Comments on: Friday Entrepreneurs: John Knox and Matt Landry, Take Cover

By: Gabe

Gabe — Sat, 17 Mar 2007 04:51:50 +0000

If you find a great deal on a house and if the location is great, go for it. I got on the property ladder about 6 months ago. Found a house with great potential. It needs some work, but now I can probably sell the house for 50k more.

I don’t pay much more than I would if I were still renting – I only pay $120 more now and it’s well worth it. More freedom and no landlord who can increase costs every year.

By: Tristan Yates

Tristan Yates — Mon, 12 Mar 2007 22:48:05 +0000

If I owned the place I rent now, I would have to pay a $75,000 down payment, my mortgage payments would be 50% more than my rent payments, I’d pay another $1000 a month in property tax and insurance, I’d handle all the maintenance, I’d be on the hook for any property declines, and if I ever missed a couple payments I could be forced into bankruptcy. How is that a good deal exactly?

By: Cindy Murphy

Cindy Murphy — Wed, 13 Sep 2006 14:21:45 +0000

Come on, you don’t have to spend a ton of money to have a house of your own or get trapped in an ungodly mortage. You take your time, save a decent down payment so your monthly mortage payments are reasonable. I’ve got a 15-year loan and at this point am making double payments so will have it paid off rather quickly. And you don’t have to constantly pour money into a house if you do your homework ahead of time. I’m even willing to never buy another car as I live so close to a bus stop (should it ever come to that), that’s how much I’d rather have the house than the vehicle though mine is paid for at this point. Again, you have to do your homework ahead of time and be real honest with yourself. And most importantly, forget about keeping up with the Jones’, it ain’t worth it and don’t play around with credit cards. I feel sorry for people who think they have to live their lives that way. I hated apartment living, to me it was a total waste of hard-earned money no matter how I looked at it.

By: Richard

Richard — Thu, 24 Aug 2006 15:03:10 +0000

I don’t understand the logic behind these guys comments. In many cases this is true but its a little to in the moment for me to really trust. It’s too easy to look at the history of people we actually know to see who benifits more, renters or owners. Thsi is completelly dependent on the specific housing market. I live in an area where the housing market is still good here. I can buy a large house for $200-$250,000 in a good neighborhood close to town. Prices are not skyrocketing overnight like the were the past few years, but they are still rising at a stable right.

I can see where in LA it might not be a good idea to pay $1,000,000 for a two bedroom flat.

Land is one of the only things there will never be more of. If it’s paid for properly it’s an easy investment to pass on to former generations. Homes have historically been a great investent. Take my grandmother for example. She just bought a brand new $170,000 home and she pays $300/mo for her mortgage. She could never afford to live in something equivalent renting. Plus it’s an actual house.

Then there is my dad. He paid $110,000 in 1990. It’s now worth around $450,000 and paid for.

The argument that one commenter made about businesses renting is crazy. Businesses are scared to buy their spaces because commercial properties can take years to sell and are far more expensive. However, stable businesses often buy their properties. A recent employeer of mine was working on restoring a historical building for our office just before I left the company. For what the building costs (2 million) v.s. what were paying in rent (around 300k/year) It’s easy to see that in just a few years the building will pay for itself.

My dad has owned his own company for 25 years and kicks himself often for not owning a building. Ofcourse, now its not worth the costs at his age. But it would have been a great investment 20 years ago and he would have no rent.

Then, I can draw from my own experience. I purchased my home 2 years ago. It’s already appreciated far more than enough to justify the purchase, but more importantly (and relevant to this article) I’m now around $150/mo less that it would costs to rent a less apartment in the same neighborhood.

The other thing you have to look at is that since housing prices historically rise, your buying power is decreasing the longer you wait (given you don’t take out 2nd and 3rd mortgages on your home)

So far in two years, buying has saved me around $40,000. (or more if you tack on the interest it would cost me to borrow that money later)

My home is also new, well built, and I’ve had little to shell out in maintenance.

And they don’t even mention the tax benifits of home ownership.

These guys just makes far to many assumptions and the advice is far to broad.

By: debt-free

debt-free — Thu, 24 Aug 2006 13:53:47 +0000

Thats a great point, Julia. You also need to note that you are talking about an artificially inflated market and your results are not typical. But congratulations on your potential windfall. It also appears to be the beginning of the end for the real estate bubble. IF you can get $450k, its probably better to take it, run, and thank your lucky stars. Its also good that you ahven’t been cashing out your equity like so many others have. Their bubble will truely burst.

By: Julia

Julia — Thu, 24 Aug 2006 07:51:43 +0000

DON’T LISTEN TO THESE GUYS! The authors of this blog don’t know much about real estate. Ever heard of a thing called equity? Yes it’s true that home owners need to hire plumbers once in a while but that cost doesn’t even compare to the value you gain from ownership. Allow me to explain my point. I purchased my 2 bedroom, 1.5 bathroom, southern California condo in March of 1999 for $125,000.00 with 10,000.00 of my own money as a down payment. Over the last 6.5 years, my monthly payments have added up to a total of $73,000. All together, I might have spent a maximum of $1,000 to fix little plumbing and carpet maintainence problems with my condo. Today my condo is worth $450,000. Now, let’s do a little math: 73 + 10 + 1 = 84. 450 – 84 = 366. $366,000.00 – selling costs is what I’d be able to pocket if I sold it today. If I chose to follow these guys advice (and rent) instead of buying my condo 6.5 years ago, I’d have nothing to show for the money I used to pay for someone else’s equity (rent).

By: Alex Gierus

Alex Gierus — Tue, 22 Aug 2006 15:01:35 +0000

Unless you are a master of self discipline you must buy a house rather than rent long term. The reason is the appreciation and forced savings. 10 years down the road when all your friends who bought a house all have a hundred or two hundred thousand in equity that you don’t you’ll be pretty sad with all the money you saved.

If you own, your house apprecaites. If you rent, your rent inceases. The benefits of owning only increase over time.

The only way it’s better is if you take the differential between owning versus renting and get a good return with it. Trouble is, most of you won’t. You’ll be peacocking around about how smart you are while your equity growth will be marginal.

They real key is to buy the right house. You need to buy a house or condo that is of a similar standard to the one you would rent. Unless there are rent controls or the market is so overheated that rents haven’t kept up then the price of owning is comparable to the price of renting.

By: Jay Liew

Jay Liew — Mon, 21 Aug 2006 22:45:17 +0000

You have my respect for using an honor system. Great job in general, keep up the good work!

By: Jeremy Bettis

Jeremy Bettis — Mon, 21 Aug 2006 19:10:54 +0000

I think it is telling that most businesses rent their office space instead of buying it. However in the housing market there are other reasons to rent v. buy besides pure cost analysis.

Freestanding houses for rent are not very common, so if you want to live in one, you better expect to buy.

By: Hawk

Hawk — Mon, 21 Aug 2006 18:58:14 +0000

Renting is throwing money away if you pay extreme amounts for very little. Right now, my rent is 835 a month for a two bedroom one bath, 890sqft apartment in ann arbor, MI. it’s going up to 850 for a 920 square foot two-bedroom townhouse with a full basement. Is that a ripoff? Not at all – the management is so awesome it’s worth it. Similar pricing can be found for apartments run by companies that will violate your personal orifices for fun and profit.

It’s all about being smart.