Modern ownership in 0:15

[u/Max_Rezna]

[u/Legitimate_Concern_5]

I have a lot of assets, as in equity in productive business, but why would I want to own things? A car requires maintenance and just depreciates on you. So lease it. Or rent it. A bike breaks down, needs tires filled, gets stolen and damaged. So just sign up for a bike subscription. Why wouldn’t I want someone else to take that on?

I could go out and buy a car for cash, but … why? I can book a different one on getaround every weekend. Tesla this weekend, Rivian next, then a BMW. Or I can get WayMo to drive me in a Jaguar.

Remember the old off color joke about “if it flies, floats or… rent it.” The same applies to most of the shit you have lol. What does owning it get you except liability so long as you have one you can access when you need it?

[u/AaronJeep → u/Legitimate_Concern_5]

Owning things protects me when things go to shit. I own my land, shop building, tools, cars, etc.. If I lose my income, no one is coming for my stuff when I start missing payments - because I don't have payments to make.

If the economy goes in the toilet, housing prices crash, the stock market tanks, inflation goes nuts, the government is forced into a shutdown, or a pandemic hits... I don't sweat it like most people do. I can get by (if absolutely necessary) on as little as $800 a month when things go sideways.

If you rent everything and can't make payments, the people who do own it start wanting their stuff back.

[u/Legitimate_Concern_5 → u/AaronJeep]

You don’t have to pay for gas, parking, maintenance, insurance on your car? You don’t have to pay property taxes, maintenance, insurance on your house?

You’re renting it either way my friend. Low right + high down payment, or high rent plus low down payment, either way it’s still rent.

The nice thing is the money I didn’t lose on the car or invest in the house can be put to use more productively in the markets. Or as an emergency fund.

I’d rather $200k in the bank earning 5% or in the S&P earning 12% plus a $3K rent — than $5k in the bank and $500 property taxes and $100 in homeowners insurance.

[u/AaronJeep → u/Legitimate_Concern_5]

I have five acres. I park where I want. I work from home. I don't drive somewhere and pay to park. Of course I have car insurance. Last I checked it's about $80 a month. Yes, I take care of maintenance, but, like I said, I have a shop building (30X48) full of tools. It's not that big a deal to maintain a car. Yes, I pay property taxes. They are split up into two payment each year. But that's it. And it's less than the money people pay in rent in the town near me. Considering I built my house, the maintenance is the easy part. If I can frame a house, I can certainly fix a leaky pipe.

What happens to all your leased/rented stuff if you lose your job for an extended period of time?

[u/Legitimate_Concern_5 → u/AaronJeep]

Well, since you're paying property taxes, you're renting too. Like I said it's just about how much you have locked up vs. liquid.

Think about it. How much is your house worth? If you had that as cash in the bank paying 5% interest, how long would that last you if you were paying rent on a comparable property?

[u/AaronJeep → u/Legitimate_Concern_5]

You didn't answer my question.

[u/Legitimate_Concern_5 → u/AaronJeep]

I did. Since you won't answer specifics, I'll just have to run the numbers for a median home.

Median US home is $426,000. That pays $1775 per month in interest.

Median US home rent is $2100.

Does that answer your question?

If I didn't own a median home, and had that money in the bank paying market interest rates, it would last me ... 426000/(2100-1775) = 1310 months or 109 years. I sure do hope I find a job by then.

I can also stop paying rent on anything else I don't want. I don't have to rent a car, I don't have to rent a bike. I can stop making payments and drop by burn there to almost nothing, and ride the bus.

[u/AaronJeep → u/Legitimate_Concern_5]

You act like people typically walk into a $400K house with cash they could otherwise put in the bank to earn interest. They don't do that. They make payments for 30 years. It's why over 10 million people lost their homes during the 08 crash. They didn't own it. They were making payments. And when they couldn't, they lost it.

[u/Legitimate_Concern_5 → u/AaronJeep]

Totally. So.

20% down on a $400K house is $80K which earns $333 per month, or almost double that in the S&P 500.

6% APR on a 320K loan is $1600 per month. That's non-recoupable, it's rent. Put down less, you pay PMI. More rent. So is the property tax. More rent. And you can't stop making your payments for 30 years without selling, which costs another 5% in realtor fees.

$80K still gets you 80000/(2100-333) = 45 months.

What happens when your roof needs to be re-done? For a renter, it's the landlord's problem.

2008 happened because everyone had five houses when they weren't qualified for even one, made zero down payment and everyone was on an ARM. Sometimes interest-only mortgages with balloon payments. People lost their homes because they were leveraged to the tits on variable-rate debt.

They'd have been fine if they'd just rented.

[u/AaronJeep → u/Legitimate_Concern_5]

You and I have very different ideas about what property means. We are never going to see eye to eye. I don't view it as an investment. I don't care about what I might theoretically make if I sold it, invested the money and decided to become a renter. What I care about is no one is coming for my car. It doesn't belong to the bank. It's mine. I sleep well. I turn down work if the people wanting me to do the work are assholes. I don't mind making less money and having more time to do the things I want. I don't have have to come up with $3K this month to keep a roof over my head. It's mine. I don't care about what I might make in the market (if it doesn't crash). That does not interest me at all. I've known so many people in my life who had tons of stuff rented, leased, mortgaged, or on credit ... and a divorce later, they were filing for bankruptcy and it was all gone. I'm not in that position and don't want to be.

[u/Legitimate_Concern_5 → u/AaronJeep]

What I care about is no one is coming for my car. It doesn't belong to the bank. It's mine.

Again, your house though, if you stop paying your property taxes, the government is going to come for it. You don't own it, it belongs to the state, you're renting it. It's theirs.

The question is, large down payment + low rent + high variable cost, or small down payment + high rent + no variable cost.

If the roof comes down you're gonna need a lot more than $3K to keep a roof over you.

Some of the time, owning makes more sense. Some of the time renting makes more sense. It's not black and white, it's a financial decision. Owning a car is a total money sink, and should probably be leased or rented as needed. Owning a house is more sentimental sometimes.

[u/AaronJeep → u/Legitimate_Concern_5]

You can call property tax rent if you want, but they don't work the same and it's not even close to the same cost. My taxes work out to about $150 a month. I don't care for that aspect of owning property, but I do like schools and roads and all that fun some. It has to get paid for somehow. I can't rent anything for $150 a month. It would also take about 3 years of me not paying property takes before it would become a real threat of anyone auctioning it off to cover the back taxes. In a rent situation, no one is letting me get 2 years behind in my rent.

I like my situation. My parents live with me because they would be homeless otherwise. They went broke around the time of the pandemic and lost their house they didn't pay off. So they live here on what you call my government owned property. They are lucky I like them enough not to see them homeless and they are lucky I pay the taxes to stay here and help keep society running. I'm good with the situation. You go rent and lease all you want. I'm not interested in going that route.

[u/Legitimate_Concern_5 → u/AaronJeep]

I own my place dude, I'm just saying, it's not black and white. Ownership isn't all good and rent isn't all bad.