[Mortgage Is ‘Just A Fancy Bullsh*t Word For Paying Rent For 30 Years To The Bank,’ Says Real Estate Billionaire Grant Cardone — Here’s Why Renting Could Be A Better Financial Move
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Not for everybody, but I’ve heard reasonable advice of getting the mortgage at a longer amortization period, then making extra payments. When I was looking it was typical to be allowed to increase the payment by 10-20% or to make additional payments up to 10-20% of the initial loan amount each year without penalty. That’s enough to potentially be paying it off in under 10 years without penalty(which is often in the range of 3 months simple interest, so still worthwhile if you unexpectedly come in to some money), but also gives you the flexibility of going back to the minimum payments if your financial situation changes.
Renting does make it cheaper/simpler to change accommodations though. Think things like starting a family and wanting to scale the household up from just two people to adding children and down again when those children move out. Renting makes it simpler to move closer to work, public transportation, schools, Etc. as a persons needs change. On the other hand, there’s also a lot of financial benefits to living in your own home: grants/rebates available for homeowners, not rental properties, being able to save costs by doing your own maintenance/renovations, etc…
Honestly, I have been renting for a year now and it has been horrendous. I don’t think it’s worth it honestly. I am paying about double what a mortgage would be and getting a house that the owners refuse to perform any maintenance on. I’m not about to do it as that is sweat equity that they are getting, not me. With the modern trend towards treating rentals as an investment instead if a business/responsibility, the mentality of landleeches is moving more and more towards cost minimization at any expense. It is an undeniable downward spiral that needs to be halted by force. Unfortunately tenants don’t have the ability to do that and when 40%+ of single-family homes that hit the market are being purchased by equity firms and slumlords, driving the prices on the remaining homes well beyond their real value, it is a recipe for disaster.
At the current rate and trajectory, in the next 10 to 20 years, more than 90% of adults ages 25 to 50 will be renters. As the boomers die, some percentage of their homes will be passed to children, but some percentage of those will go on the market for some reason or another, which some percentage will then be snatched up as investment properties again. This is a logistic process, and while it would be functionally impossible to get it to 100%, numbers like 75% to 90% are infinitely more possible, and in fact, probably, without real governmental I intervention. (I actually have an Applied Mathematics degree, so this isn’t me pulling things from my ass)
The other thing I didn’t think of is renting makes it a lot simpler to share accommodations. A group of 2-4 people can split the rent on a property that none of them would qualify for individually.
Agreed that the current situation parallels a lot of industries in that it’s concentrating wealth in the hands of those that are already ahead and it’s difficult for new people to become part of that system. Personally, I think the solution for any of these essential goods/services is crown corporations, which creates a standard of service that private industry has to compete with instead of being able to collude to maximize margins.
Oh, also, be careful suggesting cohabitation of multiple unrelated adults. Many cities have zoning ordinances prohibiting precisely that behavior. For instance:
Yes, you can have a couple of roommates, but if one of those roommates wants a partner to “move in” it becomes immediately illegal and actually grounds for eviction in some cases since you violated the zoning for the property.
My solution was an adaptation of the NYC cab medallion system. Each city is allowed to provide medallions for up to a certain percentage of single-family residences to be rental properties and the medallion costs to maintain. It also comes along with rent caps based on the local cost of living and yearly property inspections by the city. One of the towns in my area actually did that last one because they actually care about being a good place to live, so they make some extra money on penalties or the overall property value for the town goes up because all of the rental properties are kept in very good condition. Win(city)-win(tenants)-accountability(landleeches).
Honestly, no city should want more than ~5% of single-family dwellings to be rentals. As you said, it is easier to get out of them. That means less reliable tax revenue, less people invested in the community, and potentially less community. I may be a math major, but I’m not an anthropology or sociology major, so that last one is definitely rectally sourced.
Also, I struggle, being in the exact situation where I need to get out from under an abusive landleech, to say that it is easy to move from rental to rental. Having to come up with 3k when we are already living and to mouth is really hard.
Not for everybody, but I’ve heard reasonable advice of getting the mortgage at a longer amortization period, then making extra payments.
Could you elaborate? That seems the opposite of all the advice I’ve ever heard of or seen with my own eyes.
Normally it’s better to get a fifteen year loan, than a thirty year loan and pay extra to try to pay it off in eighteen years.
In the past at least it seemed it was a lot harder for people to get fifteen year loans than thirty year loans, which is why I was offering the advice of trying to pay a 30-year loan off quickly, as the next best thing.