Real Estate 101
March 29, 2010 by Editor
Filed under Real Estate Basics
Peter Schiff video blog Oct 27th 2009 Also check me out on www.facebook.com and twitter.com
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Very good info. Right on Target!
ya I agree with you agents in toronto are sales people and probably never invested in real estate. Its all show and deception
how about living at home ???
I LOVE this vblog.
I am a realtor, and in Toronto I compete with 28,000 other agents….what drives me nuts is the vast majority of them don’t understand these basic principles….or they do and ignore them thinking not of their clients, but of their pocket books.
Keep up the great work,
PETER SCHIFF 2010!!!
Dave Ramsey describes this the same way. Your own home is not an investment because you have costs involved. Investment is when you have money coming in.
The house you live in is an expense. That doesn’t mean you shouldn’t buy one. My family prefers to sleep on a dry bed in a warm home.
However to invest in real estate you should be buying houses that rent out at a higher cost than you spend on mortgage, taxes and maintenance.
If you manage to open a gap between cost and rental on all the properties you own that is larger than the cost of your lifestyle you are financially free and that is the 1st step to wealth.
why do we care if our fellow americans lose their homes? They won’t listen to you or anybody if you were to tell them not to buy one during the prebubble. The point is they saw cheap credit they borrowed and they got screwed, and its OK, they’ll learn not to spend money they don’t have in the future.
I tried not to laugh when I learned what the phrase “Using houses as ATMs” actually meant. I never realized owning a home means one is a trillionaire.
Funny I definitely had reverted back to the mentality of ‘personal residence = investment.’ Now I am second-guessing my first-time house purchase!
The explanation of the hidden costs of home ownership were eye-opening too. “One way or another you have to pay for shelter!” great point.
Another interesting concept is the value of flexibility. Can you put a dollar amount on the flexibility of a lease vs. a mortgage? Probably not, but the convenience is some kind of value.
thats why i make videos — i am trying to show people there is another way — nothing better than really owning every thing you own
Honestly, I just don’t see Americans doing that. If anything, I see the opposite: More credit, more debt, more foreclosures – because it’s hard to change ways of doing things when you’re used to living a certain lifestyle.
There is an easy way around that. Aggressively save and pay cash. No such thing as foreclosure if you own the property.
You need to watch the video again and reread what I wrote. The questions arose from personal residential housing, not real estate in general. This is precisely what I was referring to as well as Peter, since many Americans have lost their homes due to the illusion of it as being a wise investment. That’s it.
Hopefully you’re joking. Wealthy people make money from buying houses they live in? Personal residence and real estate investments are not the same thing, as Peter Schiff explains. My friend did look at his condo as an investment and that’s the problem because Americans over built based on a phony economy.
If you buy a house and lose your job, where is the investment? How about foreclosure? A friend of mine lost his job, but was offered a job in another state, and he’s now paying on 2 houses. After being on the market for over a year, he’s trying to rent it out, but still no luck(a condo in a great location). So it doesn’t bring in money, it sucks out money.
No! It’s better to have extra money in your pocket immediately for real investment. His example was perfect, $7,500/month to rent vs. 2.5 million, which would take over 30 years to pay off with interest. If you can afford 2.5 million upfront, great, but it’s still better to put that 2.5 million into a low risk fund which yields dividends, something a house won’t do.
Yes that was my point. The term “free-market” is a fallacy, there is really no such thing, it’s just people in the absence of coercion.
My point being that, in the absence of a formalized system, people will develop varied modes of organization. Socialism and Capitalism will exist simultaneously, and in varying levels.
lol – you make great points. I used to think the same way. I totally agree that governments are no more trustworthy than businesses. But, as Ron Paul told Larry King, the solution to corporatism is the free market. Only in a free market can you re-allocate ‘your’ (ownership) resources (labor and capital) away from fraud, waste and abuse, and towards the public good. I understand perfectly well that our rights are not endowed to us by any creator but by mutual consent- i.e. democracy.
If the problem is that PEOPLE are selfish and dishonest, how does it solve the problem to institute a system where PEOPLE have power over other people? The whole notion of the state is a fallacy. The solution to dishonesty is voluntarism, being able to re-allocate your own resources away from the dishonest, and towards the virtuous, at will.
You don’t understand the nature of property rights, they don’t exist, they are defined subjectively, so of course you can share ownership if you agree to.
The socialist ideal assumes that everyone will be completely honest and unselfish. But people are inherently dishonest and selfish. You need laws and police to keep people in line. That requires government. All societies require government. The absence of government is anarchy. Free market societies at least recognize that it’s good to own things. But there is no such thing as sharing ownership. You either own something or not. You can’t share something unless you own it.
No, nothing about Socialism inherently demands the existence of the state, it’s just a non-hierarchical form of organization based on all participants sharing ownership of their own labor. Do you think it’s wrong for people to agree to share ownership? Do you think that businesses should be run as plutocracies? It’s asinine.
In the absence of the state there will be varying shades of Capitalism and Socialism, because society itself is populated by people who think that way..
Everything is a mental construct, that doesn’t invalidate anything. Yes, capitalism and socialism are ideals (i.e. “conceptions of things in their perfection”) and perfection is unobtainable but, capitalism is a superior ideal because, in the absence of coercion by the state, people will ultimately seek to profit from their labor and capital. That’s not the opposite or absence of capitalism, it IS capitalism.
watch?v=yAa6dYBwy7M
No, both capitalism and socialism are simply intellectual constructs used to define non-existent ideals. The reality is, and will always be, much more complex than our models of how reality should work.
In the absence of a state extortion racket, human beings will arrange their labor and resources independent of these meaningless ideologies, according to necessity balanced against individual value judgments. Both Socialism, Capitalism, Communism, and other social orders will simply co-exist.
Peter: What about when the house is paid off? Then you’re no longer paying rent – extra money in your pocket every month. Can’t that be considered an investment? An annuity is a large sum up front in exchange for smaller periodic payments going forward. Isn’t home ownership basically the same thing – a large sum up front in exchange for NOT making small periodic payments going forward? (assuming you stay put once the home is paid off; also depends on the actual principal, interest, etc). Thx
God bless you! I’m recently married and young and as one of the newer generation with some common sense in me… I could never wrap my head around a house being an investment when everyone explained it to me. Everytime I consider it the word “lunacy” comes to my mind. And as for the American dream… you took the words right out of my mouth. Home ownership is a lie, the American Dream was about potential as an individual!