Not the coolest of titles, nor particularly inspiring caption photo...
BUT WE ARE BACK WRITING LIKE THERE'S NO TOMORROW (#1421984, #1417296, #1413116, #1407453, #1412952) -- because, honestly, there isn't: bitcoin is breaking and we can all sense it. Have fun staying poor, guys.
Please zap me scudos or digital euros (Maybe Lagarde was on to something #1020250)... these sats don't buy you shit anymore #debasement.
Landlords are amazingLandlords are amazing
Since most of us regular consumers have to live somewhere, we’re sooner or later asking ourselves whether we should own or rent our dwellings. And at dining tables with friends and extended family, the owning-vs-renting conversation often comes up.
renting vs owning is a silly dichotomy: it’s all renting. The only question is whether you’re renting money from a bank or the actual apartment from a landlord. Essentially, it’s all just a balance sheet question in your own personal finances. You either rent the dwelling, or you rent the out-of-thin-air money that the bank created to buy the house on your behalf. You’re either on the hook for paying rent to a landlord or on the hook for paying a bank money rent, i.e., “interest.”
By renting,
I offload all of these practical and financial troubles to someone else. They are on the financial hook for hijacking their personal balance sheet to a physical domain, nestled between a profit-hungry bank and a rapacious government. They are financially liable for maintenance, for repairs, for keeping the house in working order.
"When you’re 'buying a home,' you aren’t just forking over dough for a dwelling like any other market transaction. You are underwriting a leveraged real estate business on your own personal balance sheet!""When you’re 'buying a home,' you aren’t just forking over dough for a dwelling like any other market transaction. You are underwriting a leveraged real estate business on your own personal balance sheet!"
Financial opportunity cost is real, even though mortgages get you nice, cushy, tax-advantage 7x leverage.
You’re stuck paying into a financial product that returns you approximately the low-ish single-digit interest on your mortgage. That’s not a great savings vehicle; I’d much rather keep my surplus funds regularly dollar-cost-averaging into the stock market’s long-run return of 9.7 percent, the fantastic decade the S&P 500 just had (15 percent), gold’s steady 9 percent, or bitcoin’s 25-90 percent (adjust depending on timeframe and repeat-probability going forward).
Here was my sassy little bitcoin-self-custody remark that I honestly regret including... Pretty embarrassing to stand by that sentiment when this apeshit misbehaving money is doing what it's doing:
And to be frank, I’d much rather watch my unencumbered bitcoin fall 30 percent in value — which it has done many times in the past, and recovered — than try to fall asleep in my overleveraged house, suddenly underwater because the housing market fell.
SALUDOS CROWD.
One of the issues around renting vs owning that always mattered more to me, but seems to get lost in these discussions, is control and stability. Renting puts you at the whims of a landlord, with protection that lasts at best a year or so; after that, they can change the contract any way they like, and while you can reject it, you have to move and find another place. Yes, you're at the whims of your bank when you own (or when you own part of a house and a mortgage, to be precise), but at least the contract there can't be broken if you can pay your vig.
Yeh, I've had bad landlords before and it's no fun. So in that sense, owning can be a lot less risky than renting.
But for all the reasons laid out in the article, I'm not a fan of owning a second home as an investment property. i'd rather not deal with that hassle, and rather invest in bitcoin or stocks.
Don't do it. I owned a 2nd home and was a headache. You will get a call on a random tuesday from a neighbor you don't know that says "hey, I noticed you have water leaking from side of your house for the past few days".
Good luck finding the time, energy, and money of dealing with that for your "investment".
Own bitcoin and when you want to go on vacation sell a little and rent a nice place for a week or two and turn the keys back to the owner afterwards and let them deal with the busted pipes on a random tuesday.
Precisely! I want others dealing with busted pipes and other broken shit
True, I'm blessed with having a great situation and excellent relationship with my landlord — so I get all kinds of perks plus avoid the kind of things you're mentioning.
Lately, I’ve been thinking about the value of minimal financial obligations.
The fewer things you’re on the hook for, the more freedom you have in how to spend your time.
Precisely. Rent everything, screw the ownership obsession<3 (...and you'll be happy)
Rent is greater than monthly mortgage payments, so I’d rather have the lower recurring outlays.
not when you average out maintenace/repair expenses, I don't think
Some landlords are cheap and won't maintain the property. Then as the tenant you're put in a tough spot of either paying to repair someone else's capital, or paying the cost of living with the problems
don't you think that's, at least a little bit, what you're shopping for when you're DECIDING as a tenant where to rent? (Fair enough, rent-control and the quality of the entire rentable housing stock down, but OK)
It is part of the calculation but how much market pressure actually exists there?
As an owner, you face the entire cost and benefit of each situation. That should lead to better individual outcomes. The cost is in having to make all those decisions.
veeery circular eh, since now we're back to the efficient cost of decision-making, what to outsource and what not!
It depends and this is the main part of my point; I have more say in those maintenance and repair expenses as the owner.
The fixed monthly payment is lower and I get to decide which additional expenses are worthwhile and when they’re worthwhile. That flexibility gets lost in averages.
in general an important observation
Ok, Klaus
I've owned homes for the last ~30 years. No plans to sell now (kids are still in school), but when the youngest moves out we are debating whether to buy or rent for our downsizing.....
Homes are generally really bad assets. Yes, they go up in value*, but the constant upkeep becomes increasingly burdensome.
In 2024 had to replace main A/C unit and water heater (both were at their engineered 10 yr failure point). That was about $15K in total expenses....
Holding the cash, earning a dividend, and dedicating the proceeds to rent does simplify things.
Yeah there's a bunch of that location-dependent thing. Hopeless
My pal, balls-deep into property ownership and investing, recently told me plenty of apartments in London — hottest property market there is, aight, can't go wrong — are selling for less now than 5-10 years ago.
Change in buyers' taste and market structure/macro etc can just rug you. You thought you were just parking cash in a real-return guaranteed asset and you end up having a part-time job repairing things and forecasting the local labor market.
The thing about all those expenses of ownership is that you still get to make the decisions about how much to spend. That’s important.
When you rent, you’re paying upfront for an unknown amount and quality of service plus the moral hazard that comes with renting.
I must have missed this memo. Can you explain?
best set up, best opportunities -- and the dream is just pissed away in financial engineering and node implementation squibbles.
Are you telling me you're not sensing that too...?
I've been aware of boring price action and the twitter drama, but I don't think either really signals a break.
This cycle people were sold the lie that nation states have bought in, but clearly they haven't. I'm fine with that.
I gotta say, I think this is terrible advice. Buying a home and paying a mortgage is often cheaper than monthly rent. So, you actually don't have "surplus funds" with which to DCA. Renting for 30 years and you now have zero money as capital, just 30 years behind you. Paying off a 30 year mortgage you have 30 years behind you and a home to sell.
Real estate is highly debt leveraged.
Prices rose since 1990 because the cost of debt was declining steadily until peak Covid.
Since peak Covid the cost of debt has not reduced- and going forward it cannot reduce, or increase by much as either would collapse the entire fiat debt monetary system.
So property prices are almost certain to stagnate, and they are.
Buying property now is not the good investment it was over the years from 1990-2020.
What often gets lost in the rent versus own conversation is that both paths are heavily influenced by the macro environment and personal risk tolerance. Owning property is not just a lifestyle choice it is a leveraged position in a single illiquid asset that is subject to local economic forces regulation and the whims of credit markets. Renting on the other hand trades the potential upside of appreciation for flexibility liquidity and insulation from certain financial shocks but comes with its own long term exposure to rent inflation and lack of equity building.
One thing worth considering is that while the stock market and bitcoin have shown explosive returns over certain timeframes they also carry volatility and sequence of return risks that become more pronounced when your investment horizon shortens or you require liquidity. Real estate does not escape volatility either it just moves in slower cycles and hides the mark to market losses more effectively.