The Dirty Truth About Home Ownership (Bestie Ep) #1009

You’ve gotta wait 30 minutes to get back in the pool if you’ve eaten! Don’t pee in the pool- it’ll turn red! There are a lot of things we learned in childhood that we’ve likely discarded as false or at least irrelevant at this point. But there are probably some things we still believe because they were ingrained in our brain at an impressionable age. Similarly, there are a lot of folks clinging to the ‘American Dream’ that they should have that house surrounded by that white picket fence, why? Well in large part because it’s the financially smart thing to do. “You’re throwing away money if you're still renting!” It’s a “money fact” lodged somewhere in the recesses of our brain that we can’t shake. We think that recency bias is leading a lot of folks astray in their quest for home ownership. And of course higher mortgage rates play a role as well. On top of that, it turns out that it’s MUCH more affordable to rent in most major metros today, but how much could you save every month? But at the end of the day, if you still want to purchase a home we have a few prerequisites that you should have checked off your financial to-do list, before you start making offers.

 

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During this episode we enjoyed a It Was A Time To Believe In Anything by Burial Brewing! And please help us to spread the word by letting friends and family know about How to Money! Hit the share button, subscribe if you’re not already a regular listener, and give us a quick review in Apple Podcasts or wherever you get your podcasts. Help us to change the conversation around personal finance and get more people doing smart things with their money!

 

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Episode Transcript

Speaker 1 (00:00):
Welcome to Had the Money. I'm Joel and I am Matt,
and today we're discussing the dirty truth about home ownership,

(00:26):
the dirty.

Speaker 2 (00:26):
Truth the did you ever watch Clinting? Was it dirty? Harry?
That's the That's what I'm thinking. I never saw it.

Speaker 1 (00:32):
Nobody liked some Clint Eastwood classic, The Unforgiven. I think
that was my favorite of his.

Speaker 2 (00:37):
Uh yeah, we're talking about the dirty truth of home ownership,
and it makes me think that we're going to uncover
some sort of scandal or something like that. There there
is no expos that we're making public here to all
of our listeners, but we do want to make sure
that folks are entering home ownership with their eyes open,
that you're thinking through all of the different factors, all
the different ways that it's going to cost you. And

(00:58):
mainly because I don't think there's there's there's not a
lot of folks doing this. There aren't a lot of
folks who are calling into question this sort of forbidden fruit,
this thing that you dare not speak ill of. But
in essence, that's what we're gonna do today. We're gonna
poke the bear a little bit. Let's be honest.

Speaker 1 (01:11):
The facts on the ground have changed in the housing
market significantly, Yes, in particular.

Speaker 2 (01:15):
In the last year or two. Got that as well.

Speaker 1 (01:18):
And so yeah, we're gonna talk about current trends and
how that impacts how you think about buying a home
or kind of staying put. But Matt, before we get
to that, I just wanted to give a shout out
listener Lindy. She emailed us and she she had to
give herself a pat on the back, and I will
give her a pat on the back here too, for
scoring a discount. No, not just before she bought something
after the fact. Yeah, And I love this because.

Speaker 2 (01:38):
She pulled the she pulled that Costcouno reverse card. It's like, hey,
how about this, that's right.

Speaker 1 (01:44):
And so she had bought something, and I think there
was like a Mother's Day sale or something that happened
right after the fact.

Speaker 2 (01:49):
It was something that she had not yet received the
benefit of. It's like she had made the purchase and
then she saw that the price had dropped, and that's
when she thought, Oh, no, I should have waited to
have made that purchase. I got robbed.

Speaker 1 (02:01):
Yeah, but no, if you just kindly asked, and she
like literally detailed her email correspondence for us. In the
email she sent us, it was super sweet, just asking saying, hey,
see there's a discount now. I bought before the discount,
didn't realize this was coming down the pike. Can you
apply this discount to my order? And the answer was yeah,
of course, we're retroactive.

Speaker 2 (02:20):
Yeah.

Speaker 1 (02:21):
Basically one hundred and seventy five bucks back in her
pocket just for asking the question. And we always we
talk a lot about asking for discounts and how important
that can be. It's a good, good muscle to exercise
to save money, but we haven't really talked about I
guess doing it after the fact, and I think that
is not usually as strong of an argument. But in
Linda's case, it worked. And it's still like, what's the

(02:41):
worst that can happen? They might be like ever hurt
STI ask? Yeah, they might be like nope, sorry, But
still I think it's a good exercise. And sometimes people,
especially at a product like that, will reconsider or they'll yeah,
give you, give you some sort of discount. In this case,
you got the full full fifty percent off.

Speaker 2 (02:55):
Heck yeah, Well, and this is a reason that we
love talking about money. This is one of the behind
the fact that we started this podcast is because we
want folks talking about their money, not just in the
ways that you could earn it and invest it, but
also the way that you spend it. And we want
there to be a whole lot of savvy consumers out there.

Speaker 1 (03:12):
And Lindy was like, I don't think I would have
done this had and I've been listening to you guys.
You always pushed me in that kind of directions, patting
ourselves on the back, where like this, that's exactly the
kind of behavior that we want to see the folks
who then feel empowered to, you know, basically be an
advocate for themselves.

Speaker 2 (03:27):
Lind do you thank you so much for sending that
win our way? And actually it really does encourage Joel
and I when we hear some of these different stories.
And so if you have something not even similar, but
something you know in this vein where you have made
a positive change in your life when it comes to
your money, we would love to hear that. We may
not we don't share them all on the show, but
there's certain ones that kind of stand out and ones

(03:48):
that we have to share with our listeners. Sure, but
if you've got one of those yes in them our way,
how the money pot.

Speaker 1 (03:53):
We have one today in our email inbox from a
listener who's able to buy a home, largely because he
was like I was prepared, I was saving during COVID
and and if I hadn't have been listening to you
guys and taking those steps, I wouldn't I wouldn't have
owned a home today. So on that note, let's talk
about home ownership. But first ownership mentioned the beer. This
is called It Was a Time to Believe In Anything,
and it's an IPA by Burial. They have the most

(04:16):
over the top beer names and this one fits fits
like a glove for the Burial Mami convention. But we'll
have our thoughts on this one at the end of
the episode. And let's talk about housing, Matt the dirty
truth about home ownership. There are a lot of things
that we like houses. I mean everyone does. I like
ale houses, I like the house we live in.

Speaker 2 (04:31):
It's kind of like what we're fighting against is the
fact that everybody wants a house. Everybody likes the house well,
and part of that it's a desire for everyone. Yeah,
for all these millennials who are entering home ownership, age
to be able to get their hands on one.

Speaker 1 (04:41):
Yeah, and there's nothing wrong with buying a house, And
in fact, I think it's going to sound like we
think there's something wrong with it during this episode because
of kind we're actually trying to combat the predominant narrative
and help make people think again. But we will try
to offer a balanced perspective on home buying.

Speaker 2 (04:57):
But it just makes me.

Speaker 1 (04:58):
Think, Matt, that you know, in childhood, there are all
sorts of things we hear are adults say or parents say,
and we end up kind of believing it as a
stock belief our whole life, never really questioning the tenants
of whether it's true or not. It makes you think
about swimming after eating, plus to wait like an hour.

Speaker 2 (05:14):
Right, we're entering pool season for sure, Yes it is here.

Speaker 1 (05:18):
And you're gonna hear somebody say you gotta wait at
least thirty minutes. So you gotta wait at least an
hour after you eat before you go swimming. But this
is one of those things. At some point I finally
got fed up and I was like, is this for
real or not? And it turns out the Mayo Clinic
says you might experience some minor cramping, but in no
way is it dangerous to go swimming after eating. Yeah,
so this is one of those old wives tales or

(05:40):
whatever you call them that we've all heard growing up.
But it's not actually true. And I think the same
thing can be said of owning a home. It's the
surefire path to building wealth. That's how you get there,
home ownership. And it's this like money fact lodged somewhere
in the recesses of our brain that we can't shake,
and so we have to revisit the question is this
actually true? Is this actually act? And it's really a

(06:01):
nuanced topic, and so that's why we want to dive
deep today.

Speaker 2 (06:04):
Yeah, my favorite pool myth was that if you pee
in the pool, it's going to turn red and everybody's
gonna see that you beat in the pool. But hey,
that's not true. I p in the pool all the time.
It never turns red. Just kidding out of it, hanging
out at the pool with you. Again, I don't actually
do that because that's not hygienic. Right, We've got to
keep that pool. But there are a lot of things

(06:24):
out there that we believe to be true. But that's
basically because it's just the default assumption, and the narrative
exists that if you're renting, you are throwing away money.
You need to you got to buy a home in
order to build up that equity. If you want to
build up some generational wealth, you better get on the
path to home ownership, otherwise you're gonna be left behind.
How else are you gonna get there? And actually the
stats show that homeowners actually do have more wealth than renters.

(06:48):
Are you upending our argument the very a lot more? No, No,
we will get to that later on. We are not
against home ownership, like we said at the top here,
but it's also not a slam dunk decision, and it
definitely doesn't ensure that you're going to build wealth faster.
It might be a good forced method of savings for
those out there who might have less discipline when it

(07:09):
comes to your investing, but it is not a better
route to financial independence as many folks assume.

Speaker 1 (07:15):
All right, So I think part of the reason is,
like I said, the cult of home ownership. We've kind
of had this.

Speaker 2 (07:20):
That would have made a good secondary title. Yeah, the
cult of home ownership.

Speaker 1 (07:24):
That's been kind of a change and embedded belief for
a long time, just in the minds of everyday Americans.
And I think part of that comes from government, part
of that comes from news media, part of that comes
from financial pundits, but something else. I think another reason
that people really think that owning a home is like
the best decision they can make from a financial perspective,
it comes from just what's happened in recent memory.

Speaker 2 (07:45):
Right.

Speaker 1 (07:45):
Sure, there's a lot of recency bias, is what I'm
trying to say. And so if you bought a house
in Florida back in twenty nineteen, my guess is, no
one could convince you that buying a home is a
dumb move because home prices in Florida are up something
like eighty percent in that time period, and so it
would take a lot of persuasion to get you to
even consider that buying a home might not be a

(08:07):
slam duck move all the time in every situation. And
even if you sold your home just a year after
buying it, you still did well, like you still did okay,
making enough to more than cover the transaction costs of
that purchase in our likelihood. And so this torrential housing
market and ultra low rates that we had for a
bunch of years that fueled affordability, and that's really only

(08:27):
reinforced the notion that owning a home is the quickest
path to wealth. But someone who bought a home in
six they likely have a different feeling because they had
a much different experience. They either a lot of folks
had their homework closed on back then, or even if
they didn't, they might have been underwater for a bunch
of years, and they might have a completely different perspective

(08:49):
because they bought a home at a different period in time.
And so I just think that recency bias is a
part of this. It's tainted our view and has created
an even stronger bias towards home ownership. But the environment
we're in right now is different, and so different considerations
are necessary.

Speaker 2 (09:04):
Yeah, a part of the assumption that it's a really
good idea to buy a home is what we've experienced
over the recent decade plus. But there is just no
guarantee that home values are going to continue to skyrocket
because again, yea, if you bought a home back in
twenty eleven, you're sitting on a ton of equity and
you probably feel like a real estate investing genius, but
that gravy train is slowing down. And in fact, a

(09:27):
couple weeks ago, April's median home value data it came
out and we saw the biggest decline in home values
actually in twenty years. But the default assumption it still holds.
According to a recent Gallup poll, Americans still believe that
real estate is the best long term investment by far,
though actually I mean, I think it will be interesting

(09:48):
to see if sentiments shift, if we continue to see
declines in home values, or even if we see we
experience a housing price plateau for a period of time,
because I feel like that would only reinforce the fact
that folks are only looking at the short term. They're
not looking at historical data, and that's what we like.

Speaker 1 (10:06):
To look at, right which I think that's how most
people approach a lot of things. Makes me think of
bitcoin and how oh fly and high right around the
Super Bowl, all those really expensive ads. It's funny, I
was listing something the other day and I didn't realize
the La Lakers still play at a place called Crypto Arena,
and they still.

Speaker 2 (10:22):
Go the naming rights.

Speaker 1 (10:22):
I think they still have the naming rights for how long?
Who knows, But this is one of those things that
it's again that's recency biased too. It's in a lot
of people saying to the moon, well, how are those people?
I don't hear nearly the same vigor. I think there
was a recent bitcoin conference in Miami, Matt, and it
was sparsely attended, unlike the couple of years previously where
it was tens of thousands of.

Speaker 2 (10:43):
People popping bottles left and right.

Speaker 1 (10:45):
Right, And so it's just interesting to note that that
taints a lot about how we view things, and I
would I don't think it's necessarily makes a lot of
sense to equate investing your money in bitcoin or buying
a house as the same, because home we have a
lot more history when it comes to buying a home,
and home values do go up over time, right, But

(11:06):
it's also important to mention that the market you buy
in matters, and buying bitcoin in January around the Super
Bowl last year that didn't pan out so well, and
buying a home right now isn't going to be that bad,
but it is important to consider, yeah, the timing of
the purchase, and yeah, Matt, let's talk about historical data
for a second, because if you look at the last
thirty years, real estate had an average growth rate of

(11:28):
five point three percent, but the S and P five
hundred had an annualized return of nine point seven percent,
quite a bit more.

Speaker 2 (11:35):
And which of these is greater? Right, which one would
you prefer to? See?

Speaker 1 (11:39):
This is a question, and that reality holds if you
zoom out even further and you look at an even
longer period of time, right. And so, if you've listened
to this show for any length of time, you know
that we like real estate as an investment. But there's
a difference between buying a home purely as an investment
versus buying a home that you like, right, that's gonna
serve as your primary residence. And we make completely different

(12:00):
decisions when we're buying a home as an investment versus
buying it as a place for us to live and
to raise kids, have a family, stuff like that. The
entire reason that we're having this discussion is just to
combat the knee jerk belief that buying a home is
the quickest possible route to wealth, because when you look
at those numbers, when you extend the timeframe, it certainly
points in favor of stocks being a far better long
term investment, even though, like you said, that gallup pole, Matt,

(12:22):
it shows that people believe the opposite.

Speaker 2 (12:24):
That's right. Yeah, Well, actually, what's really unfortunate about that
gallup pole too is the fact that the biggest increase
as to what people thought was the best long term
investment was gold. Yeah. Look at the numbers historically on
that too, yes, exactly, which by a long shot underperforms
the stock market. Honestly, I think it's pretty equivalent to
real estate over like the past thirty, past fifty years.

Speaker 1 (12:45):
We detailed that in a recent ho Money newsletter.

Speaker 2 (12:47):
Actually, mm hmm, okay, So when we're talking about home ownership,
when we talk about its impact on wealth building, it's
impossible to not talk about leverage. It is a key
component in the perception and the reality of home price.
Appreciate not having to save up the full purchase price
of a home using financing, taking on a mortgage. It
allows you to buy something that you otherwise wouldn't be

(13:08):
able to afford. And this is a great new that
is right. I'm certainly happy that mortgages exist and that
I didn't have to save up the amount of cash
required to buy a home in cash, and I couldn't
imagine renting until being able to finally buy when you're
like fifty or sixty years old. It would make it
untenable for the vast majority of folks out there. But
leverage is a double edged sword. Again, Ask any any

(13:31):
home flippers, Ask any real estate developers who were out
over their skis back in oh seven eight as we
experience the popping.

Speaker 1 (13:38):
Of the real estate bubble. Yeah, the truth is on
the leverage front. Maat, it gives and it taketh away. Right,
It's it's smart. Reasonable use of leverage can give you
a boost. It can help you to afford something like
we said, like ten percent down. You can put fifty
thousand down to buy a five hundred thousand dollars house.
That's kind of incredible, right that the bank trust that
you're going to pay that off over the next fifteen
or thirty years. But it can also be a rude

(13:59):
awakening because if you're assuming that the value of your
property is going to see a big bump in value
in the short term, leverage just might come back to
bite you. You're in real estate in particular, a big
chunk of folks tend to assume that not having to
save up much money is going to save their bacon.
But if the wind isn't at your back in the
real estate market, and again the wind has mostly been
in our backs over the past twelve years, using leverage

(14:22):
too heavily can cause real harm. So if the wind,
if the winds are all of a sudden shifts and
it's blowing kind of at your face, it's creating you
have some headwinds going on, it could especially for real
estate investors, that use of leverage could really mess them
up in a big way.

Speaker 2 (14:36):
That's right. Yeah, So hopefully we are not completely shattering
all of your hopes for home ownership, but we do
have some additional dirty truths to get to when it
comes to home ownership, and also some of the things
that you need to consider if you are going to
go ahead with that home purchase.

Speaker 1 (14:50):
Well, get all of that right after this. All right, Matt,
we're back. Let's keep talking smack about home ownership, and
not on purpose. It kind of makes me think we
are doing it on purpose. Well yeah, but okay, not
for the sake of talking smack, but just for the

(15:11):
sake of wanting, wanting folks to make sure that they are,
their eyes are open that they are approaching this big
purchase while at the same time considering all the different
facts and factors that they should keep in mind. Yeah,
we're not trying to be contrarian for the sake of
being contrarian exactly. It makes me think of hazing, if
you wanted to be in some sort of fraternity or
something like that. I was never in a fraternity, never

(15:33):
had the desire, never was cool enough, let's be honest
to do that.

Speaker 2 (15:36):
But if I had, there's like fraternities for art yeah,
I mean, like, uh, fraternity for chemists, you know, a
different brethren that you can join. I'm not smart enough
professional fraternities, I guess as Okay, it's not just about.

Speaker 1 (15:49):
Partying it, but there's all like initiation ceremonies to get
into that, and I don't know if they're if like
what they're doing really to make that happen, But if
you still want to be a part of that fraternity
after the hazing or that initiation stuff, then it shows
that Okay, cool, you've passed the test.

Speaker 2 (16:03):
You really want to be there.

Speaker 1 (16:04):
And that's how I think of this episode. If you
really want to buy a home, you're going to listen
to all these things and you're gonna be like, yeah, Okay,
I get it. I get all the potential pitfalls, but
it's still the right move for me because I'm ready.
And so we'll talk about what it looks like to
be financially ready to buy a home as well in
just a bit. But it let's talk about renting for
just a second, because the biggest misconception about renting is
that it's for financial idiots. And you mentioned this line

(16:25):
I think earlier, Matt renting is throwing money away, and
everybody has heard that line, right, and it just has
sunk deep into our psyche now at this point that
renting is ridiculous and why would you do it for
any longer than you have to?

Speaker 2 (16:37):
In my mind, when I see people saying that, who
I picture are parents, I feel like I see a
lot of parents saying that to kids. Yeah, And I
think I wonder if it has less to do with
like the financial side of things and more about them
wanting to encourage their kids to like grow up and
get married, have some some kids so that I can
enjoy my grand and get like that whole thing. Just
trying to move them along in the life as opposed

(16:57):
to them actually providing them with any sound financial advice. Yeah.

Speaker 1 (17:00):
No, that's a good point, and part of it probably
has to do with their bias. Are like, I bought
a home for seventy thousand dollars thirty two years ago,
and now look what it's worded.

Speaker 2 (17:08):
Sorry, mom, the market's a little different than Yeah.

Speaker 1 (17:10):
Well, and then again you look at the numbers and
they probably would have been better putting money in the
market too, But it's just how they've rationalized it, how
they've thought about it. But if you're young and you're
just getting started in your career and there's a chance
you might relocate for that career, renting is probably a
slam dunk. Or you might just want to live somewhere
else in the near future. Or it doesn't have to

(17:31):
be another city, It could be another.

Speaker 2 (17:32):
Part of town.

Speaker 1 (17:33):
Yeah, where you live, and so why would you buy, Like,
don't rent? Figure out where exactly you want to live first,
and even once you have, you might want to keep renting.
I mean, one of the biggest perks of renting is
that it gives you a ton of flexibility, and that
is highly underrated. Also, renting puts a roof up of
your head, and so it's not throwing money away because
it's giving you a place to call home, even if

(17:53):
it's not a place that you own. And like, plus,
for all the home improvement haters out there, Matt, they
don't have to fix stuff that goes wrong, right, You
got a landlord for that. And it certainly makes budgeting
easier if you don't have all these other potentially intangible
costs we're going to cover in this episode. If you
don't have those to deal with.

Speaker 2 (18:09):
Us unforeseeing expenses, all you've got is a number that
you text, right and you say, enter appliance is broken,
and that's how you get things fixed. But the biggest
win that renting has over buying is affordability. So we
are going to make an argument here on the financial
side of things. There's a report from realtare dot com
and they find that you're going to save money by

(18:30):
renting in forty five of the fifty biggest cities out there.
So basically that's like everywhere, Like there's the chance that
if you are listening to this podcast, you live in
one of these cities were the best to buy.

Speaker 1 (18:43):
But it was like Detroit and I don't even remember which,
but there were very, very very few. Let's be honest,
that most It's better to rent almost everywhere from a
financial perspective, exactly.

Speaker 2 (18:53):
Yeah. And the fact is that's where the most populous
areas are as well, like the forty five of the
fifty major cities, is where a large, large percentage of
the US population lives. And on average, you're going to
save eight hundred dollars a month, which is insane. That's
almost ten thousand dollars a year back in your pocket
that you can do whatever you want with. But hopefully

(19:14):
you would take that money and you would invest it.
But it could actually be much more than that in
many of the West Coast cities. According to redfind, the
median estimated monthly mortgage payment for home buyers out in California,
specifically in San Jose is eleven thousand dollars, and you
compare that with immedian estimated monthly rents of four thousand.

(19:35):
That's crazy. What a wild swing. And one final start
here nationwhy the typical home costs twenty five percent more
to buy than to rent, and this is without even
considering maintenance costs That we're going to get to and
as we talk about some of the additional expenses associated
with home ownership. But going back to the forty five
biggest cities where you're saving eight hundred bucks a month,

(19:55):
were you to not actually spend that money, and were
you to take it and stick it in the market,
if you were to invest the difference there, you would
end up with over nine hundred thousand dollars. That's assuming
a seven percent rate of return, which is fairly conservative,
and you would have that much money after thirty years.
That's nearly a million dollars, which it's just crazy to

(20:16):
think that you could have that much just on this
one expense. This isn't like your combined total portfolio, no,
just on the cost of housing. It kind of makes
me so. On Monday, we talked about a listener was
asking about indexed Universal Life and we're talking about how,
I don't know, it's this fancy product, and yes, technically
you might be able to grow your wealth by taking
that money and sticking it in that product, but instead

(20:38):
go for the cheaper alternative and just invest the difference.
It almost makes you feel like you can't compare homes.
It's sort of like you were saying earlier, you can't compare.
It's not apples to apples. Yeah, this is like apples
to bananas or something. But it kind of makes when
you look at it from that in that perspective, it
kind of makes you think, oh, man, what am I
actually giving up by purchasing a home as opposed to renting,

(20:58):
especially if you're talking about some of these more affordable
cities where renting is drastically more affordable.

Speaker 1 (21:03):
Well, it makes me think about something else. If the
numbers were to change on car leasing versus buying a car,
that would change how we think about it. The reason
we don't like leasing a car is because it's so
darn expensive and because you have to give it back
after two or three years. Right, You've you have kind
of flushed a little a lot of money down the
toilet in order to do that, and so the wiser
thing to do is to.

Speaker 2 (21:24):
Buy a car.

Speaker 1 (21:24):
But but let's say the price of leases was magically
cut in half, we wouldn't hate leasing anymore, and in fact,
I would probably be the first one to line up
and lease a car. So it's about.

Speaker 2 (21:35):
The term, or it's less about the language, and it's
more about the numbers exactly like we would gladly issue
amakolpa and say oh yeah, yeah, yeah, like we used
to say that we hate leasing, or oh yeah, yeah yeah,
we used to say that we hated Index Universal Life. Yeah.
But if the numbers changed, if if something is different
on the ground, then we're gonna follow where the data leads.

Speaker 1 (21:52):
Is right, and so so much of it is a
question of value and price, and so this is what
makes renting potentially so much better for money savvy folks. Though,
because you just mentioned Matt almost a million dollars, I mean,
given some of those numbers, renters actually have a wealth
building advantage, which is not how any of us ever
talk about it, not how you ever hear about it.
It's just that they rarely use it. And so you know,

(22:13):
it depends on where you live, of course, but you
could easily be saving one thousand dollars a month or
more by renting instead of buying. But the key here
is that if renters would funnel extra cash into investments
that they'd otherwise put towards a more expensive mortgage, they'd
actually build wealth more quickly than their friends, their peers
who buy a house instead it's the problem here, though.

(22:35):
The crux of the issue is a lack of discipline.
That's the problem in this scenario. It's not that renting
is dumb or that renters are at a disadvantage. It
is that renters are saving a lot of money by
renting in most of the country, but they're not funneling
the money that they otherwise would have used to buy
a house into the market.

Speaker 2 (22:52):
And so the fact is we are going pretty hard
in the direction of, hey, you should consider renting. It
shouldn't be a default decision for you to purchase a home.
And a part of that is because home ownership just
costs you more than you think. We've already talked about
basically the upfront costs, like your monthly payments, but specifically
homes are really expensive to maintain. I've heard that, so

(23:13):
I've experienced that. Yes, it's just there are just ongoing costs.
I mean, like patching a roof, the cost of maybe
some fresh paint it's getting warmed these days. We've talked
about getting your h VAC service. That's important as well.
Pest control that's something that costs some money as well,
Although that's one of those that you could totally diy
that you can get yourself. We actually have a great

(23:34):
article up on the website that tells you exactly how
you should spend your twenty dollars on these two items
and how that will save you a ridiculous amount of
money over the years. So that's one way that you
could reduce that cost. But you're likely going to spend
roughly about one percent of the purchase price every year
on home maintenance. That's the general rule of thumb. But

(23:57):
then just not to mention the fact that you are
your time, there's this additional hassle factor with getting these
things done, with scheduling the work being done there on
your house, or if you are looking to be a
little more frugal, setting the time aside to actually doing
that work your strength.

Speaker 1 (24:13):
Yeah, there's a big time costs, just a pain in
the butt though to being a homeowner, less so than
being a renter. And sometimes there's an active god. There's
a tree that falls through your roof and it just
ruins your day and potentially months of your life while
you're trying to, like work with the insurance company get
that figured out.

Speaker 2 (24:26):
Do you want to give folks a little update as
to where things are at the given moment with.

Speaker 1 (24:30):
Your Construction is just about to begin, okay, which feels
like it's taking a long time to do that, but.

Speaker 2 (24:36):
It has been a long time. But I mean that's
the they've ripped out. Fortunately, that's the insurance. They've ripped out.

Speaker 1 (24:40):
Some of the things that were damaged, and we've been
living in it, but we're just about to move out.
Construction is going to begin and hopefully it won't take
more than a couple of months. Fingers crossed, Fingers crossed,
But yeah, these are one This is one of the
things that comes along with home ownership. And granted it'd
be a pain if you're a renter, but not nearly
to the same extent.

Speaker 2 (24:56):
And I think you still have to move if you're
a renter, but you wouldn't. It's just like, Okay, I'm
gonna find another place, as opposed to having to do
the work associated with right getting this not just maintaining
this property, but getting it back to where it was.
I feel like if I were in your shoes, that
would be the hardest part is knowing that like you're
not improving any you're improving it exactly, getting back to
like we added on the you know, like little screen

(25:17):
porch on our house whatever, And it's kind of a
pain of the butt to coordinate with a contractor. But
there's sort of this prize at the end of the
tunne where you're like, oh, but it's going to be
worth it. Yep. I cannot imagine the frustration that you're
feeling when it comes to just getting back to baseline.

Speaker 1 (25:31):
Yeah, and it's just a part time job of it all. Like,
that's what That's what smokes me really as I'm just contacting,
talking to so many people, talking to contractors, the adjuster,
all that kind of stuff, and I'm just tired of it.
I'm just like ready for it to be done, so
hopefully sooner rather than later. I think one other thing though,
that that gets people, Matt. You're talking about upgrades, You're
you added on the screen porch. That is something else
that people when they buy a home.

Speaker 2 (25:51):
Don't you make an example out of me? They all
of a sudden are like, well, what about this? What
have I upgrade that? Nah? You know, I can make it.

Speaker 1 (25:57):
I can improve this or that, And that is kind
of part of the fun of homeownership. But it also
adds to the cost. It makes me think of the
Diddero effect, Matt and.

Speaker 2 (26:05):
It just saw the classic French philosopher.

Speaker 1 (26:08):
Right, the eighteenth century French philosopher, and he someone gave
him or I guess he sold his library for like
the modern equivalent of fifty thousand dollars, and he lived
in poverty before that he bought this fancy new row.

Speaker 2 (26:19):
It's more details than I've read in the past.

Speaker 1 (26:21):
Yeah, so I did some more research into it. And
but in light of this gorgeous new robe, like all
of his other possessions.

Speaker 2 (26:27):
Just looked into you.

Speaker 1 (26:28):
They look like crap. And so I think that that
can be the case for a lot of us when
we when we buy a home, it's like, okay, cool, yes,
starts with a code of paints, but how far can it? Well,
I'm replacing the floor is now, or you know what,
I need a new sofa in here because that's what's
gonna tie the whole room together, or maybe a rug.

Speaker 2 (26:44):
I don't know.

Speaker 1 (26:45):
But these are the kind of These are the kind
of things that happened to all of us as homeowners,
or these subtle psychological polls that cause us to consume
and maybe our finances start as spiraling out of control
because we are just coaxed into spending more than we
would if we were if we'd remained renting.

Speaker 2 (27:02):
Sure. Yeah, well and it's not necessarily too that, like
maybe you love all your stuff, Like maybe you move
in and you're just like, my stuff looks great in here.
I love my house. But then that's the problem, like
you kind of like what you spend a lot of
money on a house that's where your dollars flow to.
It makes sense that someone would take maybe a little
little bit more pride in their house compared to maybe

(27:23):
where they're renting before, right, And so like once you
start having a sense of pride, like you start thinking,
oh I wanted to look even nicer, it's not necessarily
that what you have currently, like your previous possessions are
relatively shabby. It's just that, oh, I want this house
to be nicer. Sure, right, And so like you know, well,
I'll use myself as an example again. But for us,
like the landscaping at our house that we purchased last year,

(27:44):
it was fine, but we really like to have an
interesting outdoor area, so we started going down that direction.
So maybe we felt prey to that. But maybe it's
you moving into the you know, a house and you're like, oh, well,
you can't have lambin at countertops. That's just no, that's
just so nineteen seventies. You know, you got to take
care of that. Or oh, the carpet over here is

(28:06):
you can't just a, we can't have carpet, but b
even if you did have carpet, that's dirty carpet. Right,
there's no way we're not going to runt a steamer
and actually clean it. No, no, no, let's just rip it
out and do hard woods, like you said, double edged
sort of home ownership. Yes, I think some of it.

Speaker 1 (28:18):
Those improvements can be a blast, and it's really exciting
to get to kind of create your own space.

Speaker 2 (28:22):
But the flip side of it is it cost you money.

Speaker 1 (28:24):
It can be a money so I can absolutely and
on top of the fact that you're spending a lot
more than you would have been if you had been
running something similar. Also, it's also important to mention math
that timing is crucial. Timing matters, and every market across
the country is different. Of course, it's easier to buy
a home in Mississippi than it is in southern California clearly.
But market gyrations can change the value proposition meaningfully over

(28:47):
time too, And so the housing market now is just
quite a bit different. It looks a lot different than
it did a few years ago. It's always morphing and changing,
And so that value proposition that I mentioned, like we
would change our tune on leasing a car if leasing
prices were cut in half. Well, the value proposition of
buying versus renting is different from state to state and

(29:08):
from market to market as the market evolved. So if
home ownership is a massive goal for you, it's worth
it's truly worth asking whether or not you'd be willing
to move somewhere where the cost of housing isn't as expensive.
We're all about putting down routes. Stay in one place
for a long time if you love the place where
you are, but maybe moving elsewhere to a cheaper market
makes sense for you if you're priced out where you're
currently living, or does perpetually renting make the most sense

(29:32):
if you love where you live and just kind of
not putting off a dream of home ownership, but maybe
just being like, hey, maybe that was the wrong dream
to begin with. Then maybe the real dream is something else,
and it really is financial independence, which you're going to
be able to get more easily by renting and investing
a heck of a lot more.

Speaker 2 (29:48):
That's right. Yeah, So the housing market has changed in
recent years, and we touched on mortgages earlier more kind
of from a principal standpoint as to the power that
it can have if the wins you're back, but the
problems that you can face if that wind is blown
in your face. But the specific rates that folks are
paying right now, like the mortgage rate environment like that
is also changing the dynamics of home ownership. There was

(30:10):
an article in the journal just last week about the
diverging paths of folks who bought a home just a
few years ago and then the folks who purchased a
home within the past six to nine months. We've previously
said to avoid being a quote unquote payment buyer where
you're only considering the monthly payments, Well that that doesn't
mean that you should ignore the interest rate altogether, because

(30:34):
they influence the payment on a home purchase massively. Any
want to be home buyers out there, they know that
interest rates aren't their friend right now, about those fluctuations
they can, and they should. Honestly, they should impact your
overall price range of homes that you can realistically afford.
It should change the filters or the parameters as you
continue your home search if you are seeing rates go up.

Speaker 1 (30:57):
I think interest rates should determine the purchase of a
whole lot of other things, a whole lot less because oh,
what's the APR and your credit card?

Speaker 2 (31:03):
Guess what?

Speaker 1 (31:04):
For how to money listeners, it shouldn't have I don't
care because you should be paying it off on time
and in full of your month. It doesn't matter if the
APR my credit card is eighty two percent because I've
got that set up for auto pay and I'm paying
the full statement balance. Same thing with a car, like
I'd rather you not take out a car loan, and
so it doesn't matter if cash Yeah, we talked about
really care about car loan? Sure, interest rates on cars

(31:25):
used the new using new car loans have gone up.
But the goal is to not have a car payment
at all. Right, that's but for almost everybody listening, not
being able to avoid a mortgage is an impossibility. It's
the same with Matt and I. We've had a mortgage
on every property. And that's okay, it's just what are
the terms of that mortgage? They massively influence more than

(31:46):
any other product, like what you can afford what you
should be looking at totally. It's also important Matt to
mention equity and which is it's a different beast than
money that you've accumulated in the market. And so a
home is an ill liquid asset, which means it's more
difficult and often expensive to tap your home equity or
to ye to come by it in some way form
or fashion. And so if you do opt to grab

(32:06):
some of those wealth gains via a home equity line
of credit or something like that, you start putting the
asset that keeps a roof over your head at risk. Right,
And so what do you do with the wealth you
accumulate in a house? Our advice has always been mostly
to leave it alone. You might, yes, take some to
make some small improvements to your house or something like that.
That is typically the best use of home equity is

(32:28):
to make improvements when you want to over time. But
the fact that your net worth has grown because you're
the equity in your home has grown really shouldn't change
the way you live your day. To day life, although
I feel like it can more if you are investing
in the market and those funds are just easier to access,
especially if you're investing some of those some of that
money in like a brokerage account. But Matt, it's not

(32:49):
all doom and gloom, and we do you and I
own houses. We own multiple houses because we're landlords as well,
and so we're not completely against home ownership. We just
want people, like you said, to go in with eyes
wide open. Let's talk about the benefits of home ownership,
and then maybe some of the prerequisites for before you
start looking to buy a home, where we think you
should be financially before you start that search. We'll get

(33:10):
to that and more right after this.

Speaker 2 (33:21):
All right, we are back in jil You know, we
have dunked on home buying quite a bit. But the
truth is we mostly like owning our own homes, even
with all the trade offs, with all the downsides that
we've mentioned. We don't rent, we own our homes.

Speaker 1 (33:35):
So people are like, why aren't they taking their own medicine?
What's the discount?

Speaker 2 (33:38):
It mostly has to do with the intangibles that you
experience when you are a homeowner.

Speaker 1 (33:44):
And by the way, not to rub it in or
anything like that, but we also bought most of our
homes in a different environment where yeah, the buy to
rent ratio was significantly different, absolutely, and so that changed.
But I think now I would I would certainly be
thinking twice much more.

Speaker 2 (33:59):
I'll be looking at the rent market. But that being said,
one of the reasons that we were like it wasn't
just financial reasons though right like it made sense from
like a lifestyle standpoint, there are these intangibles, and when
you own your own place, you've got a little more
stability at home. Right Like, you know that there isn't
a landlord out there who might either drastically raise rent

(34:19):
on you or even just kick you out because they've
decided to sell the place because how values have shot
through the roof and it's time for them to cash out.
So if you decide to stay in that home long term,
you just know where you're going to be a decade
or two from now. With when it comes to renting,
not so much. You might know where you're going to
be for the next ten months, but beyond that, who knows.

Speaker 1 (34:40):
Yeah, I do think that that is one of the
biggest benefits the putting down roots, the knowing where you're
going to be, especially if that's where you want to
be and you don't want to leave. I know people
who have been long term tenants in certain places. I
had a neighbor two doors down back when we lived
in town, Matt and his landlord sold the house and
he had been there for like fourteen or fifteen years,
and he was devastated because he couldn't afford to buy
it and he had to find somewhere else to live.

(35:02):
But he had like buy in, he had stake in
that neighborhood, and I was so sad to see him go.
I was like, I wish I had like an adu
in the backyard, man that you could live in. But
that is that there are a lot of renters who
do want that sort of buy in, but they aren't
guaranteed it right if they're renting and not owning. And
so I think another perk of home ownership is customization abilities.

(35:22):
We kind of talked about the downsides of that with
like the Dittero effect and how it could be expensive, sure,
but it's also one of the most joyous things about
owning a home. Right you're being able to transform that
space and turning it into the place you want to live.
And really, like, if you're renting, yeah, you can ask
your landlord about painting or putting up some wallpaper or
something like that, but they might say no. And even

(35:42):
that is just kind of a basic adjustment.

Speaker 2 (35:44):
But yeah, you're.

Speaker 1 (35:45):
Surely not going to be able to knock down walls
or alter the layout or modify the space well, and
you wouldn't want to, right because you, like, you wouldn't
want to spend that much money because you know that there's.

Speaker 2 (35:54):
A chance I might only be here for a year
or two. Like this, Like, you are entering into that
how arrangement with a temporary mindset, and when you do that,
you're not really willing to put forth the resources, whether
it's time or money, in order to make it feel
a little bit more like home. I honestly, I think
that's one of the downsides of renting, And I don't

(36:15):
want to put it in a negative light, so I'll
say it's one of the upsides of owning your home
is that it can I think it can have a
more positive impact on maybe the depth of relationships or
the amount of community that you're able to build up
around you. Because if you are, say you're just renting
a house, and you're thinking, all right, I'm you know,
I'll live here for maybe twelve months, maybe I'll push
that out to eighteen, maybe even twenty four months. We'll see.

(36:37):
I think when you enter into that that mindset, with
a transient mindset, I don't think you're going to be
as willing to build relationships. Right, Like the people who
live on your street, they're your neighbors, and you might
not be doing it on purpose. It's just like a
subtle sex exactly exactly, yeah, one pc. But if you
were to buy that home, the people who live on
your street, they are potential friends, you know, it's like,

(36:59):
oh not only friends, yeah, and like friends and resources
and teachers, and it just it feels there's I don't know,
it's like I'm trying to be approach it from like
a wholesome kind of There is a change that happens,
and like you said, it may not even be all
that intentional. But when you know in the back of
your mind that you may not be there for that long,
well why not spend your time and energy on something
else that isn't tied geographically to a location, right, like

(37:23):
you would spend maybe some of your extra time and
energy on your career because guess what, if you were
to up and move on, you take your career with you.
It doesn't necessarily have to do with that particular house.

Speaker 1 (37:34):
Yes, I think that is a big plus in favor
of buying a house. You know where you're going to be,
you know who your neighbors is going to be. I mean, yeah,
some of them are going to move on too, but
it's it looks a lot different for sure, and you
enter into it with a different mindset, and I don't know,
I think that's powerful. But let's talk about some of
the prerequisites, some of the things that we want people
to consider and to think through before they kind of

(37:56):
start perusing Zillo, find an agent and start trying to
get pre qualified. And so yeah, even though we've spent
the majority of this episode really kind of discussing the
dirty truths of home ownership and much less time discussing
the pros of it, those benefits can be so incredibly
powerful that they can be enough to push you in
the buying direction. So let's discuss what an aspiring homeowner

(38:17):
needs to consider really before they start making offers, right,
and the first, the number one piece of this mat
is understanding how long you plan to own the home.
That's got to be the top factor, right, And like
five to seven years is a good rule of thumb,
but given where home prices are right now, I want
to extend, maybe go to the longer side of that timeline,

(38:37):
maybe more like seven or eight years. Because if you're
buying a home and hopes it's going to appreciate in
the next two or three years like homes have over
the past few years, you might think, oh cool, I'm
going to make out like a bandit. I'm going to
buy this home. I can barely afford it. But if
I can afford it for twenty four months and then
flip it, I'm going to be just fine. Well, the
likelihood that you get burned goes up so much more

(38:58):
if you're approaching a home.

Speaker 2 (38:59):
Purchase like that.

Speaker 1 (39:00):
So time is your friend on even if you overpay
a little bit, that's okay, as long as you plan
to stay in that home for a long enough period
of time to make up for that slide amount where
you overpaid. Right, Like, the longer you can commit to
owning that home, the better decision it's likely to be.

Speaker 2 (39:14):
Yeah, well, and you said owning that home. I think
there's a difference too, between owning that home and living
in that home, because as long as you own it,
then it's like it's okay for you to not necessarily
continue living in there. And so what I'm hinting at
here is converting that primary residence into an investment property. Joel,
that was like your first investment property happened to be

(39:35):
the first house that you purchased as your primary residence,
and my second rental property was a second round exactly. Yeah, yeah, mine,
we really liked our first home and then we ended
up actually buying separate investment properties. But that can be
a next one. It's not about you necessarily living there.
It's about you maintaining that ownership because the transaction costs
are so stinking high, and if you have an ability

(39:56):
to amortize that, if you have an ability to stretch
those expenses outs over a longer period of time, all
the while, hopefully the while the value of a home
is continuing to rise, you're gonna end up in a
stronger position from a financial standpoint. But also, let's talk
about the down payment required because three quarters of folks

(40:17):
who want to buy a home, they haven't even saved
a dime. That doesn't bode well. If you can't save
up a meaningful and down payment, then how are you
gonna be able to afford some of those other increased
costs that we just talked about, some of those unexpected costs.

Speaker 1 (40:31):
For folks who can't save a down payment. I realize
it's difficult and it's a large sum of money, but
that's what I always come back to, is like, cool,
if you can't do this, if you can't find the
skin to give in the game, how are you gonna
be able to afford the increased costs every single month,
every single year for years to come.

Speaker 2 (40:47):
Yeah. Well, and we didn't even talk about some of
like the more like phantom hidden costs of like a
potential hoa or the fact that most homes are probably
they tend to be a little bit larger than the
little apartment that you're running. So you're talking about increased
utility calls, you're talking about taxes, the property taxes because
you're buying an up and coming part of town, and
guess what, the fact that you even bought that house

(41:08):
guarantees almost guarantees. I should say that the estimated value
of that home is more than what it was, you know,
with the tax records show previously.

Speaker 1 (41:17):
I've talked to a lot of neighbors in nearby who
own a home and they're like, you just get that
tax bill because this is like the season to get them.
Oh yeah, And they're.

Speaker 2 (41:26):
Looking at you and they're like, dang you, Joel for
spending that much on their house because it raises the
value of all well the house, and their faces were
pale white.

Speaker 1 (41:32):
But all my rental friends living in complete happiness, and
they're not even thinking about that stuff. And not that
taxes don't influence the price of rentals. They do, but
not to the same extent. There's still just this massive
discrepancy right now in so much of the country between
rental prices and what you would be shelling out every
month to buy a home. And I think a lot
of people think, well, the landlord's going to be able

(41:53):
to just boost rent by the amount that the taxes
go up, and they might try, but if it's not
competitive in the market, they won't be able to.

Speaker 2 (42:00):
It's a slow boost. It's a gradual, slow moving freight train.
But for all the aspiring homeowners out there, we would
love to see you put down twenty percent, which we'll
often like that's going to net you the best rates
in terms while also whittling down those payments. But again
we understand that that can be an incredible sum of money.

(42:22):
And so if you're a first time home buyer, we'll
say that it is okay to put down less, but
saving up a meaningful chunk is just a necessity no
matter what. We want to make sure that you've got
skin in the game, while simultaneously unders like we understand
that it's not purely a financial decision that drives whether
or not that you can buy a home. There are
other life reasons to purchase a home, and we think

(42:44):
that those can be just as important. It's not just
about the numbers, it's about what it is that you
want your life to look like.

Speaker 1 (42:50):
I wouldn't make an idiotic financial decision because of those
life decisions, but correct those certainly way in and you
might be willing to trade off some of those some
of those financial things. It might mean, hey, you're going
out to eat less or something like that. That's a
worthwhile trade off, right to own a home if that's
what you really want and if you found the right
place to settle down. But it's also important to know that.
And by the way, Matt, you mentioned the down payment. Yeah,

(43:11):
you got to save that up. But at the same time,
you have to keep that emergency fund on hand even
as you're buying that home, right.

Speaker 2 (43:17):
Yeah, yeah, don't tap into that, like, keep that margin on.

Speaker 1 (43:21):
Hand because, like we said, cost likely to go up.
You might want to do some things to the house,
but what if you lost your job two months after
buying that home. You want to make sure that you
haven't depleted your emergency fund completely in an effort just
to get your hands on that house, right, And so yeah,
plan for at least three months worth of living expenses
even after all the costs you're going to incur when

(43:41):
you close on that house that you're buying.

Speaker 2 (43:43):
Yeah, don't forget all like the prepaids, because a lot
of times you'll be like, oh, yeah, the tax bill
comes out in March and you're buying the summer, so
we're actually going to pro rate and there's gonna be
six months worth of taxes that you have to come
to the table with and you're like, wait, what, that's
so much of thousands of dollars that you weren't necessarily
expecting to pay. Those are the kind of expenses that
kind of it seems like that they just kind of
pop out of nowhere that you have.

Speaker 1 (44:05):
That's why you got like that stat about I think
it was seventy seven percent of people not having saved
a dime when they want to buy a home. It's
so sobering because I'm like, there's all of these ancillary
costs that come along with it. And if you haven't
even thought about the down payment, if you haven't started
day one putting money aside for it, you're so far
off from being ready to do that. Maybe it's just
pie in the sky hope for people. Hey, yes, someday

(44:27):
down the line, I'd like to own a home, But
if you want that goal to become a reality, you
got to start setting money aside for it right now.

Speaker 2 (44:33):
That's right. Yeah, the last thing that you want to
do is just buy a house, move into a home
that you were barely able to afford. Then you're hit with,
you know, a bunch of unexpected expenses that just leave
you incredibly financially vulnerable, like you mentioned getting laid off
from a job, or like what if you get sick
and you have a high deductible plan and you got
to reach a ten thousand, eleven thousand dollars deductible before

(44:55):
the insurance kicks in, like that kind of thing, and
you can't to you need a plan for it, and
you needn't need that margin.

Speaker 1 (45:00):
Needs to be there, and you can't plan fully for everything,
of course, right if that's what some insurance products are
there to help you with, but it's also true that
you can't. There's not really an insurance product for losing
your job and not be able to pay your mortgage.

Speaker 2 (45:11):
Yeah, and at the very least, like in my mind,
this is a non negotiable having the emergency fund set aside,
because like when it comes to the down payment, it's
not ideal, but it's okay for you to not necessarily
have that twenty percent even though that's one hundred percent ideal,
because if you aren't able to put down that full
twenty percent, it means, yeah, your mortgage rate, it may
not be the absolute most competitive rate, but it's going
to be pretty dan close to what most lenders are

(45:34):
offering for a twenty percent down and you're gonna have
to pay a little bit extra for PMI, right, But
like at the end of the day, we're talking about
like a few percent. Right. But let's say you get fired.
Let's say all of these unexpected expenses hit you all
at the same time, and you don't have the cash
on hand to get by, and you turn their credit cards.

(45:54):
What's the interest rate on those bad boys? You're talking
like twenty percent, And so there's a drastic difference between saying, Okay,
it's not the most ideal thing to not put down
twenty percent, but the difference between you know, a few
percent versus like twenty percent that you're paying when it
comes to credit cards, that's a big old stinking spread.
And we want to make sure that you are not

(46:14):
entering into a situation that could leave you vulnerable to
that twenty percent.

Speaker 1 (46:18):
Yeah, and the emergency fund is really there to insulate
you from ever having to tap credit cards in a
way that is not just not ideal but really.

Speaker 2 (46:26):
Crappy, very harmful to your financial health. Yeah. Yeah. And
the other thing too, with like PMI, like that's something
that you can, you know, after you can come back
to that and get that thing pulled.

Speaker 1 (46:35):
Off so it can be a temporary expense exactly. Yeah,
all right, So basically the whole goal of this episode
is to challenge assumptions, right, and it makes me think, Matt, like,
which came first, the chicken or the egg? That is
a question that no one knows the answer to.

Speaker 2 (46:48):
Right.

Speaker 1 (46:48):
But according to Pew research, ninety six percent of folks
in the top ten percent of net worth own their
home instead of renting. But is it the home that
makes you rich? Or do rich people tend to buy homes?

Speaker 2 (46:58):
Like?

Speaker 1 (46:58):
And I think the latter tends to be true to
a certain degree. And a circle has no end Joel, Right, yeah,
and so I don't know. We've used that reality to
create a different narrative, right, one that centers around the
home purchase making people rich, creating a wealth exactly. And
depending on the specific location and purchasing climate, it has
helped fuel the net worth of buyers, specifically who purchased

(47:20):
two to twelve years ago. Those people have done incredibly well.
But expecting that to continue to be the case given
the amount of upward movement we've seen in the housing market,
for home ownership to be what pushes you towards financial
independence is highly unlikely, and so it's not that it
can't be a financial decision that makes sense for your family.

(47:40):
Just think twice before you buy into the home ownership
equals wealth building. That correlation, i'd say is pretty suspect.

Speaker 2 (47:48):
Yeah, yeah, totally, And ultimately, I think it just takes
a little bit of sacrifice, right, Like, are you willing
to give up some other things, including some of your
financial freedom, for that joy of home ownership? I think
that is an important question for folks to ask, because again,
we've owned multiple homes ourselves. You know, we've invested in
real estate, and given the right climate, given the proper
financial planning, owning a home can be the perfect move

(48:10):
for you, and there's a chance that the returns could
be pretty significant as well. But I also wouldn't count
on that, you know, that home being the smartest financial
move that you've ever made.

Speaker 1 (48:22):
Hope, I sure hope it's not, by the way, because
if it is the best financial move you've ever made,
it means that you haven't invested inside of the retirement
account that we talk about as being the biggest wealth drivers,
And so maybe it is. I think for a lot
of people it has been. That doesn't mean it's the
best route though, totally.

Speaker 2 (48:39):
Yeah, and to it to a certain extent, like when
you buy a home, like you said, like you are
putting down roots, Like there is an amount of permanence,
Like there's a degree, like you are anchoring yourself essentially,
and you just got to ask yourself if you're ready
for that stage of life, if that's what you want
the next seven plus years to look like. But ultimately,
I think what we're pointing out here is that you

(49:00):
shouldn't be buying a home or you shouldn't continue to
rent purely based on financials. There are so many other
more important factors in life to consider. It shouldn't just
be for financial reasons, though that is an important lens
to look at the decision making process through. But it
shouldn't just be only financial reasons, but life reasons as well.

(49:20):
It's to be close to a family or friends, or
make or whether it's schools or a pace of life.
If you can't rent there, then okay, yeah, maybe buying
there is something to consider.

Speaker 1 (49:30):
Yeah, but it makes me think one more thing. It's
kind of like who's worse off when it comes to
higher education. It's the folks who went to school for
three years and took on the student loan debt but
didn't get the degree. The same thing is true for
people who buy a house. The people who are absolutely
in the worst position are the folks who are there
for a year or two and sell. And so that
timeline is massively important when you're making this decision. Absolutely

(49:52):
as well. Son, Let's get back to the beer that
we had on this episode. This since called do It
it was a time to believe in anything than IPA.

Speaker 2 (50:00):
Fits along with the theme of the episode a little
bit like we do not want you to believe anything
when it comes to housing.

Speaker 1 (50:06):
Yeah, and we hope you folks who want to buy
a home want to own a home at some point
achieve that. But we hope you achieve it under the
right circumstances. But Matt, what were your thoughts on this beer?

Speaker 2 (50:15):
My tasting notes are going to be similar to some
of the other burials that we that we've had with
a few additions. It's certainly sharp. Again, the amount of
hops that they must put in their IPAs is just
off the charts. But in particular this ipa, is this
a double or single. I don't single, it's a single regardless.
It had this brightness to it that I felt that
I feel like the other two didn't. And I feel

(50:37):
like you can see it in the color a little
bit too, Like it seemed like maybe it was a
I don't know, maybe it was a touch more vibrant,
but on the in the mouth it had just a
like a lightness and a brightness to it where it
felt like it was alive. This reminds me of some
of those early fresh Hot beers that we had. I
don't know, I feel like fresh Hop beers were real big.

Speaker 1 (50:54):
I was totally thinking freshers six seven years ago and
we got a few that were I thought this was
more like back than some of the other burial beers.
And even still it's intense from an ipa perspective, but
it's less intense than the other burial IPAs we've had.
And yeah, fresh hot vibes for sure, Like I'm tasting
the grain on the vine almost yeah.

Speaker 2 (51:13):
Yeah, it's like tingly, yeah, like it almost it's like
for any of the Chinese, like Chezuan fans out there,
and you kind of got that tingle on the tongue,
like This one kind of has that going on it.
It certainly has some of those higher notes like on
the scale as opposed to like those lower, deeper, earthy
notes that you can get with some of burials IPAs.
But definitely really enjoyed it though.

Speaker 1 (51:35):
Yeah, this was a good one, all right, But that'll
be it for this episode. You can find show notes
links to some of the stuff we mentioned, including I
don't think we mentioned this, but there's a New York
Times has this great rent to buy calculator that will
look out there and to.

Speaker 2 (51:47):
Totally do that you can. There's just so much you
can play around with. There a lot of sliders, Yeah,
makes it a lot of fun to play with.

Speaker 1 (51:53):
And you can basically say this is the purchase price
I'm looking at blah blah blah, and they'll say, well,
if you can find a rental in this price range,
then renting makes more sense. Or here's what tips the
scales and when you might want to buy. I think
that's a helpful total to play with if you're in
the market. Absolutely.

Speaker 2 (52:05):
One of the things you can play with too, is
you can change the scale as to how long it
is that you'll stay in that property, and you can
physically see how it's like instead of buying that home.
And now what that means is that you can you
could afford renting a place that cost you this much
stinking money, and it would. It's gonna blow your Mind's
amazing because it puts the closing costs, the transaction costs
into perspective. Uh yeah, we'll make sure to link to

(52:28):
that in the show notes. It can be incredibly enlightening,
but otherwise, that's going to be it for this episode.
For all the listeners out there who have not left
us a review yet, we would greatly appreciate some kind
words over there. It helps us to get the word out,
helps other folks to find how to money and to
better their financial standing. But Joel, that's going to be
it for this episode until next time. Best Friends Out,

(52:48):
Best Friends Out s