Is Renting Actually Better Than Buying a Home?

00:00:00.000 | It's one of those things in life where everyone kind of feels like they want to buy a home

00:00:03.980 | because we've all been told our entire lives that it's the American Dream.

00:00:07.640 | If something has been marketed to you your entire life, it probably feels like a very

00:00:11.980 | genuine desire, but like, what is it about ownership that is so appealing to you?

00:00:16.280 | Because your name is going to be on the deed and not the lease.

00:00:19.040 | When I was in my early 20s, I was like, "Oh my God, I'm throwing money away on rent."

00:00:22.560 | It was beginning to start that process that actually kind of opened my eyes to be like,

00:00:28.080 | "Wait a second.

00:00:29.080 | The property taxes, the HOA fees, like insurance.

00:00:31.680 | No one ever told me about that stuff.

00:00:33.160 | Like what?"

00:00:34.160 | I had so internalized the narrative that renting was throwing money away that it was impossible

00:00:37.940 | to conceive that like continuing to just rent was actually more cost effective and going

00:00:42.960 | to allow me to save and invest more money and grow more wealth than buying this condo.

00:00:48.560 | We just looked and in all but like a couple cities in America, it is cheaper to rent than

00:00:52.900 | to buy.

00:00:53.900 | Part of that is high prices, but a big part of that is interest rates.

00:00:57.360 | The fact that interest rates are so high right now has forced the conversation to be like,

00:01:02.160 | "Maybe it's actually not a good deal."

00:01:04.120 | Whenever I hear people talk about the correlation between net worth and homeownership, the causality

00:01:09.680 | is presumed that it's, "Oh, well, owning makes you richer."

00:01:13.840 | But I think it's the opposite that just richer people tend to buy their homes.

00:01:18.920 | Katie, thanks for being here in person.

00:01:21.080 | Oh my goodness.

00:01:22.080 | Thank you so much for having me.

00:01:23.480 | We've had all these phone calls and now we're finally meeting in person.

00:01:27.340 | We're having this little day in Napa Valley.

00:01:30.080 | Yeah.

00:01:31.080 | I attribute this to a guy named Chris Powers who has a podcast called The Fort and he lives

00:01:34.720 | in Dallas.

00:01:35.720 | He was like, "Well, when I have guests on, I'm going to have them come to Dallas and

00:01:38.800 | I'm going to like make a day out of it."

00:01:40.640 | So you drove down here, went out.

00:01:42.680 | You've never been to Napa.

00:01:43.680 | We went out for lunch.

00:01:45.600 | We're currently staying at our Picasso up in Napa.

00:01:48.920 | So we're here for the week, halfway in between.

00:01:50.720 | I don't know.

00:01:51.720 | We had a good little time.

00:01:52.720 | Yeah.

00:01:53.720 | I'm having a great time.

00:01:54.720 | I don't even feel like I'm on a podcast right now.

00:01:55.880 | I feel like I'm just continuing to hang out with you.

00:01:59.720 | Yeah.

00:02:00.720 | Well, it's funny because this topic of renting versus buying, which we'll get right to, like

00:02:04.820 | we started talking about it casually at lunch.

00:02:06.640 | I was like, "Oh, we're going to record this conversation.

00:02:09.140 | Let's just do it."

00:02:10.740 | So I'm curious because when I was doing research, I was like, "I want to do an episode on rent

00:02:14.140 | versus buy.

00:02:15.140 | I wonder if there's anyone I know who's as passionate about this topic."

00:02:18.360 | And I was like, "Wow, Katie's done like four episodes on this topic over the years.

00:02:22.580 | What is it about this that just gets you fired up?"

00:02:24.940 | There is something about it that gets me fired up, and I think it's because it's one of those

00:02:28.400 | things in personal finance where there's nothing quite so emotional that strikes that chord

00:02:37.060 | with people where the misconception of expectation and reality are so divergent.

00:02:45.080 | So by that, I basically mean the narrative around homeownership as a wealth building

00:02:51.980 | mechanism is so darn strong, and we can talk about why that is.

00:02:58.560 | But the reality of what it usually looks like in your most average case for someone who

00:03:04.860 | buys a home instead of rents it doesn't really live up to the hype in most cases.

00:03:11.260 | And so I just find it to be one of those frustrating topics financially where you can lay out the

00:03:19.060 | math for someone.

00:03:20.060 | You can show them in a spreadsheet, "This is what will happen if you do this.

00:03:24.500 | This is what will happen if you do that."

00:03:26.280 | And for whatever reason, it's like if someone has made up their mind that owning is better,

00:03:32.180 | there is no amount of math.

00:03:33.660 | There are no projections that will talk that person out of that decision.

00:03:38.800 | It's just so interesting because there's really nothing else in personal finance that I think

00:03:42.900 | people cling to so strongly.

00:03:46.220 | Yeah, maybe the magnitude of the cost makes it even more emotional.

00:03:53.140 | The fact that it's also something that I think our parents give us advice on more than maybe

00:03:57.620 | any other financial topic, I think real estate.

00:04:01.060 | The thing that drives me nuts about this decision of rent versus buy is that it seems so based

00:04:06.700 | in other people's opinions about what happened to them and not based on the comparison.

00:04:12.020 | So it's like, "Oh, I bought a home and I made a lot of money."

00:04:15.940 | And it's like, "Well, you made the money over 30 years.

00:04:17.980 | Maybe you had to renovate your house.

00:04:19.360 | Maybe if you had just invested it in the stock market, it would have done just as better

00:04:21.820 | or even better."

00:04:24.100 | And so it seems like people's advice on the topic, broadly speaking, is just based on...

00:04:30.020 | It's anecdotal.

00:04:31.020 | Yeah.

00:04:32.020 | And so it's not...

00:04:33.020 | They didn't run a model to say, "Oh, you know what?

00:04:34.980 | Had we just invested all this money and rented all along, we would have done just as well.

00:04:39.220 | It's just we did well."

00:04:40.660 | Exactly.

00:04:41.660 | Because you are assuming that that was the best path, you're really not thinking about

00:04:45.460 | the counterfactual wherein something else would have happened.

00:04:48.220 | And in some cases, it would be impossible to run that type of counterfactual because

00:04:52.500 | you probably weren't tracking rent prices that entire time.

00:04:57.620 | Data-wise, it's perfect.

00:04:58.940 | Even if I could say, "Okay, we're talking about this specific zip code.

00:05:02.860 | We can go back in time and actually look up what the average rent was for the type of

00:05:07.380 | home that you lived in for those 30 years, and we can run the numbers and whatever."

00:05:12.700 | But in that case, I find that people be like, "Yeah, but then I would have had to move a

00:05:16.340 | lot."

00:05:17.340 | And it almost just doesn't matter.

00:05:19.900 | So I guess it's my selfish and hard-headed one woman's journey to try to get people to

00:05:29.300 | think about it differently because I used to be the person that felt like, "Oh, if I'm

00:05:36.140 | 25 years old and I'm still a renter," now that's laughable, but when I was in my early

00:05:42.680 | 20s, I was like, "Oh my God, I'm throwing money away on rent."

00:05:46.220 | And it was beginning to go down that road and beginning to start that process and looking

00:05:52.960 | at condos in Dallas, Texas, and starting the pre-approval process and what have you, that

00:05:59.500 | actually kind of opened my eyes to be like, "Wait a second.

00:06:03.020 | There is so much more to this that no one ever tells you."

00:06:06.060 | For example, the property taxes in Dallas, Texas are 2% per year.

00:06:10.860 | So here I am going on my merry way thinking, "Oh, I'll put 10% down on this condo.

00:06:17.120 | This is great.

00:06:18.120 | I'll have someone else live in it, pay me rent.

00:06:20.960 | What could be easier?

00:06:21.960 | I've got life figured out."

00:06:23.680 | And then come to find out, I'm already in the pre-approval process looking at a specific

00:06:29.800 | condo and the real estate agent's like, "Okay, so the property taxes, the HOA fees, insurance,"

00:06:35.280 | she starts going through all the other things, and I was like, "No one ever told me about

00:06:38.920 | that stuff.

00:06:39.920 | I've never heard of it."

00:06:40.920 | And I find that that is kind of a common experience.

00:06:44.180 | But for me, it was like my, it like radicalized me.

00:06:47.520 | I was like, "Wait a second."

00:06:49.600 | Changed on a dime.

00:06:50.600 | Changed on a dime.

00:06:51.600 | Oh, absolutely not.

00:06:52.600 | I couldn't afford it in the first place.

00:06:54.960 | That was why the entire thing was kind of so comical in retrospect.

00:06:58.520 | I was like, "What money did I think that I had to even be doing that in the first place?"

00:07:02.920 | I had so internalized the narrative that renting was throwing money away, that it was impossible

00:07:07.300 | to conceive that continuing to just rent for $700 a month, whatever I was doing at the

00:07:13.680 | time, was actually more cost-effective and going to allow me to save and invest more

00:07:18.160 | money and grow more wealth than buying this condo and having the unrecoverable costs probably

00:07:23.840 | exceed the rent that I was paying at the time.

00:07:27.120 | It's funny because the throwing money away on rent, we've heard it a bajillion times,

00:07:33.320 | and I'm thinking, "Oh, well today, guess what?

00:07:35.160 | We threw away money when we bought lunch."

00:07:39.060 | To go back to your point about property tax, I throw away a lot of money.

00:07:42.460 | We own and we throw away money on proper tax.

00:07:44.660 | We throw away money on insurance.

00:07:45.700 | We throw away money on mortgage interest.

00:07:47.340 | Sure, some of that mortgage interest is a tax deduction, but we throw money away on

00:07:51.260 | maintenance, on repairs, on renovations.

00:07:54.580 | All of those things are throwing money away.

00:07:56.780 | When you actually compare it and say, "Let's strip out all the money you throw away on

00:08:00.500 | a home and then look at the delta between how much you spent and if you rented," and

00:08:06.260 | here I think is the big reason why a lot of people made money in real estate is, yes,

00:08:10.500 | renting might have been cheaper, but the assumption that they will be on par is that you also

00:08:15.740 | invest the difference.

00:08:18.460 | When you have a mortgage, if you don't want to get kicked out of your house, you have

00:08:21.660 | to make your mortgage payment.

00:08:23.500 | Part of that mortgage payment with a traditional loan is that you're paying the principal down.

00:08:29.180 | The sad truth is that in the first, I don't know the exact numbers, but it's like in the

00:08:32.660 | first-

00:08:33.660 | Basically the first 10 years.

00:08:34.660 | You're paying down almost none.

00:08:36.620 | I mean, you're paying a little bit down, but the vast majority of all the money you pay

00:08:39.820 | each month goes to your interest.

00:08:42.980 | But in the long run, over 30 years, you pay the house down.

00:08:45.900 | When you rent, in the long run, unless you also invest money, you will be left with nothing.

00:08:51.100 | Of course.

00:08:52.100 | I think that that forced savings device argument for ownership is a compelling one, I think.

00:09:00.820 | If you are a person that does not really have a strong track record of being able to force

00:09:07.480 | yourself to save and invest, that wasn't really my problem.

00:09:12.060 | I'm a pretty good saver and investor, and so I didn't feel like, "Oh, if I don't buy

00:09:18.020 | a house, it doesn't matter that only," we'll call it, "20% of my outgoing funds that I'm

00:09:25.220 | spending are actually staying in my pocket, and the other 80% are going to the local municipality,

00:09:33.060 | the insurance company, the bank."

00:09:38.260 | At that point, I'll just save the 100% myself, or whatever percentage is the delta between

00:09:44.180 | the rent and the ownership cost, and keep the down payment invested.

00:09:48.900 | The funny thing is that that dilemma, for me, was actually playing out at a time where

00:09:55.620 | the interest rates were such that it was pretty easy to make the numbers work for owning,

00:10:00.340 | because the interest rates were less than 4%.

00:10:03.380 | Now, it's so funny to see, now that rates are above 6% and 7%, it's like people are

00:10:09.220 | discovering amortization calculators for the first time, like, "You'll never believe how

00:10:13.300 | much this house is actually going to cost you."

00:10:15.140 | I'm like, "Has no one looked this up before?"

00:10:17.540 | This has always been true.

00:10:18.740 | It's just that money used to basically be free, but now you really just can't ignore

00:10:24.900 | it.

00:10:25.380 | It's no longer a little bit at the margin.

00:10:28.980 | It's like, "Oh, no.

00:10:30.820 | The mortgage payment is $2,500, of which $2,000 is interest.

00:10:36.820 | Okay, well, now this choice doesn't look so obvious anymore."

00:10:44.100 | Do you listen to Ben and Cameron on Rational Reminder?

00:10:49.540 | They have really great rent versus buy content, particularly because if you know anything

00:10:54.740 | about Canada's real estate market, it's kind of like the US, but worse, where they also

00:11:00.980 | are experiencing really hot real estate numbers, but they didn't have the equivalent of a

00:11:06.740 | 2008-style correction.

00:11:09.220 | So, theirs was going up then and has been going up the entire time and didn't have that

00:11:14.420 | huge five-year dip that then they had to climb back out of, so it's even worse in Canada.

00:11:20.260 | And one point that they made that I thought was so fascinating was that paradoxically,

00:11:25.540 | the time that it is most expensive for you to be a homeowner is when you own your home

00:11:30.900 | outright, because that's when the opportunity cost is highest.

00:11:34.500 | You would think it's most expensive in the beginning, in this period that we're talking

00:11:38.100 | about, where you are paying, you are outlaying so much cash, and such a small fraction of

00:11:44.420 | it is building equity.

00:11:45.780 | The rest is no different than rent in that sense.

00:11:48.100 | But they made the point that because over time, you're probably not going to see property

00:11:54.420 | appreciation in excess of like four or five percent.

00:11:58.180 | It's just keeping pace with inflation.

00:12:00.500 | For the most part, it's not really going to be all that impressive.

00:12:04.820 | It's most expensive to you as the homeowner when so much of your net worth is in this

00:12:09.700 | thing that is just keeping up with inflation, maybe a little bit in excess of it.

00:12:15.220 | And I thought that was so interesting.

00:12:16.980 | So I'm like, yeah, I mean, the other people's money aspect or the fact that you're levered

00:12:22.340 | when you buy is in some ways the most expensive part of it, but also the part that can make

00:12:30.260 | it work.

00:12:31.300 | Because in that first, I don't know, when not so much of your money is tied up in it

00:12:38.660 | and you've made this levered bet on the fact that it's going to go up, your net worth is

00:12:45.620 | increasing at a disproportionate rate because of that, if the property is, in fact, rising

00:12:50.660 | in value.

00:12:51.380 | Yeah, when I see people defend buying, obviously, if you're there for a really long time and

00:12:56.660 | you pick right or you get lucky, those are great cases.

00:13:00.180 | But some of the defenses are, okay, mortgage interest is tax deductible.

00:13:03.380 | Okay, but if you own your house outright, there's no mortgage interest, that doesn't

00:13:08.500 | apply.

00:13:09.060 | Only matters to you, are you paying in excess of, you know, you're a married couple, are

00:13:14.820 | you spending more than $29,000 a year on mortgage interest and property taxes?

00:13:18.980 | Because if you're not, you're just better off taking the standard deduction anyway.

00:13:22.580 | Is that the payment doesn't change and that you have a fixed payment, whereas rent, you

00:13:28.340 | can assume is going to go up over time.

00:13:30.420 | Though can go down, like people were negotiating their rent down during the pandemic and other

00:13:36.420 | times.

00:13:37.060 | Some people I know have said, look, I think I'm going to live here two years, I'll negotiate

00:13:40.180 | my rent down if I commit for two years.

00:13:42.100 | Maybe one other case was what you said about leverage, right?

00:13:45.220 | If we can make the claim, and I think data shows it, that your property is probably not

00:13:49.700 | going to appreciate at the same historical rate as the stock market.

00:13:53.220 | That's just like hasn't ever happened.

00:13:55.140 | Maybe in one or two years it will happen, but over the long run it hasn't.

00:13:58.180 | So if you can't lever up your investment, then it doesn't make sense.

00:14:01.700 | And so to your point about owning the entire house being the most expensive time, that

00:14:05.460 | makes sense.

00:14:05.860 | There's no leverage, there's no tax deduction.

00:14:07.620 | And in the last case, I guess if you sell your house, you do get, as a married couple,

00:14:13.700 | up to $500,000 of tax-free gains.

00:14:15.860 | That's nice.

00:14:17.460 | That's pretty, I would say that's one of the more compelling reasons.

00:14:21.620 | And also, I mean, to be fair, you can't live inside an index fund.

00:14:26.580 | So I see the point that people will make, which is like, well, I have to live somewhere.

00:14:31.940 | And if one path is going to all things considered equal, all things the same, if one path is

00:14:40.340 | eventually going to lead to me having this asset that I can sell for a profit that is

00:14:46.180 | functionally operating the same way as a piggy bank, where some of the money that I'm paying

00:14:51.460 | for it is going to stay inside it and I can turn around later and benefit from that, then

00:14:57.940 | great.

00:14:58.580 | I agree that that's maybe the optimal path.

00:15:02.100 | The problem right now, as far as I can see it, is that the rental market and the buyer's

00:15:08.180 | market are so distorted.

00:15:10.260 | They are so out of whack with one another.

00:15:13.220 | To a degree that I don't, I don't want to say historically that we've never seen, because

00:15:18.100 | that's not true.

00:15:18.820 | I think this has happened at least one other time in the 21st century where the gap was

00:15:24.100 | so dramatic, but it's almost laughable how much cheaper it is in most places to rent

00:15:34.100 | and invest the difference than to become an owner.

00:15:37.300 | And I think with any asset, most investors probably realize that the price you pay for

00:15:42.420 | the asset is going to in some way determine the return that you get.

00:15:47.300 | So if I buy Amazon at $10 a share or $200 a share, obviously my return is going to be

00:15:54.420 | greater if I'm getting in at $10 a share.

00:15:56.580 | So unlike an index fund, you cannot dollar cost average into a house.

00:16:02.260 | You lock in the price when you buy it.

00:16:04.500 | So right now with things being so inflated and with the buyer's market being so much

00:16:09.780 | more expensive than the rental market, it's not in all things considered the same, all

00:16:15.460 | things considered equal equation right now.

00:16:17.700 | Things are not equal at all.

00:16:19.060 | Renting is so much cheaper.

00:16:21.060 | I'm going to push back really briefly and just say, right now things are expensive.

00:16:25.140 | And I think we just looked and in all but like a couple cities in America, it is cheaper

00:16:29.300 | to rent than to buy.

00:16:30.740 | In almost every major city and in the area where right now in the Bay Area, it's probably

00:16:34.900 | the most ludicrously more expensive place to buy than rent.

00:16:39.140 | Part of that is high prices, but a big part of that is interest rates.

00:16:44.340 | And dollar cost average, maybe not the right term, but you can refinance your mortgage

00:16:50.580 | at a future date if interest rates drop.

00:16:52.260 | Fair point.

00:16:52.900 | So I think that if you were to buy a house today, let's use an extreme example that I

00:16:57.860 | think is very unlikely, and interest rates drop to 2% tomorrow and you refinance tomorrow

00:17:02.580 | on your house, you might be in a situation where over the next 10 years, it actually

00:17:06.900 | was cheaper to buy.

00:17:08.100 | I think a lot of these rent versus buy comparisons right now are looking at 7% interest rates

00:17:13.860 | and at that rate, it's really crazy.

00:17:16.100 | So if you had some crystal ball that said interest rates are going to drop to zero tomorrow,

00:17:20.260 | you might be better off buying and refinancing.

00:17:22.580 | However, that doesn't look likely.

00:17:24.660 | If you look at the predictions for Fed Funds rates, yes, they're predicting a rate cut

00:17:31.460 | this year, but like not a big rate cut.

00:17:33.460 | And I don't know, you know, it's not that the Fed Funds rate is the mortgage rate, but

00:17:38.100 | Have you ever refinanced?

00:17:38.820 | They're trending.

00:17:39.380 | Yes.

00:17:40.260 | Okay.

00:17:40.820 | So what was the closing cost situation like when you did that?

00:17:44.100 | It was not that high.

00:17:46.580 | So we didn't even mention closing costs.

00:17:47.860 | By the way, other things you throw money away when you buy a home, you throw, you know,

00:17:51.940 | anywhere from 1% to 3% on your closing costs.

00:17:53.860 | But the biggest one is you're paying probably depending where you live, 5% to 6% in broker's

00:17:59.940 | fees when you sell.

00:18:00.980 | Right.

00:18:01.460 | Now, when you buy, you're effectively paying that fee.

00:18:03.700 | Also, you're just not the one who outlays it, but it's factored into the price, which

00:18:09.140 | is why this, you know, class action lawsuit, this kind of scrappy lawyer out of Missouri

00:18:14.900 | who challenged the National Association of Realtors, 6% commission.

00:18:19.380 | And that to me, this, the fact that now this commission is getting struck down and there

00:18:23.780 | are all these copycat, this copycat litigation in different states that are trying to say

00:18:27.780 | the same thing is fascinating because it just is a perfect example of like the externalities

00:18:34.820 | that are going to impact what happens to housing prices over time that going into this year,

00:18:40.020 | you probably never thought of.

00:18:40.900 | There are some variables that we're all aware of.

00:18:42.900 | Like what is the fed funds right?

00:18:44.980 | Can it do our interest rates going to go down?

00:18:46.580 | I don't know.

00:18:47.060 | Maybe we think we know what's going to impact the rent versus by equation, but this lawsuit

00:18:53.780 | kind of came out of nowhere and if all of a sudden a fixed price, a fixed fee of 6%

00:19:00.740 | that used to be to your point, baked into the price of every home sale is now gone.

00:19:06.420 | Of course, that's going to impact prices.

00:19:09.220 | And they're thinking that it could, you could see kind of a universal softening across the

00:19:14.420 | board because now you don't have to pay this 6% commission as the seller to your agent

00:19:20.020 | and to your, your, um, buyer's agent.

00:19:23.460 | So I don't know, it's just an interesting, to me, I just kind of shows that we, we, you

00:19:28.420 | never know what is going to change nationally, but also like in the town that you're trying

00:19:33.540 | to buy in and how that could radically shift this assessment for you and what makes more

00:19:39.540 | sense.

00:19:40.020 | But I was asking about closing costs specifically because I always hear people talk about refinancing

00:19:45.460 | as like, well, yeah, you date the rate, you marry the house, you marry the price, you

00:19:50.820 | date the rate.

00:19:51.460 | And like the implication of course, is that you can just get a lower rate later, but I,

00:19:55.780 | I rarely hear people acknowledge the fact that you have to pay closing costs again,

00:20:00.020 | this isn't like a free transaction.

00:20:02.180 | And so I'm curious what that experience was like for you.

00:20:06.340 | So I'm looking at our refinance right now.

00:20:08.740 | And there were $50 credit report, $13 flood certification.

00:20:15.220 | Unfortunately, these don't get summed up $135 tax service, $735 appraisal fee, $25 title

00:20:23.620 | insurance and other almost $1,700 title fees, $400 recording fee.

00:20:30.820 | So that's not bad at all for the value of the property.

00:20:34.180 | Add all that up, maybe it's a few thousand dollars.

00:20:37.620 | Someone listening probably has a, has the kind of memory.

00:20:40.100 | It's like, I know exactly that number.

00:20:41.300 | I was, but I was under the impression that it was a set percent, the same way that closing

00:20:45.940 | costs when you initially buy a home can be.

00:20:48.420 | So it really depends.

00:20:49.860 | The first mortgage we ever had, we had bought a house in San Francisco is classified as

00:20:53.620 | what's called a TIC.

00:20:54.500 | It was a tenancy in common.

00:20:55.620 | So we actually, we bought a two bedroom condo, but it was not a condo.

00:21:00.820 | It was a TIC, very different with another couple.

00:21:04.020 | So we all owned the two units together and we had a legal agreement between us about

00:21:10.500 | how we would share them.

00:21:12.020 | Basically, we would only inhabit ours.

00:21:13.620 | They would inhabit theirs.

00:21:14.500 | But technically, if they stopped paying their monthly fees, we're on the hook because there

00:21:19.060 | were four of us on the title.

00:21:20.020 | It was very financially intimate because we were like, we're going to buy a house with

00:21:24.260 | you.

00:21:24.340 | So we need to see your balance sheet.

00:21:25.620 | We need to see everything because, and we all put in three months of mortgage payments

00:21:29.540 | in advance.

00:21:30.500 | And every time the mortgage was paid, we had to put another month in.

00:21:33.140 | So you would kind of get a three month headstart as if someone was going to miss.

00:21:37.700 | But when we refinance that, the loan we had had a 1% early termination fee effectively.

00:21:44.180 | So when we went to refinance, we had to pay 1%.

00:21:46.340 | So if you were to have a loan with these kind of 1%, I don't remember what the exact name

00:21:52.340 | of that fee was.

00:21:53.140 | Yeah, you would have had to pay 1%, but I did not have to, but I did not have to.

00:21:59.620 | And I've actually heard, I think it's called recasting.

00:22:02.500 | And this is where I think there is also a recasting that could somehow have lower fees.

00:22:07.140 | There are some financial institutions that I think have very, very low fee refinances.

00:22:12.580 | And so I imagine when interest rates drop, there will be a massive fight for banks to

00:22:18.980 | refinance.

00:22:19.620 | There will be plenty of people who want to refinance.

00:22:22.020 | And I imagine that there will be some competition.

00:22:24.500 | So I could see those costs going down.

00:22:27.780 | Interesting.

00:22:28.420 | Okay.

00:22:28.660 | I could see that too.

00:22:29.700 | You know, we did an interesting, um, well, two things.

00:22:33.460 | Okay.

00:22:33.860 | So one thing that this is bringing up for me is I'm thinking about generations past and

00:22:42.580 | kind of this claim that real estate is, or rather, let me be more specific because I

00:22:48.820 | think sometimes you hear real estate, you, it brings to mind people who are investing

00:22:53.460 | in real estate.

00:22:54.420 | As in I buy this house, I'm renting it out to someone else.

00:22:58.340 | It's going to cashflow.

00:22:59.460 | I'm having my costs covered.

00:23:00.980 | Someone else is paying down the mortgage and maybe I'm skimming off a little bit of the

00:23:04.100 | top every month, or, you know, I have some like net income on that transaction.

00:23:08.500 | That is very different than I am buying a primary residence that I am going to live

00:23:14.580 | in and pay for.

00:23:15.380 | And so when I think about the generations of the past and how they were able to build

00:23:21.460 | wealth and what they had available to them, as it compares to what young people today

00:23:26.660 | have available to them.

00:23:27.860 | I think the big difference is that your average young professional in the eighties and nineties

00:23:34.660 | had a much steeper road to other public investments.

00:23:40.900 | They did not have a supercomputer in their pocket that they could place a $0, $0 commission,

00:23:47.140 | $0 fee trade and buy the S&P 500 in five minutes.

00:23:52.100 | That wasn't really a thing.

00:23:53.780 | And so I think about homeownership for that demographic or for that that group of people

00:23:59.940 | in history as like, well, yeah, it probably was your best option at that time.

00:24:05.380 | It was probably one of the only realistic ways that you could really build wealth easily.

00:24:10.660 | And I think that as the options for wealth building and the ability to decouple our need

00:24:16.100 | from shelter, from our interest in building wealth, as that becomes more and more available

00:24:22.260 | to anyone who has a smartphone and some like extra money on the side that that housing

00:24:27.940 | looks less and less attractive as like the primary means by which you build wealth.

00:24:33.380 | But all that to say, it doesn't surprise me when I hear people in my parents' generation

00:24:37.300 | say, oh, you should always buy a house.

00:24:38.900 | It's going to make you wealthy.

00:24:39.940 | It's like, well, yeah, because for them, it probably did.

00:24:42.180 | But like.

00:24:42.680 | That has not been the experience of, I'll say, my generation or our generation, we did

00:24:49.860 | a really interesting study with our audience or we surveyed like almost a thousand people

00:24:57.220 | and basically asked them about their housing costs and their incomes and their net worths.

00:25:01.940 | And while more of our audience in this respondent pool owns rather than rents,

00:25:08.820 | the monthly median cost for the owners was twenty six hundred dollars per month

00:25:15.780 | compared to two thousand dollars a month for the renters, which obviously we're not

00:25:20.020 | we're not controlling for size of dwelling or what have you.

00:25:22.980 | But I did think that that was interesting that they're spending more.

00:25:26.180 | The median age of the owners was about four years older.

00:25:29.140 | They were thirty four compared to the median age of the renters, which was thirty.

00:25:32.340 | But this was what was really, really blew my mind, just that the median

00:25:37.300 | like household income was so much higher for the owners compared to the renters.

00:25:41.620 | So when we look at their net worths, yes, the owners were richer,

00:25:44.740 | but they they were spending more on housing.

00:25:47.460 | They just had more money.

00:25:48.660 | They had more income.

00:25:50.180 | And so whenever I hear people talk about the correlation between net worth and homeownership,

00:25:55.060 | the causality is presumed that it's, oh, well, owning makes you richer.

00:26:00.500 | But I think it's the opposite, that just richer people tend to buy their homes.

00:26:05.380 | And based on the incomes and costs that we saw in our survey data set, like, yeah,

00:26:11.860 | I mean, it kind of tracks like intuitively, it makes sense.

00:26:15.060 | But I would say that it was also supported in what we saw from our

00:26:18.500 | survey filler outers, our hand raisers.

00:26:22.580 | It's funny, because when you first started saying that, I was thinking that there was a reason why

00:26:28.660 | the owners would buy a bigger place or spend more than the renters, not just comparison of costs.

00:26:35.140 | But I've always found that there's this rule of thumb.

00:26:38.340 | It's like, don't buy a home unless you're going to live there for ten years.

00:26:41.220 | And I'd say the primary reason behind that is this broker's fee, right?

00:26:45.140 | You're going to have a 5% loss.

00:26:47.140 | And if you buy a home and try to sell it next year, and you've got to take a 5%, 6% loss,

00:26:51.140 | and the closing costs up front, it doesn't make sense.

00:26:54.900 | Now, if we can get rid of that, that actually could change that rule of thumb.

00:26:58.980 | I have a friend who was selling a place in Miami.

00:27:02.340 | And I actually told him, I said, hey, you know what?

00:27:04.900 | Why don't you propose something crazy to your realtor?

00:27:08.020 | Because why not?

00:27:09.220 | And I've always wanted to try this.

00:27:10.500 | And he said, I'm going to say, I'll give you X percent if you sell it at list,

00:27:16.020 | but I'll ratchet it up if you sell it above.

00:27:18.820 | So it went all the way up to 9%.

00:27:20.180 | And it went down to 3% if they sold below the price that they thought they could.

00:27:24.740 | And it turns out they got an offer and they took it.

00:27:27.380 | And they didn't get to actually test this.

00:27:28.980 | But I was really excited to see, because a model that would make a lot more sense to me

00:27:33.060 | isn't give you 6% for selling the house.

00:27:35.060 | It's like, give you a performance fee if you do a really great job

00:27:38.420 | and are able to get a better price.

00:27:39.860 | And you get less fee if you don't.

00:27:41.940 | But that's a little bit of a tangent.

00:27:44.180 | Where I was going with this was because of that rule of thumb,

00:27:47.540 | I see people that are young, they're looking at buying a home.

00:27:50.580 | And they're like, well, we have to live here 10 years to make buying a home a good deal.

00:27:54.740 | We want to live in a pretty nice house.

00:27:56.340 | Yeah, we need a place that when we have kids, we can fill it out.

00:27:59.620 | And so this was our thinking when we first bought a house, we had no children.

00:28:03.300 | And we were like, well, if we're going to live here long enough

00:28:05.460 | for this to be a financially good deal, we need a house that we can have kids in.

00:28:08.580 | So we need at least, let's call it three bedrooms.

00:28:11.060 | Well, we didn't need three bedrooms for like five years.

00:28:15.140 | So had we bought a place with three bedrooms versus rented,

00:28:19.460 | for renting, we would have just had a one bedroom for the next five years.

00:28:22.660 | And then we might have upgraded.

00:28:23.700 | But for buying, because we knew we had to be there for so long,

00:28:27.220 | we were like pre-buying space we didn't need.

00:28:29.700 | Yeah.

00:28:30.100 | And so that would have been a very...

00:28:32.660 | So I think this problem of pre-buying space is something,

00:28:35.780 | oh, I want to buy my forever home.

00:28:37.380 | So I have to buy the home that I wouldn't necessarily rent a comparable home for.

00:28:41.540 | And then I do the math and I say, oh, well, I'm spending three grand a month now.

00:28:45.220 | Like you can't compare apples to apples unless you look at the same kind of house.

00:28:48.740 | But also I actually want to push back.

00:28:51.620 | Sometimes people say, well, do the rent versus buy with comparable properties.

00:28:55.060 | And I say, well, if you're only going to rent a one bedroom for three years,

00:28:58.660 | and then you're going to switch to a two bedroom for three years,

00:29:00.500 | and then maybe a three bedroom in three more years,

00:29:03.060 | we'll compare that kind of whole picture

00:29:06.740 | because you wouldn't actually have to rent the comparable three bedroom for a while.

00:29:10.580 | And what we ended up doing was we found a place, it was random.

00:29:15.220 | We were just going around.

00:29:16.420 | We saw this house and it had a separate entrance on the master bedroom,

00:29:19.460 | and it was on a separate floor.

00:29:21.060 | And we were like, what if we lock off that floor and we rent it out?

00:29:24.580 | So we basically bought a three bedroom,

00:29:27.540 | but for five or six years, it was just a two bedroom.

00:29:30.820 | So we only lived and we rented out the other room.

00:29:33.220 | So we were able to commit to, we're going to live in this place for 10 years.

00:29:36.420 | It ended up being about eight or nine years,

00:29:37.860 | but we were committed to live to it for a really long time.

00:29:40.420 | But we were able to not pay the price for the space we thought we would need in the future.

00:29:44.180 | Then we ended up decorating.

00:29:45.940 | We had a nursery, we had a kid, and then we moved out,

00:29:47.780 | like right after having our first child.

00:29:50.420 | The thing about buying your primary residence that I think

00:29:54.260 | is maybe the sticking point for me is that

00:29:59.540 | I think there is a really smart way to do it.

00:30:03.380 | One of those ways is what you just described,

00:30:06.980 | which is using it in some capacity to create more income for you.

00:30:12.180 | So like we rent a very nice home in California,

00:30:15.060 | but there is something in our lease agreement that says like,

00:30:17.380 | you can't Airbnb out this house, but we travel a fair bit.

00:30:21.780 | It would be pretty nice if we could, right?

00:30:23.620 | But like, that's not our decision to make.

00:30:25.780 | So if you're someone who is willing to get creative

00:30:29.220 | and you're like, "Ah, I'll just, you know, lock off this part of the house,"

00:30:32.020 | or "Oh, I'm just going to rent a bedroom out."

00:30:33.620 | I mean, those are great ways to shift this equation very quickly.

00:30:38.100 | The other thing that I would say is I think

00:30:39.780 | the problem or what I always try to dissuade particularly young people from doing

00:30:48.900 | is kind of going into this transaction with blinders on

00:30:54.020 | as though like this is just what I am supposed to do at this phase in my life.

00:30:59.300 | And like the moment that I feel like I could eke out a down payment

00:31:03.540 | and like spend 45% of my take-home pay on that mortgage payment,

00:31:07.780 | I'm going to go for it and pull the trigger because this is my ticket to wealth.

00:31:11.620 | I have just heard from so many listeners of the podcast, readers of the blog,

00:31:17.540 | people in our community who basically say,

00:31:20.820 | "Hey, I bought this house. I used all my savings for the down payment.

00:31:25.540 | Like I have nothing left in my emergency fund or I have very little left in my emergency fund.

00:31:30.260 | I'm spending almost half of my net income on it every month.

00:31:34.100 | I feel really spread thin. I feel really stretched.

00:31:37.380 | Like I can't really, I have no discretionary income anymore.

00:31:41.060 | I live in stress that something is going to break and I can't afford it."

00:31:44.580 | I'm like, "Who wants to be in that position?"

00:31:46.980 | Like that situation is not going to pay off for that person for a very long time.

00:31:53.460 | And that's an if.

00:31:54.420 | Like if the property continues to appreciate,

00:31:56.980 | they better hope they didn't buy in an area that's like on a downswing

00:32:00.180 | because in that case, they're kind of struggling and scrimping for nothing.

00:32:05.060 | And so I think if you want to buy and you can comfortably afford it,

00:32:10.020 | like you are in a financial position where you are operating from a position of strength

00:32:15.300 | and to your point about renting out the room, like kind of creativity

00:32:19.780 | or we'll say just like general savviness, I think it can make a great deal of sense.

00:32:25.220 | It's just problematic for me when the situation or the decision is approached

00:32:33.060 | as kind of like a black and white.

00:32:35.540 | I almost look at it in some ways as like the decision to go to college today.

00:32:40.020 | Like, yeah, a college degree is probably going to help you.

00:32:44.180 | Like if you just look at the data and like, you know,

00:32:47.140 | incomes associated with level of schooling, is it smart to go to college?

00:32:51.620 | Yes.

00:32:52.500 | And also, should you spend $50,000 a year out of state to go to a state school

00:33:00.900 | and study something where your starting salary is going to be

00:33:03.300 | $45,000 and also take out a ton of debt?

00:33:06.740 | Like the circumstances around the choice matter.

00:33:10.740 | What you spend on it matters.

00:33:12.180 | The sacrifice you have to make to make it happen.

00:33:14.660 | Right.

00:33:14.900 | What you want to do with it matters.

00:33:16.580 | And so I think that it's just that kind of like binary, buying is always good.

00:33:22.420 | Going to college is always the right choice.

00:33:24.420 | It's like, no, there are many ways to turn both of those things into financial nightmares

00:33:30.580 | if you're not approaching it in a strategic and thoughtful way.

00:33:35.060 | And it can be really stressful because I know the peer pressure.

00:33:38.420 | I have two anecdotes.

00:33:39.780 | One was we had a friend and it was another couple and they were hoping to buy a home.

00:33:46.100 | We had bought our first home.

00:33:47.860 | And I'm not even kidding.

00:33:49.140 | And that was the real estate arms race.

00:33:50.740 | They're like.

00:33:51.140 | Well, one of the couple was like, I don't think that it makes sense for us to hang out anymore

00:33:56.420 | because like, we just don't like being around.

00:33:59.620 | Like you knew we wanted to buy a home and then you went and bought a home.

00:34:02.340 | And now it was like this weird.

00:34:04.340 | It became a thing in this relationship with this other couple where they were like,

00:34:08.500 | we just like now is not the right time for us to keep hanging out because we're kind

00:34:11.860 | of frustrated that you were able to do this.

00:34:13.300 | And we weren't.

00:34:13.860 | Imagine the pressure you would feel that you have to own such that it would hurt your relationships

00:34:18.180 | with people that are able to do this thing.

00:34:19.780 | And then there's one other anecdote that was so strange was a friend of mine said, gosh,

00:34:24.980 | it's getting so expensive in the Bay Area to buy a home.

00:34:27.220 | I think we're going to buy a home somewhere else.

00:34:30.180 | And I was like, are you moving?

00:34:31.300 | They're like, no, but like they had so much pressure that they felt like to be successful,

00:34:36.020 | they needed to own a home that they bought a home in a city they didn't even live in,

00:34:40.100 | not because they wanted to become rental property landlord like they didn't.

00:34:44.260 | That wasn't why they just felt like they needed to own a home to be successful.

00:34:49.460 | And like that was the path they were going on.

00:34:52.820 | Another friend of ours in the Bay Area was like, well, we can't afford a home.

00:34:55.540 | So we're going to buy a vacation home in Tahoe.

00:34:57.380 | And I was like, if you can't afford to buy a primary home,

00:35:01.060 | I don't know if vacation home is the best option.

00:35:03.780 | I'm not saying it's a terrible like we're not going to go down that conversation.

00:35:06.980 | That could be a whole nother episode.

00:35:08.260 | But it was just there have been multiple touch points in my life where I've watched other people

00:35:13.300 | make decisions because they felt this immense pressure.

00:35:16.420 | And in a way, the fact that interest rates are so high right now

00:35:21.780 | has forced the conversation to be like, maybe it's actually not a good deal.

00:35:27.220 | And I just hope that we don't have this thing happen,

00:35:30.260 | which I think it could go one of two ways.

00:35:31.700 | One, interest rates drop and people are like, I don't even need to do the math anymore.

00:35:35.780 | It must be such a good deal.

00:35:37.140 | Yeah.

00:35:37.460 | But the other is, oh, wow, I remember that I did the math a year ago and it didn't,

00:35:42.660 | you know, it didn't check out.

00:35:43.860 | Maybe I should do it again and see if it checks out now.

00:35:45.940 | Who knows?

00:35:47.780 | I think right now the homes are, in my opinion, homes are so expensive,

00:35:53.460 | not just because the real estate market is doing great.

00:35:56.500 | But I just think no one wants to sell because most people that own a home, if they sell.

00:36:00.580 | What is it, like 70% of people have a sub 3% or something insane?

00:36:04.580 | Yeah, it's a massive number of people have very cheap mortgages.

00:36:07.780 | And so if I wanted to move right now, I would have to go get a 7% mortgage.

00:36:12.740 | And I'm like, or start renting.

00:36:14.740 | And one thing that I think they do in other countries,

00:36:18.180 | I'd have to fact check this, but I'm pretty sure in like Germany, for example,

00:36:23.380 | you can actually take a mortgage with you.

00:36:26.900 | So you could say, you know, I already have this loan for $400,000 that I've been paying down.

00:36:33.940 | Right.

00:36:34.260 | And it's at a 3% interest rate.

00:36:36.740 | I'm going to sell this house and apply this loan to the new house that I'm going to buy.

00:36:42.580 | I think that would actually clear up quite a bit of the gridlock that we have right now

00:36:47.140 | in the market where to your point, no one wants to move.

00:36:50.420 | And rightfully so people feel trapped.

00:36:53.620 | They feel like, well, I can't move because not only is it like an emotional

00:36:58.420 | thing or even not even emotional, not even is it a rational thing of,

00:37:02.500 | well, I have a 3% rate right now and I don't want a 7% rate.

00:37:05.540 | It's like, no, if I had to buy a different house,

00:37:07.940 | I actually would spend more money to get less.

00:37:10.820 | I wouldn't even be able to afford a house as nice as the one I live in now.

00:37:15.140 | If I sold it and then.

00:37:16.980 | Our house would cost like 75% more if we refinanced at today's rate.

00:37:21.300 | Right.

00:37:21.780 | So what are you going to do?

00:37:22.740 | Sell that house and then go try to buy something that's 75% less nice.

00:37:26.900 | Like it just doesn't make sense.

00:37:28.580 | But I think if you give people the ability to.

00:37:30.740 | Take that those loan terms with them and just shift it around,

00:37:36.980 | then you might see more fluidity and like things will start to kind of like,

00:37:40.660 | you know, shift.

00:37:41.700 | I don't see a way out of this beyond either more supply or like.

00:37:46.500 | Some crazy unexpected externality like the.

00:37:51.700 | The commission thing like another similar, you know.

00:37:55.940 | Piece of legislation or or something that's going to shift things system wide.

00:38:02.420 | So my worry is that.

00:38:03.860 | I don't see the incentive.

00:38:06.500 | For financial institutions to make that happen.

00:38:09.140 | Now I could see it when interest rates drop.

00:38:13.140 | You get offered a do you want a 4% interest or do you want a four and a half percent interest

00:38:19.220 | loan that you can take with you?

00:38:20.340 | My guess is they might charge a premium for something like that.

00:38:23.700 | And right now I don't think you can get away with a premium because

00:38:26.820 | everyone's mind right now is I'm going to refinance in the future.

00:38:29.700 | So whatever mortgage I get now, I don't care about.

00:38:31.700 | But if we get to a point where people have this recent kind of past of wow,

00:38:35.780 | they used to be it was 7% three years ago.

00:38:37.780 | Do I want four?

00:38:39.300 | Do I want four and a half that's portable?

00:38:41.380 | Maybe that could be a cool product.

00:38:42.660 | I'm trying to pull up the exact numbers here, but.

00:38:45.620 | Right now we're in our Picasso, which is like a fractional home.

00:38:49.300 | We only own one eighth of this house.

00:38:51.700 | And I was talking to a friend who was going through the process of

00:38:54.660 | buying an eighth of a house in Southern California.

00:38:57.140 | And the owners when you're selling a home.

00:39:00.740 | Right now it's typical that the only thing you really negotiate is the price.

00:39:04.660 | And but people's mindsets are just different on different factors.

00:39:09.220 | And one of the best pieces of advice I think my might have been my brother-in-law gave me

00:39:13.380 | figure out what matters to the seller.

00:39:15.540 | Yep.

00:39:15.940 | And some people really want to get the deal done fast.

00:39:18.980 | And so if you can promise a short close, you can get something done.

00:39:22.020 | Some people want a great family to live in the house that they raise their kids in.

00:39:25.860 | And that letter is going to move the needle.

00:39:27.860 | I can tell you the letter is probably not going to move the needle for me.

00:39:30.260 | But like for some people, the letter matters.

00:39:32.340 | For some people, it's the best price.

00:39:34.260 | But Picasso gave owners who were selling the ability to buy down the interest rate for the

00:39:43.060 | buyers.

00:39:43.940 | So I can't remember exactly how it worked, but it was like for an amount of money that

00:39:47.940 | wasn't as much as you'd think, you could give the potential buyer of this property like

00:39:53.780 | a 2% mortgage for the next 10 years.

00:39:56.180 | It was a fixed 10-year interest-only mortgage.

00:39:59.780 | But the seller could basically spend like, I don't know, $10,000 to buy the interest

00:40:05.300 | rate down to 1.99%.

00:40:06.500 | I'm not going to quote every dollar amount I just said could be wrong.

00:40:11.220 | But there is an amount that when I heard the number didn't seem that high that you could

00:40:16.420 | pay to basically be able to market your house as this house has a 2% interest rate for the

00:40:22.020 | next 10 years.

00:40:22.820 | So let's say this house was $750,000, what's more compelling?

00:40:28.740 | Like a $750,000 house with a 7% interest or like a $760,000 house with a 2% interest?

00:40:37.540 | Like people are irrational.

00:40:40.820 | And the answer is it was exactly the same.

00:40:43.060 | Like if you did the math and you said, "Oh, what if I take $10,000 and I just put it in

00:40:46.820 | a high-interest savings account and I use it to make the extra payment?"

00:40:49.940 | The math was even.

00:40:51.700 | But some people just loved the idea of locking in 2% for 10 years, right?

00:40:55.700 | Like it just sounded so good.

00:40:56.820 | So I wonder if kind of in the way that points were a thing, I wonder if instead of me, the

00:41:04.100 | buyer having to do that, I wonder if the seller might want to market that property in a way

00:41:09.940 | that it could change the dynamics.

00:41:11.620 | I don't know.

00:41:12.020 | It was just the most interesting thing that I've seen happen in interest rates where the

00:41:16.820 | seller could choose to buy down the interest rate.

00:41:18.820 | Well, there's a piece of this that I'm also now thinking about, which is you said, "Think

00:41:24.740 | about what matters to the seller."

00:41:26.820 | And this won't be the case for everybody, but I did have this woman named Catherine

00:41:33.460 | Valentine on my show a couple of months ago.

00:41:36.660 | She's a negotiation expert and she told this story about buying her current home.

00:41:41.860 | And what they found was that she basically is looking through this house that she's in

00:41:48.020 | love with, right?

00:41:48.660 | And as is common, she goes, "Well, this is kind of like the tippy, tippy, tippy top of

00:41:56.580 | our affordability range.

00:41:57.780 | Like technically we would need this to be like 10 to 20% less for it to be like comfortably

00:42:03.220 | affordable, as is the experience with most people nowadays.

00:42:07.220 | Like you're probably stretching yourself to get into that house."

00:42:10.500 | But she said that she noticed something when she was kind of examining the home.

00:42:15.060 | She's like, "This place is immaculate.

00:42:17.140 | It's pristine."

00:42:18.660 | The wife of this couple that lived in this house thought of everything when they were

00:42:23.940 | renovating it.

00:42:24.660 | You know, they have under cabinet, you know, inside the cabinet, what is it called?

00:42:29.780 | Outlets, like every, like down to the inch of every tiny little detail has been accounted

00:42:35.140 | for.

00:42:35.380 | And she was like, "Something tells me based on this couple and what I am noticing about

00:42:41.540 | this home, that money is not the most important thing to these people.

00:42:45.460 | Like making the most money possible on this sale is not what they care about."

00:42:49.780 | And so when they went in to make their offer, she structured multiple, I think the strategy

00:42:57.780 | is called multiple equivalent simultaneous offers, such that you are pulling different

00:43:02.580 | levers in each one so that to you, it's kind of all the same.

00:43:05.940 | You'd be happy with anything, but you're basically giving this person options.

00:43:09.140 | And so in one of these offers, they basically said, you know, "We'll close as fast as

00:43:13.780 | you want.

00:43:14.500 | We'll waive the inspection," which she said would typically never do that, but it was

00:43:18.340 | a calculated risk based on how pristinely this home had been maintained that like pretty

00:43:23.380 | sure we're not going to find any issues here.

00:43:26.580 | And you know, basically like anything you don't want, just leave it behind.

00:43:31.460 | That chandelier you hate, don't worry about it.

00:43:33.460 | Leave it.

00:43:33.860 | That room of stuff that you would have to figure out something to do, don't worry, just

00:43:36.660 | leave it.

00:43:36.900 | We'll figure it out.

00:43:38.180 | And they ended up giving them quite a good discount on the home and chose that offer

00:43:42.980 | because they wanted to move fast.

00:43:44.420 | They didn't want to have to worry about hiring people to come in and clean out the crap.

00:43:47.780 | So she said, in much the same way you just explained, like, "I just want to echo paying

00:43:53.860 | attention to what the seller really cares about and where you might be able to structure

00:43:59.540 | a deal or, you know, negotiate in a way that if you, if you're aware of their core interests,

00:44:05.380 | a lot of people's core interest actually isn't money.

00:44:07.460 | Some people have a ton of money and more money than they know what to do with.

00:44:10.740 | And like, they're actually more concerned with timing, ease, convenience, these things

00:44:15.780 | that as the buyer, you might actually be more able to give them those things than all the

00:44:20.500 | money they could ever want.

00:44:21.620 | It's not going to work every time, but in certain transactions, it's kind of an interesting

00:44:25.940 | way to approach it.

00:44:27.060 | It's funny, as you're saying that, I have two reactions.

00:44:30.100 | One is I've never actually considered doing the multiple offer thing, right?

00:44:33.860 | Like some people might want the certainty that you're not going to flake out.

00:44:37.460 | So you could have a really high deposit.

00:44:38.900 | Say we're going to give you 5% and if we back out, you can keep the house or you can

00:44:43.700 | keep the 5%.

00:44:44.100 | Like another one is like, we'll close faster.

00:44:47.300 | But on the other side of the equation, if someone came to me and said, "I have one

00:44:50.900 | offer at one price where I'm willing to give you 5% and I have one offer at another

00:44:54.660 | price where I'm willing to close fast.

00:44:56.260 | And then I have this other one where I'm going to keep all my contingencies and keep

00:44:59.140 | everything, but I'll pay a little bit more."

00:45:00.820 | My immediate reaction would be, "Well, I know you can afford the high price and I

00:45:04.180 | know you can afford the 5% deposit."

00:45:06.420 | So I would counter with like the combination of like the most value, the best offer for

00:45:13.220 | all of them.

00:45:13.940 | And you'd have to be able to stand your ground because you've just shown your cards that

00:45:18.260 | you can afford the high price.

00:45:19.940 | I don't know, to be fair.

00:45:21.380 | I don't know that any of her offers included the full price.

00:45:24.500 | I think she was just betting on the fact that like, "I'm making some assumptions about

00:45:31.060 | these people I'm buying this house from, that like they actually don't care as much

00:45:35.940 | about getting top dollar."

00:45:37.540 | Oh, another indication.

00:45:39.060 | It was also that they had already bought their next home.

00:45:41.620 | They hadn't sold the current home yet, had already purchased the next one.

00:45:46.020 | So she's like, "Oh, so they don't even need this money to like buy the next house

00:45:51.300 | they're going to live in.

00:45:52.340 | All right.

00:45:52.820 | Yeah.

00:45:53.380 | I've got wiggle room here.

00:45:54.820 | I don't have to throw all the money I possibly can at these people because that's probably

00:45:58.980 | not actually going to move the needle as much."

00:46:01.060 | Yeah.

00:46:01.460 | So I would say one thing here is try to figure out as much as you can about the seller before

00:46:05.540 | you buy.

00:46:06.100 | Put those internet stalking skills to work.

00:46:08.900 | I mean, property records are usually something you can search up online by address.

00:46:15.300 | Um, you know, we, one of our partners has always delete me.

00:46:17.940 | Most people haven't gone and removed their personal information from the web.

00:46:20.980 | So to the extent they don't listen to this show, their information is probably out there.

00:46:24.980 | Uh, do your research and try to figure out who these people are.

00:46:27.540 | But I like the idea of even saying, "Hey, I'm going to submit an offer.

00:46:32.020 | Here are three types of offers.

00:46:33.700 | Which one do you want?"

00:46:35.220 | And then just asking that question or even asking their agent, be like, "Would you rather

00:46:39.380 | have the high, the high deposit?

00:46:41.700 | Would you rather have the faster close?

00:46:43.300 | What kind of offer do you want?"

00:46:44.820 | Um, that's interesting.

00:46:45.940 | Now, now we're going down this path of how to, how to make sure you buy a house after

00:46:48.980 | we just spent all this time talking about how it's not the best deal.

00:46:51.940 | I mean, most people probably are eventually going to do it, but I think it's the life

00:46:56.980 | cycle of it is funny too.

00:46:58.340 | Because like in my, in our age group, you know, the circles that I'm having this conversation

00:47:03.620 | and it's kind of like my forever home, but then I go and visit my grandma who just sold

00:47:08.500 | her house and is now moving back into a place that she has to rent because she can't take

00:47:12.580 | care of a house anymore.

00:47:14.260 | And it also just kind of makes me think about the cyclicality of all of this.

00:47:17.620 | That like, yeah, just also keep in mind that like that forever home isn't actually in most

00:47:23.380 | cases forever.

00:47:24.580 | Like most people will eventually become renters again.

00:47:28.180 | So it's the function of like, do you along the way want to be a property owner?

00:47:34.420 | Do you want, is it the expectation or assumption that like being the property owner is going

00:47:39.060 | to give you more money later when you go to potentially move into like some sort of assisted

00:47:43.700 | living or not that that's everyone's path, but like generally speaking, there is a, you

00:47:50.980 | end up coming kind of full circle again, in many cases, if you live long enough, that

00:47:54.900 | is.

00:47:55.220 | It would have been even cheaper to get a 10 year, a 10 year fixed rate and that adjusted

00:48:00.740 | after, right?

00:48:01.540 | Like an interest, an adjustable rate for 10 years.

00:48:04.500 | So I thought, hmm, should we do this?

00:48:06.420 | And I asked around, if you look online, the average person stays in their home 12 or 13

00:48:10.740 | years.

00:48:10.980 | And when you look at a 10 year adjustable rate mortgage, the breakeven point is somewhere,

00:48:17.300 | depending on the rate and the cost somewhere around like 13 or 14 years.

00:48:21.060 | Meaning if the 10% adjustable rate is less of an interest rate, which it almost always

00:48:26.660 | would be than a 30 year fixed year 11, you're paying more than you would for the 30 year.

00:48:31.140 | But like you saved so much for 10 years that it kind of breaks even around 13 years.

00:48:35.540 | And I was like, gosh, if the average person leaves in the window of time that the adjustable

00:48:40.260 | rate is actually a better deal, what do I want to do?

00:48:43.540 | And it's even though I was like, well, on average, I would guess I'm probably the kind

00:48:47.380 | of person that would move more than the average person.

00:48:49.700 | Yeah.

00:48:50.260 | Yet somehow I couldn't bring myself to do it.

00:48:51.860 | So like we...

00:48:52.580 | Why do you think that it's just the certainty of feeling like on the off chance we want

00:48:57.620 | to stay longer, I'm going to be kicking myself?

00:49:00.180 | Or I mean, it could have been too that you looked at just historical interest rates and

00:49:04.340 | said, we're at an all time low.

00:49:05.620 | I mean, how much...

00:49:06.260 | I think it's...

00:49:08.040 | I'll say probably the latter is what I said.

00:49:11.780 | But you said one of the greatest reasons of buying is that you like lock in this price.

00:49:15.860 | It was kind of like, I don't like uncertainty.

00:49:19.060 | And so I'm willing to pay a premium for uncertainty going away.

00:49:24.180 | And there's just no stress about it.

00:49:26.740 | Right?

00:49:26.980 | I know that if I had this 10 year mortgage, I have friends that did this.

00:49:30.660 | They have right now an adjustable rate mortgage and they still have a few years.

00:49:35.940 | But right now they're like, gosh, in a few years, like, what are we going to have to

00:49:39.700 | pay?

00:49:39.860 | What are we going to...

00:49:40.420 | Oh, how is this going to work?

00:49:41.460 | What are we going to do?

00:49:42.500 | And I just don't need that in my life.

00:49:44.660 | Like, I don't have to think about it if that happens.

00:49:47.860 | I'm also seeing a lot of articles right now about how I assume it's because property tax

00:49:54.820 | assessed values are going up, that this is happening, but that people's property tax

00:50:01.220 | bills and insurance rates are going through the roof right now.

00:50:05.140 | And so I think it was in the Wall Street Journal, like over the weekend, where there are all

00:50:10.100 | these instances of people getting new quotes and they're like, oh my God, I'm on a fixed

00:50:16.820 | income.

00:50:17.300 | Like I'm 67 years old living on social security.

00:50:20.260 | I can't afford $400 more a month for my insurance and taxes.

00:50:25.140 | Like, this isn't what I signed up for.

00:50:27.220 | I think the examples given were in like Boulder, Colorado.

00:50:29.940 | They probably weren't in California because with Prop 13, your property tax only goes

00:50:33.700 | up by like a small percentage each year.

00:50:35.620 | That's good.

00:50:36.500 | And it's kind of inflation adjusted even.

00:50:38.900 | But in a lot of other states, your property tax changes every year.

00:50:42.820 | And so...

00:50:43.700 | But one thing that I've talked about before, but if anyone wasn't listening, you can appeal

00:50:48.020 | your property tax.

00:50:49.620 | Even in California, because we bought only in the last few years, in the middle of the

00:50:54.420 | pandemic, you could make a strong case that our home has gone down in value since we bought

00:50:59.300 | it, at least based on comps.

00:51:02.020 | I think you could make that case.

00:51:03.220 | And so we appealed our property tax.

00:51:05.620 | And unfortunately, the process takes like nine months.

00:51:09.540 | Do you have to go in actually and present your case?

00:51:12.420 | That's what would happen.

00:51:13.460 | However, once there's a date, then the assessor reaches out and says, hey, can we work out

00:51:18.740 | a deal? It's almost like a settlement where they're like, hey, can we come up with something?

00:51:22.100 | A little plea deal.

00:51:22.980 | I sent off all my data, my spreadsheets.

00:51:25.540 | I said, here's why I think the property's gone down by 15%.

00:51:28.500 | Oh God, they didn't see you coming.

00:51:29.860 | And then they're going to come back and say, what if we go down 10%?

00:51:33.940 | What if we go down 13%?

00:51:35.700 | And I don't know how it'll work.

00:51:36.980 | I can't wait to share more.

00:51:38.020 | But once we do it, we lock it in for forever.

00:51:41.620 | But if you live in Texas, you might have to do it every single year.

00:51:45.300 | But there are some advantages.

00:51:48.340 | I believe it is Texas where there isn't all this public data.

00:51:52.980 | So you actually have a lot more control over how much your house is worth because there

00:51:58.340 | just aren't public records of all the sales.

00:52:00.340 | I believe this is Texas.

00:52:01.460 | I could be wrong.

00:52:02.260 | Whereas in California, you can go look up any property and be like, how much did it

00:52:04.980 | sell for?

00:52:05.780 | What were the prices?

00:52:06.580 | What are the comps?

00:52:07.700 | And in some states, that stuff isn't all just open public data.

00:52:11.620 | And so you can kind of say, my house is worth this much.

00:52:14.420 | And it's on the state to be able to prove that you're wrong.

00:52:17.460 | Oh, like the burden of proof is on them.

00:52:18.820 | I believe that's the case in California.

00:52:20.580 | I was talking with the founder of this company, OwnWell, that will do this for you.

00:52:24.020 | So if you're not a nerd like me that wants to go spend millions of hours building a model

00:52:27.780 | to save like $500, which most people probably aren't, you can hire them.

00:52:32.580 | And they'll go negotiate on your behalf.

00:52:34.180 | They'll file all the paperwork on your behalf to the state or the county.

00:52:38.100 | And then they'll take 25% of whatever they save you in the first year.

00:52:44.020 | So in California, it's a great deal, right?

00:52:45.380 | If they save you $1,000 a year for life, you pay them $250.

00:52:49.780 | It used to be a very old school business model.

00:52:51.460 | We got a letter in the mail from some company that was like, hey, we're going to negotiate

00:52:55.300 | this for you.

00:52:56.100 | And then I was like, this company seems like an old school.

00:52:58.900 | There's got to be a better version of this.

00:53:00.420 | And I looked online and I was like, oh, there's like the startup version that's gone through

00:53:04.980 | and crunched all the data to do it more efficiently.

00:53:07.620 | And they don't charge as high a fee.

00:53:09.140 | And it seems like they do a better job.

00:53:10.980 | So in hindsight, I should have just used them.

00:53:14.820 | But I love going down the rabbit hole of seeing how it all works.

00:53:18.420 | I actually reached out to them and they were like, why don't we just show you how it works?

00:53:21.380 | You can file it yourself.

00:53:22.420 | And they kind of peeled back the curtain and showed me all the models they would build.

00:53:25.300 | And then they put a deal on the deals page on all the hacks.

00:53:29.540 | They gave everyone a deal.

00:53:30.340 | So there is that.

00:53:31.220 | If you're an owner, you can negotiate that.

00:53:33.460 | But if you're a renter, you don't have to deal with any of this.

00:53:36.100 | None of these extra fees.

00:53:37.220 | So and funny enough, we were talking about a handful of people we know, mutual friends

00:53:41.140 | of ours who have more money than both of us combined, I think almost all of them.

00:53:45.540 | And they're all renters.

00:53:46.740 | Like we have a ton of friends with money who are all renting.

00:53:49.780 | And so this is not, you know, you said, oh, correlates, right?

00:53:53.860 | People with more money are more likely to be owners.

00:53:55.860 | But people that we know who are really savvy with money, who have lots of money,

00:54:00.980 | still appreciate the flexibility.

00:54:02.980 | I want to move.

00:54:04.500 | I want to do whatever I want.

00:54:05.620 | I, my wife and I are always talking about, oh, wouldn't it be fun to go like move to

00:54:10.500 | Japan for a year?

00:54:11.300 | Wouldn't it be fun to go live in Spain for a year?

00:54:13.700 | I'm like, oh, we have this house.

00:54:14.980 | I mean, this low interest rate, like it almost doesn't even seem possible.

00:54:19.380 | Like you could lease it out.

00:54:20.580 | Totally.

00:54:21.780 | But I'm just, it almost like feels like it's an obstacle.

00:54:25.060 | Yeah.

00:54:25.300 | It's like something in the way that otherwise you could just be like, whatever, screw it.

00:54:29.060 | Yeah.

00:54:29.460 | And maybe the grass is always greener, but there's some world where it's like, gosh.

00:54:32.580 | It would kind of be nice if we were renting and someone was like, hey, at the end of the

00:54:38.020 | year, we're going to need our house back.

00:54:39.380 | And we were like, sweet.

00:54:40.340 | We were just forced to have to decide what we want to do and where we want to go and

00:54:44.420 | where we want to live.

00:54:45.220 | And like, all those things are on the table.

00:54:47.460 | Whereas right now, the amount of work it would take to even consider moving is so drastically

00:54:53.540 | high.

00:54:53.860 | Now, obviously I'm a hundred percent sure that if someone is listening to this and they're

00:54:58.580 | like, my landlord is telling me that at the end of the year, I have to move.

00:55:01.140 | They're not like stoked about that decision.

00:55:03.540 | And I sympathize with that person greatly because that's a horrible situation to be

00:55:08.340 | in.

00:55:08.660 | No one wants to not know where they're going to go, but I think I don't have the freedom

00:55:13.220 | that someone who rents does.

00:55:14.500 | Yeah, totally.

00:55:15.060 | And I'm not sure I would trade for it right now, but I definitely am jealous of it a bit.

00:55:21.380 | I also think that when you're young and you're not quite, I'll say, established yet in your

00:55:30.260 | career, renting has a lot of upside because you want that type of flexibility.

00:55:37.220 | Like if your job has an opportunity a couple States away and you're up for it, you want

00:55:44.260 | to be able to like jump on that and take it and, and, you know, grow with a completely

00:55:51.140 | unencumbered by like, oh, but I have this house that I have to sell.

00:55:54.500 | And that's a whole nother element that I have to consider.

00:55:57.140 | And it's like, I've always heard people kind of talk about how, when you're young, even

00:56:02.500 | if you can afford it, or you could technically afford it, that sometimes there's a benefit

00:56:06.580 | to continuing to rent because it just means that you have more flexibility, not just in

00:56:11.060 | what you want to do and like discretionary moves, but that if your career were to kind

00:56:17.540 | of, you know, go in a different direction that you could quickly jump on that and be

00:56:21.540 | nimble in the choices that you're making.

00:56:24.020 | Yeah.

00:56:24.820 | I don't know what made me think of this, but another hidden cost of owning that I believe

00:56:31.300 | Ramit Sethi brought up in a podcast I heard him on was when you buy a home, you spend

00:56:36.900 | way more on furniture.

00:56:37.940 | When you rent a home, you have this budget, not think of not furnishings and renovations,

00:56:43.780 | not as like major things that have problems.

00:56:46.100 | Like obviously when you rent and the toilet breaks, that's on the landlord.

00:56:49.380 | When you own, it's not on the landlord.

00:56:51.220 | It's on you like paying a plumber or learning how to become a plumber overnight.

00:56:55.140 | And, and, and I was thinking, gosh, when you buy, you're like, oh, I'm going to be here

00:56:59.220 | forever.

00:56:59.780 | We deserve like a really nice bed.

00:57:01.780 | Look at the kitchen.

00:57:02.340 | Like we should redo the kitchen.

00:57:04.020 | Like you never, you don't think about that when you're renting because why would we redo

00:57:06.660 | the kitchen?

00:57:07.140 | Like it's not our kitchen.

00:57:08.180 | But we didn't need to redo that.

00:57:10.820 | You know, we redid our laundry room.

00:57:12.420 | We didn't need to redo the laundry room.

00:57:14.820 | I feel a lot better.

00:57:15.940 | I love the new laundry room we have.

00:57:17.780 | It looks like it was the only room in our house that hadn't been renovated was one bathroom

00:57:21.540 | and one laundry room.

00:57:22.340 | So we had this house where even though it's about a hundred years old, every room had

00:57:26.580 | been updated in the last a hundred years.

00:57:28.580 | And then the bathroom, it had been updated maybe 30, 40 years ago, but it just looks

00:57:34.020 | so weirdly out of place with these like Italian tiles that are like, I can't even describe

00:57:38.740 | it, but it was the one room missing.

00:57:39.780 | The Tuscan mom kitchen that everyone knows about.

00:57:42.500 | We had the Tuscan mom bathroom.

00:57:43.780 | Yeah, the Tuscan mom bathroom.

00:57:44.980 | There's like the olive oil on the, on the counter with the little peppers inside it

00:57:49.220 | or whatever the hell that weird decor was back in the like mid aughts.

00:57:53.380 | Yeah, so we renovated that, but we wouldn't have done it if we were renting.

00:57:57.060 | Totally.

00:57:57.560 | And but your point about furniture is well taken.

00:58:00.580 | I mean, like you definitely, I always say that too.

00:58:03.620 | Weirdly enough, like I'm aware of this.

00:58:05.060 | I always go, eh, you know, we'll get nice furniture when we buy.

00:58:08.820 | I'm not going to pay a bunch of money to on like nice furniture to furnish a house.

00:58:12.980 | I'm like, I don't know if this is the layout that we're always going to have or if we're

00:58:16.020 | always like, why would I buy this sectional when I don't know if our like family room

00:58:20.100 | in the house we're going to buy is going to be this shape.

00:58:22.340 | Like it might not fit.

00:58:23.460 | It might not work.

00:58:24.180 | So you kind of yeah, you like defer those types of upgrades.

00:58:27.940 | But as anyone who has ever spent a lot of money on furniture knows.

00:58:31.300 | You really don't.

00:58:33.220 | It doesn't really change your life like at all.

00:58:35.540 | We've we've spent a little bit of money on like one or two nice pieces.

00:58:39.700 | And beyond the first week or two, I didn't think about it again.

00:58:44.260 | Yeah, maybe a mattress.

00:58:45.460 | I've not heard anyone.

00:58:46.500 | Oh, I do have a nice mattress.

00:58:47.940 | Like that seems to be one, but that seems to be one that's like a functional choice.

00:58:51.060 | That's not like an aesthetic decision.

00:58:52.820 | No, it's like and it's very easy because you're going to have a mattress in your next house.

00:58:56.340 | It's probably going to fit.

00:58:57.060 | This is what determines the quality of my sleep.

00:58:59.620 | Like that is a different decision than like, oh, is this a, you know, a $400 couch I bought

00:59:05.620 | off a friend, which is what our current couch is?

00:59:07.700 | Or are we spending $5,000 on this sectional because it's in our forever home?

00:59:12.580 | And it just I think, yeah, the stakes of the decisions feel much higher.

00:59:16.020 | So that framing that as a hidden cost is interesting because it's it's not that you

00:59:20.660 | would have to do that if you buy, but just psychologically, you're more oriented in that

00:59:24.900 | direction as an owner, which I think is interesting.

00:59:27.380 | Yeah, we really struggle because we look at these furniture stores like room and board

00:59:31.380 | design within reach.

00:59:32.180 | You know, this is within reach.

00:59:33.700 | Yeah, really.

00:59:34.580 | And we're like, I just can't I don't need a $2,000 coffee table.

00:59:38.420 | So we don't have a lot of really nice furniture.

00:59:42.260 | But we keep telling ourselves one day we'll one day we'll graduate and buy really nice

00:59:49.300 | furniture for now.

00:59:50.340 | Like, I think, you know, there's some great stuff on Wayfair.

00:59:53.060 | But yeah, OK, I feel like we probably belabor this topic a lot.

00:59:59.860 | My takeaway is just do the math like and and we didn't talk much about the emotional side

01:00:06.900 | of it, which is like a really big, important part.

01:00:09.780 | Some arguably the biggest part.

01:00:11.540 | Yeah, some people like this one.

01:00:13.300 | Some people want to buy a home because they just feel like they want to own a home.

01:00:16.660 | And that's fine.

01:00:18.180 | My only thing with that, though, I would just encourage you to interrogate that desire and

01:00:24.580 | where that is coming from.

01:00:25.940 | I think in some cases it can be very genuinely held.

01:00:29.700 | And then in other cases, if something has been marketed to you your entire life, it

01:00:35.220 | probably feels like a very genuine desire.

01:00:37.860 | But like, what is it about ownership that is so appealing to you?

01:00:41.540 | Like, because your name is going to be on the deed and not the lease.

01:00:44.740 | Like, what's really what's the difference?

01:00:47.380 | Why? Why is that?

01:00:48.340 | And you might have an amazing answer and you might be in a place that you can afford it.

01:00:53.140 | Fantastic.

01:00:54.180 | But I do think that, like, it's one of those things in life where everyone kind of feels

01:01:00.340 | like they want to buy a home because we've all been told our entire lives that it's the

01:01:03.860 | American dream.

01:01:05.220 | And like, there is so much money that gets spent every year on like marketing the dream

01:01:10.340 | of homeownership to Americans is like how you'll know you've made it and like what it

01:01:14.660 | means to be an adult.

01:01:16.020 | So, yeah, if that's the water you're swimming in, you probably are going to feel pretty

01:01:20.100 | emotionally driven toward the choice.

01:01:21.860 | But I do think it's worth kind of taking a second look like, well, what is it really

01:01:26.500 | about this that I'm I'm so drawn to?

01:01:29.300 | Oh, I don't know.

01:01:30.580 | It just kind of feels like that's when I know I've made.

01:01:32.660 | OK, well, it's probably just like you've really internalized the marketing that's been, you

01:01:36.900 | know, crammed down your throat your entire life, as opposed to like, oh, well, I need

01:01:42.660 | the land and I like to garden and I like little projects and I have these dogs and I want

01:01:46.180 | my kids to.

01:01:46.740 | It's like those reasons to me.

01:01:49.540 | I'm like, sure.

01:01:50.420 | Like, yeah, you're into projects.

01:01:52.500 | You like to work on stuff like door with your hands.

01:01:54.580 | You want a yard.

01:01:55.380 | You want to live with animals, kids.

01:01:57.860 | You want to live in a specific place.

01:01:59.060 | It's like it's like a continuity of stability thing.

01:02:01.300 | Maybe maybe you didn't grow up in a home like you were always moving apartments with your

01:02:05.940 | family.

01:02:06.340 | And so like you want to have more stability in your own life.

01:02:09.540 | Perfect.

01:02:10.020 | But like as long as the answer goes deeper than like, I don't know, I just kind of feel

01:02:14.740 | like I should and I don't know why I feel like I should.

01:02:17.220 | That's that answer is where I'm like, you might want to think about that a little bit

01:02:22.180 | more.

01:02:22.660 | Yeah, I imagine if you push on that and run the numbers, you might be able to convince

01:02:26.980 | yourself differently.

01:02:27.940 | Or if you have a lot of pressure from a family member, maybe run their numbers, go back,

01:02:31.620 | go back and see, like, because I think it's crazy if you look at, you know, what the rule

01:02:36.580 | 72, right?

01:02:37.380 | So you divide 72 by the interest rate or the return.

01:02:40.580 | Take stock market at 7%.

01:02:42.100 | It's like 10 years to double your money.

01:02:43.620 | So if your parents have owned a house for 30 years and they're like our home doubled,

01:02:48.820 | actually, that's not good.

01:02:49.700 | Like that was a bad return.

01:02:52.180 | And so I would just say, make sure that if you're guiding a lot of your emotion on data,

01:02:59.220 | make sure you actually look at that data checks out because I don't know, I'd say if your

01:03:03.300 | home hasn't tripled in three years, in 30 years, like you probably didn't get a good

01:03:07.540 | return.

01:03:07.940 | Yeah.

01:03:08.440 | So.

01:03:09.540 | So true.

01:03:10.500 | Okay, this is fun.

01:03:11.940 | Thank you for driving down here.

01:03:13.380 | Dude, thanks for having me.

01:03:14.660 | This was so fun.

01:03:15.860 | And for everyone listening, I would say this is slightly a different episode.

01:03:19.220 | It was like not as prepared in terms of like we outlined every bullet point we wanted.

01:03:23.860 | It was more of a raw conversation.

01:03:25.220 | Which I know we were both big preparers.

01:03:27.140 | We're both big.

01:03:27.860 | I'm a scripter.

01:03:28.900 | I'm like every single word that I'm going to say into this microphone has been fine

01:03:33.140 | tuned by three editors first.

01:03:35.380 | So yes, the off the cuff thing was fun.

01:03:37.460 | Yeah.

01:03:37.780 | So I'm curious if people have feedback.

01:03:39.380 | Podcast at all the hacks dot com.

01:03:41.140 | Thanks for being here.

Is Renting Actually Better Than Buying a Home?

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