Several years ago I read a book called Rich Dad, Poor Dad. Most have heard of it. Usually when I read something like that I'm looking for a 1 or 2 nuggets to come away with. I'm looking for gems. And one of them was how owning a home can be overrated.
That's right. Robert Kiyosaki said if he wasn't into investment properties he wouldn't own a home. He'd rent. As would I.
First of all, I'm into investment properties. I like it. I enjoy that type of investing much more than putting money in the market. Stocks and mutual funds, to me, are a way of putting my future in the hands of others.
With rental properties, well, everyone needs a home. They either rent or buy. No getting around it. We won't go into the nightmarish stories landlords have about tenants wrecking the house. Most of the time it's poor management.
I've had rental properties since 2008, and have never had a problem with a tenant. And it's not because I'm lucky. It's because I know how to find a good renter. I also know how to take good care of a renter.
I use true customer service to get positive results from those who choose to rent from me.
They are my customers. I treat them like an asset, because that's exactly what they are.
As I said before, I'm into investment properties. My primary residence has plenty of equity. Plenty of value even after I consider the debt (loan).
But that's what I do. Some people don't like or appreciate real estate. And if I didn't then I'd be renting.
The reasons I own:
- I like real estate. I like the investment opportunity
- that's it - that's the only reason
Should I buy a house:
- it ties you to a location - for a long time!
- it commits you to a large loan - for a long time!
- something breaks, you pay for it, you suffer because of it
- homeowners insurance is more expensive than renters insurance
- escrow accounts cause your payment to change (increase) with very little notice
I could go on and on. The downfalls clearly outweigh the benefits. However, people want to be "homeowners". They want to say they own, not "I rent".
But if truth be told, a renter could potentially have less headache and more money than a homeowner.
But good landlords are hard to find.
Wrong. It's not that they're hard to find, it's that we don't evaluate the owner during the application process. It's a two-way interview. While the landlord is checking to see if we'll pay rent on time, we should check to see if they correct issues in a timely manner.
While they're reading our application we should be reading their lease.
Tenants have more power in a rental situation then one might think, regardless of the landlord's attitude.
I once had a landlord who lived several hours away. I had an issue and couldn't get him on the phone. I decided not to deposit rent. Guess who called?
And you think the landlord is in charge?...
If I'm a good tenant I can get almost anything I need or want from the owner. I build security by taking care of the place. By paying on time, etc. I make myself valuable. And when I'm valuable to the owner, I practically own the place. They become the bank, or the mortgage company if you will.
When we're a homeowner and we pay on time... we get nothing.
When we hold our mortgage payment because the company's service is horrible, we hurt ourselves, and the situation doesn't change. It doesn't improve. We get nowhere fast.
Owning a home handcuffs us to a location and a large debt. Plain and simple.
We're left with no authority, other than we can paint whatever color we want. We can change the flooring without permission. We can do cosmetics all day every day.
So, should I buy a house? Is it worth the 15-30 year handcuffs? Is it worth dealing with a mortgage company you can't get away from? One with horrible customer service?
Is it worth having to live immaculately while you're trying to sell? That's right. Ask someone who's sold a home they were living in. It's a pain. It's like living in a museum with a revolving door.
"Hey, Realtor Jane here. I need you to leave so I can show your house"
"Hey, Jane again, sorry, I know it's Saturday morning, but can you leave?"
"It's Jane, I've got a couple that wants to see your house tonight..."
Benefits? Yes, but they come with a high price and a long commitment.
Being a homeowner may not be a bad choice, but it's definitely overrated.