July 19, 2023 • 28 mins
. Is the home an asset or a liability? Meaning, does it make you money or cost you money? We've had a liability asset conversation before, haven't we? You guys comfortable enough with that to answer the question? Yeah, I have an answer. Yeah. I think, well, I'm fairly certain a home is an asset.
Interesting. Because it makes money. Okay. Gideon, I think it's a liability. You know, you're, you're both right. No, how is that possible? Well, most people misunderstand that it is just an asset. However, there's a lot of liability tied to owning a home that people don't think about. And so what we're going to do today is we're going to go through some financial consideration.
Buying a home, the length you plan on staying in a home, market conditions, as well as your lifestyle and flexibility of owning a home. I want to start by letting the listener know I'm kind of biased. I have a home, working on a second home right now. So that just is a place to come from as I'm a homeowner by nature, but don't know for sure that it's for me long term.
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Episode Transcript
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Dad (00:00):
If you're thinking about those economic, like, say I
wanted to move to Indiana, andhow much should it matter what
the economy is doing with thishouse that I'm moving into?
Say I'm planning to sit thereand make it my career, is it
like, well, this house is gonnadepreciate for a little bit
before it starts to go up?
Cause if you're trying to, ifyou're trying to invest, it
(00:20):
matters very much.
But if it's a place to live...
The way I would look at it,Ashton, is I'd look at what my
rent would cost me versus whatowning a home.
When I'm making that financialdecision and is that month to
month?
Is it over the course of 10years?
If you think you're gonna bethere, I would run and I would
look more like at the 10 yearspan If it's just the short
(00:42):
term, I'd look at a short termhere's the thought for today.
(03:09):
Is the home an asset or aliability?
Meaning, does it make you moneyor cost you money?
We've had a liability assetconversation before, haven't we?
You guys comfortable enough withthat to answer the question?
Yeah, I have an answer.
Yeah.
I think, well, I'm fairlycertain a home is an asset.
(03:29):
Interesting.
Because it makes money.
Okay.
Gideon, I think it's aliability.
You know, you're, you're bothright.
No, how is that possible?
Well, most people misunderstandthat it is just an asset.
However, there's a lot ofliability tied to owning a home
(03:53):
that people don't think about.
And so what we're going to dotoday is we're going to go
through some financialconsideration.
Buying a home, the length youplan on staying in a home,
market conditions, as well asyour lifestyle and flexibility
of owning a home.
I want to start by letting thelistener know I'm kind of
biased.
I have a home, working on asecond home right now.
(04:14):
So that just is a place to comefrom as I'm a homeowner by
nature, but don't know for surethat it's for me long term.
Just so that everybody's awarewhere I'm at, right?
Do I always want to own a home?
Do I always want a standalonedwelling?
I don't know now that I'mGetting older and watching in
laws and parents deal with that.
(04:35):
I'm thinking Rethinking thatidea so I still might own
something But so when I'mtalking about home even I'm even
talking about a condo a townhomea standalone home You know,
something like that versusrenting and how that liability
changes.
Yep.
All right.
So some financialconsiderations, let's just say a
(04:58):
typical home just to try andkeep it real simple is a 325,
000, right?
So not a huge home, kind of astarter home.
If you took a 15 year loan, outon that.
On that mortgage at about sixand a half percent where the
mortgage rates are right now.
Six and a half to 6.
(05:19):
8 How much do you think you'repaying for that home total with
your interest on over 15 yearsover 15 years six percent
interest every month?
Right.
Yeah Wait, what was the startingprice?
Yeah, 325 325 I was gonna guess800 to a million, I guess.
(05:42):
Yeah, you're, you're a littlehigh on a 15 year, it's half a
million, 500, 000.
So you're paying, what is thatclose to 200 and 200, 000 plus
280 on, on just interest.
Yep.
Now we'll talk about some taxbreaks and some of that as we go
into it, just keep that in mind.
Now, if you do a traditionalmortgage, which is where your
(06:02):
lender is going to probablysteer you, they're going to say,
Hey, go to a 30 year loan.
Your payments are a lot lower.
And they are on this type ofhome.
If you did a 15 year note atthat 6.
8% interest, your loan paymentscan be like 2, 800 a month.
If you did that same home andyou're like on a 30 year note,
your, loan payments, like 2170,any thoughts on how much you pay
(06:26):
for that?
Now you're a little bit higherinterest rate normally.
Cause you're borrowing money forlonger.
So, I ran that at about a sevenand a quarter.
About a half a percentdifference.
Say all the numbers in a rowagain.
Yeah.
325, 000.
Yep.
A 30 year note.
Okay.
30 year loan.
Yep.
At seven, yeah, at seven and ahalf on that 325, 000.
(06:48):
So the last one was 500, 000.
It's a longer loan.
It's a higher percentage.
I'm gonna guess that thatone's...
708 Well, actually you got itcuz you didn't go over but get
in was closer at eight.
It's seven hundred and eightyseven 1, 000 give or take means
I still win on the price isright.
You would yeah.
Yes.
(07:08):
So where's my free home then?
So yeah So there is You know,you do pay a lot in interest.
Now, there are some tax writeoffs on interest, and we can
cover that in a tax episode, butreally, you're still not, you're
getting a tax break, but you'rereally not making any money, so
there's a lot of interest you'regoing to pay.
There are some upsides, andAshton, I think you hit on this
(07:31):
early.
You can build equity.
Do you guys know how much myhome's increased in value since
we've owned it?
Just to give the listenerperspective, we've owned it for
20 years.
Do we get to know what youbought it at?
Yeah, two hundred and twothousand dollars.
I'm gonna guess it went up by...
Well, I've guessed first a lot.
(07:51):
Do you want to guess first?
Sure.
I'll say two hundred percent.
Okay, so what you're saying isyou're worth, you're saying it's
worth double.
So now it's 400.
So I'll, I'll say 500 instead.
I'll make it 500.
I was gonna say 500 too.
I'm gonna do 501.
Ashton, you're closer.
(08:12):
Yeah! 501 is like 530.
But really the only upside islike 330, 000.
So that seems like a lot.
Right?
In 20 years.
And it is.
I don't want to discredit that,but if I would go to buy a home
now, I've got to spend all thatmoney to buy a home because the
price of his home are up foreverybody.
But if you think about it, andI've paid that much in interest,
(08:34):
right, 500, 000 in interest intheory, you know, you start
going, where does this homereally make sense?
Yeah.
Well that's why you, some ofthese tax breaks help.
But you gotta look at, there aretaxes on a home.
There's property taxes you haveto pay every year.
There's insurance you have tobuy for it.
You know, and then you got tomake sure your budget can afford
(08:56):
it.
One of the other thing I'd lookat on a financial, cause the
reason why this came up is I'vebeen interacting with our Reddit
people that I've been chattingwith on Reddit and, and they're
going, when can I buy a home?
I'm 20 years old and I'm reallyexcited about buying a home.
And my take is wait, just giveyourself a second.
What's your budget for home?
What's the rent in your area?
(09:17):
Right.
If, if I would have paid rentfor that same amount of time, I
probably, it's all gone.
And I probably would have had topay as much as I paid for my
mortgage and rent because of thesize of our family.
Right.
There's six of us.
We needed a big home.
Gideon's the last one thatactually lives at home right
now.
And so I'm down to where I don'tneed that size of a home.
(09:39):
You know, and it puts all thisstuff in question any other
financial considerations.
Well, I mean there's theoperating cost Yep, good Yep,
which there isn't an apartment,right?
But the operating costs are alittle bit different because now
you've got to think about lawncare You've got to think about
(10:00):
watering outside watering.
You've got a sprinkler repairsGeneral repairs hot water.
Like if you if you're rentingyou can always put in like hey,
this is no longer working fix itWhereas if you own a home you
can Text yourself if it makesyou feel really good, but yeah,
fix it anyways.
So mom texts me, Hey, can youplease fix this door?
(10:22):
It's still broken now, but thereare stuff that you can do.
And we'll talk about that, youknow, like, and that's like in
the lifestyle section about howyou can modify and update it.
But now when you're thinkingabout getting a home, another
thing to consider on is how longdo you plan on staying there?
One of our.
It was our second home that webought.
(10:42):
We bought our first one inTaylorville.
Our second one is in Colorado.
And in between those two welived.
We rented a place in Californiabecause I told my wife,
California is crazy.
The market goes up and themarket goes down.
And you just have to time itjust right.
And I don't know that I have thetiming of it just right for a
two year deal.
Cause that's how long I'msupposed to live there.
(11:02):
So when we moved to Colorado,I'm like Colorado safe.
My brother in law kept tellingme how the market is so strong
in Colorado and that it's goingto go up in Colorado and you'll
never lose money in Colorado.
Well, the problem is we got overthere.
We decided that we didn't lovethe job.
Didn't mind Colorado, but thejob wasn't for me.
And I moved in six months.
(11:24):
Any guess on how much I lost onthat home in six months?
I'm already telling you, it's aloss.
Yeah, it's a lot, I'd imagine.
Yeah, I lost twenty grand.
Yeah.
And it was mostly in realtorfees.
Right, because they were like,you said you'd do this, and now
you're leaving.
Yeah, so I still had to pay therealtor for, to sell my home.
I had to pay for the propertyinspection.
(11:46):
I had to pay for everythingelse.
And so I lost 20, 000.
So, how long are you going tolive in an area?
The longer you own a home,mathematically, the better
chances you have of equity inthat home.
And equity is the, what you paidfor versus what it is now.
(12:08):
Right.
Doesn't include interest.
And then the other thing that Iwanted to talk about in this
length of stay is, is it'sstability for your family.
Right.
For, for mom and I that became abig deal.
I had moved her 10 times in thefirst 4 years of marriage, 5
years of marriage.
She was done.
It was actually our 11th move tomove into that home.
(12:29):
So there was an emotionalattachment to that home.
Right.
That I couldn't talk her out of.
She's like, look, I'm going to,I'm going to be here.
I'm going to raise my kids here.
Now that you guys are raised,that emotional attachment is
starting to separate for, so yougotta, you gotta be honest about
it with yourself and say, howlong am I going to stay here?
Is this best for the kids?
I don't know.
You've, you have to decide as alistener.
(12:52):
Cool.
How long are you going to staythere?
Yep.
So financial considerations,length of stay.
Something else is to think aboutis market conditions.
And we kind of touched on those.
What kind of market conditionsaffects housing?
Just about everything I'dimagine.
Cost of living in an area.
Yep.
Outside of, you know, living ina house.
But like all the stuff, likefood, gas, all those other sorts
(13:14):
of things.
Sure, and then location.
Yeah, location, location,location as they say is the most
important, three importantthings in real estate.
So, so that's something to thinkabout.
I have a friend of mine boughtsome homes in Indiana.
And Indiana was going through areal.
Economic downturn.
They're not bringing in thebusinesses.
There's there's a lot ofdeflation that's happening
(13:34):
They're how to lose his all ofhis money that he put into him
Yeah, cuz they never went theynever grew friend in Phoenix
bought a home never made themove to Phoenix We said hey,
it's a good investment.
At least I have a home Paidevery month on a losing project
At some point in time, you justhave to say, look, take the
home, you know what I mean?
(13:54):
Sell it for a loss, be done withit, you know.
And so with those sorts of, sothose two examples are
individuals that are trying toget into the real estate
business to accrue wealth.
Which is a bit different thanthe situation that someone like
me would be in getting a homefor the first time.
So, that, I have a question herethat I'm trying to formulate
(14:17):
correctly.
If If you're thinking aboutthose economic, like, say I
wanted to move to Indiana, andhow much should it matter what
the economy is doing with thishouse that I'm moving into?
Say I'm planning to sit thereand make it my career, is it
like, well, this house is gonnadepreciate for a little bit
before it starts to go up?
(14:38):
Cause if you're trying to, ifyou're trying to invest, it
matters very much.
But if it's a place to live...
The way I would look at it,Ashton, is I'd look at what my
rent would cost me versus whatowning a home.
When I'm making that financialdecision and is that month to
month?
Is it over the course of 10years?
If you think you're gonna bethere, I would run and I would
(14:58):
look more like at the 10 yearspan If it's just the short
term, I'd look at a short termThat's where you want to look at
the supply and demand in an arealike in Utah You're like, oh I
found this home and it's reallya cheap price and I can put my
whole family in and it's theright Thing you have to buy that
home because rents out ofcontrol here Right.
So you look at it and go, yeah,yeah, this is, this is a good
(15:19):
move, but, but that's why it'snot always just a financial,
it's it's sometimes it's whatmarket am I in?
What is what's happening aroundme did like an away, everybody
lost money on their homes.
I only have bought mine in nofour, but I never went negative
because I looked for aforeclosure home that somebody
was already at low end.
(15:40):
So when I bought it, I alreadyhad some equity.
It got sucked up in a way, but Inever went upside down on my
home.
Right?
So, yeah, those, that, that's avery fair question.
So I'd, I'd look at thatanalysis and just kind of make
that that baseline best decisionI could.
And you don't have a crystalball, right?
But you do know, you do knowUtah's growing.
(16:00):
Yeah.
And in Indiana, you know it'sshrinking and you're making a
career out there.
You're gonna look for the nicestproperty that you can buy.
Where in Utah, I'm looking forthe cheapest home I can buy in
the nicest neighborhood.
Right?
Yeah, yeah.
Over there, you're like, wow, mymoney's going to buy me a lot,
I'm going to go look forsomething really nice, because I
might as well, because I'm goingto be here for a while.
(16:23):
Makes sense.
Does that help?
Yeah.
And then the other thing is topay attention, when you're going
to buy a home, read thenewspaper, pick up, look at what
interest rates are doing, what'sthe economy doing, what are they
projected to be doing, that whenyou go to buy that, like, I
don't know that I'd buy a homeright now.
Keep in mind, realtors are goingto tell you it's a great time to
buy a home.
It's always a great time to buya home when you've got
(16:43):
commissions on the line.
Right.
But when you want to really stepback and look at it, how does it
work?
Okay?
It might sound like I'm beingnegative about home buying.
I'm not trying to be.
I'm just trying to help thelistener understand that we have
been sold a bill of goods sinceWorld War II.
That every American should own ahome.
It was kind of the thing thatthe, the US government realized
(17:05):
that as people are coming offfarms and they're going into
suburbia that they didn't want atransient population.
They're afraid what would happenis what we were seeing in the
great depression where peoplelive in an area for two or three
years and then pick up and moveand go to a different area for
four or five years.
And they wanted to try andstabilize that.
And they did that by.
Making home ownershipaffordable, which was a good
(17:27):
thing for a lot of Americans,but it, it doesn't mean that
that's what you have to follow.
Fair.
So we're kind of going against abunch of decades of education.
My parents would flip out if Itold, if they heard me telling
podcasters and listeners not tobuy a home.
Me, I'm going, hey, I think youneed to look at it balanced.
(17:48):
And that's, that goes into mylast one, which is lifestyle and
a personal preference.
Gideon, what's your big goalafter college?
Live in a van down by the river.
That's right.
So does it make sense for you toget into home ownership?
And so what you should do onyour income is you should look
and say, okay, my van down bythe river is going to cost me
(18:10):
two grand to live in a month,you know, or it's going to cost
me three grand to live like thatmonthly.
I should know that if I was tobuy a home, it would cost me
about 900 more than that.
Take that 900 and invest it.
something that you believe in,whether it be stock market,
whether it be land, whether itbe real estate through.
(18:33):
A diversified fund or directlybuy and want to have somebody
rent it.
You know, you need to look atyour ROIs and look at it as a
business, but you need to investthat money.
Let's say that your career overthe next six months, Ashton, all
of a sudden you're making bigmoney, you've got some good
leads and you've got a job.
You might look at it and say,okay, do I really want to buy my
home right now where, and Idon't know that I'm going to
live in Utah.
(18:54):
I don't know if I'm going to bein Montana, California.
I'm not a hundred percent sureyou might be better off to say,
cool, I'm going to invest thedifference.
If I know that I should bepaying 3, 000 a month for a
home, for the style of home Iwant, I'm only paying 800 a
month in rent, invest thatdifference, and that's where
you're going to grow yourwealth.
(19:15):
But make sure you invest thedifference.
Because when people here don'tbuy a home, they hear...
Oh, live off less money andspend it.
And that's not the true either.
Cause some of the cool thingsabout owning a home is I can
modify the living space.
Have I modified my personal homemuch?
Nah.
Oh, okay.
I disagree.
I've modified.
No, you're right.
(19:35):
I really haven't.
I've added a couple extra.
I really haven't, I've added acouple extra closets, but I
haven't tore down walls andknocked down stuff.
So you can modify it, I canpaint it, you know, so on and so
forth.
That's what I was thinking,we've painted that a lot.
Yeah, painted it, updated thetile, updated the carpet.
You know, trying to keep itmodern.
Right?
Granite countertops and thosekind of things.
(19:56):
But...
Now I realize I'm alsoresponsible for my lawn and my
garden and those kind of thingsmake me look at it and go, I
think I'm ready to downsize myhome because I don't love mowing
lawns Gideon does.
Nah, I just get paid for it.
Oh, did you mow my lawn beforeyou left?
Nope.
I didn't think so.
I tried to tell him too.
We had to do it to Monday rightbefore he pulled out of town.
(20:19):
Do you want to wander if youwant to wander a home might not
be the best for you?
But like I said, make sure youinvest the difference.
I think one of the biggestthings that I, that I've been
thinking about is you, youmentioned it.
It's, culture exists for areason, and I was trying to
remember, I remembered the quotewrong.
Herbert Hoover, his slogan wastwo cars in every garage and a
chicken in every pot.
(20:40):
For some reason I thought hesaid, and a home as well or
something, but he didn't.
But those cultures exist.
For reason but it doesn't meanthat that reason has to be your
reason either is something thatyou've kind of touched on a lot.
I think it adds a little bitmore to the front end.
cause when you get into all theinterest rates and the, and the
money that it costs and all thatsort of stuff, you've decided
(21:03):
that a home is for you.
But before that you've got tothink about all the culture and
you know, the culture of whatyou want to do with your life,
the culture of the work thatyou're in the culture of.
All those different things andit can help you before you get
to the step of this is how muchmoney it's gonna cost over the
course of 20 years.
I love it, Ashton.
Cause that, that really builtright where I was gonna say is
(21:26):
sometimes it's the pride ofraising your family, right?
It's that culture of being, hey,I raised my family in the same
spot.
They had stability.
Right?
So there's that cultural pridethat I still feel, and there
might be a sense of pride in theneighborhood, the community, the
security.
But I love that you ask thelistener to take a step back and
(21:46):
say, what do I want in life?
Not what does everybody tell meI need to get?
And that's so hard, so hard tostep back and say, what do I
really want?
And then make a decision to makea plan of action.
I love home ownership.
It's been really good for us asa family.
It's been great.
I provided a stable place foryou guys.
(22:07):
You knew where you're cominghome every night.
You didn't have to worry aboutmoving every six months because
of rent change.
I'm very glad I did it.
I just don't know.
Like I said at the start of theepisode that that's where I'll
continue to be in the future.
But at the same token, I'mplanning on how to build onto
here, how to build a biggercabin, you know, encouraging the
(22:27):
listener to look at their life.
But don't follow the crowd, makeyour own decision and realize
that home buying is buying ahome, not just buying a car or
signing up for a cell phoneplan.
A home is a commitment but it isa lot, it's a less of a
commitment than getting married.
So you know, it's that balancebetween the kids and then move
(22:50):
forward in confidence after youmake that decision, whether to
buy a home or not, and then liveyour best life.
You got this.
If you're thinking about those economic, like, say I
wanted to move to Indiana, andhow much should it matter what
the economy is doing with thishouse that I'm moving into?
Say I'm planning to sit thereand make it my career, is it
like, well, this house is gonnadepreciate for a little bit
before it starts to go up?
Cause if you're trying to, ifyou're trying to invest, it
(00:20):
matters very much.
But if it's a place to live...
The way I would look at it,Ashton, is I'd look at what my
rent would cost me versus whatowning a home.
When I'm making that financialdecision and is that month to
month?
Is it over the course of 10years?
If you think you're gonna bethere, I would run and I would
look more like at the 10 yearspan If it's just the short
(00:42):
term, I'd look at a short termhere's the thought for today.
(03:09):
Is the home an asset or aliability?
Meaning, does it make you moneyor cost you money?
We've had a liability assetconversation before, haven't we?
You guys comfortable enough withthat to answer the question?
Yeah, I have an answer.
Yeah.
I think, well, I'm fairlycertain a home is an asset.
(03:29):
Interesting.
Because it makes money.
Okay.
Gideon, I think it's aliability.
You know, you're, you're bothright.
No, how is that possible?
Well, most people misunderstandthat it is just an asset.
However, there's a lot ofliability tied to owning a home
(03:53):
that people don't think about.
And so what we're going to dotoday is we're going to go
through some financialconsideration.
Buying a home, the length youplan on staying in a home,
market conditions, as well asyour lifestyle and flexibility
of owning a home.
I want to start by letting thelistener know I'm kind of
biased.
I have a home, working on asecond home right now.
(04:14):
So that just is a place to comefrom as I'm a homeowner by
nature, but don't know for surethat it's for me long term.
Just so that everybody's awarewhere I'm at, right?
Do I always want to own a home?
Do I always want a standalonedwelling?
I don't know now that I'mGetting older and watching in
laws and parents deal with that.
(04:35):
I'm thinking Rethinking thatidea so I still might own
something But so when I'mtalking about home even I'm even
talking about a condo a townhomea standalone home You know,
something like that versusrenting and how that liability
changes.
Yep.
All right.
So some financialconsiderations, let's just say a
(04:58):
typical home just to try andkeep it real simple is a 325,
000, right?
So not a huge home, kind of astarter home.
If you took a 15 year loan, outon that.
On that mortgage at about sixand a half percent where the
mortgage rates are right now.
Six and a half to 6.
(05:19):
8 How much do you think you'repaying for that home total with
your interest on over 15 yearsover 15 years six percent
interest every month?
Right.
Yeah Wait, what was the startingprice?
Yeah, 325 325 I was gonna guess800 to a million, I guess.
(05:42):
Yeah, you're, you're a littlehigh on a 15 year, it's half a
million, 500, 000.
So you're paying, what is thatclose to 200 and 200, 000 plus
280 on, on just interest.
Yep.
Now we'll talk about some taxbreaks and some of that as we go
into it, just keep that in mind.
Now, if you do a traditionalmortgage, which is where your
(06:02):
lender is going to probablysteer you, they're going to say,
Hey, go to a 30 year loan.
Your payments are a lot lower.
And they are on this type ofhome.
If you did a 15 year note atthat 6.
8% interest, your loan paymentscan be like 2, 800 a month.
If you did that same home andyou're like on a 30 year note,
your, loan payments, like 2170,any thoughts on how much you pay
(06:26):
for that?
Now you're a little bit higherinterest rate normally.
Cause you're borrowing money forlonger.
So, I ran that at about a sevenand a quarter.
About a half a percentdifference.
Say all the numbers in a rowagain.
Yeah.
325, 000.
Yep.
A 30 year note.
Okay.
30 year loan.
Yep.
At seven, yeah, at seven and ahalf on that 325, 000.
(06:48):
So the last one was 500, 000.
It's a longer loan.
It's a higher percentage.
I'm gonna guess that thatone's...
708 Well, actually you got itcuz you didn't go over but get
in was closer at eight.
It's seven hundred and eightyseven 1, 000 give or take means
I still win on the price isright.
You would yeah.
Yes.
(07:08):
So where's my free home then?
So yeah So there is You know,you do pay a lot in interest.
Now, there are some tax writeoffs on interest, and we can
cover that in a tax episode, butreally, you're still not, you're
getting a tax break, but you'rereally not making any money, so
there's a lot of interest you'regoing to pay.
There are some upsides, andAshton, I think you hit on this
(07:31):
early.
You can build equity.
Do you guys know how much myhome's increased in value since
we've owned it?
Just to give the listenerperspective, we've owned it for
20 years.
Do we get to know what youbought it at?
Yeah, two hundred and twothousand dollars.
I'm gonna guess it went up by...
Well, I've guessed first a lot.
(07:51):
Do you want to guess first?
Sure.
I'll say two hundred percent.
Okay, so what you're saying isyou're worth, you're saying it's
worth double.
So now it's 400.
So I'll, I'll say 500 instead.
I'll make it 500.
I was gonna say 500 too.
I'm gonna do 501.
Ashton, you're closer.
(08:12):
Yeah! 501 is like 530.
But really the only upside islike 330, 000.
So that seems like a lot.
Right?
In 20 years.
And it is.
I don't want to discredit that,but if I would go to buy a home
now, I've got to spend all thatmoney to buy a home because the
price of his home are up foreverybody.
But if you think about it, andI've paid that much in interest,
(08:34):
right, 500, 000 in interest intheory, you know, you start
going, where does this homereally make sense?
Yeah.
Well that's why you, some ofthese tax breaks help.
But you gotta look at, there aretaxes on a home.
There's property taxes you haveto pay every year.
There's insurance you have tobuy for it.
You know, and then you got tomake sure your budget can afford
(08:56):
it.
One of the other thing I'd lookat on a financial, cause the
reason why this came up is I'vebeen interacting with our Reddit
people that I've been chattingwith on Reddit and, and they're
going, when can I buy a home?
I'm 20 years old and I'm reallyexcited about buying a home.
And my take is wait, just giveyourself a second.
What's your budget for home?
What's the rent in your area?
(09:17):
Right.
If, if I would have paid rentfor that same amount of time, I
probably, it's all gone.
And I probably would have had topay as much as I paid for my
mortgage and rent because of thesize of our family.
Right.
There's six of us.
We needed a big home.
Gideon's the last one thatactually lives at home right
now.
And so I'm down to where I don'tneed that size of a home.
(09:39):
You know, and it puts all thisstuff in question any other
financial considerations.
Well, I mean there's theoperating cost Yep, good Yep,
which there isn't an apartment,right?
But the operating costs are alittle bit different because now
you've got to think about lawncare You've got to think about
(10:00):
watering outside watering.
You've got a sprinkler repairsGeneral repairs hot water.
Like if you if you're rentingyou can always put in like hey,
this is no longer working fix itWhereas if you own a home you
can Text yourself if it makesyou feel really good, but yeah,
fix it anyways.
So mom texts me, Hey, can youplease fix this door?
(10:22):
It's still broken now, but thereare stuff that you can do.
And we'll talk about that, youknow, like, and that's like in
the lifestyle section about howyou can modify and update it.
But now when you're thinkingabout getting a home, another
thing to consider on is how longdo you plan on staying there?
One of our.
It was our second home that webought.
(10:42):
We bought our first one inTaylorville.
Our second one is in Colorado.
And in between those two welived.
We rented a place in Californiabecause I told my wife,
California is crazy.
The market goes up and themarket goes down.
And you just have to time itjust right.
And I don't know that I have thetiming of it just right for a
two year deal.
Cause that's how long I'msupposed to live there.
(11:02):
So when we moved to Colorado,I'm like Colorado safe.
My brother in law kept tellingme how the market is so strong
in Colorado and that it's goingto go up in Colorado and you'll
never lose money in Colorado.
Well, the problem is we got overthere.
We decided that we didn't lovethe job.
Didn't mind Colorado, but thejob wasn't for me.
And I moved in six months.
(11:24):
Any guess on how much I lost onthat home in six months?
I'm already telling you, it's aloss.
Yeah, it's a lot, I'd imagine.
Yeah, I lost twenty grand.
Yeah.
And it was mostly in realtorfees.
Right, because they were like,you said you'd do this, and now
you're leaving.
Yeah, so I still had to pay therealtor for, to sell my home.
I had to pay for the propertyinspection.
(11:46):
I had to pay for everythingelse.
And so I lost 20, 000.
So, how long are you going tolive in an area?
The longer you own a home,mathematically, the better
chances you have of equity inthat home.
And equity is the, what you paidfor versus what it is now.
(12:08):
Right.
Doesn't include interest.
And then the other thing that Iwanted to talk about in this
length of stay is, is it'sstability for your family.
Right.
For, for mom and I that became abig deal.
I had moved her 10 times in thefirst 4 years of marriage, 5
years of marriage.
She was done.
It was actually our 11th move tomove into that home.
(12:29):
So there was an emotionalattachment to that home.
Right.
That I couldn't talk her out of.
She's like, look, I'm going to,I'm going to be here.
I'm going to raise my kids here.
Now that you guys are raised,that emotional attachment is
starting to separate for, so yougotta, you gotta be honest about
it with yourself and say, howlong am I going to stay here?
Is this best for the kids?
I don't know.
You've, you have to decide as alistener.
(12:52):
Cool.
How long are you going to staythere?
Yep.
So financial considerations,length of stay.
Something else is to think aboutis market conditions.
And we kind of touched on those.
What kind of market conditionsaffects housing?
Just about everything I'dimagine.
Cost of living in an area.
Yep.
Outside of, you know, living ina house.
But like all the stuff, likefood, gas, all those other sorts
(13:14):
of things.
Sure, and then location.
Yeah, location, location,location as they say is the most
important, three importantthings in real estate.
So, so that's something to thinkabout.
I have a friend of mine boughtsome homes in Indiana.
And Indiana was going through areal.
Economic downturn.
They're not bringing in thebusinesses.
There's there's a lot ofdeflation that's happening
(13:34):
They're how to lose his all ofhis money that he put into him
Yeah, cuz they never went theynever grew friend in Phoenix
bought a home never made themove to Phoenix We said hey,
it's a good investment.
At least I have a home Paidevery month on a losing project
At some point in time, you justhave to say, look, take the
home, you know what I mean?
(13:54):
Sell it for a loss, be done withit, you know.
And so with those sorts of, sothose two examples are
individuals that are trying toget into the real estate
business to accrue wealth.
Which is a bit different thanthe situation that someone like
me would be in getting a homefor the first time.
So, that, I have a question herethat I'm trying to formulate
(14:17):
correctly.
If If you're thinking aboutthose economic, like, say I
wanted to move to Indiana, andhow much should it matter what
the economy is doing with thishouse that I'm moving into?
Say I'm planning to sit thereand make it my career, is it
like, well, this house is gonnadepreciate for a little bit
before it starts to go up?
(14:38):
Cause if you're trying to, ifyou're trying to invest, it
matters very much.
But if it's a place to live...
The way I would look at it,Ashton, is I'd look at what my
rent would cost me versus whatowning a home.
When I'm making that financialdecision and is that month to
month?
Is it over the course of 10years?
If you think you're gonna bethere, I would run and I would
(14:58):
look more like at the 10 yearspan If it's just the short
term, I'd look at a short termThat's where you want to look at
the supply and demand in an arealike in Utah You're like, oh I
found this home and it's reallya cheap price and I can put my
whole family in and it's theright Thing you have to buy that
home because rents out ofcontrol here Right.
So you look at it and go, yeah,yeah, this is, this is a good
(15:19):
move, but, but that's why it'snot always just a financial,
it's it's sometimes it's whatmarket am I in?
What is what's happening aroundme did like an away, everybody
lost money on their homes.
I only have bought mine in nofour, but I never went negative
because I looked for aforeclosure home that somebody
was already at low end.
(15:40):
So when I bought it, I alreadyhad some equity.
It got sucked up in a way, but Inever went upside down on my
home.
Right?
So, yeah, those, that, that's avery fair question.
So I'd, I'd look at thatanalysis and just kind of make
that that baseline best decisionI could.
And you don't have a crystalball, right?
But you do know, you do knowUtah's growing.
(16:00):
Yeah.
And in Indiana, you know it'sshrinking and you're making a
career out there.
You're gonna look for the nicestproperty that you can buy.
Where in Utah, I'm looking forthe cheapest home I can buy in
the nicest neighborhood.
Right?
Yeah, yeah.
Over there, you're like, wow, mymoney's going to buy me a lot,
I'm going to go look forsomething really nice, because I
might as well, because I'm goingto be here for a while.
(16:23):
Makes sense.
Does that help?
Yeah.
And then the other thing is topay attention, when you're going
to buy a home, read thenewspaper, pick up, look at what
interest rates are doing, what'sthe economy doing, what are they
projected to be doing, that whenyou go to buy that, like, I
don't know that I'd buy a homeright now.
Keep in mind, realtors are goingto tell you it's a great time to
buy a home.
It's always a great time to buya home when you've got
(16:43):
commissions on the line.
Right.
But when you want to really stepback and look at it, how does it
work?
Okay?
It might sound like I'm beingnegative about home buying.
I'm not trying to be.
I'm just trying to help thelistener understand that we have
been sold a bill of goods sinceWorld War II.
That every American should own ahome.
It was kind of the thing thatthe, the US government realized
(17:05):
that as people are coming offfarms and they're going into
suburbia that they didn't want atransient population.
They're afraid what would happenis what we were seeing in the
great depression where peoplelive in an area for two or three
years and then pick up and moveand go to a different area for
four or five years.
And they wanted to try andstabilize that.
And they did that by.
Making home ownershipaffordable, which was a good
(17:27):
thing for a lot of Americans,but it, it doesn't mean that
that's what you have to follow.
Fair.
So we're kind of going against abunch of decades of education.
My parents would flip out if Itold, if they heard me telling
podcasters and listeners not tobuy a home.
Me, I'm going, hey, I think youneed to look at it balanced.
(17:48):
And that's, that goes into mylast one, which is lifestyle and
a personal preference.
Gideon, what's your big goalafter college?
Live in a van down by the river.
That's right.
So does it make sense for you toget into home ownership?
And so what you should do onyour income is you should look
and say, okay, my van down bythe river is going to cost me
(18:10):
two grand to live in a month,you know, or it's going to cost
me three grand to live like thatmonthly.
I should know that if I was tobuy a home, it would cost me
about 900 more than that.
Take that 900 and invest it.
something that you believe in,whether it be stock market,
whether it be land, whether itbe real estate through.
(18:33):
A diversified fund or directlybuy and want to have somebody
rent it.
You know, you need to look atyour ROIs and look at it as a
business, but you need to investthat money.
Let's say that your career overthe next six months, Ashton, all
of a sudden you're making bigmoney, you've got some good
leads and you've got a job.
You might look at it and say,okay, do I really want to buy my
home right now where, and Idon't know that I'm going to
live in Utah.
(18:54):
I don't know if I'm going to bein Montana, California.
I'm not a hundred percent sureyou might be better off to say,
cool, I'm going to invest thedifference.
If I know that I should bepaying 3, 000 a month for a
home, for the style of home Iwant, I'm only paying 800 a
month in rent, invest thatdifference, and that's where
you're going to grow yourwealth.
(19:15):
But make sure you invest thedifference.
Because when people here don'tbuy a home, they hear...
Oh, live off less money andspend it.
And that's not the true either.
Cause some of the cool thingsabout owning a home is I can
modify the living space.
Have I modified my personal homemuch?
Nah.
Oh, okay.
I disagree.
I've modified.
No, you're right.
(19:35):
I really haven't.
I've added a couple extra.
I really haven't, I've added acouple extra closets, but I
haven't tore down walls andknocked down stuff.
So you can modify it, I canpaint it, you know, so on and so
forth.
That's what I was thinking,we've painted that a lot.
Yeah, painted it, updated thetile, updated the carpet.
You know, trying to keep itmodern.
Right?
Granite countertops and thosekind of things.
(19:56):
But...
Now I realize I'm alsoresponsible for my lawn and my
garden and those kind of thingsmake me look at it and go, I
think I'm ready to downsize myhome because I don't love mowing
lawns Gideon does.
Nah, I just get paid for it.
Oh, did you mow my lawn beforeyou left?
Nope.
I didn't think so.
I tried to tell him too.
We had to do it to Monday rightbefore he pulled out of town.
(20:19):
Do you want to wander if youwant to wander a home might not
be the best for you?
But like I said, make sure youinvest the difference.
I think one of the biggestthings that I, that I've been
thinking about is you, youmentioned it.
It's, culture exists for areason, and I was trying to
remember, I remembered the quotewrong.
Herbert Hoover, his slogan wastwo cars in every garage and a
chicken in every pot.
(20:40):
For some reason I thought hesaid, and a home as well or
something, but he didn't.
But those cultures exist.
For reason but it doesn't meanthat that reason has to be your
reason either is something thatyou've kind of touched on a lot.
I think it adds a little bitmore to the front end.
cause when you get into all theinterest rates and the, and the
money that it costs and all thatsort of stuff, you've decided
(21:03):
that a home is for you.
But before that you've got tothink about all the culture and
you know, the culture of whatyou want to do with your life,
the culture of the work thatyou're in the culture of.
All those different things andit can help you before you get
to the step of this is how muchmoney it's gonna cost over the
course of 20 years.
I love it, Ashton.
Cause that, that really builtright where I was gonna say is
(21:26):
sometimes it's the pride ofraising your family, right?
It's that culture of being, hey,I raised my family in the same
spot.
They had stability.
Right?
So there's that cultural pridethat I still feel, and there
might be a sense of pride in theneighborhood, the community, the
security.
But I love that you ask thelistener to take a step back and
(21:46):
say, what do I want in life?
Not what does everybody tell meI need to get?
And that's so hard, so hard tostep back and say, what do I
really want?
And then make a decision to makea plan of action.
I love home ownership.
It's been really good for us asa family.
It's been great.
I provided a stable place foryou guys.
(22:07):
You knew where you're cominghome every night.
You didn't have to worry aboutmoving every six months because
of rent change.
I'm very glad I did it.
I just don't know.
Like I said at the start of theepisode that that's where I'll
continue to be in the future.
But at the same token, I'mplanning on how to build onto
here, how to build a biggercabin, you know, encouraging the
(22:27):
listener to look at their life.
But don't follow the crowd, makeyour own decision and realize
that home buying is buying ahome, not just buying a car or
signing up for a cell phoneplan.
A home is a commitment but it isa lot, it's a less of a
commitment than getting married.
So you know, it's that balancebetween the kids and then move
(22:50):
forward in confidence after youmake that decision, whether to
buy a home or not, and then liveyour best life.
You got this.
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