, but not $6,000. First month's rent is a cash flow item (because it pays for the first month's rent). The last month is a deposit, but as mentioned, the landlord is required to pay interest on that amount to the renter, hence the long run effect of that $2,100 less the foregone investment growth PLUS the interest earned on the deposit isn't going to materially change the 25 year numbers.

Owen the Owner will actually own nothing once his wife leaves him and takes the house. Roger the Renters wife will leave him and he will just have his new younger gf come over to his rental house. Statistically these are more likely outcomes.

Rent where you live, own where you can rent.

Life is dynamic... jobs change, family gets bigger and smaller... accidents happen, opportunities arise. Given all of this, the renter has so much more flexibility to adjust to these life events while the owner is stuck. He has to wait and sell, possibly at a market price that is below his equity + fees. Then there's that peace of mind that comes with having now liabilities. Less stress. You pointed out the owner moving only once every 10 years, but realistically... people these days, given the job market, tend to move much more frequently.

@markymarcb4932

8 жыл бұрын

very good points.

@XeXers

8 жыл бұрын

I totally agree! I know a lot of people who feel trapped because they own their own home... and can't pursue some life option because they can't easily move. How much is that flexibility worth? that needs to be quantified.

@shepdshepd4667

8 жыл бұрын

In many places, renters do not have that flexibility. I noticed this author mentions Toronto. In Toronto, your first rental year you are obligated to pay for. For that entire year, your flexibility is exactly the same as a homeowner's as you'll have to find an appropriate sublessee. After that, many scum landlords try to encourage renters to sign a 1 year lease suggesting that's how they can keep their rental. If you throw that letter in the garbage, Ontario law forces the landlord into a month-to-month situation after the first year.

@sparkleprizm199

8 жыл бұрын

That makes sense.

@aluisious

7 жыл бұрын

The renter also has great flexibility to get his rent raised 400% in ten years.

Factor in relationships and divorce = Broke

@86chanko

8 жыл бұрын

lmfao

@gb1709

8 жыл бұрын

This is somerhing I never really ubderstood. Let's say a woman who has her own house and job gets married and gets a child and then gets divorced. Does she still get money for the child even though she can handle it? And what if only the father raises the child, does he get money from the woman?

@kalingingsong

8 жыл бұрын

depends on which jurisdiction you are in, rules are different based on state/province etc

@randeknight

8 жыл бұрын

Both parents must support the child, no matter what other circumstances. This is fine by my mind. Yes, in the rare occasion that the father gets primary custody, the mother is required to pay child support. However, the inner workings as to who gets what in the separation is seriously opaque and usually the man comes out much worse off than he should...and left paying for a house he doesn't live in anymore and a car he can't drive....and all too often, children he never sees.

@gb1709

8 жыл бұрын

Rand Knight thanks for the information, one last thing though. If a woman has a job and can handle everything by herself after a dicorce, does the man still have to pay something?

Buy a home if you can, you can always rent it out and move elsewhere. Bought my house last January for 175k it’s now listed to sale for 245k. Best thing I ever did in my 26 years of living.

@dariusdobre9290

Жыл бұрын

bought BTC in 2015 for 20.000 best thing I did in my 29 years of living

as a 17 year old I understood nothing why don't they teach this at school?

@obedmpp

7 жыл бұрын

Don't worry, at your age I didn't understand anything. In fact, 2 years ago, or even 1 year ago, I knew almost nothing about investments and bla bla. Just read some business books, don't rush into investment books or anything, business books will teach you about all this slowly, you'll learn by simple osmosis.

@digitalproducts_me

7 жыл бұрын

Illusion I agree, i dont know shit about Buying a car, about insurance, about rent etc. but i know how to analyze a poem in french

@Sammysapphira

7 жыл бұрын

Illusion why didn't you take economics? it's there in many many schools, if yours didn't have it then you should have gone to another school if it mattered enough to you.

@illusion9423

7 жыл бұрын

benblue3 I chose sciences instead At the time the idea was that the choice I took was the one that allowed me to make my money I'm not that interested in being a manager or something like that Seeing how the basic notion of modern day taxes got skipped for the classics of poetry just proves that I'm smarter than the people in charge of teaching me

@lucy-dj1px

7 жыл бұрын

Illusion you can do some research in economics and find meanings to words or phrases you're not familiar with while going through the study material. That's how I passed economics during my senior year in high school. 😊

the worst disadvantage of owning a house isn't even shown in this video. the worst disadvantage is that most people with average incomes have to put all their eggs in one basket. the average housing market might increase by 3,5% on average, but who cares about average when your house loses value? who cares about 3,5% on average, if you bought in high? diversification is THE ONE PRINCIPLE every investor has to have in mind. and it's the biggest mistake most house owners make. rodger might invest in high stock markets in his first year, but when stock markets crumble, he will buy in low in his second year. he might buy junk stock in his first year, but if he diversifies he will buy promising stock in his second year. owen on the other hand might buy when prices are low and in a good area where prices will go up over 25 years. but he also could buy in a high market where prices will go down. i'd bet investing in houses in chicago in late 1970 was a bad 25-year investment. and who could have predicted that kind of development?

@The1SimLash

7 жыл бұрын

I agree that buying stock or property at the right time is very important, but I don't understand your reference to Chicago homes in the 1970s. You could've bought a home in Chicago for ~$20k and today's median price is ~$270k, according to Zillow/Trulia, which is about a ~1400% increase. www.thepeoplehistory.com/70s-homes.html www.census.gov/hhes/www/housing/census/historic/values.html

@trueRocc

7 жыл бұрын

Hans Wurscht I think you might have the opposite thought on that. renters don't have to pay for new appliances unless it's in contact and your own. plus there are more bad renters to God renters, more people don't care about what's not theirs and just wrecks stuff. Face it, now adays your damage deposit doesn't go very far for repairs anymore.

@manivvg8565

3 жыл бұрын

A

The ratio "Price of the house" / "Rent" in the example is 238. What I have seen in real life is that this ratio is more between 150 and 220. Hence the ratio of 238 in this example artificially favors the "renting" option vs the "buying" option.

@PreetBanerjee

8 жыл бұрын

Totally agree: in Toronto, this is a real world approximation (price and rent taken from comparable homes in same neighbourhood at same time). But Toronto is overheated compared to 99% of cities in North America.

@xavytex

8 жыл бұрын

***** What is holding rents from going up, or houses prices to go down to reach some kind of balance, like in other cities ? Is it a new phenomenon or has it been like this for a while ?

@PreetBanerjee

8 жыл бұрын

It's been building up for a while. There are many people suggesting that foreign capital is driving up prices (especially from China), but rents are more tied to the local labour market and people living here are getting squeezed out of ownership and sometimes forced to rent. When oil dropped, and because oil is a big part of our economy, our dollar tanked. At the same time, house prices in the hot markets started to accelerate even more. That adds fuel to the theory about foreign money as everything became cheaper for foreign buyers as our dollar tanked.

@xavytex

8 жыл бұрын

***** You must be right, I forgot about the Chinese... We buy 3+ times more from Chinese than they buy from us. They have Canadian dollars up the wazoo so they have to invest it somewhere. Seems like Canadian financial advisors fluent in Mandarin or Cantonese have a great future ;)

@INeedMySpaceTech

8 жыл бұрын

i was at 183 at my last place i'm around 220 now.

So alot of people are for " buying a home " ! What people keep forgetting is that people with morgage debt has this huge enormous dark debt cloud hanging over them for the rest of their lives, while me the renter has more money to put away every month ! People with huge debt struggle to pay their bills every month while i am ONLY paying rent ! I am mr anti debt and i am allways paying in full for everything i buy ! I have never had ANY form of debt in my life and i never will ! I know so many people with big morgages who has enormous monthly costs that they are having a hard time paying their bills ! And i can only say this - I Am Glad I Am Not One Off Them !

I feel like renting is the best idea for freelance workers and buying for people who have a stable income, because if work is slow, you can skip saving that difference for the moment, but if work is good, you can save enough to keep up.

@jorge62142

6 жыл бұрын

2000 AND FUCKING 17 AND THOSE KIDS ARE TALKING ABOUT STABLE INCOME i just gonna write lol so you dont know if im sarcastic... lol

This is too adult for me to understand. I'm going to have to watch this a few times.

@djordjemojsic4638

8 жыл бұрын

Imagine listening on foreign language

@eveofhades9260

8 жыл бұрын

+Djordje Mojsic Much more difficult, I'm sure!

@knecht6974

8 жыл бұрын

+Mildred Fletcher I live in Germany and learn/speak english for about 8 years now, but have never heard the word mortage before, neither have I heard of interest/principal in this context before :/

@mikaelb.2070

8 жыл бұрын

I'm also German and if you really learned English for eight years then it is pretty strange that you never came across the words mortgage (Hypothek) and interest (Zinsen). Those are pretty standard words.

@UltraSonic73

8 жыл бұрын

+Adam Moer yeah, mortgage and interest are some pretty standard vocabulary to be honest :s

In my 3rd world country (Algeria), in order to OWN a house you have to straight up pay with cash. No mortgage no interests, no increase, no nothing.

@abhgup

7 жыл бұрын

under developed economy... will potentially change over time.

@ChemsddinK.

7 жыл бұрын

come on thats hard to believe,im from tunisia ans i think we have the same laws/ rules,i'm sure Algeria has interest banks,Algeria is not a 3d world country the youth are educated, they have a 3rd world goverment.

@azouachili

7 жыл бұрын

it's sadly the truth.

Great video, I've tried to explain this idea to people so many times and very few seem to grasp that renting can be a better alternative...particularly in high cost areas like silicon Valley. Another overlooked variable is the mobility of renting. Also, a lot less upkeep. You should do a similar video on leasing vs owning a car.

Why is rent only $2100 on a $500,000 home?!? Wrong.

@Duffyyy94

7 жыл бұрын

We are renting a house that is worth 1.2 million. Our rent is 4800 / month. Sounds about right.

@Kanriel

7 жыл бұрын

The wrong part is how they established mortgage is $2300/month for the same house next door, so there's no way rent would be less.

@chinese302

7 жыл бұрын

He's sharing it with his boyfriend so maybe that's just his share

@Duffyyy94

7 жыл бұрын

lol ?

@Duffyyy94

7 жыл бұрын

Only 3 Bedrooms :/

I live in Vancouver, B.C., Canada, so both seem impossible for the moment hahahaha

@GomerKaine

7 жыл бұрын

Haha, same. #TheStruggle

@sobekflakmonkey

7 жыл бұрын

AIIUserNamesInvalid Right, but that is actually the reason here in Vancouver, lots of foreign investors from China and a few from other places. Has nothing to do with race though, it just so happens that it's straight up rich Chinese people buying up a lot of property. The only mistake is when people use that as an excuse to hate all Chinese people, I just hate the rich folks who make everyone elses lives harder.

@shi1483

7 жыл бұрын

SK B yes u can, but ur government welcomes it, for foreign investment and tax benefit (u do know foreign investors have to file tax return for any rental profit from day 1, plus the usual and extra stamp duties, right? so they are not living in the country but still contributing by taxation).. I can invest somewhere else, but ur housing price won't go down anyway as there are always foreign investment plus local demand. Everyone including foreign investors prefer lower housing price , thats common sense of buying anything regardless u are local or not. Not to mention the physical job increase in ur building n construction industry. Most new properties in Aus is done by re planning of sub divison, which mean ur urban planning is actually utilizing its land use from a big old house that can only provide housing for one or two families to apartment complex that offer at least 20 times more, with that same piece of land, that actually lower housing price in its very basic form by increasing housing supply.

@shi1483

7 жыл бұрын

u should actually blame ur local developer and mortgage offering banks, they are the one who make billions by pushing the housing price up in forms of over optimistic pricing n evaluation. Where the foreign investment is come from , its actually irrelevant as long as it does not flow back in a short period of time, while u hardly see real estate investment being withdrawn in less than 5 years.

moral of the story if you live in Toronto and are in your twenties like me, you are doomed lol

@faint3745

8 жыл бұрын

honeslty, i have no idea how im going to buy a house, if its this expensive

@john5823

8 жыл бұрын

Unless you're Drake lol. Then you're actually quite fine enjoying the view from the CN tower.

@blackmayb3

8 жыл бұрын

you're cute. I'll take care of you

@londontrada

8 жыл бұрын

lol, Try London, UK. I can barely afford to rent

@danielphilipos7932

8 жыл бұрын

Michael Jackson broooo 😂😂😂😂

I'd rather just rent and avoid the hassle of it all.

@The757packerfan

7 жыл бұрын

Which can be a valid point. But you are paying extra for the landlord to deal with the hassle that you don't deal with.

@LusoSparz

7 жыл бұрын

The757packerfan yeah I understand honestly that doesn't really bother me too much. I'd rather not have the commitment. plus having to owe money to the bank having to pay interest really just makes me more nervous than anything else

@rambrasil

7 жыл бұрын

Except your rent continues to go up.

@LusoSparz

7 жыл бұрын

Isn't that dependent on the economy and housing? I mean you can invest a fuck ton in a house and isn't there still a possibility that it can loose its value or something ?

@The757packerfan

7 жыл бұрын

Correct. The value of a house can go up or down depending on the market. Likewise, rent can go up or down depending on the market. So, the value of a house going up or down, as well as, rent going up or down, is a moot point. Since both can happen and no one can predict the future.

I like the phrase “when you buy, you rent money” renting and spending difference=hyperbolic discounting this is such a great video, clear, concise and comprehensive, which is very hard to accomplish in under 10 minutes.

In today's economy renting makes the most sense. Lack of job security = you need to be able to move out relatively easily.

The best financial strategy is to buy a tent and live in the woods rent/mortgage free!

@gmansplit

8 жыл бұрын

Seriously, who the fuck would buy a house that expensive (500k) especially with only 35k. I wouldn't buy a 500k house even if i had 5 million in my bank account.

@gatewaysolo104

8 жыл бұрын

on who's property?

@Rutibex

8 жыл бұрын

I live in Canada, we have lots of woods that aren't owned by anyone in particular except "The Crown". I don't think shes using it all at the moment :P

@walperstyle

8 жыл бұрын

It depends on location, taxes, government regulation and such. I would buy something like that in a heartbeat if It was in a community that had resources and low taxes. I could profit from it. The thing to realize it it can all come crashing if government creates new laws. Look at Vancouver right now, the govenrment is talking about making some laws to stop the foreign investment. Frankly, That will cause the bubble to burst, you watch. Edit: Though I agree that vacancy rates are an issue, we shouldn't hurt people that are trying to hide money here.

@NaNslx

8 жыл бұрын

Or get a tiny house for between $25,000-$50,000

Something that is not accounted for in this video is that in the USA you also get a tax deduction every year for the Mortgage interest and Real Estate Taxes. Don't know the tax situation in Canada but this is a major advantage of owning vs renting in the USA.

@PreetBanerjee

7 жыл бұрын

That is correct. In Canada: no deductibility for interest on principal residence.

@Dreaming7kid

7 жыл бұрын

lenny p true! Tax deduction for mortgage interest and property tax. But dont forget, property also need HOA and insurance, plus maintenance, which can be a lot too.

@orlock20

7 жыл бұрын

A couple of factors are disasters from a flood to termites and real estate prices for the area. One can look at Chicago where housing prices collapsed. Insurance tends to under pay if the insurance decides to pay at all like what happened after the Katrina disaster and the World Trade Center attacks.

I always figured the point of buying a home was to live in it for the rest of your life? And then when you die passing it on to your family... Why would anyone sell a home they buy after 25 years?

@notjustwarwick4432

7 жыл бұрын

1 mill dollars

@Auditioneere

7 жыл бұрын

Lorenzo Panetta Yeah but then you have to buy another home anyways for probably the same price? If your home is worth a million dollars so is everyone else's.

@BobbyHardenbrook

7 жыл бұрын

You can sell the 1 million dollar home and then move to a retirement locale with better weather and/or lower home values. That's a common pattern in the U.S.

@EternalSilverDragon

7 жыл бұрын

People sell their homes all the time and for lots of good reasons: Up sizing Down sizing Wanting to be closer to family Wanting to be further away from family Moving to a healthier climate Taking a job in a different location etc.

@fleamanATW

7 жыл бұрын

A lot of people HAVE to sell their houses in order to afford retirement.

Renting works for me. I'm able to invest and live in a building with a smimming pool, large movie theater, computers, gym, everything I need for a single woman.

@joyceg7859

9 жыл бұрын

All for how much a month if u don't mind the question ?

@AdrianSanchezq

8 жыл бұрын

+Lorraine Elijah Brown That sounds just like what I want to do. Also because I expect to move every 2 or 3 years, so as the guy said, the costs of moving are too high

@lorenzofranco8406

8 жыл бұрын

+Lorraine Elijah Brown OK. It may look attractive to you, now, but, after 25 years of doing this, it will not look so attractive. You see, what the guy int he video failed to mentioned is the effects after the mortgage plan is met. The owner will have something to show for the past 25 years. Whereas, the renter has nothing [in terms of asset(s)] to show for the 25 years.

@lastnbrown

8 жыл бұрын

+Lorenzo Franco I don't want the responsibility of a house. I like to move around. There are other ways to invest. Houses take time to sell, like Michael Jordan house for 14 million dollars. The only good can come from a house is the interest on the mortgage and real estate tax deductions. If I buy a house, I will rent it out for more deductions on repairs and keeping it up.

@lorenzofranco8406

8 жыл бұрын

Lorraine Elijah Brown What makes me laugh is, the fact that you debunked the whole premise of 'buying property' within a few sentences. You are really playing down the benefit of having a piece of land/property to your name. It's not as clear-cut as you portray it to be, Lorraine.

yeah im gonna go ahead and call BS on some of the points made: 1) if owning a 500k$ house brings over 3k$ of maintenance and taxes, who would rent this exact same house out to you for just 2k$ ? that would mean the landlord has no gain and pays additional 1k$ so that you can live in his home ... total BS! 2) Owen payd transfer taxes and legal fees as the buyer of his home so he would naturally transfer these costs to the new buyer of his home instead of ending up paying another 64k$ for fees and taxes ... that would mean he payd up twice ... 3) year 1 roger still has 35k$ when getting his keys to his rent house, which is wrong as you have to pay upfront

@PreetBanerjee

8 жыл бұрын

You're assuming that Owen the Owner is the landlord, or that landlords only buy at current prices with 5% down. You're forgetting that a landlord may have bought this house for $250,000 years ago and his cost of carry is much lower. You're also assuming that the market for rents is based solely on carrying costs, and not the supply of rental housing and demand of renters. If you have a rental property and renters don't show up, you lower the price until it's rented. This example is from Toronto (as stated in the video), where the price and rent were established based on actual listings at the same time, for comparable homes, in the same neighbourhood. Toronto is considered to be an overheated market in terms of the ratio of price to rent, which may explain your incredulity.

@AndreasIndustriePro

8 жыл бұрын

so what you are saying is that it might be in fact roger's landlord ending up with a loss ?

@PreetBanerjee

8 жыл бұрын

That happens in overheated markets, yes. Newbie landlords are willing to run breakeven or below hoping to cash in on the capital gain. Sign of a possible bubble and mania. Normal housing markets don't see that.

@AndreasIndustriePro

8 жыл бұрын

but then in this video that people all over the world can watch you compare owner ship to renting in this very special market which is in fact out of the norm ?

@PreetBanerjee

8 жыл бұрын

The channel is focused on Canadian personal finance. I agree it's out of sample compared to the rest of the world. There is, however, a spreadsheet which allows users to change every variable (link in description).

This is a good video. I would like to remind people though that rent also usually increases faster than the escro for a mortgage and the base mortgage on a fixed mortgage remains the same. In the US our rent where we are living just increased by 8% which prompted us to by a home with similar overall monthly costs so that in 5 years we aren't paying nearly 50% more

The difference in the UK, is that if you pay 700 rent and you bought that house with a 25 year mortgage instead, the monthly payments would be about 500.

@Ronaldus81

7 жыл бұрын

Bruno Lazaro yep, it's the same in The Netherlands, especially in rural areas. Plus the rent will be increased yearly by 3-4 percent.

@leimad13

7 жыл бұрын

That is true, the problem is though that you can't get the mortgage even if monthly cost is £200 less compared to renting. My family pays £650/month rent and we tried to get a house of our own but banks won't agree to lend us the money. We earn not enough to cover for the loan even when we are able to pay £650 for the rent. So we are stuck renting until somehow our yearly income becomes acceptable by bank. That is even if we can cover 20% of the house cost straight away. Something is really messed up with mortgages in UK...

@cbflazaro

7 жыл бұрын

leimad13 same. I'm stuck on a £550 rent when I could easily afford a £1000/mt mortgage. Even if I save 10-20% deposit I will struggle to get a mortgage because my income is a mixture of self employment and a 0 hour contract to other company.

@funofboredom

7 жыл бұрын

Yeah, but how much do you pay in interests? If you take a longer mortgage, the interests will be more.

@cbflazaro

7 жыл бұрын

i rather pay 200 mortgage+300 interest for something that eventually is mine rent-free than pay 700 rent for something that will never be mine

I want to see the place that will rent a $500,000 house for $2100 a month.

@DIProgan

7 жыл бұрын

I've seen it for even cheaper.

@COVID-19

7 жыл бұрын

Somalia doesn't count

@DIProgan

7 жыл бұрын

How about Sweden. Also a $500.000 house is a $500.000 house wherever it is.

@williamrobinsoniii4870

7 жыл бұрын

how do you get 520.83 per month added to your rent at 1.25% on a 2100.s month mortgage. I'm not the smartest man in the world but help me out.. an 2100 for rent? that house must be beautiful?

@DrKrFfXx000000000000

7 жыл бұрын

Madrid.

Great video, but just curious, how did this video get featured so prominently in KZread's recommended page? Seems like a became a big hit outta nowhere. Wish I can get something like that for my vids o.O

@CornellSkyers

8 жыл бұрын

I'm now a fan of both your channels!

@vangard0

8 жыл бұрын

umm, isn't recommended videos just based on your Google searches (and things you watch on KZread)?

@Captain_MonsterFart

8 жыл бұрын

I doubt it. I bet one can pay to have fake "hits" on their videos and have them appear in the recommended list. I find the cat compilation videos that show up with over a million views to be rather suspicious!

@PictureFit

8 жыл бұрын

Jaeman20 Yea it is, but this doesn't have much to do with anything I've been watching.

@zolawrx

8 жыл бұрын

All you gotta do is pay KZread some money and boom people starting watching your video.

I've owned my house for 10 years and in that 10 years, I've made repairs, some "improvements" and such and now my how is worth less that 80% than what I paid for it. Mind you, I'm also still paying interest which will cost hundreds of thousands of dollars over the course of my loan. The money I've spent on repairs alone would've covered three years of rent payments in my current neighborhood. Do I regret it? No, but was it the best option? Not necessarily.

I don't know how I stumbled on this video but it was interesting to see. I'm renting at the moment and this assures me to calm down with my situation

my brain hurts after this. Half this shit I don't even know.

@longyearbyensvalbard3117

8 жыл бұрын

ikr

@Perceus589

8 жыл бұрын

+Longyearbyen Svalbard You don't need to understand everything he says as long as you get the full picture, it's not that hard.

@SomeKidsAtHomes

8 жыл бұрын

then you're stupid

@longyearbyensvalbard3117

8 жыл бұрын

+Frostbite janfijooka blental inrackeste tromnar glantrennek aspottanond. Did you understand what I wrote here? No? Then you're stupid! Just because someone else doesn't understand what you understand doesn't mean they're stupid.

@Perceus589

8 жыл бұрын

Longyearbyen Svalbard There is a difference between knowledge and intelligence you have the knowledge to understand what you wrote, that doesn’t mean you are smart...

Moral of the story: Buy a modest house and invest as much of the difference as possible?

@jonlevert

8 жыл бұрын

John Smith Oh, not at all

@IaintTrynaGoOutLikeBIGnPAC

8 жыл бұрын

+Jon LeVert Finding a modest house is one thing. Finding a house at a modest price is another thing

@jhemmd17davis57

8 жыл бұрын

+John Smith omg where do you buy a house with that price range???? will it look like a shed? lol

@jhemmd17davis57

8 жыл бұрын

+John Smith will that be in Mexico????

@123lowp

8 жыл бұрын

Or live with mom and invest in hookers???

There's no way that's your real handwriting. I refuse to believe it

@peterkuzmin8624

7 жыл бұрын

CrynoKing I was thinking the same thing haha

@dogeilante

7 жыл бұрын

lol

@dogeilante

7 жыл бұрын

the straight lines... that's a robot. This guy is a robot

@morganboutwell8231

7 жыл бұрын

Sanjeev Nayak what's that?

Great video! As an aside, owning makes more sense in countries with low interest rates. Like here in Norway, where the interest rate it 1.8 %. Mortgage payments are about half of what you pay for rent, so the advantages of owning are enormous.

If this is the type of content you create, you have gotten yourself a subscription. I enjoy the deeper look at hidden costs that many people seems to skim over, but also the real world senario as well. thank you for a non biased look on things

@PreetBanerjee

8 жыл бұрын

Thanks Stephen - appreciated!

I think renting is still better because of the freedom it gives you, you can move to a new place anytime and downgrade if necessary.

@RealLifeEddy2K

8 жыл бұрын

and at the end of the day you own NOTHING. With buying a home, no matter what the economy does, once you own it, you only need to cover the 2000-3000 a year in property taxes, with renting you need to cover the 12,000 a year rental prices. Fuk that.

@Rubysh88

8 жыл бұрын

it also depends where you live (geographically), for some people it takes like 40 years or more to buy an house, in 40 years, a lot can change, i know people who lost some good job opportunities because it required them to move and they would lose a lot of money if they sold their house back then so it was either keep paying both the house and a rent or lose the job. And there's others who spend a lot of money and time commuting because they ended up working quite far from where they live.

@moonstriker7350

8 жыл бұрын

You only wish you could. Only spoiled westerns lucky to grow up in a period of booming economy think that. If the economy gets thin, the new place you might move anytime, at the whim of your landlord, is the street. Welcome to your new homeless life. Seen it happen with my own two eyes, the house I own a flat in, also has people renting (mostly from the municipal government). The police coming in their robocop gear, packing the furniture out while the family was screaming and crying standing on the pavement.

@Rubysh88

8 жыл бұрын

Lithian Haim i can see you don't know much how the housing works outside your little bubble. First of all, many will rent because they cant actually buy, the banks wont fund enough, im talking about having to put a 20% or more down pay. Besides that, landlords cant kick you out at whim if you made a contract and even if you do it illegally, they still don't want to mess with the cops because that would put them in trouble for renting without a contract so no, here in Europe, for what i know, as long you pay your part, you wont get kicked out. Also, you know you can rent homes that have all the furniture eh? You don't even need to worry about those.

@moonstriker7350

8 жыл бұрын

No, I'm the one who knows what's outside the bubble. The answer to your whole post is in my previous. Now that even western European and USA economy is starting to really stumble, you will likely soon learn. The legality/illagelity consideration and your rights about renting and having a place to live will end the same time as the gravy train, and the cops will b e evicting you, not protecting you, juts like I saw here.

Well you can pay off your mortgage and live in your home on a lower fixed income after retirement, but a renter will still have to work to pay the same rent or downgrade to a cheaper place.

@jeffdaman6969

7 жыл бұрын

Nunya bizness True. I believe renters don't think long term when it comes to that.

@nickcase2635

7 жыл бұрын

Nunya bizness right! And the answer here is not living outside your means or at the limit of your means. If they had purchased a home that was $125,000 they would have come out way, way, way ahead of that renter, possibly with a fat IRA.

@nunyabizness3866

7 жыл бұрын

Well, if people were smart and planned ahead for retirement and the like, you could rent or buy and come out fine, but most people dont. All the money for those knicknacks you bought over your lifetime would really come in handy at the end. If nothing else you could be a responsible homeowner and get everything in tip top shape for the long haul in your 50s.

@nerys71

7 жыл бұрын

Nunya bizness smart planning have nothing to do with it if the economy prevent you from doing anything no matter how much you plan or how smart you are

@nunyabizness3866

7 жыл бұрын

Delaying or Denying gratification is a key method to making it in any economy. Being super frugal will also increase your odds. Sometimes taking a long time doing nothing but going to work and going home and curling up with a good book is the best option. Many times people just cant do what needs to be done.

teaching a generation insanely valuable info that schools dont , keep up the great vids!

There are other factors worth mentioning, house maintenance for owners, commuting distance between workplace and home can be reduced to save cost and time when living in a rented house - helps you not lose out to a better job in future, also the advantage of moving out whenever you want from a rented place ,say if you find a cheaper better suited location.

@jonathandpg6115

8 жыл бұрын

house maintenance is about 1% and is shown in the video. it's added. Commuting distance can be the same this is more of a side by side thing.

@theviralstory3356

8 жыл бұрын

Gabzo Avro aah missed that, commuting distance at times makes a difference (atleast for me), since the video was mainly targeted around Toronto so may not be a huge. Where I live, the houses that I can afford to buy are generally in the upcoming areas around the city which is about 1 hour drive from my workplace, but I have rented an apartment which is 5mins walk. It saves me around 7-8% on fuel, more importantly 2 precious hours a day which is invaluable. Next time If I wish to switch my job, I can do without worrying about having my house and worrying about it.

@jonathandpg6115

8 жыл бұрын

Skywalker yeah he was more comparing places that are side by side. I agree with time I am finally getting my drivers license (I waited way to long) because the time I loose to get to work is Invaluable. I hate wasting time.

@theviralstory3356

8 жыл бұрын

+Gabzo Avro same here, hate wasting my time when most of is spent @office.. need to make most of what is left :D and congratulations on the driving license, drive safe ;)

@TanAikHong1993

8 жыл бұрын

you know people mostly won't give you a like because your comment shows that you are on the renting side.

$35k in the bank and no debt, what sci-fi world do they live in?

@canyouimagine

8 жыл бұрын

Rodger and Owen are 45 years old, single, and take the bus to work. They have no kids and paid off their student loans 10 years ago. Both of their families died and, therefore, cannot ask for money. Rodger and Owen subsist on ramen and tap water.

@BewareTheLilyOfTheValley

8 жыл бұрын

Haha!! This comment is both funny and sad :)

@sarysa

8 жыл бұрын

43% of US home buys in 2014 were cash purchases. I also saved up for years and bought a way cheaper house with cash. Despite north american consumer culture, a lot of people are frugal. In 2016 I've had a month where I kept my bills under $500.

@corb2347

8 жыл бұрын

+ATLxawesome hahahaha Perfect :D

@MsLia32

7 жыл бұрын

45+25=70 they be dead by the time they can start benefitting from their monies

Let's not forget that while renting is more money per square foot of space, a renter doesn't have to pay when things (like a water heater or roof) break.

@mikes7423

7 жыл бұрын

he took that into consideration with the 1.5% repairs

@iceweasel2199

7 жыл бұрын

no he doesnt , but yes he does. Those things are included in the rent price. At least in my country. Its always better to buy than to rent. Like his example , its ridiculous to think you'd have a million saved up after 25 years, thats 3300$ a month you need to save EVERY month for 25 years.... and after all that time I already paid off my mortgage and live debt free , and you havent lived your life because you saved 3300$ a month and couldnt do anything else. Go ahead and to that =) I'd rather have my own place and live instead of 'going around the system' because renting is the better choice

@ransom182

7 жыл бұрын

$3300 a month over 25 years to save $1,000,000?! BAHAHAH I think you're investing wrong pal... Home ownership is a great thing because average people have no fucking clue what investing in their money in other asset classes actually means. They also have no self control and paying down their mortgage is their only form of savings.

@mackenzieowens161

5 жыл бұрын

@@iceweasel2199 learn the differnece between investing and saving, search JLCollins here on youtube and enjoy a lecture from him

The comments demonstrate how people hear what they want to hear. Great video by the way. it cemented what I intuitively knew in actual numbers and examples.

This is why I live in an RV. I am able to live anywhere and I am still investing in my "home"

@rileytavares4087

8 жыл бұрын

Do you pay property tax for that?

@Katzbynite

8 жыл бұрын

Uhhhhh...NO!! His property tax is the tag fee he has to pay depending on the state. Insurance does not go to the state for property taxes..GEEZZZ!

@rileytavares4087

8 жыл бұрын

+Katzbynite I was just asking because I didn't know.

@jalster2

8 жыл бұрын

Katz def needs to calm down, but the vehicle insurance is probably more equivalent to home owner's insurance...

@SoWhatJoshua

8 жыл бұрын

it's a cool lifestyle, but it can't be compared to investing as in buying a home. homes appreciate in value while you pay the mortgage, but RVs depreciate in value as you pay off the loan that you used to buy it.

where is home maintenance? new roof every 20 or so years HVAC ect. 3.5% a year is extremely high for real estate, like bubble high.

@douglasthompson9070

7 жыл бұрын

Yeah, I've read a 1.5% return is a more conservative estimate that more expected to rely on.

@stevemasterson7776

7 жыл бұрын

yeah 1.5% is way more realistic.

@BobbyHardenbrook

7 жыл бұрын

The video did include maintenance, watch it again. It assumed 1.5% of the home value per year for maintenance...which seems about right to me. I.E. an average of $1500/year for a $100,000 home.

@blupyxi5669

7 жыл бұрын

I'm at 4%

@BobbyHardenbrook

7 жыл бұрын

Well 1.5% is the average. The good years and bad years usually average out

Amazing content very balanced and the animation combined with your voice made it easy to watch. I'm glad I stumbled across your channel. You have a new subscriber!

"roger the renter" made me think of "bob the builder" and "joe the plumber"

@PreetBanerjee

7 жыл бұрын

I actually think you might here about a Roger the Renter in the next election, at least in jurisdictions where house prices are entering bubble territory lol

@romanfox5368

6 жыл бұрын

They're brothers.

over 25 years his rent stayed the same? he rented the same house for 25 years or he was thrown out about 10 times, was stressed about that he can't find a place, lived a year in his brothers house without paying a rent? Do you live on a paper or real world? Don't mislead people!

@Small_Vocaloid_UTAU

7 жыл бұрын

4:40 They do compensate for inflation.

@bjorn1583

7 жыл бұрын

renter loses job and cant pay rent so gets kicked out with no debt owner loses job and cant pay mortgage so bank takes house and kicks him out with massive debt that will continue to rise until it is all payed off or becomes homeless living on the streets till his dying breathe

@zdrux

7 жыл бұрын

You don't get your house repossessed AND stuck with the loan, it's one or the other.

@danielmiller7936

7 жыл бұрын

Konstantin Petrunin

@JaRW7

7 жыл бұрын

An annual rent increase was considered in the presentation.

Buy the ugly house on the block that way the other houses bring up the value of yours, rather than buy the nicest house on the block and have all the other houses drag down the value of yours. This also gives you room to put some sweat-equity (capital improvements) into the property that increase its' value and creates equity. Buying the house on the block without a garage and putting a 2 car garage on it for $10,000 might make the value of the property jump by $15,000-$20,000. Or build that garage yourself, learn a new skill, save $5,000 and still get the full $15k-20k gain. Same thing with swapping out the old bathtub for a nice tile shower, etc.... Buy for value, rather than sell the property, refinance and buy another and rent the old one. utilize leverage and other people to pay your expenses. It can be done in ways where people don't trash your property and stay for a long time. I've been at my house as a renter for 4+ years, my landlord lucked out on me, but he's not upholding his end of the bargain, his neglect to maintain the property and cheap rehab choices has cost me a lot of time and energy on the house and utilities and frustrations with making him uphold his end of the relationship. Tip: Don't rent your house to an experienced property manager either.

@INeedHerPomPomJuice

8 жыл бұрын

The thing about the ugly house is...who would want to buy it? If there's a neighborhood with all nice houses, and one crappy looking house, I doubt it would sell. If it did sell, it would not sell in the same proximity as the other houses. It's also very uncommon to find a poor looking house in a nice neighborhood. That's also a lot of time and money being spent on something that's not guaranteed. People who buy poor homes are not as well off as those buying nice homes, their jobs would be more centrally located in downtown of a city. Nice locations are usually far from downtown. However, if it did work out like you planned, it would be a pretty cool investment

@Remrie

8 жыл бұрын

+Sean Puffynipples thats the goal of savy investors. they invest with a margin of safety and give themselves room to utilize multiple strategies. if you buy the nicest house on the block and improve it further, you likely will waste your time and money and find it doesn't sell or appraise any higher. the trick with buying the lower end houses in those markets is making sure the RCE and ARV come in at at a predetermined target consistent with what is safe and realistic.

@Robertking1996

8 жыл бұрын

+Sean Puffynipples actually a lot of people. Most rich people live in neighborhoods close to downtowns where their jobs are located usually. This example applies to Los Angeles, Houston, Dallas, Miami, Boston; just about anywhere. Suburbs are a different case. But usually you'll see an old house in a nice neighborhood because the original owners never moved. Someone will eventually buy them out because they want to live in the prestige neighborhood and just bulldoze and build a new structure fitting their likes.

@INeedHerPomPomJuice

8 жыл бұрын

I'm just worried if the amount of time put into it is worth the extra 15k. That's a lot of time being spent improving it and making it better. Obviously in places like NY and LA, the story is different, but if we take a suburban neighbourhood the story syncs up better. The challenge is finding that house, the second challenge is actually buying it. Like Robertking said, if there's an old house in a nice neighbourhood the chances are the owners have been there for quite a long time. Why would they move? Even if they did move, I think putting in that much effort for little gain is not worth your time. Ideally you would want 10 houses, fix them up, and, say, get a 30k profit from each house. That would be a business. That's a millionaires game at that point :p

@Remrie

8 жыл бұрын

Sean Puffynipples It just depends on how much "meat on the bone" is enough for you/investors. Kudos on your last name Sean. XD But generally a rehabber tries to double their money. Buy a house for

I followed for 20 seconds aaaaaaand you lost me.....I'm just not going to have kids, everything is fucking expensive nowadays. I need every penny. Plus this world is fucked anyways

@Hakken1

7 жыл бұрын

metallicak5 Your positivity has given me hope for the future!

@metallicak5

7 жыл бұрын

Think realistically....you think there's enough high paying jobs for everyone to live a happy life with a high paying salary, a wife, kids and a dog with a backyard?? There world isin't going to last long. one of these days something massive is going to happen and you have to be prepared.

@riKringkast

7 жыл бұрын

metallicak5 And had your watched the entire video instead of losing interest after 20 seconds, your would've known why your answer makes little sense.

@MichaelBatmanKeaton

7 жыл бұрын

metallicak5 preach brotha preach!

Thank for you the video.... It's just what I needed and I'm glad you used an example in Toronto. Very applicable.

To add: Preet didn't cover the price:rent ratio, but that's one of the biggest factors in the decision, and more importantly the one you can know with certainty in advance (whereas whether a real estate crash comes or how an investment portfolio will do will be unknowable in advance). A $500,000 place renting for $2,100 is pretty typical in Toronto these days for a price:rent of 238X, but in the past (when your parents created the heuristics of renting being a waste), a place equivalent to one renting for $2,100 might have only cost $300,000. In some parts of the city the price:rent is approaching 300X, so a place that might rent for $2,100/mo would cost over $600,000 to buy! Checking out equivalent rentals is a key first (or zeroth) step before looking to buy a place. For the last point in the video: the renter can also choose to rent a more modest place and invest even more. Indeed, they usually have more freedom to do so as transaction/moving costs aren't as big of a barrier, so a renter only needs to find a place big enough to suit their needs for 3-5 years whereas an owner might try to upsize to ensure they have enough space to grow for the next decade or more. Indeed, no matter what kind of house the owner chooses, they should also be investing for the future (that part just isn't shown because it would be equal between the two cases -- here consider the renter's part not as their total net worth, but their net worth in addition to what they would both have saved and invested on top of shelter costs). Related to that point: Preet mentioned the drag of taxes, and the big capital gains hit at the end (assuming the entire portfolio was sold at once), however if in your owning case you would not have much headroom to save and invest (i.e. you'd be house poor) then you'd be able to shelter those savings from renting in your TFSA/RRSP, reducing or even eliminating that drag, further improving the rent case. For the first point on this last screen, I still lean towards the renting case: the money goes *somewhere*. If the renter isn't saving it, then they're likely using it to have a higher quality of life rather than being "house poor" (unless they're very undisciplined and are just wasting it unconsciously, which is a separate problem).

This is why I'm glad I rent and make mad money through investing. I can also move whenever I want and work wherever I want.

I bought my House when i was 21 years old. It was 220.000 euros worth in 2008. Now it's worth 500.000 euros. I own the Bank 150.000 euros at this point. If i would sell now i would have 350.000 € i could buy something else and live without owning anyone Money. It is very important to know when to buy and when to sell. I bought the house in the Financial Crisis back in 2008 so it was cheap. Keep that in mind and you can easily make some Money and live a normal life.

this what youtube should be about. real self education. thank you really thanks you

Another thing to note that is VERY important is the risk of income fluctuations over time (loss of job, reduced pay, etc). In this example the renter is more protected against reductions in his monthly income (by temporarily reducing or eliminating his contribution to savings) and can even tap in to his savings if necessary (ie between jobs). He can also more inexpensively move to another city or area where the job opportunities may be. The owner is committed to making the full mortgage payment, and if there is a job in another city, they have to sell and move (and possibly buy), thus incurring added cost. Really the best option is at the end -- buy a more modest house and also have an investment portfolio.

@HolisticDetective

8 жыл бұрын

+Jeffrey Alami Better yet, move to a cheaper apartment and keep up the savings! Or Owen can rent out his big fancy house and rent a smaller apartment until his income recovers.

Really enjoy your explanations and use of visual aids - also fantastic to find a Canadian perspective, which is hard to find! This will be my go-to video when I want to explain the same thing to my friends, family and clients.

Wow thats actually an amazing video! Exspecially the part at the end with things to think about is very good. Exactly this should be tought in school but I'm watchign youtube to learn more about this topic. Thanks

Thx for sharing it makes a lot of sense now. I have been debating wether to get an expesive house and tighten the belt knowing it will shoot up in value or get one where the mortgage is relatively the same as our current rent and never be house poor even though the increase in value is a bit slower but will allow us to save and get the kids their first homes too and the latter makes more sense. Thank you very much for taking the time to share this.

.. my old flat increased in value of about 100 000 over a 5 year time period. Though when/if you sell.. you kinda get back the money you spent paying down your loan.. So, Roger the Renter.. You missed out on alot of cash ^^,

@harvenius

7 жыл бұрын

exactly

@VonGrav

7 жыл бұрын

***** Its the way to do it ;)

@march11stoneytony

7 жыл бұрын

Greater the risk, greater the reward. Lots of people around here are selling their homes and losing a lot though. I'm from an oil town though

@march11stoneytony

7 жыл бұрын

***** Now is the worst time too get out, since you'll lose the most.

@joesmith9330

7 жыл бұрын

100000 OVER 5 YEARS IS NOTHING COMPARED TO OTHER INVESTMENTS WITH A LOT LESS RISK AND MANEGEMENT

You said it in the beginning. You might as well pay your own mortgage rather than the landlord's. If the owner of the rental property also has a mortgage (that they are allowing the renter to pay off for them - which is most often the case) then the rent will always be more than the cost of ownership. Best case scenario - the owner of the rental is only interested in the long term asset value of the house and not short term rental profits, but no landlord in their right mind will take a loss for 25 years.

Anyone else came here to learn but left more confused than ever?? lol

@badreligion9417

7 жыл бұрын

right here lmao

@erikdawg60

7 жыл бұрын

Miko Philo i did, now i really don't know what i should do lol

@MrEjblanco

7 жыл бұрын

Miko Philo portfolios... sounds so easy... if i understood

@erikdawg60

7 жыл бұрын

Maxx Kroes so if i can i should purchase a home instead of renting

@bobmario8520

7 жыл бұрын

I paid rent for 14 years same house New Jersey ,the house just got sold so I have to move I have 2 months notice so,renting sucks

when you own a house you basically rent your land from the Gov which is property tax but have to pay it Forever ($3000 avg yr), unless you are native american you pay 0.

Interesting to see the difference. In the UK you're realistically looking at a 20% deposit and often mortgage payments are on par with rental costs.

@mytymj7

8 жыл бұрын

indeed, which makes renting worthless, dunno why it's so popular, where I live renting is only so something rich people do

@randeknight

8 жыл бұрын

Because so few people can save enough money for the deposit while simultaneously paying rent. This leads to children staying at home into their late 20s or even 30s so they can save up for the deposit.

@brenden9758

8 жыл бұрын

It's like that here too, the author of the video is just misinformed.

@iSOBigD

8 жыл бұрын

Because a lot of people can't imagine saving $20k-50k let alone hundreds of thousands of dollars in order to pay off a car or put a down payment on a home. Some live paycheck to paycheck, meaning they literally don't have money left at the end of each month. When a down payment on a home can be 5-20% of its value, it narrows down the people who can afford it because so many people don't save up, so they rent. It's the same with buying a used car for 50% of the cost after 2 years vs a new car for 100% of the cost + interest over ~5 years, just because they can't save up in the first place.

@JustinCrediblename

8 жыл бұрын

+cabington do your calculations include taxes and repairs? I doubt it.

5 percent down payment... must be nice.

@Rubysh88

8 жыл бұрын

banks here will fund 80% if you're lucky...

@RealLifeEddy2K

8 жыл бұрын

that upfront bullshit is just that, bullshit. I never had any of these LTT fee's when I bought my house...It was 110,000, I put 3500 down and the actual loan came out to like 108,500 or something...So 1500 total in taxes.

@Rubysh88

8 жыл бұрын

Real Life Eddy You got lucky, here, banks here rarely fund more 80% of the house value, meaning you need to pay 20% or more upfront so a lot of people end up renting their whole life, it's that or they have to use third party loan services with huge interests....

@daewalkr

8 жыл бұрын

Lol think that's bad it's min 20% in NZ

@KingBobXVI

8 жыл бұрын

Seattle too, unless you want the default insurance.

It actually makes perfect sense the aim is not to focus so much on the calculations and rates but moreover on the concept, which is quite on point just have to shop around for the best investment opportunity.

Just extremely great info and concepts to consider. Great job.

This is renting a house, rent a one bedroom for yourself (I rent for 900 a month in BC) and you will see your well far outpace buying a home.

need to factor into the decision: 1) mobility of labour and availability of work 2) cost of renting space vs. renting money 3) reasonable long-run assumptions for property appreciation 4) risk and diversification 1 and 3 will have vastly different profiles in different geographies and markets. 4 hasn't been sufficiently addressed.

This is an excellently made video! Thank you for sharing this amazing information!

Thank you for this video, it was well thought out. There was one factor which wasn’t explicitly factored in to the analysis, and that was the degree of concentration of each investor’s investment. All of Owen’s wealth was invested in the house. Now this might have been highly profitable for Owen if his particular area becomes highly sought after, but it could also be very damaging if his area decays or the particular house declines in value. Roger on the other hand has probably bought a mutual fund or exchange traded fund, and is more diversified. Diversification is not necessarily good for rapid wealth creation, but it is the safe and probably the best option for a non-professional / passive investor. If we assume that Roger and Owen are non-professional investors, just trying to decide whether to rent or buy, Roger has a diversification benefit here.

How does roger the renter get 1,025,000? He invested the 35,000? On what? How come it appreciates more if he invested that in a property?

@PreetBanerjee

7 жыл бұрын

A stock portfolio. Which have beaten housing over long periods of time. observationsandnotes.blogspot.be/2011/07/housing-prices-inflation-since-1900.html

@flamingcokecans

7 жыл бұрын

it's not that the $35,000 grew that much, but that he also put the difference between rent expenses (rent + insurance) and ownership expenses (mortgage payment + maintenance + insurance + ...) into his portfolio as well, an extra $1100/month

@familydinner1

7 жыл бұрын

Not in Vancouver they don't.

@danieljckson

7 жыл бұрын

moonlightshow did you really watch the video?

@swordoflight7789

7 жыл бұрын

I thought the same thing because he did not clarify very well, that the renter was investing the hypothetical "difference" between what a mortgage holder would pay and his particular rent. Which would be 1100 a month over 25 years with the starting 35k from the beginning. The money you make from such a portfolio automatically stays in said portfolio I think some people above are confused. Watch the video again, Would you save the difference? or spend it. He is talking about the difference in between what the renter and the mortgager pays which is hypothetically 1100 dollars in his dumb ass example. So basically to even sort of catch up to the homeowner you would have to start a portfolio / money market account with 35,000 in it that paid back some high numbers like 7% you would then have to add 1100 a month to it for 25 years faithfully and hope for the best, and you will still most likely do worse than the guy who just bought a house unless he is moving and reselling constantly. I think the topic kind of falls flat on its face

Now this is an actual use for maths you know something that will effect our adult lives! This is what we should be taught in schools

@PreetBanerjee

8 жыл бұрын

Thanks Daniel!

very educational!!! thank you for this. subbed!!!

This video was fascinating. Thank you.

This video is excellent. Thank you so much for making it!

@PreetBanerjee

8 жыл бұрын

Thanks David!

@COGGYCOGSY

8 жыл бұрын

+Preet Banerjee would love to see a house I can rent for cheaper then I can buy lol clueless!

@PreetBanerjee

8 жыл бұрын

You're assuming Owen the Owner is the landlord. You're forgetting that the landlord may have bought that house 20 years ago for $200,000 and his cost of carrying is well below current market rents.

@COGGYCOGSY

8 жыл бұрын

+Preet Banerjee ok again please show me a house that is cheaper to rent then to buy ?

@p46709394

8 жыл бұрын

+COGS's CORNER Can you tell me where to buy a $10 dollar note by paying $5, please? Hey I am sure someone on Earth would do that, so u should be able to answer!

How do I get $578K in the next 25 years while living in this shitty apartment?? :P

@PornoCorner

8 жыл бұрын

Good video though!

@HomeSkillenSLICE

8 жыл бұрын

This video assumes you are just as rich as the house owner. Such a high percentage of renters are poor as dirt like me lol

@getrolli469

8 жыл бұрын

you won't stay hot for so long...

@imoneixusa9742

8 жыл бұрын

25 years×12 months×$1,100 =$330,000 + 7% portfolio increase a year - yearly inflation estimates come out to 500/600k

@imoneixusa9742

8 жыл бұрын

but who REALLY is going to save $1100/month if they are renting and not being forced to save? You might do it for a while until you see a car you want, or a vacation, or say hey let's skip a couple months... with a mortgage, you CAN'T do that

This is a great video. Thank you.

Very much the situation in Australia, including the growth/income assumptions and people's thought process. The video is very well designed to give a layman the idea of choice. On another note, both are hard to think about at present, as taxation and un/employment are rather big assumptions and game changers.

The rule of thumb for determining rent is that a landlord should be making 1% of the initial investment on the property per month after paying taxes and insurance. If I buy a $500,000 home and rent it that means the monthly rent is going to be $5,000 plus taxes and insurance. Cost or renting is always higher per month than it would be to buy the same home and pay a mortgage. The advantage of renting is mobility. If you're going to move every few years it is to your advantage financially to rent.

@901blitz

8 жыл бұрын

I can't think of anywhere in Canada where you will get $5000 a month rental income on a 500k asset.

@stretch2187

8 жыл бұрын

It's probably hard anywhere, at least on the residential side. There's not a lot of people looking to rent at that level. The point is though, that if you're not getting the right percentage from your investment property you're doing it wrong. If you've got $500,000 to use as an investment, you can't afford to have it not make you the right percentage. Where I am I could buy five houses for that and get my 1% a month on all of them, but doing it with one house would indeed be difficult.

@nutman411

8 жыл бұрын

ya, I think 5000 is a tad high. but its not unreasonable to get 3500 or 4000

@faYte0607

8 жыл бұрын

here in LA, a $450K home yields $2400/mo rent. That's 0.5% return....

@futureprogrammer880

8 жыл бұрын

lol i was thinking 2100 is alot monthly you can get places for 1,500 easy.

I am not completely familiar with how things work in Canada, but here in Florida, my mortgage payment for a 1255 sqft townhouse is hundreds of dollars less than rent for a similarly sized apartment in the same area and I always have the option of selling the townhouse and getting back my down payment and at least some of the money I spent per month as long as the market cooperates. And down here, it will not cost me nearly as much to sell the house as it seems to cost up there. Granted, the initial down payment was a significant portion of my savings, but it makes budgeting in the long run a lot easier each month.

and this is why you buy with cash and then rent... also, you wouldn't be able to rent that house for 2,100...you always rent for more than the mortgage to cover all landlord's expenses...this wasn't an apples to apples comparison at all.

@eavening4149

7 жыл бұрын

only makes sense to rent if you're not staying in one place for a long time.

Loved the video as well!

Why I rent: 1) over a 25 year period transaction costs on real estate will almost definitely go up, whereas transaction costs on stocks etc. are going down. This is a big variable since the "winner" here is largely determined by the amount of transaction cost one does or doesn't pay 2) In a globalised world, market fluctuations happen faster and faster, so liquidity itself can be an asset because it allows to make decisions faster and be able to capitalize on opportunities when they become available. If other variables are equal I believe that the liquidity and freedom of renting is a big asset over a 25 year period. 3) If you do come across financial hardship and are unable to pay either your rent or your mortgage, it's much more advantageous to be indebted to an individual landlord than a bank. The landlord will likely not have the resources to keep chasing you indefinitely and will likely write off the loss at some point. In Canada, if you screw over a bank, you'll have all sorts of headaches the rest of your life, everything from credit cards, to higher fees. Your life will not be easy. 4) If the main advantage of owning is to have an asset that appreciates in value than why not buy a house and rent it out to someone else? Depending on how you finance you will have someone else paying off the debt on that house and over time that would lead to cash in your pocket which begins to pay for your own rent. In other words, using this method you have the liquidity and freedom of renting while still owning a house. 5) The laws in Ontario highly favour renters if you come into a legal dispute. Not saying this is right or wrong but why not be on the side that the law favours ?

1) Renting also has piece of mind...the landlord has an obligation to maintain the property...if the house is infested by termites, you dont lose....the landlord does and you can move. If you own the house and it gets infested, you have major issues 2) If you own a home, you are not a prisoner of the rental market that may go up due to a bustling economy in your region. Think silicon valley...the people who bought there are loving ownership and renters are struggling!

@MrClarkisgod

8 жыл бұрын

I'm 35 and just bought my first home in cash. It is a huge hassle and a pain in the dick in general. I'm seriously considering going back to renting. Huge hidden costs and time sink.

@OverSoft

8 жыл бұрын

You're doing it wrong, i'm 31 and am on my second home (bought my first one when i was 24). I have already earned on the first house and my second one has appreciated €35.000 already. No one can tell me not to hammer in a nail in the wall, no one can tell me i can't do something. Also: what's the pain in the dick? Having to paint your house every 5 years? Really? That's the pain in the dick? Hire a painter: done. The upfront hassle is worse, yes, you have to get a mortgage and inspection, etc... But once you've got the house, there's nothing you have to do but pay the mortgage, that's it.

@duper1025

8 жыл бұрын

+Altair Ibn-La Ahad Exactly! I found the same thing, maintenance on the house, new roof, new chimney, and the time you mentioned, I spend my time shovelling snow mowing the lawn and raking leaves instead of enjoying life. Those you like gardening, great, I don't. Plus the house is way too large, filled with crap I don't need, big cost to heat and cool, taxes, enough I'm planning to sell and rent an apartment downtown and enjoy my leisure time!

@PremiumFuelOnly

8 жыл бұрын

If termites infest the place, get out there with a hammer and fix it, its your investment, you will benefit from inflation when you sell it.

@OverSoft

8 жыл бұрын

+Mostly Compilations Must be a US thing. In most countries things like solar panels are encouraged and always allowed. Also here in The Netherlands, at least for actual houses (not apartments) there's no such thing as HOA's. I've owned 2 homes and currently rent out multiple apartments, so (at least here in The Netherlands) owning makes much more sense than renting.

the very last point you made is simple however it is most profound, LIVE MODEST AND SAVE TO INVEST,.

Missing so many other factors of life, plus you better pray the value of your house goes up^^^^, also depends on what kind of job you have and how you save? but also depends where you live? Nyc is a crazy gamble!!

What you did miss was why most of the people in urban areas chose to rent - mobility. There is an "opportunity cost" if you decide to buy a home and settle down in an area. While I am not from Canada, I think the fact that if you buy a home when you're 35 years old means you may very well let go of the career options that may come your way from other cities. A renter may well have a better overall income and net-worth at the end of 25 years compared to the home owner because he can move easily for a better paying job. A home owner, if he decides to move in such a scenario, will have three options: 1. Keep his home as it is, and rent it out in a new city. Which adds to the expenses multifold, and may well be not worth it considering that proportional hike in wages may not cover the proportional hike in expenses. 2. Buy a new home everytime he finds a better job. 3. Rent out his existing home, and rent a new home in the new city. Rent income from one covers the rent expense from the other. This is a very important point that you missed entirely in your video.

@Xerilian

8 жыл бұрын

That seems like one giant "WHAT IF" to me.

@Xerilian

8 жыл бұрын

That's not a what if. It's a liability as well as an asset. You're talking about some completely hypothetical situation of getting a job in some other city. I think you're WHAT IF is a bit more far fetched than someone buying a home and setting down roots.

@beakerthefrog

8 жыл бұрын

The average term of employment for a worker with a 4 year degree is around two years. Further, many companies are requiring relocation for management positions. They don't want you supervising the same employees you worked with. This is a growing trend, and it's unlikely to go anywhere. This isn't even factoring in the fact that opportunities often require one to relocate just by virtue of where they originate from. If you DON'T have a four year degree (I don't), you will still almost always choose where you live based on where you want to work. You go where the jobs are, not where you want to go. Relocating for work is becoming the norm in the western world. So yes, it's a "what if," but it's becoming less and less of an "if" as time goes by.

@Xerilian

8 жыл бұрын

If you say so :D

@yandan8

8 жыл бұрын

+TyrannosaurHex I agree, this is an important point. However I would suggest looking at this as separate *prioritized* decisions. Each decision made in its own time and context. Income/career would have higher priority than housing, because without income there would be no housing (both important). Both decisions can be revisited anew any time an opportunity comes up -- whether it's a better job or better housing.

A very unbiased informative video, thank you!

@PreetBanerjee

8 жыл бұрын

+AJBurtonOperator Thanks!

@FORZAinter

8 жыл бұрын

How come you didn't include extra costs though? No way nothing breaks in that home for 25 years. a renovation, some new appliances...Would love to know if that would make any sort of impact

@AJBurtonOperator

8 жыл бұрын

+A Osman Good point!

@PreetBanerjee

8 жыл бұрын

3:55

@PreetBanerjee

8 жыл бұрын

3:55

Very nicely done video, well explained!

Your penmanship is on point!

Where can you find an investment portfolio that grows at 7% with low risk? But buying a house (assuming it grows at 3.5%) and selling it later almost suffers no risk.

@PreetBanerjee

8 жыл бұрын

7% with low risk doesn't exist. Similarly 3.5% with NO risk doesn't exist, but generally would be lower risk, but in the case of mortgages, it's also leveraged.

@SexyBakanishi

7 жыл бұрын

Unless your interest rates go up and you can no longer afford payments. Or you get a market crash, as you do periodically. Or you go to sell your home for retirement and it isn't worth enough to keep you alive for the next 20 years, or there isn't a buyer.

great video, thanks!

@PreetBanerjee

8 жыл бұрын

Thanks!

If you are rich and can afford to invest your extra money, then sure renting makes sense in this specific case. For the majority of renters, they do not have the available funds to be piling away 1000 dollars each month so this estimation would not hold up to reality. Most persons would be looking for a house with a monthly payment of an amount or rent of the same amount leaving less room for investment. You should make another video on why it makes sense to buy a house anyway because if you can pay it off quicker with less interest, you would be able to avoid the losses to mortgage interest or rent. Buying within your means seems to make even more sense than this situation, thanks for the thought provoking video!

@TheMystery51

7 жыл бұрын

Most of us never live within or below our means. They over spend and that is the reason everyone is broke.

Omggg you draw and write so well :o !!! Thanks a lot for the advices!!!

@aurelianspodarec2629

7 жыл бұрын

LOL it's a computer programme haha it's a special software ^^

@Zavtar

7 жыл бұрын

Do you know how the software is called please ?

@PreetBanerjee

7 жыл бұрын

www.videoscribe.co by Sparkol

@Kenneth_the_Philosopher

7 жыл бұрын

On a five-year mortgage, the payments are actually 8,984.35. How did you get 2,318? Why did you use a five-year instead of a 30-year mortgage?

@PreetBanerjee

7 жыл бұрын

5 year term, 25 year amortization.