309: Is Homeownership A Scam? (Rent vs. Own)
Play episode · 42 min

Should you rent or own your home? 

Host Keith Weinhold reveals the biggest homeowner myths.

Complete episode transcript below. Read along.

Subscribe to our weekly newsletter here

Resources mentioned:

Business Insider: Rent vs. Own:

https://www.businessinsider.com/buying-a-home-instead-of-renting-isnt-always-better-for-your-savings-2017-11

Housing Wire: Homeowners Wish They Were Renting:

https://www.housingwire.com/articles/49743-quarter-of-us-homeowners-wish-they-were-renting-instead/

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Welcome to Get Rich Education. I’m your host, Keith Weinhold. Is homeownership a sham? Is it a rip-off? 

 

When it comes to the home that you live in yourself, is it better for you to pay rent to a landlord, or own that home yourself? 

 

For your primary residence, what should you do in your specific life situation? You’ll learn today … on Get Rich Education.

 

——————-

 

Welcome to GRE! From Syracuse, Sicily, Italy to Syracuse, New York and across 188 nations worldwide. I’m Keith Weinhold, this is Get Rich Education.

 

Usually on this show, you learn about how buy-and-hold rental property, when bought strategically - produces wealth. We’ll return to that next week, but today ...

 

… it’s about your primary residence. And, when we talk about, should you own your home or is it better for you to pay rent to a landlord - think about how important this is. 

 

Because whether I’ve had the chance to meet you yet or not, there’s one thing that I definitely know about you, and that is, you are always going to live … somewhere.

 

Your housing expense is one of the biggest financial expenses in your life.   

 

Despite that it’s such a substantial financial decision for you, some people revert to orthodoxy - this FLAWED orthodoxy where they think that owning is always better. That’s not true.

 

I really want you to watch your mind as I tell you this today, because there are very likely a few tripwires installed there … and I am about to hit some of them. So do your best to remain calm … if you must.

 

Though more people are waking up to the fact that renting is sometimes better, I still think that popular culture has long reinforced this misplaced notion that owning is always better.   

 

“Are you a homeowner, Greg? No. I rent. Oh.” 

 

Haha! That’s from the classic comedy movie “Meet The Parents”. Owen Wilson & Ben Stiller - while Robert De Niro - the future father-in-law was party to that chat where he’s thinking that the homeowner is the more apropos suitor for his daughter than the renter is. 

 

Look, if you can OWN a home and your monthly housing payment is $2,500, but you could instead PAY RENT on an equivalent home for $1,500 - now your cash flow has increased by $1,000. That’s money in your pocket today that could be re-invested at a rate of return.

 

Now with your $2,500 housing payment in this example - that’s more than just a mortgage payment remember. 

 

When you own, your HOUSING payment consists of mortgage principal & interest, property tax, property insurance, maintenance, repairs, utilities and more. You’ve got to add all that up to get to $2,500. 

 

What about that TIME it took you on HOW to repair the leaky faucet when you owned the home? Factor that in.

 

Now, the homeowner might reply, but at least part of my $2,500 payment is building equity for me. Yes, it is. A minority of that payment is building equity. You’d rather have equity - you’d rather have principal paydown than lose it to interest. 

 

And you’d rather have equity than nothing.

 

But, as I’ve discussed extensively elsewhere - so I won’t do that again here - home equity is unsafe, illiquid, and it’s rate of return is always zero.

 

You can probably repeat that to me at this point - ha! 

 

Also, what’s more important in your life? Cash flow or equity? Cash flow is what creates financial freedom. As an investor in the pursuit of freedom, in fact, you want to CONVERT your equity to cash flow. 

 

Remember, in this $1,500 rent payment vs. $2,500 housing payment scenario on your primary residence … it’s the renter that has the additional $1,000 cash flow and the homeowner that builds the equity.

 

Let me remind you. If you would like to READ along as you listen to the show today or you know someone that’s hearing impaired, you can read the complete transcript to this episode at GetRichEducation.com/309. 

 

That’s GetRichEducation.com/309 to see all the Show Notes and the entire written transcript for this episode. 

 

Well, some people think that buying & owning their primary residence is: "LIke paying rent. Except you get to keep it." Well,that has caused millions of people to buy houses that they later regret. 

 

I know a young, married couple - Jerome and Jessica - they’ve got two kids. They wanted to move from snowy Anchorage, Alaska to Las Vegas, Nevada. They had lived their entire lives in Anchorage and were tired of the snow and wanted some heat. 

 

You think that they might discover an overcorrection problem, btw? Vegas is in the middle of the Mojave Desert. But anyway ...

 

They had owned their Anchorage home for five years before they put it up for sale. That was the first home that they ever owned - starter home.

 

Had they been renting that home - they could have moved where they wanted to in as little as a month. 

 

But as homeowners, by the time they made all the make-ready repairs to the home, got it listed for sale, had to repeatedly prepare their home for showings - meaning they had to intermittently get their home in pristine condition to make it look good for showings - uprooting their lives every time … they finally sold it in 4-½ months by the time their buying got their financing in order & inspections & appraisal & the deal actually closed.

 

If Jerome and Jessica had been renters instead, they could have been on their way in a month.

 

Plus, over the five years, their home appreciated a little, but not enough to offset the 4% closing costs when they had bought five years earlier, all the maintenance & repairs that they had put into place DURING the five years they lived there, plus then they then had to pay a real estate agent a 5% commission when they sold.

 

They not only lost money by owning, they lost time, they lost mobility. They didn’t have liquidity.

 

For Jerome and Jessica, they got a lesson. “Paying rent is not the same as throwing money away.”

 

Well, I can tell you, Jerome and Jessica moved to Vegas one year ago now. They have been renting from Day One there, they’re still renting, and they have no plans to buy in Vegas anytime soon.

 

“Paying rent is not throwing money away” because you get the BENEFIT as using that space as a home, a place to sleep, prepare food, eat, shower, study, entertain - how in the world is that throwing money away? It isn’t. 

 

You know that I’ve told you on this show before that paying rent is not throwing money away just like the five hour flight that you took from Boston to Phoenix last year wasn’t throwing money away.

 

No one called it throwing money away when you paid $500 to “rent” that airline seat for five hours. Why, because you had the BENEFIT of travelling somewhere.

 

Sheesh, how far are people going to take it with this nonsense that “Paying rent is like throwing money away?”

 

Your gym membership is $50 a month. But you didn’t get to take a set of the 40-pound hex dumbbells home after six months of membership did you?

 

Gosh, how far would you take this nonsense line of reasoning?

 

You like to go mini-golfing? I’ll bet that you paid some portion of your fee to rent the put-put club and a little orange golf ball for two hours.

 

How are you going to think - that you now expect to own equity in a put-put golf club that’s all nicked-up and was used by 80 different people? Sheesh, that’s ridiculous. 

 

You had the benefit of a gym membership because you’re healthier. You had the benefit of mini-golfing because you like some recreation. You didn’t throw money away.

 

What about renting an RV for a week? You didn’t throw money away. You had the benefit of using it.

 

This whole misguided notion that paying rent for a place to live is throwing money away is a … replete farce. 

 

But that also doesn’t mean that renting your primary residence is always better than owning either. 

 

Well, let me give you some numbers here. This will help you debunk that notion that - ad infin-I-tum, homeownership is better.

 

Look, in a place like Manhattan’s Tribeca neighborhood, a small apartment has, just for simplicity, say a rent-to-value ratio of three-tenths of one-percent.

 

That’s a lousy deal if you’re the landlord and an awesome deal if you’re the renter. 

 

So, what that means is that market rent is only $300 per $100K worth of property. That’s that three-tenths of 1%.

 

That ratio might then be $3,000 of rent on a $1M apartment in Tribeca, Manhattan.

 

But look, in a place like Memphis, Tennessee or Little Rock Arkansas, the rent-to-value ratio might be a full 1%. 

 

Now see, if you’re a renter here, you’d have to pay $1,000 for every $100K worth of property. (Not $300 like Manhattan)  

 

Well, in that case, it makes more sense for you to own your home. 

 

BTW, it also then, makes sense for you to own Memphis real estate & rent it to others - because for every $100K of Memphis property you own, you’d RECEIVE $1,000 in rent. You’d RECEIVE a full 1%.

 

Generally, on the coasts, it’s better to pay rent for your primary residence - and in the heartland, it’s better to own that real estate - whether you’re renting it to others OR living there yourself.

 

But there are so many more considerations here than just numbers and geography. So, what else makes sense to your specific situation?

 

And before I go on, please don’t think that I’m “against” the real estate AGENT industry. That’s not true. Gosh, I’ll stand up for a GOOD real estate agent when it makes sense.

 

For example, when it comes to selling your home, you might not want to pay a 5 or 6% sales commission to an agent. Some people would rather sell it themselves and pay 1 or 2%.

 

But what some sellers fail to consider is that an agent might help you get 4% more for it because they know how to reach more buyers, and do it fast, and save you a lot of hassle and uncertainty.

 

So, there’s just one example of how I’ll stick up for agents when it makes sense.  

 

But, getting back to should you own or rent your primary residence, I’m here to help you decide what’s best for you. You’ve ultimately got to decide. 

 

I WILL tell you when it’s better to be a homeowner than rent shortly. But first ...

A recent survey from Freedom Debt Relief shows that homeowners have many regrets when it comes to the purchase of a new home, mostly because they are largely unprepared for the initial cost and the ongoing financial responsibility that comes with homeownership. 

Of the 1,028 people surveyed, 29% said homeownership makes them feel anxious and stressed, while 26% said the cost of owning a home is a burden and they wished they were renting instead.

When it comes to affording house payments, it was Millennials and Gen Z homeowners who said they are struggling the most. Half of these homeowners said property taxes turned out to be higher than they expected, while 52% said their monthly mortgage payments are too high. 

With renting comes an always-available maintenance team and the ability to call the landlord when there is a problem.

Conversely, homeowners have to mow their own lawn, paint their own walls and fix their own leaky faucets. 

And some of these tasks have homeowners shelling out more cash than they planned, with 59% saying maintenance and repairs are more costly and require more effort than expected, and 60% saying they cannot afford needed upgrades. 

That said, it seems the idea of owning a home is still attached to the concept of what it means to succeed in this country, with 59% of homeowners saying they believe that owning a home is still part of the American dream. 

I’d like to add that the survey was conducted “pre-pandemic”.

 

Most people think that owning a home is a financial asset.

 

That's debatable.

 

The Rich Dad school of thought is known for saying that, "A home is a liability, not an asset". 

 

An asset puts money into your pocket every month. A home is a liability because it takes money out of your pocket every month.

 

Of course, in the conventional sense, a home is in your asset column and it’s mortgage is in your liability column.

 

Though owning a home is often a poor financial investment, you still tie up a lot of money in your humble abode. 

 

You really have more than two choices in how you live - it’s actually more than just rent or own. 

 

You have four choices in how you live: you can own your home, pay rent to a landlord, be homeless, or live with your parents – ha!

 

We’re only discussing two here: Rent vs. Own.

 

Fannie Mae associates “Home ownership with the American Dream.” in their marketing slogan. 

 

In America, how many people own their homes vs. rent their homes anyway? About 2/3rds own and ⅓ rent. The homeownership rate is currently about 68%. 

 

Well, I’ve probably got your wheels turning now on “rent vs. own”. 

 

Let’s break things down further. I’ve got 16 factors that I came up with here for you to consider, many of which you’ve never thought about before - on this.

 

Often it’s an exercise in pros vs. cons for you. Often, it’s rationalizing a series of trade-offs for you. 

 

The first of these 16 factors is ...

  • Mobility. Many people move more often than they expect. Renting keeps you nimble. With a new job opportunity or life change like marriage and kids, your mobility is an asset. A homeowner that moves a lot gets eaten up and beaten up with closing costs, make-ready expenses, and sales commissions. Kinda like where I told you about Jerome, Jessica, and their two kids.

 

  • Choice. There are more homes for sale than there are rentals, especially at the higher end. See if you want to rent a high-end place, they’re often really hard-to-find, especially in a more rural area. Renting of high-end homes limits your choice. You might feel like you HAVE to buy to get what you want.

 

  • Equity Buildup. Equity is the difference between what your home is worth and how much you owe on a mortgage. Homeowners build equity; renters don’t. Equity is like a forced savings plan. But equity is an awful investment with zero return. Your return is zero because the presence or absence of home equity has nothing to do with whether or not your home appreciates. (Yet you would rather have equity than nothing.) Houses make terrible “banks” - they’re bad places to store cash.

 

  • Liquidity. Though most homeowners build equity, it’s difficult to access. To tap your home equity, you must prove to a bank that you qualify again, wait months, incur costs, and you still might be denied access to the equity.
  • Opportunity Cost. Many tie up a 20% down payment or more in home equity. As I’ve stated, those equity dollars are low-use, zero return dollars. Instead, your chunk of money can be earning a return for you elsewhere.

 

  • Sunk Cost. This is an overlooked killer for homeowners. I mentioned some of them already. Mortgage loan closing costs, constant home maintenance and repairs, property taxes, utilities, landscaping, snow removal, leaf raking, rototilling, replacing obsolete fixtures and appliances, roofing, and painting costs are never fully recouped when you go to sell it. Renters bear almost none of these sunk costs. Renters aren’t losing time at Lowe’s & Home Depot either.

 

  • Control. Homeowners have a big advantage here. The peace of mind of knowing that a landlord can’t tell you to move is priceless. You have a feeling of belonging, an anchor. As a homeowner, you can knock out a wall, renovate your kitchen, or add a fence. Make it yours. Control is a big homeowner “plus”. 

 

  • Appreciation. Renters don’t experience price appreciation. They commonly even have to endure rent price increases. Homeowners with loans benefit from financial leverage, which can amplify your wealth in an appreciating environment (though you’re lucky if this offsets ongoing opportunity cost and sunk cost). Inflation becomes your friend for homeowners - and when you’ve only got a tiny down payment into a home that you own - leverage AND inflation are both your friend.

Now, a homeowner may also get an unusually outsized equity benefit if they buy in the right place at the right time. For example, if they had bought 10 or more years ago in a place that’s appreciated a lot - for example in Charlotte, Nashville, Austin, or Boise. That could be a homeowner boon there.

But if you buy a home and it’s value doesn’t appreciate - or even goes down - plus each month you paid more than you would have as a renter - plus you’ve lost time doing repairs & maintenance, then you’re REALLY lost out as a homeowner.

  • Tax Advantages. Homeowners often get the mortgage interest deduction. But this is just one small consideration. As our most recurrent guest in GRE history, Rich Dad Advisor Tom Wheelwright says, “Don’t let the tax tail wag the dog.” To say that “I’m buying instead of renting for tax reasons.” That’s a really weak argument.

 

  • Low mortgage rates. Homeowners can tie up long-term fixed interest rate debt at these historically low rates. Economists believe they’ll stay low for a long time into the future. This is a homeowner advantage.

 

  • Price and Rent-To-Value Ratio. If a home costs less than $250,000, own it. If it costs more, pay rent. If the monthly rent is under $700 per $100,000 of home, rent it. If rent costs more, own it. That’s that approximate seven-tenths of one percent rent-to-value ratio - or rent-to-price ratio. This formulaic approach indicates how much “home” you have the benefit of living in per dollar paid. Regional and other factors can skew these numbers. Of course, when we get that general with the numbers, there are going to be more exceptions.

 

  • Community formation. Owning your home provides both you and your neighbors a feeling of “belonging.” Homeowners are more likely to look out for the common good of the neighborhood. That helps everyone. People feel more fulfilled when they’re part of something greater than themselves.

 

  • Travel. This is so simple yet everyone overlooks this. Have you been to New York City? New Hampshire? Iowa? Arizona? Florida? Alaska? Ecuador? If you haven’t even gotten out to see the very world that you live in, be a renter until you’ve found the place that fits your interests. 

Some people find themselves owning a home for a few years, then later realize that they don’t even live in a region that fits their interests.

Maybe you don’t want to move far away because you want to be close to family. That’s legit. Family can be a good reason for NOT making a distant move. It’s about what’s important … to you.

 

  • Personal cash flow. If it costs substantially more to own a place rather than rent that place, then rent it…and vice versa. Homeowners that divert too much of their income into housing payments are what’s known as “House Poor.” This stifles your opportunity to travel, invest, and provide opportunity for your family.

 

  • Natural disasters. Areas subject to frequent earthquakes, hurricanes, and floods clearly tilt to the renter’s advantage. Even if you’re adequately insured as a homeowner, these catastrophes are worse for homeowners. No one thinks about that stuff until it happens.

 

  • Consumer advantages. Owning rather than renting can give you higher credit card limits and more favorable insurance rates.

Those are the 16 factors that I compiled to help you figure out what makes sense for you.

 

A decided stigma still exists with renting. But you don’t live your life for the Joneses, you live it for you.

 

I’ve got more for you on: “Should you rent your home or own your home.?

 

Hey, have you had something on your mind that’s made you want to write into the show, but you just haven’t done it yet?

 

Well, I think that it’s been a while since I mentioned our Contact Page here on the air. 

 

You can get ahold of us at GetRichEducation.com/Contact.

 

What you can do there is either send us a WRITTEN message - or you have the option of leaving some audio - basically leaving a voicemail. 

 

I really like it when you leave us a voicemail personally, because it’s something that I might be able to play & answer on the air for you.

 

I like to hear your voice.

 

We get a ton of messages - and we’re grateful for them. But understand that we sure can’t give personal replies to every one of them.

 

You can either write in OR leave a voicemail, again, at GetRichEducation.com/Contact.

 

More on rent vs. own, next. I want to try to help you make the best decision that you possibly can. I’m Keith Weinhold. This is Get Rich Education.

____________________

 

Welcome back to Get Rich Education. I’m your host Keith Weinhold.

 

Homeowners have a higher net worth than renters. 

 

The average homeowner net worth is $195,000.

The average renter net worth is only $5,000. 

 

That is a substantial gap. The means that homeowner net worth is nearly 40 times what renter net worth is.

 

Does that alone mean that owning is better? No. I think that it does TILT toward owning.

 

But see, to even BE a homeowner and qualify for a mortgage, you would have already needed to have assets and income … in order to cross that threshold.

 

I don’t think these figures are a good reflection of WHERE the homeowners wealth actually came from - was it equity building through leveraged appreciation & principal paydown or how much income they earn from their job?

 

That’s information that I’d like to see. 

 

Of course, in the greater context of Get Rich Education - net worth matters. Not as much as cash flow, but it matters, because net worth can be converted into cash flow.

 

Nonetheless, that net worth stat still tilts to the homeowner favor, just not as much as one thinks.

"People often say that buying a home was the best investment they ever made," that’s what Ne ela Hummel said - the chief planning officer at financial planning firm Abacus Wealth Partners. 

"The problem is that their return as investors is often worse than they think. 

When calculating how much they made on a home, most people do not include the out-of-pocket costs they incurred through things like replacing pipes, repairing roofs, or numerous other unexpected expenses that come up. As a tenant, your costs are fixed, but as a homeowner, you are on the hook for any repair that comes up."

That’s the end of what they said.

Those needed repairs to your home may involve you doing a lot of research online - and watching YouTube videos - to find a solution or simply paying a repairman to remedy the issue. 

Either way, you’re on the hook for investing more time and money into your home when something breaks.

Now, I’ve got another test on renting vs. owning your home.

 

Is a home an “investment”? Do you see your primary residence as an “investment”.

 

Well, what is an “investment” anyway? What is the definition of “investment”.

 

We are an investing show - and we take deep consideration of both the value of your time and your money here, so …

 

The definition of “investment”, per the Oxford dictionary is … “the action or process of investing money for profit or material result.” That’s it.

 

So is your home an investment? I think some people see it that way. 

 

Like I’ve said, if you’re rather lucky and buy the home in the right place and at the right time - you could profit from it. Though that’s more the exception than the norm … probably.

 

What I like to say is that in general, your primary residence is a poor FINANCIAL investment. But it is a good LIFESTYLE investment. 

 

See, in this way, your primary residence is like a vacation.

 

That is because, think about the money you spent on your last vacation. Whether you went to the beach or the ski slopes or French vineyards, it was not a good strict FINANCIAL investment, but it was a good LIFESTYLE investment. 

 

You improved your quality of life. You improved your standard of living.

 

A home is typically a good lifestyle investment and a poor financial investment.

 

Now, look, we’re all somewhat biased based upon our own set of experiences. That goes for me too. I am an 18-year real estate investor. 

 

I grew up in a home that my parents … owned. They even had the mortgage completely paid-off early. 

 

In fact, I think I shared with you before that my parents still live in the same Pennsylvania house that they’ve owned continuously since 1974.

 

But when I grew up in upstate Pennsylvania, all my friends’ families OWNED their homes. No one rented.

 

Later, I’d go on to learn about socioeconomic stratification and how I’d just be less likely to associate and even meet kids from renter households.

 

There was one notable outlier. When I was about 14 years old and the Petroski family moved to town - they were some pretty nice, relatable friends that were into sports & baseball cards - and I learned that they rented. 

 

And that was the first time that I ever remember hearing the word “landlord” in my life … when the Petroskis talked about their landlord, Mr. Hosley.

 

I’ll tell you, my parents owning their home might have help stabilize my childhood. I’m not really sure, because I can’t compare what it’s like to move as a kid, because we never moved.

 

If you’ve got kids, is uprooting them to move damaging to them? 

 

Or does it help them become more adaptable later in life? I truly don’t know the answer. I haven’t read about that at all.

 

But all the kids knew where I lived & could count on me for getting together. 

 

I had an awesome childhood, raised with two married parents, playing wiffle ball in the yard, catching crayfish in the creek, going camping, and collecting Star Wars action figures. All that great kid stuff. And part of that is … well ...

 

Home felt like home. If it’s important for you to build a legacy for your family and have your home incorporated into that - then perhaps only homeownership will give you those … nostalgic feelings. 

 

For me, it was knowing how my brother & I’s Christmas stockings were going to be hung from the mantle in the living room next to our wood-burning stove. 

 

The love from my parents is the most important thing for sure. But knowing that everything was going to be in the same place every year too?

 

You need to understand something. That right there brought me a FEELING, an emotion, that concern for a rent-to-value ratio NEVER could. That’s stuff’s got NOTHING to do with math.

 

If you can’t feel at home, at home, then where you can feel “at home”?

 

Remembering that spot on the living room floor where I was watching the television when the Phillies won the World Series. Yeah, I can still go there and show you that in my parents’ home.

 

See, if I go much further down this track, I’ll soon get teary-eyed here with you. 

 

So, with rent vs. own, is there a hybrid approach? No, there’s not really. There’s something called a lease-purchase. But those agreements are uncommon. 

 

One somewhat hybridized approach is … one that I’ve taken. 

 

I own the home that I live in. I’ve lived in that home for 8 years. But see, what I did is, knowing what we know about equity, is that I decided to own my home but have a low equity position.

 

I made a 5% down payment with a conventional loan. 

 

See, now I’ve got 20:1 leverage, very little skin in the game, and still have control, plus I got a 3.5% interest rate back in 2012.

 

See, instead of putting 20%, with 5% down, now I have that difference of 15% of the value of the home … out working for me as equity levers in other income properties in other states.

 

And no, I pay ZERO monthly PMI despite putting 5% down with a conventional loan. I’ve given you detail on how I pulled that off on previous shows, and you can too. 

 

The short story is, make a strong offer on your buy price and put it into the contract that your seller pay upfront PMI for you.

 

Now, there are some other distinct things happening in my geography where - if someone wanted to come buy my primary residence from me, but yet I could keep living here as their renter …

 

… and it was written into the contract that they couldn’t make me move, and I know I would pay them a lower rent amount than I’m currently paying in my mortgage & all those other homeowner expenses, I WOULD consider doing that.

 

Those situations are hard to find.

 

Yep, I would convert my mortgage payments to rent payments if I could get that arrangement. 

 

And why do this? Because the lower rent payment would increase my personal monthly cash flow, plus it would free up any dead equity that I have in the home.

 

Part of the rationale there is that my home market has few prospects for substantial appreciation in the next few years.

 

Well, in rent vs. own, what’s the bottom line with what makes the most sense for you financially? (Just … talking financial only here)

 

Be a renter in a high-end home and then buy low-cost income properties in investor-advantaged markets in the Midwest and South - that you rent out to others.

 

See, if you’re a renter in a high-end home, now you’ve got zero dead equity tied up in your home - and instead, it’s leveraging property in sensible markets.

 

In fact, I know a few other people - savvy people - that understand rent-to-price ratios and do exactly that. 

 

They’re FAIRLY wealthy people that are renters by choice - and own lots of rental property in low-priced markets.

 

But there’s no one definitive OVERALL factor in your Rent vs. Own decision because this is where finances and feelings intersect.

 

So here’s hoping that you’re finding a few considerations that you’ve never thought about before!

 

To be clear here and to summarize overall ...

 

  • Is homeownership a sham? Is it a rip-off? No.

 

  • Is homeownership overrated? Yes, it still is.

 

  • Many people that are renting should own. These people seem to know that.

 

  • Conversely, many that are owning would actually be better off renting. Few seem to know that and they’re even willing to take up an argument with you. 

They’ve heard the same “Paying rent is like throwing money away.” thing for so long, that they’d rather argue than really think it through.

 

Well, the reason that I did this show today - though it’ll be just as relevant if you’re listening 5 to 10 years from now, is pandemic-related. 

 

It’s because the COVID-19 pandemic is appearing to increase the migration rate as people look for less dense housing. 

 

Whether you’re migrating or not, now you better know whether renting or owning your home makes the most sense for you.

 

Next week here on the show, we’ll discuss what we usually do - INCOME property - property that you don’t live in, but instead, rent to others - and just exactly why the investment makes more ordinary people wealthy than anything else. 

 

If there’s one thing that I know about you, it’s that you are always going to live somewhere. 

 

And you know what else, so is everyone that you know. 

 

Every person that you know - may or may not own rental property - but everyone that you know is always going to live somewhere too. 

 

Do you think that this show would benefit them? 

 

This episode in particular might save your family and friends SO much time and money.

 

I love it when you share the show with others. So I’d be grateful if you took a screenshot of this episode and shared it on your Facebook, Instagram, Twitter, LinkedIn, or even through an email or text with those that you care about. 

 

I always endeavor to make things clear to understand here on the show. I’m Keith Weinhold.

 

Don’t Quit Your Daydream!

The Remote Real Estate Investor
The Remote Real Estate Investor
Roofstock
Author Chad Carson’s Path to Financial Freedom and Full Time Real Estate Investing
In this episode we chat with Coach Chad Carson with coachcarson.com about his journey to financial freedom, real estate partnerships, common challenges for investors and Chad's thoughts of the future of real estate. --- Transcript Michael: Hey everybody. Welcome to another episode of The Remote Real Estate Investor. I'm Michael Albaum and today I'm joined by, Tom: Tom Schneider. Michael: And today we are going to be having a really, really, really fun episode with author, teacher Chad Carson with CoachCarson.com . So Chad is gonna be talking to us about all things real estate, his story, how he got started, and now he's been a full time investor since his college graduation. All right, let's jump into it. Theme Song Michael: Chad, thank you so much for taking the time today. Really appreciate you being here with us. Chad: Yeah, thanks, Michael. Thanks, Tom. Really great to be here as well. Michael: And so tell all of our listeners whereabouts in the country are you located. Chad So I live in Clemson, South Carolina. And probably our claim to fame is the university right next door. It's a tiny little town. But Clemson University's here the football team. And so I went to school here and then stuck around afterwards and still live here. And it's really right next to the foothills of the Appalachian Mountains, lots of hiking, lots outdoors, lakes. So just a good good place to live and raise a family and invest in real estate as well. Michael: Awesome. And we were just chatting before we started recording here that you got some rain from this last weather system. But everything is all good. Everything is sounded dry. Chad: As far as I know. Yeah. No emergency text, you know, you guys are about long distance investing and passive investing. You know, most of the time, I don't hear anything from the property managers. They handle it. But now it's every once in a while you do get some emergency text. Michael: So far, so good deal. Awesome. So I know you I think Tom knows you pipe in bigger pockets. It's kind of, you know, you're a big hero of mine for what you've done and what you've written. And we'll get into that in a little bit. But we'd love to get a little bit of your background and your story to start things off here. Chad: Sure. Yeah. Well, I love bigger pockets as well. And what when I first started there, it was 2003. And I graduated from college. And I was a I was a biology major in college, I played football. So I kind of was just, you know, like anybody else when they're becoming an adult trying to figure out what's what's next, what am I going to do with my life. And I was fortunate enough that my dad had rental properties. And I used to like growing up, he would drop me off at a rental property and that he had bought at a foreclosure sale in the middle of the summer in Georgia. And it'll be hot in the junk everywhere and an old refrigerator and he's alright, Chad, I'll be back in a few hours cleaning that frigerator out. They had old, you know, like deer meat or something. I'm sure it sounds like I hate this business. Who would want to do real estate. So low Behold, I graduated from college, I thought why don't I just give this real estate thing a shot for a year or two. And then I'll go back to the real world after that. And 20 years, 18 years later, I'm still still doing that little side hobby of real estate investing. Michael: How great is it? It's so funny how the lens in which we learn about something or see something tends to overshadow you know, somebody of the other facts, right? Because we hear all the time Oh, I don't want to be a landlord. I don't wanna go fix toilets in the middle of the night. Or it is just you know, I don't want to go clean out refrigerators. Chad: Yes, exactly. Yeah, my brother and I were ungrateful little little guys that were complaining about that. But it was really good. It was a good learning experience to I think you all come in a side lesson, but cleaning the floors of the store or cleaning out the frigerator of your landlord. I mean, you don't want to do that forever. But it's really a good learning experience to see the basics of the dirty work of what has to be done. Michael: Absolutely. And so we're all your dad's rentals local to where you guys lit. Chad: He was in Newnan, Georgia still is he has rental properties there and he and my mom have retired and live off a rental income now. And so yeah, that was all kind of local local rentals. And then he's actually now lives in another state. So you know, it's evolved into a long distance rental arrangement for him as well. Michael: Right on and so after you graduated college and started to do your real estate side hustle, I mean, how did you get Into it full time was it was always part time or was it always full time? Chad: It was actually full time for me Luckily, I didn't need a lot of money to live right after college you know, still in the the ramen noodle stage, living and spare bedrooms of friends houses and worst case living in my camera, a Toyota Camry or a 10 or something, you know, so I was I was in that stage of life where I was really low cost no family to support it. So I just jumped in. And rather than being an investor, I was really more accurately an entrepreneur, who is just trying to find good deals, we would flip them we would either typically when I my first year to have a business partner, we've worked together the whole time, we would find deals for other people and just kind of pass them on for a small fee is what's called a wholesaler. So that was how we learned the business, cut our teeth. And then but as we learned to do that, we picked up that skill of finding good deals, it was kind of a natural step to start borrowing our own money from private investors from a couple local banks. And so we started flipping some houses where we fixed them up and flipping, flip them. And then after another A few years after we built up a little bit of capital, we started doing rental properties. And that's really split now that's that's our main thing. Now we very rarely do any flips. But we do rental properties. We loan some money to other people who are flipping houses so we're more of a kind of transition into a more passive investor long run Michael: Right on you kind of covered the Whole real estate investing schema there, didn't you? Chad: Yeah, I've been fortunate to be able to do a lot of it. Yeah, I've been on the money side now a little bit more the buy and hold the flipping, I've been the one who's out there making, you know, 5, 10 offers a week, you know, knocking on doors trying to buy properties that are, you know, in distress situations or landlord. So, it's been fun to be able to do all aspects of it. And I think it's kind like I talked about earlier, some point, if you want to outsource it other people, I don't think you need to know how to be an expert on everything. Like I'm not an expert, remodeler, contractor. But it certainly helped me be able to make decisions a little bit better with our money. Knowing all the details, what has to be done, Michael: That makes sense. Tom: It's almost more important to know where your gaps are at, you know, you know, versus coming in. And hubris and you know, saying that you're the best and every as that's a great point. Chad: Yeah, yep. Michael: And was all this local to where you were Chad? Chad: It was at the time. Yeah, so I've always invested in Clemson, I was fortunate that, you know, not a lot of people in the country aren't as fortunate that the deals that we were flipping also transition nicely into rental properties. And actually, my very first rental property was a house that I bought from another investor, the investor owner financed it to me with a really small downpayment. And I moved in briefly for like six months, and I realized is like a 2324 year old kid, as I can't afford this house with like $750 payments, and it'…
39 min
The Art of Passive Income
The Art of Passive Income
Mark Podolsky
How To Get A Passive Return On Your Investment
Omar Khan is a real estate investor with over 10 years of global investment experience. He is a CFA Charterholder and has graduated from the University of Toronto with a B.Com in Finance. Omar is one of the people behind Boardwalk Wealth, a private equity firm in Dallas, Texas which connects international investors with US-based multifamily real estate opportunities. He is responsible for capital raising, strategic planning, and investor relations. Omar has worked for 10 plus years in corporate finance investment and has advised on over $3.7 billion of capital financing and M&A transaction. Four years ago Omar moved from Canada to Texas with his wife and newborn son. Listen in as they discuss: * Omar’s entrepreneurial journey * Who is an ideal buyer for his service * A realistic expectation of doing a multi-family deal * CAP rates and how it works Omar also shares some of the worst advice he’s seen or heard in his area of expertise. TIP OF THE WEEK Mark: My tip of the week is learn more about multi-family investing, or if you just want to passively get a nice return investment listen to Omar Khan. Just go to boardwalkwealth.com, it’s a really good place to start. Scott: Go check out invideo.io, it’s very cool they have all kinds of graphics. Omar: Check out US Census Data, it’s free and it got pretty much all other resources you’ll see online, they’re building up US Census. Also, there are free sites called city-data.com, bestplaces.net and you can go to niche.com they got better graphics. _Isn’t it time to create passive income so you can work where you want, when you want and with whomever you want?_
28 min
Master Passive Income Real Estate Investing in Rental Property
Master Passive Income Real Estate Investing in Rental Property
Dustin Heiner
Investor Coaching: How to Raise Your Credit Score FAST! I raised mine 100 points in 6 weeks!
I raised my credit score by 100 points in a couple months. In this video, I show you exactly how I did it and how you can increase your credit score too! Get the Free Real Estate Investing Course: https://www.masterpassiveincome.com/freecoursep Join the Real Estate Wealth Builders Investor Membership https://www.masterpassiveincome.com/buildersp My Website: https://masterpassiveincome.com // WHAT TO WATCH NEXT How to Become Successfully Unemployed: https://youtu.be/wx5Ke9KVs58 Get Money For Investing in Real Estate: https://youtu.be/u4IY5UMDkrI How to Start Investing In Real Estate: https://youtu.be/fJVOeSgXZRQ How to Analyze a Real Estate Investing Deal in 5 Seconds: https://youtu.be/SqA1HcAW4EI How to Set Up Your LLC for Your Business: https://youtu.be/B9RzLkAZI9s How to Use Owner Financing to Make Loads of Money: https://youtu.be/qAOpCOWvj6Q //BEST REAL ESTATE INVESTING RESOURCE LINKS Find Off Market Properties: https://masterpassiveincome.com/propertysearch Get Business Funding https://masterpassiveincome.com/fundandgrow Great High Interest Savings Account: https://masterpassiveincome.com/cit Accurate Rental Rates: https://masterpassiveincome.com/rentometer Self Directed IRA for Real Estate Investing: https://masterpassiveincome.com/rocketdollar Learn more about Dustin and find resources to build an automatic real estate investing business: https://masterpassiveincome.com/ Join our free private Facebook group! https://masterpassiveincome.com/group NOTE: This description may contains affiliate links to products we enjoy using ourselves. Should you choose to use these links, this channel may earn affiliate commissions at no additional cost to you. We appreciate your support!
14 min
Apartment Building Investing with Michael Blank Podcast
Apartment Building Investing with Michael Blank Podcast
Michael Blank
MB 236: The Financial Freedom to Do What You Love – With Megan Lamke
Time is precious. Are you spending your days doing what you love with the people you love? What if multifamily real estate could help you do just that? What if you could achieve financial freedom fast—regardless of your current financial situation? Megan Lamke is Managing Partner at Megan Lamke Real Estate, a firm that helps driven women turn their grit into true financial growth. She built a network of real estate investors working for Wells Fargo Home Mortgage, and once she and her husband, Darik, had paid off their personal debt ($535K in under 5 years!), they started investing passively in multifamily syndications. Megan quit her corporate job to pursue active investing full-time in April of 2019, and today, the Lamkes have a portfolio of 1,491 units valued at $344M. On this episode of Apartment Building Investing, Megan joins me to explain why she took a W-2 job after college (despite wanting to become a real estate entrepreneur) and what she and Darik did to live below their means and pay off their debt so fast. She describes what she did to find a good operator as a passive investor and how she leveraged her sales and marketing background to transition to active investing. Listen in for Megan’s insight on how to raise capital at scale with a platform and learn how YOU can achieve financial freedom and spend time doing what you love! Key Takeaways When Megan started thinking about real estate * Parents struggled financially, read Rich Dad Poor Dad at age 10 * Entrepreneurship and business clubs in high school and college Why Megan took a W-2 job after college * Needed to pay off student loan debt before leave Rat Race * Learned sales skills, got to work with real estate investors What Megan and her husband did to live below their means * Sold luxury cars, bought cars for cash * House hacked 6BR (rented to rugby teammates) * Side hustle as sales and marketing consultant How Megan and her husband got on the same page financially * Financial literacy class as part of premarital counseling * Set goal to pay off debt, achieve financial freedom How Megan’s strategy shifted once she was out of debt * Sold 6BR house to invest passively in multifamily syndications * Goal to replace corporate salary as quickly as possible Megan’s advice on finding a good multifamily operator * Look at track record, online reviews, lawsuits and marketing efforts * Ask questions re: where properties located, how managed, etc. What Megan’s last day of work was like * Surreal (like leaving the Matrix) * Culmination of goal that started in fifth grade How Megan’s life is different now that she’s a full-time investor * Control own time (decide when to work) * Spend more time with daughter, volunteering What active investing looks like for Megan * Use SDA to underwrite 10 deals/day (300 in 2019) * Leverage background in sales and marketing to build out platform What Megan has done to scale her capital raise efforts * Done-for-you tech stack to automate lead gen, booking calls * 30 to 37 calls with prospective investors every week What Megan is doing to attract prospective investors to her platform * Create content (social media, videos, blog and weekly webinar) * Sponsor real estate events, promote lead magnet on podcasts How Megan describes her ideal investor * Successful career woman age 40-55, primary breadwinner * Gritty and knows how to get stuff done How the automation works to turn interested prospects into investors * Receive automated email with free download * Follow up with drip marketing campaign to encourage call How much capital Megan has raised through her online platform * $18M raise to close on $49M apartment building * In process of closing on $18M 503(c) How raising capital looks different now that Megan has a platform * Don’t have to call each investor, track follow-up manually * One centralized management tool that automatically follows up Connect with Megan Lamke Megan Lamke Real Estate Megan’s No-Nonsense Women’s Guide to Investing Megan on Facebook Megan on Instagram Megan on LinkedIn Resources Register for Michael’s Platform Builder Incubator Join the Nighthawk Equity Investor Club Rich Dad Poor Dad by Robert T. Kiyosaki Business Professionals of America DECA Dave Ramsey Robert Kiyosaki Financial Freedom with Real Estate Investing: The Blueprint to Quitting Your Job with Real Estate—Even without Experience or Cash by Michael Blank The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8AM) by Hal Elrod Michael’s Syndicated Deal Analyzer Trello Investor Deal Room Podcast Show Notes Michael’s Website Michael on Facebook Michael on Instagram Michael on YouTube Apartment Investor Network Facebook Group
36 min
The Brian Buffini Show
The Brian Buffini Show
Brian Buffini
Making Your Quantum Leap, Part 2 #247
“You’re more ready for a quantum leap than you know.” – Brian Buffini If you want to make extraordinary breakthroughs and achieve higher performance levels, you must take action. In this episode, the second part of a session recorded live at MasterMind Summit, Brian takes a deep dive into how to make a quantum leap in your life. He explains why you should trust your gut, while also knowing the difference between your instincts and a whim; how your past successes can become your prison; and why you already have everything you need to make a quantum leap if you let others help you. YOU WILL LEARN: * What you have now that you didn’t have before. * What a quantum leap is, and what it isn’t. * What you need to do before you take the leap. MENTIONED IN THIS EPISODE: Buffini & Company MasterMind Summit “Chicken Soup for the Soul,” by Jack Canfield and Mark Victor Hansen “The Alchemist,” by Paulo Coelho The John Brockington Foundation INSPIRATIONAL QUOTES FROM THIS EPISODE: “I would rather trust my gut and suffer failure than not trust my gut and have some moderate success.” – Brian Buffini “Every time you take a risk or move out of your comfort zone, you have a great opportunity to learn more about yourself and your capacity.” – Jack Canfield “Before anything else, preparation is the key to success.” – Alexander Graham Bell “Unsuccessful people make decisions based on their current situation. Successful people make their decisions based on where they want to be.” – Anonymous “Be brave. Take risks. Nothing can substitute experience.” – Paulo Coelho https://www.TheBrianBuffiniShow.com http://www.brianbuffini.com Instagram: https://www.instagram.com/brian_buffini Facebook: https://www.facebook.com/brianbuffini Twitter: https://twitter.com/brianbuffini Theme Music: “The Cliffs of Moher” by Brogue Wave
25 min
Real Estate Rookie
Real Estate Rookie
BiggerPockets
School Teacher Making $72,000 a Year in Cashflow with Amy Barber
What do you get when you combine Dave Ramsey-style frugality with aggressive deal-finding tactics? You get teacher Amy Barber and her fiancé, Jay – and their $6,000 monthly cashflow in rural Iowa. In this episode, Amy shares her strategies for buying foreclosed ranch houses in cash, cleaning them up, then refinancing so she can repeat the process again and again. Think no one's doing deals during the pandemic? Well, she's bought 4 houses in the past 4 months, and plans to keep going until she's making enough to comfortably leave her W-2 job. If you're looking for guidance on how to build the financial foundation so you can invest in real estate from a position of strength, Amy's story will fire you up and get you ready to take that most important next step toward "getting rich slowly" just like her. By the way, Amy came to our attention through the Real Estate Rookie Facebook group. If you find other awesome investors who would make a great fit for the show, tag us or send them to biggerpockets.com/guest so they can apply. In This Episode We Cover: * How Amy got started as an "accidental landlord" during the Great Recession * Buying 4 properties in the last 4 months * Finding deals through her fiancé's job in foreclosure preservation * How they bought a foreclosed house and created $50k in equity * Taking Dave Ramsey's course to get her finances under control * Delaying gratification and making sacrifices to create enough cashflow to quit her W-2 job * Working 2 jobs and doing real estate on the side * And SO much more! Links from the Show * Real Estate Rookie Facebook Group * Felipe's Instagram * Ashley's Instagram * BiggerPockets Forums * BiggerPockets Podcast * Financial Peace University by Dave Ramsey * Airbnb * Outdoorsy * Mint * Cozy * Stessa * Apartments.com * Asana * Zillow * Brandon's BiggerPockets Profile * BiggerPockets Money Podcast Check the full show notes here: https://www.biggerpockets.com/rookie34
49 min
More episodes
Search
Clear search
Close search
Google apps
Main menu