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Speaker 1: Welcome to How to Money. I'm Joel and I'm Matt,

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Speaker 1: and today we're talking about why your house is an

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Speaker 1: awful investment. Yeah, but first, Joel, I feel like we've

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Speaker 1: been opening a lot of accounts lately. Uh, and you're

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Speaker 1: just talking about one that you are about to open

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Speaker 1: or that you already have already have, Yeah, definitely filled

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Speaker 1: the end account overload at this point in time. Well,

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Speaker 1: you mean both because you know, like I mentioned my

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Speaker 1: my my photography business account, which, by the way, it's

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Speaker 1: going pretty sweet. Oh. The Bank of Internet, yeah nice,

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Speaker 1: which still sounds fake, but it sounds totally fake. And

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Speaker 1: you know, I think they thought it sounded fake too,

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Speaker 1: and so they changed it. They're kind of going with

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Speaker 1: b of I. It sounds a little more professional and actually,

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Speaker 1: and the added Federal to it, so it's it's b

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Speaker 1: of I Federal dot Com is the actual is the

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Speaker 1: actually r L Anyway, they said that sounds like a

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Speaker 1: classy institution. Yeah, Federal, it's legit. So they just sent

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Speaker 1: me an a t M card for that account. And

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Speaker 1: it's the first piece of mail I've gotten from them.

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Speaker 1: You know, normally open account and you just like are

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Speaker 1: flooded with all this material and promotional stuff and not them. Dude,

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Speaker 1: I've gotten zero. I've got nothing from them X until

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Speaker 1: today I got my Yeah, I got my unmarked envelope

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Speaker 1: and I could tell there's a card and there. I

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Speaker 1: was like, what is this? That's good? Man? How much

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Speaker 1: are banks wasting on all the mail that? Yes, this

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Speaker 1: is great? It's overwhelming right now, man, I want to

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Speaker 1: let everyone note that the initial sign up bonus offers

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Speaker 1: for changing banks are awesome. They're like, they're out there

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Speaker 1: in full force. And so I just signed up for

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Speaker 1: a new same music account with Discover Discovers online bank,

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Speaker 1: and they, man, they run a great business. I really

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Speaker 1: like what they're up to. And I had a two

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Speaker 1: bonus waiting for me if I put dollars in a

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Speaker 1: same mus account with them and keep it there for

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Speaker 1: a month. So that's pretty easy barrier to jump through

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Speaker 1: and just make two hundred bucks, like you know, pretty quickly. Um.

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Speaker 1: And so there are a lot of offers like that

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Speaker 1: right now, going on in particular this summer. So look around. UM.

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Speaker 1: I know some are up to seven hundred and fifty dollars,

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Speaker 1: and those are usually only applicable if you've got like

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Speaker 1: a hundred thousand dollars sitting there and are willing to

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Speaker 1: move it over like a big old deposit. Yeah, fatty,

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Speaker 1: just throwing it over there. But even today I got

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Speaker 1: a something in the mail from Chase. So Chase has

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Speaker 1: a like three hundred bucks if I opened up a

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Speaker 1: checking account, and two hundred if I opened up a

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Speaker 1: savings account, for a potential total of five hundred bucks.

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Speaker 1: And so, you know, I think sometimes it is a pain.

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Speaker 1: And I'm not saying that everyone should jump through all

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Speaker 1: these hoops and open up ten bank accounts. The Discover

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Speaker 1: one was pretty chill for me, and so I decided

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Speaker 1: to take advantage of it, and especially you know, only

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Speaker 1: needing to be there for a month um and also

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Speaker 1: just kind of you know, I think they have some

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Speaker 1: good products. Yeah, so that's the thing. Are you just

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Speaker 1: basically parking in there for a month to get the

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Speaker 1: bonus and then you can pull it out and you're

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Speaker 1: you're you're totally fine, Yeah exactly, And you know, who knows,

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Speaker 1: we'll all see, you know, how the the account goes,

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Speaker 1: and and maybe I'll you know, keep some of my

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Speaker 1: money there, depending on you know that there are other benefits.

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Speaker 1: But yeah, I think it's definitely worth pointing out that,

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Speaker 1: just like people use credit card bonuses credit cards sign

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Speaker 1: ups to to kind of make some extra money on

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Speaker 1: the side or to get bonus travel perks, I think

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Speaker 1: opening up a bank account or two here and there,

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Speaker 1: when you're offered a pretty sweet sign up bonus, that's

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Speaker 1: you know, worth considering taking advantage of. Oh but wait,

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Speaker 1: are you still planning to keep the rest of your

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Speaker 1: money though with UH C I T. Yes, So most

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Speaker 1: of my money will you know, likely stay with C

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Speaker 1: I T just because they're They're interest rate is higher

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Speaker 1: than anybody else's. And so yeah, right now, the big

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Speaker 1: chunk on my cash is with Discover. You know, I

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Speaker 1: might keep the bank account around for a while, um, depending,

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Speaker 1: but you know, I might not just close it out right,

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Speaker 1: But the C I T interest rate is pretty good.

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Speaker 1: I don't want to pass that up. So I'll definitely

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Speaker 1: keep most of my cash in that account for the

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Speaker 1: time being. Yeah, and we'll speaking of sign up bonuses

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Speaker 1: in credit cards, you know, that's my that's my favorite,

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Speaker 1: that's my go to and specifically I love that uh

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Speaker 1: and you mentioned Chase as well, but the Chase Inc.

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Speaker 1: Business Preferred Card I don't. I don't think you can

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Speaker 1: beat it because that sign up is eight fifty bucks man,

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Speaker 1: and that's after three months. You have to spend five grand,

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Speaker 1: which for some folks that that kind of might be

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Speaker 1: you know, that's kind of a tall order. But I'm

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Speaker 1: able to put all my business expenses on there and

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Speaker 1: stuff with the Reynolds. It's really it's not that difficult

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Speaker 1: to kind of rack up. Especially I feel like this

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Speaker 1: time a year into the summer, there's just a lot,

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Speaker 1: a lot of stuff breaking. Yeah, I can't put the

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Speaker 1: h VAC on there, like I told you about recently.

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Speaker 1: But although interesting tip for folks, there is a new company,

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Speaker 1: a new website called Plastic p L A s t

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Speaker 1: i Q dot com Q okay, and they supposedly plastic yes,

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Speaker 1: and I guess they essentially let you put anything on

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Speaker 1: a credit card. So if you need to meet a

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Speaker 1: spending threshold in order to get that sweet sign up bonus,

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Speaker 1: you know, Plastic or plastic however they pronounce it um

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Speaker 1: is worth considering because they peak they will let you

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Speaker 1: pay with the credit card for anything, including you know,

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Speaker 1: mortgage payments. That I read someone bought a Tesla through

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Speaker 1: Plastic on their credit card. Yes, uh, and so they

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Speaker 1: charge a two and a half percent fee, which normally

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Speaker 1: would be, you know, more than your rewards would cover,

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Speaker 1: like even the best reward cards usually that you get

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Speaker 1: two percent, right, so you would be paying a half

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Speaker 1: percent spread. But that's not necessarily a case for the

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Speaker 1: sign up bonus bonus and stuff like that. And so, huh,

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Speaker 1: that's kind of cool if you are into kind of

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Speaker 1: the credit card hacking and sign up bonuses and stuff

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Speaker 1: like that, you know, and you're bummed that you can't

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Speaker 1: pay a card payment or a mortgage payment with your

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Speaker 1: credit card because you use them wisely. Remember you use

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Speaker 1: your credit cards wisely. Yeah, honestly, that's what's about to say.

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Speaker 1: I'm gonna say like this, you know, fair warning. This

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Speaker 1: is like the credit card hacking and the sign up bonuses.

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Speaker 1: This is a little more I hate even saying this

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Speaker 1: because it sounds a little shady and just it's just

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Speaker 1: a little more advanced. And if you're kind of struggling

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Speaker 1: with credit card debt and consumer spending, don't sign up

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Speaker 1: for the new credit card just to get the bonus,

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Speaker 1: because it doesn't matter if you're getting great cash back

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Speaker 1: or if you're getting like that really sweet bonus. If

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Speaker 1: you're paying on your payments because you're not paying your

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Speaker 1: statements in full, then it is not worth it. Yes,

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Speaker 1: But if you are one of those people that pays

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Speaker 1: your credit cards off in no matter what, if you're

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Speaker 1: total nerd and you're into the sign up bonuses, p

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Speaker 1: l a s t i q dot com is worth

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Speaker 1: checking out. You create an account, you enter the recipient,

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Speaker 1: you tell them who you want to pay, and then

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Speaker 1: Plastique accepts um any of your credit cards and charges

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Speaker 1: you two and a half percent or less. It has

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Speaker 1: potentially per transaction appairly sometimes they run bonuses and stuff

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Speaker 1: like this. So you, yeah, you enter in, the recipients

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Speaker 1: take it. Yeah, and then they just mail you know,

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Speaker 1: they cut a check and then they just send an

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Speaker 1: official certified check to whoever you want it sent to you. Yeah.

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Speaker 1: So that's pretty cool, man. Interesting. I like that business model. Um,

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Speaker 1: and it's smart, it's creative. Yeah, for the uber nerds

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Speaker 1: in the financial community, Like, man, this is like music

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Speaker 1: to your ears, right, just so you can meet some

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Speaker 1: of those hefty sign on bonuses. Yeah, because I know

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Speaker 1: a lot of folks also do that with the airline miles.

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Speaker 1: I honestly know nothing about airline miles, like the rewards,

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Speaker 1: and there's like a bunch of other fancy stuff you

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Speaker 1: can do with rewards. But we just, man, this stage

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Speaker 1: of life that we're in, we're not doing a lot

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Speaker 1: of flying. You know, we're definitely not doing a lot

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Speaker 1: of flying with with our with our girls. Like my

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Speaker 1: brother in law, they just flew up to Wisconsin and

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Speaker 1: it was the first time they've done it. But their

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Speaker 1: daughter is only one, and I'm like, man, our oldest

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Speaker 1: is almost five and she's never never been on a plane. Still,

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Speaker 1: you know, we're just trying to avoid that. Well yeah,

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Speaker 1: I mean yeah, once you get into having a family

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Speaker 1: of four or five and you're paying for that many

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Speaker 1: plane tickets to just get just super expensive. Man, Just

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Speaker 1: we're just gonna load up in the van. Yeah, that's right,

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Speaker 1: the minivan. We're Everyone thinks you're cool in that thing, bro, Yes,

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Speaker 1: oh yeah. But but when it comes to travel reward

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Speaker 1: credit cards, you know, I haven't done the digging either.

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Speaker 1: I know there's I know where the great resources are,

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Speaker 1: and I will turn to them when I'm ready, But

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Speaker 1: there definitely are a lot of great resources out there

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Speaker 1: for you if you are into and in that period

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Speaker 1: of life where you want to do some travel hacking

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Speaker 1: and you know what. So on the podcast, we need

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Speaker 1: to get an expert on so we can learn and

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Speaker 1: and learn along with our audience, you know, how to

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Speaker 1: kind of take advantage of some of those travel credit

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Speaker 1: card offers. Yeah, let's do that soon. All right, onto

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Speaker 1: the beer. I'm gonna let you pronounce this one. Yeah.

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Speaker 1: So this is from brewery Taru and this specific beer

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Speaker 1: is called the Ruse and this is from so this

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Speaker 1: is an aged beer, which is awesome. Man, this specific beer,

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Speaker 1: this is a big old bomber. Right. So that's seven

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Speaker 1: and fifty millilaters. And dude, you're not gonna gets how

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Speaker 1: much I got this beer for. I'm just gonna tell

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Speaker 1: you I got it for three dollars and eighty cents. Well,

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Speaker 1: you shop in that discount shelf exactly. And you know what.

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Speaker 1: I've been to this place before. This is the massive

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Speaker 1: beer store in Augusta that I visit when I go

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Speaker 1: to visit my parents, and Kate and I swung in

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Speaker 1: there when the girls were down for a nap. I

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Speaker 1: spotted this bad boy on the shelf and picked up

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Speaker 1: a couple you can't turn down. I mean brewery, true,

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Speaker 1: they make awesome beers. And then on top of that,

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Speaker 1: you know you can't get a seven fifty for three

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Speaker 1: eighty that's just that'st bonkers. Yeah, that's it's just too

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Speaker 1: good to pass up. Plus I pull the beer up

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Speaker 1: on Untapped and searched it real quick and it crushes.

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Speaker 1: And by the way, if you're not on on Tapped,

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Speaker 1: that's the primo app. That's what I always go to.

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Speaker 1: If you'm in the store and I'm like, is this

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Speaker 1: beer any good? Before I buy it? I want to know?

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Speaker 1: And that's you and t A P P D. And

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Speaker 1: you can. We've had a bunch of our listeners follow

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Speaker 1: us on on to Happen. It's kind of fun to

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Speaker 1: to see what they're drinking and for them to see

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Speaker 1: what we're drinking. So you can follow Matt at not

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Speaker 1: Poor Matt on Untapped, and you can follow me at

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Speaker 1: not Poor Joel on the app that is us. And okay,

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Speaker 1: I want to say something really quick about the brewery.

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Speaker 1: Uh So, it used to just be the brewery b

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Speaker 1: R U E R Y, and they at some point

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Speaker 1: a few years back, they divided into two different distinct breweries,

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Speaker 1: you know, one that specializes in regular beers and one

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Speaker 1: that specializes in barrel aging and brewery. True is that

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Speaker 1: other brewery. And the cool thing about the breweries when

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Speaker 1: they launched, they only package their beers in these large

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Speaker 1: format seven milli leader bottles, like the size of a

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Speaker 1: bottle of wine. But nobody else was doing that. They

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Speaker 1: were the only one, and everyone thought they were going

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Speaker 1: to fail because people didn't buy beer in big bottles

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Speaker 1: like that. They liked a six pack of beer, right,

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Speaker 1: that was just kind of the standard for how you

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Speaker 1: bought beer was in a six pack. And uh, but

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Speaker 1: the brewery now at this point has essentially broken off

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Speaker 1: and there are two different breweries and they sell so

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Speaker 1: much beer and they may some of the best beer

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Speaker 1: out there. I'm really pumped to have this one because

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Speaker 1: I love everything they make. I feel like the biggest

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Speaker 1: characteristic of a lot of their beers that they make

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Speaker 1: that I enjoy are aggressive, no doubt, you know, like

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Speaker 1: there's just no subtle flavors when it comes to their

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Speaker 1: beers there, it's very aggressive. Uh, these bigger bottles you

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Speaker 1: have to split, you have to share with the frame

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Speaker 1: because you just get palette fatigue. I honestly I can't

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Speaker 1: finish one of these by myself, and it's just more

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Speaker 1: fun obviously to drink with a buddy lightweight man. I'd

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Speaker 1: like to see you through one of these down now,

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Speaker 1: don't dare me give me your glass right now, Let's

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Speaker 1: do it and so On the bottle here it says,

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Speaker 1: this is a sour blonde ail aged in oak barrels.

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Speaker 1: It's earthy, sharp and funky. Cheers, buddy jeers. This is

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Speaker 1: this is like exactly what I love and exactly what

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Speaker 1: my wife hates. If you go back the risk of

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Speaker 1: that episode like this is the beer that she's talking

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Speaker 1: about that she does not like, but that has to

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Speaker 1: be the best three dollar bottle of beer ever. That's delicious.

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Speaker 1: I definitely should have picked up more of these. Man,

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Speaker 1: the crap. Next time this happens, like this sort of

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Speaker 1: fortuitive event where you find three dollar amazing bottles of beer,

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Speaker 1: please text me. I will essentially force you to buy

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Speaker 1: me large amounts. It's like super tart. It's definitely earthy,

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Speaker 1: like it says, and it's got this huge oak presence.

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Speaker 1: At the same time. Oh, that is so good. That's

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Speaker 1: that's lovely. These beers don't really go bad. You know.

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Speaker 1: We talked about how gooses can last a really long time,

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Speaker 1: and this one in particularly, this is from so this

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Speaker 1: is three years old and they usually have a shelf

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Speaker 1: life of like twenty years for real. Yeah, that's right.

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Speaker 1: This one doesn't specifically say that, but I gotta think

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Speaker 1: it was sellered properly at the right temperature, because to me,

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Speaker 1: this tastes fantastic. And I just gotta think they weren't

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Speaker 1: moving enough of these bottles and they just needed to

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Speaker 1: make room on the shelf. Yeah, completely, man, Their losses

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Speaker 1: is our gain, thanks Brewery. True, we're loving this delicious

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Speaker 1: three dollar beer. Alright, Matt, onto the super contentious topic

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Speaker 1: that we have picked for this show. Your house is

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Speaker 1: an awful investment, that's right, man. A big reason we're

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Speaker 1: talking about this is because a lot of people like

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Speaker 1: step that your primary residence is thought of as a

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Speaker 1: great investment, right, and that that is often accepted as

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Speaker 1: sort of like a gospel truth. Without question, it's a

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Speaker 1: great investment, and we wanted to talk about that because

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Speaker 1: we don't believe that that's true. Yeah, and and and

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Speaker 1: more than anything, when you're deciding to buy a primary house,

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Speaker 1: it requires a lot of critical thinking, um a lot

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Speaker 1: of analysis to make sure that you're buying something that

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Speaker 1: works for you financially and isn't actually just gonna be

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Speaker 1: a drain like buying or leasing a new car would

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Speaker 1: be right. And so this American dream, right this, this

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Speaker 1: huge part of our culture has been home ownership. That's

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Speaker 1: always been lifted up as a super high ideal in

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Speaker 1: our country, and most folks just kind of buy into

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Speaker 1: that blindly that that's just the next step right on

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Speaker 1: the ladder of American success, is to own their own home.

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Speaker 1: And while I think people will hear that you and

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Speaker 1: I both think that there are good reasons for owning home,

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Speaker 1: there are also a lot of reasons that a primary

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Speaker 1: house is a terrible investment. And so we want you

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Speaker 1: to think about all these factors. It gives it gives

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Speaker 1: you a lot of things to think about as you're

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Speaker 1: approaching a potential major purchase like this. You know, before

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Speaker 1: you sink a huge down payment or you know, saddle yourself,

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Speaker 1: you know, for a home for thirty years, you know,

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Speaker 1: before you jump into a major decision like that, to

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Speaker 1: actually run through some of these you know cons and

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Speaker 1: you know, run the numbers and and think about whether

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Speaker 1: you know primary home purchase actually makes sense for you

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Speaker 1: as an investment. That's right, man. So a home could

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Speaker 1: be a great purchase for you from a personal standpoint,

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Speaker 1: from a personal from a lifestyle standpoint, from just sort

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Speaker 1: of the stage of life that you're in. This you know,

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Speaker 1: moving every year every couple of years may not be

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Speaker 1: something that you want to do. It can be a

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Speaker 1: great thing for you and for your lifestyle, but from

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Speaker 1: a financial investment standpoint, it's not a great investment. It's

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Speaker 1: still an investment. Chances are, over the long term your

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Speaker 1: home values will rise. There might be dips from year

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Speaker 1: to year, but over time you will see that value increase.

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Speaker 1: You're just not going to see it increase as much

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Speaker 1: as you're going to see the stock market increase year

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Speaker 1: after year. Yeah, and you'll hear, you know us be

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Speaker 1: a little bit bullish on homes in general. I think

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Speaker 1: there there are a lot of good reasons to own

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Speaker 1: a home. And you know, Matt and I really enjoy

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Speaker 1: owning homes. You know, actually both of us own four homes,

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Speaker 1: one personal residence each and then three rental homes. And uh,

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Speaker 1: you know, we actually did an episode on renting verse

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Speaker 1: buying a home that was episode number fifteen, and we

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Speaker 1: think that's kind of worth listening to maybe alongside of this,

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Speaker 1: you know, as you consider whether or not you should

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Speaker 1: be renting or buying. But ultimately, what we want to

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Speaker 1: do is dispel the myth that buying a home is

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Speaker 1: always a good investment, And in particular, it's the word

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Speaker 1: investment that I have a problem with. You know, I think,

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Speaker 1: you know, a goodbye, you know, that's different. Sometimes, you know,

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Speaker 1: a hundred dollar television is a goodbye, but it's not

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Speaker 1: a good investment. And so people use that word investment

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Speaker 1: so quickly and easily in our culture. Hey I just

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Speaker 1: bought a boat. This is an awesome investment, right, and

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Speaker 1: it's it's just not and so, uh, that ward just

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Speaker 1: needs to be used carefully. So just be aware up

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Speaker 1: front that we're not trying to day that. You know,

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Speaker 1: buying a home is a terrible idea, buying a home

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Speaker 1: for you to live in, don't do it. You should

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Speaker 1: be a renter all your life. But it's that word investment,

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Speaker 1: and that's what we're going to focus on in this episode. Man, Yeah, Man,

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Speaker 1: we recently talked about this because we were sort of

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Speaker 1: inspired by an article that was written like years and

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Speaker 1: years ago by Jim Collins. This was a great article

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Speaker 1: essentially talking about this. He was kind of covering why

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Speaker 1: owning a home isn't a great investment. And I know

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Speaker 1: I've had some conversations with friends who, especially after the

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Speaker 1: housing crisis No. Seven and O eight, they talked about

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Speaker 1: how we're never gonna purchase a home because they were

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Speaker 1: so sort of scared by the turn that the housing

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Speaker 1: market took. And that being said that the specific friend

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Speaker 1: I'm thinking about owns a home, you know, at this point,

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Speaker 1: I think they kind of were able to ease out

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Speaker 1: of that period of life. But it's worth discussing. It's

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Speaker 1: it's worth talking about how it's just not automatic that

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Speaker 1: purchasing a home, primary residence is a great investment. Well

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Speaker 1: that that's a great point, I think, Matt, because a

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Speaker 1: lot of people felt that way after the housing downturn, like,

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Speaker 1: oh man, my all my confidence in housing a shot,

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Speaker 1: and there's no way I'm gonna buy a house again.

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Speaker 1: And the same thing happened with the stock market, right

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Speaker 1: there were a lot of people that said I'm never

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Speaker 1: buying stocks. Again, I don't trust the market. I don't

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Speaker 1: trust you know, my money there for the future, and

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Speaker 1: ultimately what you're saying, I think, to a certain extent

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Speaker 1: with both of those things, I don't trust the American

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Speaker 1: economy because people buy homes when they're making money. People

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Speaker 1: make money when businesses make money. When businesses make money,

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Speaker 1: the stock market does well. That's an oversimplification, but but

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Speaker 1: I think you know, if your confidence and shot either

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Speaker 1: one of those things, the people that at that time,

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Speaker 1: you know it. Certainly, fear does a lot to a

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Speaker 1: person psyche But hopefully in this podcast episode, we're trying

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Speaker 1: to go through you know, some of the historical numbers,

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Speaker 1: some of the historical data, and you know, the last

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Speaker 1: ten years from where the stock market was and from

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Speaker 1: where the housing market was, you'd be a fool not

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Speaker 1: to be bullish and not to say, you know, things

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Speaker 1: are going to continue along at the same rate for

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Speaker 1: the next ten years, like go all in. You know,

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Speaker 1: but that's a terrible idea to think of the past

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Speaker 1: would predict the future, you know, for the last ten years,

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Speaker 1: over the next ten years, just in the same way

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Speaker 1: that to think that that housing housing in stock market

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Speaker 1: crash in two thousand seven eight is indicative you know,

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Speaker 1: over the way the next ten years would be after that,

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Speaker 1: And so we want to go kind of historical. Here

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Speaker 1: are the things you actually need to consider when buying

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Speaker 1: a primary home, um and we we think we'll have

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Speaker 1: some sound advice for you when you're actually considering it,

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Speaker 1: so that you don't buy something that is going to

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Speaker 1: actually become more of like a weight around your neck

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Speaker 1: than this like joyous place for you to live. That's right, Joel,

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Speaker 1: And we're going to tell you exactly why your home

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Speaker 1: is an awful investment right after this break. Okay, man,

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Speaker 1: let's go ahead and get into the reasons why your home,

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Speaker 1: and specifically we are talking about your primary residence, why

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Speaker 1: it is an awful financial investment. The number one reason

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Speaker 1: is because of poor returns. So over the course of

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Speaker 1: several years, over the long term, house will appreciate, it

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Speaker 1: just does not appreciate as much as the stock market. Well,

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Speaker 1: since the sixties, the U. S. Census Bureau and the

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Speaker 1: National Association of Realtors on average showed an increase of

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Speaker 1: about four per annually in home values, and over that

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Speaker 1: same period, the stock market showed returns over ten percent, man,

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Speaker 1: So you're looking at four percent versus ten percent, And

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Speaker 1: if you're looking at it purely from the angle of

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Speaker 1: what is a better investment, what are you gonna take

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Speaker 1: ten percent or four percent ten percent every day? Exactly exactly.

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Speaker 1: So the number one reason is you're not going to

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Speaker 1: get the same kind of returns that you're going to

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Speaker 1: get out of increasing home values that you're going to

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Speaker 1: get out of the stock market. Yeah, Matt. Another reason

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Speaker 1: that your home is likely a terrible investment is that

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Speaker 1: homes are not productive in actually generating you money. So

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Speaker 1: money invested in the stock market earns interest and pays

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Speaker 1: you dividends along the way too. And you know, your

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Speaker 1: home is actually just sitting there kind of siphoning cash,

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Speaker 1: you know, saying hey help me, I need a new

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Speaker 1: roof or whatever it is. And so it's actually you know,

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Speaker 1: costing you not only you know, the mortgage and taxes.

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Speaker 1: So your house just really doesn't actively produce you any money.

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Speaker 1: Another point we wanted to bring up is just how

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Speaker 1: expensive home is as an investment. There are a lot

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Speaker 1: of different ways that is expensive. The first one I

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Speaker 1: want to cover here is that it just costs a

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Speaker 1: lot of money to get a home, you have to

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Speaker 1: sort of go all in. It just takes a lot

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Speaker 1: of money to get that first home. You know, you're

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Speaker 1: you're looking at putting down, and that just takes a

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Speaker 1: lot of money to kind of even get your foot

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Speaker 1: in the game. So the median price of a home

428
00:19:29,160 --> 00:19:31,159
Speaker 1: today in America is like, is right around two and

429
00:19:32,400 --> 00:19:37,960
Speaker 1: so down on fifty dollars. So imagine trying to buy

430
00:19:37,960 --> 00:19:41,520
Speaker 1: a stock where just to get that one stock, like

431
00:19:41,560 --> 00:19:46,040
Speaker 1: one share of stock is fifty I wouldn't do it.

432
00:19:46,040 --> 00:19:49,359
Speaker 1: It's just so expensive just to get that one singular

433
00:19:50,119 --> 00:19:53,720
Speaker 1: undiversified stock. And and that's a big point, Matt, because

434
00:19:54,160 --> 00:19:57,080
Speaker 1: you said not diversified, right, And so you're buying this

435
00:19:57,160 --> 00:20:02,280
Speaker 1: one house built of brick and would and cement and

436
00:20:02,960 --> 00:20:06,679
Speaker 1: drywall maybe plastic, I don't know, maybe plastic. Maybe get

437
00:20:06,720 --> 00:20:09,680
Speaker 1: that vinal siding on this one particular plot of land

438
00:20:09,680 --> 00:20:13,640
Speaker 1: in this you know, one particular state city town street.

439
00:20:13,920 --> 00:20:18,040
Speaker 1: And your diversification in that is not very good at all.

440
00:20:18,080 --> 00:20:20,560
Speaker 1: It's actually, in fact the opposite of good. And so

441
00:20:20,640 --> 00:20:23,159
Speaker 1: when it comes to investing, you actually want a lot

442
00:20:23,200 --> 00:20:26,720
Speaker 1: of diversification exposure to you know, hundreds and hundreds of

443
00:20:26,800 --> 00:20:30,240
Speaker 1: different companies throughout the country and that actually do business

444
00:20:30,240 --> 00:20:32,679
Speaker 1: throughout the world. In a primary home is actually the

445
00:20:32,680 --> 00:20:36,440
Speaker 1: exact opposite of being well diversified. Yeah, from a financial investment,

446
00:20:36,640 --> 00:20:40,040
Speaker 1: it's very, very risky. Another huge expense if you're going

447
00:20:40,040 --> 00:20:42,320
Speaker 1: to consider your home as an investment is that it

448
00:20:42,359 --> 00:20:46,520
Speaker 1: costs a ton of money to maintain. Most experts, and

449
00:20:46,560 --> 00:20:48,800
Speaker 1: I've seen this from my personal life as well, is

450
00:20:48,840 --> 00:20:51,280
Speaker 1: that it costs about one percent of the price of

451
00:20:51,320 --> 00:20:53,920
Speaker 1: the home, So the purchase price, it costs about one

452
00:20:53,920 --> 00:20:57,399
Speaker 1: percent of that to maintain annually. And so take the

453
00:20:57,400 --> 00:21:00,560
Speaker 1: example I just said, right, the two hunt median home

454
00:21:00,560 --> 00:21:03,919
Speaker 1: in America, you're looking at a year that you're just

455
00:21:03,960 --> 00:21:07,119
Speaker 1: putting towards maintaining that home. On the flip side of that,

456
00:21:07,200 --> 00:21:09,879
Speaker 1: we have stock investments that are spread out all across

457
00:21:09,880 --> 00:21:13,439
Speaker 1: the market, very well diversified, that have an expense ratio.

458
00:21:13,520 --> 00:21:15,280
Speaker 1: And I'm sort of equating the saint the two. Right,

459
00:21:15,400 --> 00:21:17,640
Speaker 1: You've got like expenses that it takes to maintain your home,

460
00:21:17,880 --> 00:21:20,120
Speaker 1: and then on stocks you've got expense ratios because that's

461
00:21:20,160 --> 00:21:22,040
Speaker 1: just the sort of ongoing costs that you have with it.

462
00:21:22,400 --> 00:21:24,719
Speaker 1: And the two funds that were the biggest fans of

463
00:21:25,280 --> 00:21:29,119
Speaker 1: you're looking at an expense ratio of point zero four percent.

464
00:21:29,520 --> 00:21:33,080
Speaker 1: There's a huge difference between one percent and point zero

465
00:21:33,119 --> 00:21:36,520
Speaker 1: four percent. We're talking about twenty times more than twenty times,

466
00:21:36,640 --> 00:21:39,600
Speaker 1: right that I don't even know. It's it's a ton. So,

467
00:21:39,680 --> 00:21:43,800
Speaker 1: going back to that two home, if we had the

468
00:21:43,840 --> 00:21:46,200
Speaker 1: same expense ratio that you would have with our favorite funds,

469
00:21:46,200 --> 00:21:48,760
Speaker 1: which is point zero four percent, instead of paying twenty

470
00:21:49,440 --> 00:21:52,400
Speaker 1: dollars a year in maintaining your home, it would only

471
00:21:52,440 --> 00:21:56,040
Speaker 1: cost you one dollars. Yeah, that's a huge difference, dude.

472
00:21:56,240 --> 00:21:58,960
Speaker 1: Isn't that insane when you look at it that way? Yeah,

473
00:21:59,080 --> 00:22:02,080
Speaker 1: that's too, completely crazy and definitely puts a win in

474
00:22:02,080 --> 00:22:04,600
Speaker 1: the column of investing in stocks as opposed to considering

475
00:22:04,600 --> 00:22:06,880
Speaker 1: your primary home and investment. Yeah, Matt in. The next

476
00:22:07,040 --> 00:22:10,080
Speaker 1: huge expense to people often fail to consider, or at

477
00:22:10,119 --> 00:22:12,880
Speaker 1: least just don't factor in when they're considering their primary

478
00:22:12,880 --> 00:22:15,520
Speaker 1: home as an investment is the costs incurred when buying

479
00:22:15,600 --> 00:22:18,520
Speaker 1: and selling that home. And so the average realtor fees

480
00:22:18,560 --> 00:22:20,480
Speaker 1: in the United States, they're higher than a lot of

481
00:22:20,480 --> 00:22:24,440
Speaker 1: other places in the world, are three percent per realtor.

482
00:22:24,920 --> 00:22:27,119
Speaker 1: So just to buy and sell that home. And usually

483
00:22:27,119 --> 00:22:29,359
Speaker 1: you know, the seller incurs most of these costs. But

484
00:22:29,400 --> 00:22:31,280
Speaker 1: as a buyer, you should be thinking about, you know,

485
00:22:31,320 --> 00:22:33,879
Speaker 1: the future, the exit strategy, right, and so you need

486
00:22:33,920 --> 00:22:35,440
Speaker 1: to be thinking about what it's actually gonna be a

487
00:22:35,440 --> 00:22:37,160
Speaker 1: cost for you to get out of that home at

488
00:22:37,200 --> 00:22:39,320
Speaker 1: some point. And so when you're buying a stock or

489
00:22:39,359 --> 00:22:42,840
Speaker 1: an e t F, you're assuming, hopefully rightly, you're doing

490
00:22:42,880 --> 00:22:45,840
Speaker 1: business with you know, Vanguard or in one finance like

491
00:22:45,880 --> 00:22:49,000
Speaker 1: that we talked about last episode, you're paying zero or

492
00:22:49,160 --> 00:22:53,000
Speaker 1: incredibly minuscule fees to unload that stock or ETF. But

493
00:22:53,040 --> 00:22:55,239
Speaker 1: when it comes to selling your home, not only are

494
00:22:55,280 --> 00:22:57,119
Speaker 1: you paying that one percent every year to maintain it,

495
00:22:57,160 --> 00:23:00,400
Speaker 1: but you're paying huge costs, huge costs by per image,

496
00:23:00,600 --> 00:23:02,479
Speaker 1: just to get out of that house. And that's not

497
00:23:02,520 --> 00:23:05,360
Speaker 1: even factoring in you know, lender closing costs, getting an

498
00:23:05,359 --> 00:23:08,439
Speaker 1: inspection performed on the property before you buy it, and

499
00:23:08,440 --> 00:23:11,119
Speaker 1: then other random things. And there's always like ten or

500
00:23:11,160 --> 00:23:14,320
Speaker 1: twelve additional line items you see like on that statement.

501
00:23:14,359 --> 00:23:16,760
Speaker 1: You know, yeah, so it's really expensive to buy and

502
00:23:16,760 --> 00:23:20,600
Speaker 1: sell homes. There's all those other factors that come into play.

503
00:23:20,760 --> 00:23:23,320
Speaker 1: But when you're investing in the stock market. It's simple,

504
00:23:23,359 --> 00:23:25,639
Speaker 1: it's clean, and it's low cost. I hope by the

505
00:23:25,720 --> 00:23:27,320
Speaker 1: end of this this doesn't just convince me to sell

506
00:23:27,359 --> 00:23:30,439
Speaker 1: all of our properties and just be done with it. Man. Well,

507
00:23:30,720 --> 00:23:32,320
Speaker 1: I was just thinking that this is a great time

508
00:23:32,359 --> 00:23:34,199
Speaker 1: just to reassure people. We're going to get to some

509
00:23:34,760 --> 00:23:37,160
Speaker 1: reasons why I think that homes can be a really

510
00:23:37,200 --> 00:23:39,880
Speaker 1: good move. I think if you're listening right now, you're thinking, yeah,

511
00:23:39,880 --> 00:23:41,840
Speaker 1: but home isn't just an investment, right. It is a

512
00:23:41,880 --> 00:23:44,800
Speaker 1: place where I live. It means something to me, and

513
00:23:44,880 --> 00:23:48,400
Speaker 1: it's four walls around me in a bedroom and a bathroom,

514
00:23:48,400 --> 00:23:50,199
Speaker 1: in a kitchen, and it's got all these things that

515
00:23:50,359 --> 00:23:52,119
Speaker 1: I need, Like I have to spend money on a

516
00:23:52,119 --> 00:23:54,320
Speaker 1: place to live, no matter what. Some somehow, You're going

517
00:23:54,359 --> 00:23:56,560
Speaker 1: to spend money to live somewhere, no matter what, right,

518
00:23:56,560 --> 00:23:58,320
Speaker 1: And so that is the thing that's something that we

519
00:23:58,320 --> 00:24:00,119
Speaker 1: actually we do need it to clear up and make

520
00:24:00,160 --> 00:24:01,600
Speaker 1: sure people know. And we'll get to a little bit

521
00:24:01,680 --> 00:24:04,679
Speaker 1: later on the podcast too, that obviously the only consideration

522
00:24:04,760 --> 00:24:08,520
Speaker 1: when buying a home is not the investment payoff of

523
00:24:08,560 --> 00:24:10,640
Speaker 1: that home, right. There are a lot of other considerations

524
00:24:10,680 --> 00:24:12,639
Speaker 1: to make. So we will get to those But right

525
00:24:12,720 --> 00:24:14,360
Speaker 1: now we're just kind of playing this mind game and

526
00:24:14,359 --> 00:24:16,800
Speaker 1: and helping you think about your home when it comes

527
00:24:16,800 --> 00:24:18,560
Speaker 1: to thinking about, you know, how you buy a home

528
00:24:18,880 --> 00:24:22,879
Speaker 1: and ultimately that huge cultural thought that a primary residence

529
00:24:23,359 --> 00:24:26,840
Speaker 1: is a great investment and taking that as gospel truth.

530
00:24:26,880 --> 00:24:28,560
Speaker 1: We're kind of trying to debunk, you know, some of

531
00:24:28,600 --> 00:24:30,680
Speaker 1: those myths. But then you know, also hit the flip side,

532
00:24:30,840 --> 00:24:32,720
Speaker 1: you know here in just a few minutes too. So

533
00:24:32,760 --> 00:24:34,480
Speaker 1: we just touched on this how there is a lack

534
00:24:34,520 --> 00:24:38,240
Speaker 1: of diversification when you have a single home. Uh. And

535
00:24:38,280 --> 00:24:40,480
Speaker 1: what we didn't discuss them though, is that there is

536
00:24:40,520 --> 00:24:45,399
Speaker 1: so much that can ride on specific businesses or local

537
00:24:45,440 --> 00:24:47,840
Speaker 1: governments that you just don't have control over. And so

538
00:24:47,920 --> 00:24:50,560
Speaker 1: what if the local factory closes, um that is a

539
00:24:50,640 --> 00:24:53,320
Speaker 1: huge employer of a lot of the people in your area,

540
00:24:53,600 --> 00:24:56,560
Speaker 1: or say the local government just decides to increase the

541
00:24:56,600 --> 00:24:59,240
Speaker 1: taxes like crazy. These are things you don't have control

542
00:24:59,240 --> 00:25:01,920
Speaker 1: over that have huge impact on the value of your home.

543
00:25:02,280 --> 00:25:04,480
Speaker 1: And so again this is another example of sort of

544
00:25:04,520 --> 00:25:07,439
Speaker 1: all your eggs being in one single basket. Yeah, there

545
00:25:07,440 --> 00:25:09,960
Speaker 1: are all these external factors that you can't control, you know,

546
00:25:10,000 --> 00:25:12,320
Speaker 1: and you might think that you're buying in this awesome place,

547
00:25:12,600 --> 00:25:15,119
Speaker 1: but then you know, a public transportation system either fails

548
00:25:15,520 --> 00:25:17,600
Speaker 1: or you know what, maybe you don't have public transit

549
00:25:17,680 --> 00:25:19,560
Speaker 1: and it comes to the community where you are, and

550
00:25:19,600 --> 00:25:21,560
Speaker 1: that's not good for your community. I don't know. There

551
00:25:21,560 --> 00:25:24,400
Speaker 1: are all sorts of external factors that can affect that

552
00:25:24,600 --> 00:25:27,600
Speaker 1: quote unquote investment that you've made in this home that

553
00:25:27,680 --> 00:25:30,560
Speaker 1: you have absolutely no control over, and that's tough. Like

554
00:25:30,600 --> 00:25:33,399
Speaker 1: obviously you don't have control over the stock market as

555
00:25:33,440 --> 00:25:35,480
Speaker 1: a whole and where that goes, but at least you

556
00:25:35,480 --> 00:25:37,920
Speaker 1: know that it's well diversified. And so if one company

557
00:25:37,960 --> 00:25:40,840
Speaker 1: completely screws things up like en Ron, right, that affects

558
00:25:40,840 --> 00:25:43,800
Speaker 1: your portfolio minimally. But if your home takes a nose

559
00:25:43,840 --> 00:25:46,879
Speaker 1: dive and you're all in on that, that's a gigantic

560
00:25:46,960 --> 00:25:49,359
Speaker 1: hit to your portfolio. And then also related to location

561
00:25:49,359 --> 00:25:51,640
Speaker 1: as well, when it comes time to sell, like you're

562
00:25:51,680 --> 00:25:54,560
Speaker 1: mentioning that exit strategy, you're limited to the buyers that

563
00:25:54,600 --> 00:25:57,040
Speaker 1: want to buy in that specific region. So, for example,

564
00:25:57,080 --> 00:26:00,400
Speaker 1: think about selling a share of a fund that you have.

565
00:26:00,920 --> 00:26:04,199
Speaker 1: Anyone in the entire world could buy that stock or

566
00:26:04,240 --> 00:26:06,880
Speaker 1: that that fund at the market rate, But when you're

567
00:26:06,880 --> 00:26:10,600
Speaker 1: listening your home, you're limited to whoever is only interested

568
00:26:10,640 --> 00:26:13,760
Speaker 1: in your specific area. It just really limits the pool

569
00:26:13,800 --> 00:26:15,919
Speaker 1: of the potential people who could buy that quote unquote

570
00:26:15,960 --> 00:26:19,760
Speaker 1: investment from you, whether you're in Signaticui, New York, or Perry,

571
00:26:19,800 --> 00:26:24,160
Speaker 1: Georgia or heard of that first one there's a movie

572
00:26:24,160 --> 00:26:28,800
Speaker 1: about it. Yeah, I know, POKEPSI, Pokeepsie. So that's wherever

573
00:26:28,880 --> 00:26:31,600
Speaker 1: you are out of those cities, there's just a finite

574
00:26:31,600 --> 00:26:34,000
Speaker 1: amount of buyers, and Sacramento is going to have more

575
00:26:34,040 --> 00:26:37,040
Speaker 1: than Perry, Georgia. But still, no matter where you're at,

576
00:26:37,320 --> 00:26:41,000
Speaker 1: you are talking about a smaller segment of buyers. And also,

577
00:26:41,080 --> 00:26:43,560
Speaker 1: depending on the price range that you're in, right, if

578
00:26:43,560 --> 00:26:46,479
Speaker 1: you're in a more expensive home, you're appealing to an

579
00:26:46,480 --> 00:26:49,200
Speaker 1: even smaller segment of buyers. So there are all those

580
00:26:49,200 --> 00:26:52,080
Speaker 1: things that consider about your home as a primary investment

581
00:26:52,359 --> 00:26:54,399
Speaker 1: that if you do decide to list your home, you

582
00:26:54,480 --> 00:26:56,920
Speaker 1: might be appealing to a really small segment of people.

583
00:26:57,119 --> 00:26:59,960
Speaker 1: And that's just really hard compared to selling stock like Matts.

584
00:27:00,400 --> 00:27:02,600
Speaker 1: That's right, man. So next we are going to get

585
00:27:02,640 --> 00:27:04,640
Speaker 1: to some tips in some ways that you can make

586
00:27:04,680 --> 00:27:08,080
Speaker 1: your primary home a better investment. But first, let's take

587
00:27:08,080 --> 00:27:20,280
Speaker 1: a break, all right, Matt, we're back. So we've gone

588
00:27:20,320 --> 00:27:21,919
Speaker 1: over a bunch of reasons why your home is an

589
00:27:21,920 --> 00:27:24,520
Speaker 1: awful investment. But now let's kind of hit the flip side.

590
00:27:24,840 --> 00:27:27,399
Speaker 1: So purchasing and owning a home it can actually be

591
00:27:27,440 --> 00:27:30,880
Speaker 1: a great lifestyle choice for you, and perhaps you can

592
00:27:30,880 --> 00:27:33,880
Speaker 1: turn it into a good financial move as well. Most

593
00:27:33,920 --> 00:27:35,359
Speaker 1: people don't think like that when it comes to their

594
00:27:35,359 --> 00:27:37,399
Speaker 1: primary home, but we want you to think like that,

595
00:27:37,440 --> 00:27:39,520
Speaker 1: and so we're gonna kind of give you some tips

596
00:27:39,800 --> 00:27:44,200
Speaker 1: to turn your primary home into a decent financial investment,

597
00:27:44,359 --> 00:27:45,960
Speaker 1: even though we just kind of ran through a bunch

598
00:27:45,960 --> 00:27:47,840
Speaker 1: of reasons why it's not. And then we're gonna cover

599
00:27:47,920 --> 00:27:50,840
Speaker 1: some tips on ways to make your home a better investment.

600
00:27:50,880 --> 00:27:52,760
Speaker 1: But first we just need to acknowledge the fact that

601
00:27:53,560 --> 00:27:57,440
Speaker 1: typically we don't buy a primary residence to be an investment,

602
00:27:57,760 --> 00:28:00,359
Speaker 1: right Like, you get a home to live in because

603
00:28:00,359 --> 00:28:01,760
Speaker 1: it's in a community that you want to be a

604
00:28:01,800 --> 00:28:04,640
Speaker 1: part of, because you want some permanence. There's a lot

605
00:28:04,640 --> 00:28:06,800
Speaker 1: of benefits that we talked about in the renting Versus

606
00:28:06,880 --> 00:28:09,440
Speaker 1: owning episode where we talk about the benefits of owning

607
00:28:09,440 --> 00:28:11,640
Speaker 1: your own place. But yeah, the fact is you've got

608
00:28:11,640 --> 00:28:14,160
Speaker 1: to pay to live somewhere. There just can be a

609
00:28:14,200 --> 00:28:17,880
Speaker 1: big difference between what is sort of the bare minimum

610
00:28:18,160 --> 00:28:20,600
Speaker 1: amount that you could pay to to live somewhere, to

611
00:28:20,640 --> 00:28:24,600
Speaker 1: pay rent, versus what maybe most people would purchase, uh

612
00:28:24,640 --> 00:28:27,760
Speaker 1: and consider quote unquote an investment. Yeah, I think, Matt,

613
00:28:27,840 --> 00:28:30,600
Speaker 1: you know, whether I'm renting or buying, ultimately, every month

614
00:28:30,920 --> 00:28:33,160
Speaker 1: money is going to come out of my bank account

615
00:28:33,480 --> 00:28:36,360
Speaker 1: to either a landlord or to a bank. So I'm

616
00:28:36,359 --> 00:28:39,640
Speaker 1: going to pay to live somewhere no matter what. Right

617
00:28:39,480 --> 00:28:41,920
Speaker 1: I need four walls in a bathroom, in the kitchen,

618
00:28:42,120 --> 00:28:44,440
Speaker 1: all those things around me, or that's just at least

619
00:28:44,440 --> 00:28:45,920
Speaker 1: I guess what I've come to expect, and so that's

620
00:28:45,920 --> 00:28:48,120
Speaker 1: what I'm gonna have. You need a bathroom, that's good,

621
00:28:48,440 --> 00:28:50,840
Speaker 1: It helps, It helps, And so I think that definitely throws,

622
00:28:50,880 --> 00:28:53,960
Speaker 1: you know, this huge giant wrench into a debate about

623
00:28:53,960 --> 00:28:56,040
Speaker 1: whether a primary home is a good investment or not,

624
00:28:56,320 --> 00:28:58,640
Speaker 1: because you're going to be paying every month for a

625
00:28:58,640 --> 00:29:01,280
Speaker 1: place to live, whether it's a primary residence that you

626
00:29:01,320 --> 00:29:04,520
Speaker 1: own or it's a home that you rent from a landlord,

627
00:29:04,720 --> 00:29:06,440
Speaker 1: And so we kind of have to take that into

628
00:29:06,440 --> 00:29:09,240
Speaker 1: the equation and include that in the way we think

629
00:29:09,240 --> 00:29:11,800
Speaker 1: through things. But at least I hope that some of

630
00:29:11,800 --> 00:29:13,959
Speaker 1: the things that we discussed, you know, above, make you

631
00:29:14,000 --> 00:29:17,280
Speaker 1: think twice about using the word investment for your primary

632
00:29:17,280 --> 00:29:20,240
Speaker 1: home and make you instead kind of run the numbers

633
00:29:20,280 --> 00:29:23,280
Speaker 1: and think through, you know, all the costs involved and

634
00:29:23,400 --> 00:29:26,400
Speaker 1: the fees associated with buying a home, so you don't

635
00:29:26,440 --> 00:29:30,720
Speaker 1: just aimlessly blindly walk into buying a primary home thinking

636
00:29:30,760 --> 00:29:34,160
Speaker 1: that it's just a great investment that's going to appreciate

637
00:29:34,240 --> 00:29:36,160
Speaker 1: over time. We want to kind of like throw out

638
00:29:36,160 --> 00:29:38,960
Speaker 1: some of those shock value things that make you think twice,

639
00:29:39,160 --> 00:29:40,760
Speaker 1: you know, about the actual cost of a home and

640
00:29:40,800 --> 00:29:42,800
Speaker 1: what you're paying, not to mention, you know, the the

641
00:29:42,800 --> 00:29:45,080
Speaker 1: interests that you're going to be paying, usually, even in

642
00:29:45,080 --> 00:29:48,040
Speaker 1: this low interest rate environment, double the price that you're borrowing.

643
00:29:48,280 --> 00:29:52,080
Speaker 1: You know, over thirty years, if you borrow two dollars

644
00:29:52,080 --> 00:29:54,040
Speaker 1: for a home, you're likely going to pay more than

645
00:29:54,120 --> 00:29:57,720
Speaker 1: four thousand dollars for that actual home over thirty years.

646
00:29:57,760 --> 00:30:00,360
Speaker 1: And so, you know, those costs that come along with

647
00:30:00,400 --> 00:30:03,280
Speaker 1: buying a primary home, they certainly need to be factored in.

648
00:30:03,640 --> 00:30:06,360
Speaker 1: But it's definitely important to recognize that a primary home

649
00:30:06,480 --> 00:30:10,640
Speaker 1: is not purchased by most people for the sole reason

650
00:30:10,840 --> 00:30:14,120
Speaker 1: of being an investment. So that being said, if you

651
00:30:14,160 --> 00:30:16,720
Speaker 1: do want to purchase a home, here are some tips,

652
00:30:17,000 --> 00:30:20,760
Speaker 1: some ways that you can help your primary residents your home.

653
00:30:21,240 --> 00:30:23,120
Speaker 1: You're still not gonna be clearing money every month, you're

654
00:30:23,120 --> 00:30:25,600
Speaker 1: still not gonna come out ahead like you would with

655
00:30:25,840 --> 00:30:29,040
Speaker 1: an investment property or rental property. But again, these are

656
00:30:29,080 --> 00:30:31,480
Speaker 1: some ways that you can minimize the amount that you're

657
00:30:31,480 --> 00:30:34,360
Speaker 1: spending on your primary home and to offset some of

658
00:30:34,360 --> 00:30:36,600
Speaker 1: those costs. Yeah, so the first thing that you can

659
00:30:36,640 --> 00:30:39,239
Speaker 1: do when you're looking for a primary residence to make

660
00:30:39,280 --> 00:30:41,240
Speaker 1: sure that it's a goodbye and it's not going to

661
00:30:41,280 --> 00:30:43,640
Speaker 1: be as bad of an investment as it could be

662
00:30:43,760 --> 00:30:45,240
Speaker 1: and then it actually will work out in your favor

663
00:30:45,280 --> 00:30:47,880
Speaker 1: over time, is to buy a home that's to deal.

664
00:30:48,240 --> 00:30:50,040
Speaker 1: And so the more you know your market, the more

665
00:30:50,080 --> 00:30:52,680
Speaker 1: you know specific neighborhoods, Like we've talked about in some

666
00:30:52,760 --> 00:30:55,880
Speaker 1: of our real estate investing podcasts, it's really important to

667
00:30:55,960 --> 00:30:59,080
Speaker 1: kind of know streets and no neighborhoods, and that way

668
00:30:59,080 --> 00:31:01,280
Speaker 1: when a deal pops up, you're ready to pounce. And

669
00:31:01,280 --> 00:31:05,160
Speaker 1: the same thing is true for buying a primary home.

670
00:31:05,600 --> 00:31:07,240
Speaker 1: You want to make sure that you're getting as good

671
00:31:07,280 --> 00:31:08,880
Speaker 1: a deal as possible. And so if you see a

672
00:31:08,880 --> 00:31:12,480
Speaker 1: home pop on the market that is ten or undervalued

673
00:31:12,640 --> 00:31:15,400
Speaker 1: and you're ready to jump on a moment's notice and

674
00:31:15,440 --> 00:31:18,880
Speaker 1: get that deal, well, ultimately you've got some equity built

675
00:31:18,880 --> 00:31:22,920
Speaker 1: in already just by buying at a reduced rate. And

676
00:31:22,960 --> 00:31:24,920
Speaker 1: another thing you can do to kind of enhance that

677
00:31:24,960 --> 00:31:27,280
Speaker 1: as well is to buy a home that needs some love,

678
00:31:27,560 --> 00:31:29,920
Speaker 1: put some sweat equity into that beast. And that's a

679
00:31:29,920 --> 00:31:33,640
Speaker 1: great way to make a poor investment actually a decent

680
00:31:33,680 --> 00:31:37,080
Speaker 1: investment over time, because you bought something that nobody else

681
00:31:37,120 --> 00:31:39,960
Speaker 1: really wanted. You put the work in, and you're reaping

682
00:31:39,960 --> 00:31:41,920
Speaker 1: the rewards you know, based on the hard work that

683
00:31:42,040 --> 00:31:44,440
Speaker 1: you have contributed to the home. That's right, man, there's

684
00:31:44,440 --> 00:31:46,880
Speaker 1: nothing wrong with training some of that time for money.

685
00:31:47,160 --> 00:31:48,280
Speaker 1: And of course we want to keep some of the

686
00:31:48,320 --> 00:31:50,200
Speaker 1: basics of mind as well, which are you want to

687
00:31:50,240 --> 00:31:53,120
Speaker 1: make sure you are always putting down You want to

688
00:31:53,200 --> 00:31:55,280
Speaker 1: be sure to avoid that p m I. That is

689
00:31:55,440 --> 00:31:58,520
Speaker 1: an additional expense that you do not need on a

690
00:31:58,880 --> 00:32:02,040
Speaker 1: quote unquote investment that's already going to be underperforming. And

691
00:32:02,120 --> 00:32:04,440
Speaker 1: because of how expensive it is to buy and sell

692
00:32:04,480 --> 00:32:06,600
Speaker 1: a property, you want to make sure that you're staying

693
00:32:06,680 --> 00:32:09,120
Speaker 1: in that home for at least five years to break

694
00:32:09,200 --> 00:32:13,560
Speaker 1: even of those expenses. Ideally even longer. Right, ideally, if

695
00:32:13,600 --> 00:32:16,120
Speaker 1: you can stand there from seven to even ten years,

696
00:32:16,160 --> 00:32:17,479
Speaker 1: that's you know, for a lot of people, that might

697
00:32:17,480 --> 00:32:19,040
Speaker 1: be a stretch to think, oh, man, where am I

698
00:32:19,040 --> 00:32:21,200
Speaker 1: going to be ten years from now? Even I want

699
00:32:21,200 --> 00:32:23,240
Speaker 1: to be in the same city. That might be tough,

700
00:32:23,840 --> 00:32:25,640
Speaker 1: but that's how you need to think about it when

701
00:32:25,680 --> 00:32:28,200
Speaker 1: you're going into buying a primary residence. When you're looking

702
00:32:28,240 --> 00:32:30,400
Speaker 1: at buying a home, you want to also make sure

703
00:32:30,400 --> 00:32:33,040
Speaker 1: that you're giving the house time to appreciate. It's not

704
00:32:33,120 --> 00:32:35,360
Speaker 1: just about sort of recouping this cost and spreading those

705
00:32:35,360 --> 00:32:38,520
Speaker 1: over more years, but you're you're looking and hope, hoping

706
00:32:38,640 --> 00:32:40,520
Speaker 1: that your house is going to continue to rise and

707
00:32:40,600 --> 00:32:42,479
Speaker 1: value and that you're going to be able to, you know,

708
00:32:42,480 --> 00:32:45,040
Speaker 1: reap some of those rewards and get some of that appreciation,

709
00:32:45,400 --> 00:32:48,200
Speaker 1: have that translate into the check at the closing table. Yeah,

710
00:32:48,200 --> 00:32:51,840
Speaker 1: and that number is really important obviously to avoid private

711
00:32:51,840 --> 00:32:54,400
Speaker 1: mortgage insurance, which could cost you a couple hundred dollars

712
00:32:54,440 --> 00:32:56,760
Speaker 1: a month right added to your mortgage payments, but on

713
00:32:56,840 --> 00:32:58,720
Speaker 1: top of that. Let's say you do get a loan

714
00:32:58,760 --> 00:33:01,760
Speaker 1: where you put three down, and let's say it's a

715
00:33:01,840 --> 00:33:04,440
Speaker 1: hundred thousand dollar home. You put three percent down, and

716
00:33:04,480 --> 00:33:06,760
Speaker 1: the market declines and you'r a hundred thousand dollar home

717
00:33:06,840 --> 00:33:10,160
Speaker 1: is suddenly worth eight tho dollars. Right, You're only three

718
00:33:10,200 --> 00:33:13,480
Speaker 1: thousand dollars of your own hard earned money into that deal.

719
00:33:13,920 --> 00:33:15,920
Speaker 1: If you need to sell it for some reason, if

720
00:33:15,920 --> 00:33:17,600
Speaker 1: you have a hardship reason that you need to sell

721
00:33:17,680 --> 00:33:19,840
Speaker 1: your house, you need to move because you found another

722
00:33:19,920 --> 00:33:22,800
Speaker 1: job or something happened and you need to be closer

723
00:33:22,800 --> 00:33:25,760
Speaker 1: to family, well, whatever that is, you're negative in the whole,

724
00:33:25,800 --> 00:33:28,280
Speaker 1: and you might not have the cash to come to

725
00:33:28,320 --> 00:33:30,800
Speaker 1: the closing table to cover not just that deficit in

726
00:33:30,840 --> 00:33:33,160
Speaker 1: the value of your home, but also those closing costs,

727
00:33:33,200 --> 00:33:35,200
Speaker 1: those other costs that we talked about upfront. It's another

728
00:33:35,360 --> 00:33:38,080
Speaker 1: six percent on top of that bright that loss. So

729
00:33:38,120 --> 00:33:41,400
Speaker 1: it's hugely important that you come to the table with

730
00:33:42,160 --> 00:33:44,200
Speaker 1: down to avoid p m I and to avoid a

731
00:33:44,240 --> 00:33:46,920
Speaker 1: situation like that in the event of a market decline.

732
00:33:47,160 --> 00:33:50,080
Speaker 1: Edulis right. Also, be sure to be careful when renovating

733
00:33:50,080 --> 00:33:52,720
Speaker 1: and updating, because you may not get that money out

734
00:33:52,800 --> 00:33:54,880
Speaker 1: when it comes time to sell, you need to know

735
00:33:55,000 --> 00:33:58,240
Speaker 1: and own that those upgrades that you're making, in reality,

736
00:33:58,320 --> 00:34:01,120
Speaker 1: you are purchasing lifestyle upgrade. It's and be sure to

737
00:34:01,200 --> 00:34:05,960
Speaker 1: try to avoid to look at those expenses as investments. Yeah,

738
00:34:06,000 --> 00:34:08,440
Speaker 1: if you if you look around online, you can find

739
00:34:08,520 --> 00:34:10,560
Speaker 1: a lot of articles about how much return is a

740
00:34:10,640 --> 00:34:14,200
Speaker 1: kitchen renovation or a bathroom renovation actually going to get you,

741
00:34:14,560 --> 00:34:17,560
Speaker 1: And usually the returns are in the negative. Right, So

742
00:34:17,680 --> 00:34:20,880
Speaker 1: if you put sixty dollars into a kitchen renovation, you

743
00:34:20,960 --> 00:34:24,480
Speaker 1: might see thirty five or forty in increased value. And

744
00:34:24,560 --> 00:34:27,279
Speaker 1: so something else that comes along with that American myth

745
00:34:27,520 --> 00:34:30,480
Speaker 1: of home ownership always being a great investment is thinking

746
00:34:30,480 --> 00:34:33,000
Speaker 1: that you can continue to sink money into that investment

747
00:34:33,120 --> 00:34:35,160
Speaker 1: and that you'll always reap the rewards on the other

748
00:34:35,200 --> 00:34:38,080
Speaker 1: side when you eventually sell the home or in you know,

749
00:34:38,120 --> 00:34:40,840
Speaker 1: in the appreciation rate of that home. And that's just

750
00:34:41,080 --> 00:34:44,080
Speaker 1: rarely the case. Usually the improvements that you make, right,

751
00:34:44,120 --> 00:34:46,640
Speaker 1: they deteriorate over time. And most of the time the

752
00:34:46,719 --> 00:34:50,120
Speaker 1: changes that people make saying that there for quote unquote

753
00:34:50,160 --> 00:34:52,799
Speaker 1: investment reasons are just because yeah, I didn't really like

754
00:34:52,840 --> 00:34:55,000
Speaker 1: the bathroom and I wanted a new one, and that's

755
00:34:55,000 --> 00:34:57,480
Speaker 1: okay as long as you know going into it, you're

756
00:34:57,520 --> 00:34:59,800
Speaker 1: putting in your money for a bathroom that you and

757
00:35:00,040 --> 00:35:03,360
Speaker 1: joy more as opposed to calling it an investment and

758
00:35:03,400 --> 00:35:06,520
Speaker 1: then moving forward on it, because the truth is you're

759
00:35:06,520 --> 00:35:08,560
Speaker 1: not going to get a straight up dollar for dollar

760
00:35:08,640 --> 00:35:11,160
Speaker 1: even return on the money you put in for a

761
00:35:11,200 --> 00:35:14,320
Speaker 1: bathroom renovation or a kitchen renovation. You're actually gonna lose money.

762
00:35:14,400 --> 00:35:16,359
Speaker 1: So I hope you like it, man, that's so true.

763
00:35:16,480 --> 00:35:18,560
Speaker 1: You know. What it makes me think of is one

764
00:35:18,560 --> 00:35:19,960
Speaker 1: of the first things that a lot of people say

765
00:35:19,960 --> 00:35:21,439
Speaker 1: when they get a new place and they like show

766
00:35:21,480 --> 00:35:23,640
Speaker 1: you the new digs and they're like, oh, yeah, check

767
00:35:23,680 --> 00:35:25,239
Speaker 1: this out. But we're gonna we're gonna rip this out,

768
00:35:25,239 --> 00:35:27,440
Speaker 1: and we're gonna do this. Oh we're gonna replace the

769
00:35:27,480 --> 00:35:29,560
Speaker 1: tile over here. We're gonna we're gonna do this as well.

770
00:35:29,680 --> 00:35:32,879
Speaker 1: And that's unfortunate, right, It's wasteful. But what I'm pointing

771
00:35:32,920 --> 00:35:35,239
Speaker 1: out is that some of the changes that you might

772
00:35:35,280 --> 00:35:37,600
Speaker 1: make thinking that somebody else down the road, someone that

773
00:35:37,640 --> 00:35:39,799
Speaker 1: buys your house is going to appreciate, they may not

774
00:35:39,880 --> 00:35:42,200
Speaker 1: appreciate it. You know, there's a good chance that what

775
00:35:42,239 --> 00:35:44,919
Speaker 1: you're doing, like Joel said, what you're doing, it's for you,

776
00:35:45,120 --> 00:35:48,239
Speaker 1: and again that's okay, but just own that it's for you.

777
00:35:48,560 --> 00:35:51,920
Speaker 1: Unless you're adding an additional bathroom or additional score footage

778
00:35:52,000 --> 00:35:53,560
Speaker 1: or something like that, where it's more of a hard,

779
00:35:53,680 --> 00:35:56,080
Speaker 1: sort of tangible addition to the home. A lot of

780
00:35:56,080 --> 00:35:58,480
Speaker 1: times you you'll you'll see more of a return on

781
00:35:58,480 --> 00:36:00,520
Speaker 1: on that kind of improvement on the home, but in

782
00:36:00,520 --> 00:36:04,279
Speaker 1: particular finishes don't go very far. Again, so tip for

783
00:36:04,400 --> 00:36:07,360
Speaker 1: folks that are buying a home right consider buying something

784
00:36:07,360 --> 00:36:10,040
Speaker 1: that is more in disrepair. And so when you're making

785
00:36:10,080 --> 00:36:12,720
Speaker 1: those improvements, you're actually are getting more of a return

786
00:36:12,760 --> 00:36:14,400
Speaker 1: on that investment. And if you're able to do some

787
00:36:14,440 --> 00:36:17,480
Speaker 1: of that work yourself, you're gonna see even more of

788
00:36:17,520 --> 00:36:19,359
Speaker 1: a return. And so if you are able to do

789
00:36:19,440 --> 00:36:21,959
Speaker 1: you know, a bathroom renovation, you know, on the cheap,

790
00:36:22,000 --> 00:36:24,239
Speaker 1: but make it look good from a bathroom that was

791
00:36:24,280 --> 00:36:27,279
Speaker 1: pretty much non functional, then you're definitely going to see

792
00:36:27,280 --> 00:36:29,800
Speaker 1: a return. So that comes down to being a smart

793
00:36:29,880 --> 00:36:32,600
Speaker 1: buyer when you're looking at real estate, when you're looking

794
00:36:32,640 --> 00:36:34,600
Speaker 1: to buy a home, as opposed to you know, buying

795
00:36:34,640 --> 00:36:37,880
Speaker 1: something that looks perfectly good but you just want to

796
00:36:37,960 --> 00:36:41,799
Speaker 1: change for your own aesthetic. Another tip is do not

797
00:36:41,920 --> 00:36:44,200
Speaker 1: buy the biggest house on the block or the biggest

798
00:36:44,200 --> 00:36:47,399
Speaker 1: house in the neighborhood. When you're talking about your home appreciating,

799
00:36:47,600 --> 00:36:49,920
Speaker 1: you're not going to see nearly the appreciation on a

800
00:36:50,040 --> 00:36:52,080
Speaker 1: larger home or a home that's sort of at the

801
00:36:52,120 --> 00:36:54,960
Speaker 1: top of the sort of immediate market as you are

802
00:36:54,960 --> 00:36:56,400
Speaker 1: going to see on a home sort of right there

803
00:36:56,400 --> 00:36:58,160
Speaker 1: in the middle, where you are going to see a

804
00:36:58,200 --> 00:37:01,400
Speaker 1: lot more room for growth. Keep that mind, yeah, But ultimately,

805
00:37:01,480 --> 00:37:04,560
Speaker 1: the biggest way to purchase a home and actually turn

806
00:37:04,640 --> 00:37:08,000
Speaker 1: it into a decent investment where it wasn't otherwise is

807
00:37:08,120 --> 00:37:11,000
Speaker 1: if you can try your hand at house hacking. And

808
00:37:11,080 --> 00:37:14,440
Speaker 1: house hacking is essentially become the popular phrase for finding

809
00:37:14,440 --> 00:37:16,359
Speaker 1: ways to make a little bit of money on your home,

810
00:37:16,400 --> 00:37:18,799
Speaker 1: and that means either running out a spare bedroom in

811
00:37:18,920 --> 00:37:22,080
Speaker 1: a single family home, or better yet, buying a multifamily home,

812
00:37:22,600 --> 00:37:25,080
Speaker 1: living in one of the units and then running out

813
00:37:25,080 --> 00:37:27,239
Speaker 1: the others. So if you were to buy a triplex,

814
00:37:27,520 --> 00:37:29,400
Speaker 1: right you live in one portion of the house, you

815
00:37:29,480 --> 00:37:32,400
Speaker 1: run out the other two, and everybody else covers your mortgage.

816
00:37:32,600 --> 00:37:35,400
Speaker 1: So doing something like that actually flips the tables and

817
00:37:35,520 --> 00:37:38,480
Speaker 1: makes a home a much better investment right than it

818
00:37:38,560 --> 00:37:40,279
Speaker 1: otherwise would have been. And if you're just buying a

819
00:37:40,280 --> 00:37:42,400
Speaker 1: single family home and you have your family in it

820
00:37:42,480 --> 00:37:44,440
Speaker 1: and you're not ready to, you know, start running out

821
00:37:44,520 --> 00:37:47,600
Speaker 1: rooms to strangers, well, maybe consider buying a place with

822
00:37:47,640 --> 00:37:50,040
Speaker 1: an in law suite or putting an airstream in the

823
00:37:50,040 --> 00:37:52,600
Speaker 1: back of your yard, like I'm considering. Uh, And we

824
00:37:52,680 --> 00:37:55,600
Speaker 1: talked about in episode number three. Something like that can

825
00:37:55,680 --> 00:37:57,799
Speaker 1: kind of flip the tables a little bit too, where

826
00:37:57,840 --> 00:37:59,680
Speaker 1: you can actually make a little bit of money from

827
00:37:59,719 --> 00:38:03,200
Speaker 1: your house anytime. Anyway that you can do something like that,

828
00:38:03,200 --> 00:38:04,880
Speaker 1: that's going to make your house a little less of

829
00:38:04,920 --> 00:38:07,959
Speaker 1: a financial drain and maybe add a little cash into

830
00:38:07,960 --> 00:38:09,840
Speaker 1: your life. Yeah, man, that's right. That's one of the

831
00:38:09,960 --> 00:38:13,120
Speaker 1: sort of downsides we mentioned earlier on that your primary residence,

832
00:38:13,239 --> 00:38:15,920
Speaker 1: it's just unproductive. You've got a lot of equity just

833
00:38:15,920 --> 00:38:18,800
Speaker 1: sitting there idle, and unless you do a home equity

834
00:38:18,840 --> 00:38:20,799
Speaker 1: loan or cash out refid that sort of thing and

835
00:38:20,840 --> 00:38:24,000
Speaker 1: then only take that money to invest, you aren't really

836
00:38:24,040 --> 00:38:26,480
Speaker 1: able to tap into the money. And so house hacking

837
00:38:26,520 --> 00:38:28,160
Speaker 1: that's a great way, like you said, to put that

838
00:38:28,200 --> 00:38:31,800
Speaker 1: money to work and even potentially completely eliminating your monthly

839
00:38:31,800 --> 00:38:34,040
Speaker 1: housing costs. You know, I've heard stories where somebody bought

840
00:38:34,040 --> 00:38:36,839
Speaker 1: a house and they've are single, and they just didn't

841
00:38:36,880 --> 00:38:38,360
Speaker 1: necessarily want to live alone, and they got two or

842
00:38:38,400 --> 00:38:41,440
Speaker 1: three roommates to live with them. Their combined rents completely

843
00:38:41,440 --> 00:38:45,960
Speaker 1: covered the mortgage and then some That is an example

844
00:38:46,239 --> 00:38:50,759
Speaker 1: of someone taking your primary residence and house hacking it

845
00:38:50,880 --> 00:38:53,239
Speaker 1: to where they're not only reducing the amount that they're

846
00:38:53,280 --> 00:38:56,479
Speaker 1: spending every month on their housing, actually creating income from

847
00:38:56,520 --> 00:38:59,560
Speaker 1: that house. And and that's just an incredible way to

848
00:39:00,080 --> 00:39:03,239
Speaker 1: uh to build wealth for most folks. Housing it's by

849
00:39:03,280 --> 00:39:06,759
Speaker 1: far the number one expense that people have every month,

850
00:39:06,760 --> 00:39:10,000
Speaker 1: your mortgage payment. After that, typically it's transportation costs. If

851
00:39:10,000 --> 00:39:12,040
Speaker 1: you're able to take something that is normally an expense

852
00:39:12,120 --> 00:39:14,759
Speaker 1: every month and instead take that from like say a

853
00:39:14,840 --> 00:39:18,120
Speaker 1: negative bucks or negative eight hundred just whatever you're rent

854
00:39:18,160 --> 00:39:20,880
Speaker 1: or whatever your mortgage payment is, to say a positive

855
00:39:20,920 --> 00:39:22,839
Speaker 1: to look like maybe you're making three hundred bucks, or

856
00:39:22,880 --> 00:39:24,360
Speaker 1: you know, if you're making bank and you're making like

857
00:39:24,400 --> 00:39:27,959
Speaker 1: five thousand bucks a month, you have officially crossed into

858
00:39:28,320 --> 00:39:30,799
Speaker 1: great investment territory. You know, like your your home is

859
00:39:30,800 --> 00:39:33,680
Speaker 1: no longer an awful investment. It is a fantastic cash

860
00:39:33,680 --> 00:39:37,239
Speaker 1: flowing investment. Yeah, because, like we said, everybody pays for

861
00:39:37,280 --> 00:39:39,000
Speaker 1: a place to live. And if you can figure out

862
00:39:39,000 --> 00:39:41,719
Speaker 1: a way to kind of minimize those costs of your

863
00:39:41,719 --> 00:39:45,160
Speaker 1: living expenses every month, man, that's killer and brainstorming. That

864
00:39:45,239 --> 00:39:48,120
Speaker 1: can completely change your financial picture. Yeah, man, And this

865
00:39:48,160 --> 00:39:49,920
Speaker 1: is something that you guys, actually do you want to

866
00:39:49,920 --> 00:39:52,000
Speaker 1: share something about the apartment in the back of your house.

867
00:39:52,400 --> 00:39:54,719
Speaker 1: So our house has a tiny kitchen in the back

868
00:39:54,880 --> 00:39:58,120
Speaker 1: and bathroom, and there's just a door that divides essentially

869
00:39:58,200 --> 00:39:59,960
Speaker 1: the front part of the house from the back part

870
00:40:00,040 --> 00:40:03,480
Speaker 1: the house. And my wife and I and our two girls,

871
00:40:03,520 --> 00:40:05,960
Speaker 1: we live in the front square feet and we rent

872
00:40:06,040 --> 00:40:08,560
Speaker 1: out that back seven square feet and it covers, you know,

873
00:40:08,600 --> 00:40:10,680
Speaker 1: more than half the mortgage, and it works out really

874
00:40:10,719 --> 00:40:13,480
Speaker 1: just to eliminate a huge chunk of our housing costs

875
00:40:13,480 --> 00:40:15,520
Speaker 1: every month. And the first house that I bought too

876
00:40:15,600 --> 00:40:17,560
Speaker 1: was a single family home, and I rented out a

877
00:40:17,640 --> 00:40:19,360
Speaker 1: room in there until my wife and I got married,

878
00:40:19,560 --> 00:40:21,759
Speaker 1: just to kind of cut my housing costs for a

879
00:40:21,840 --> 00:40:24,160
Speaker 1: time and save a little bit more money. So anytime

880
00:40:24,200 --> 00:40:26,160
Speaker 1: you can kind of think about your house, think about

881
00:40:26,160 --> 00:40:28,480
Speaker 1: a way that you can airbnb a room or maybe

882
00:40:28,520 --> 00:40:30,719
Speaker 1: turn a small part of your home, create a kitchenette,

883
00:40:30,960 --> 00:40:33,480
Speaker 1: and have someone that goes to your church or lives

884
00:40:33,480 --> 00:40:35,879
Speaker 1: in your neighborhood that's looking for a new place to live,

885
00:40:35,920 --> 00:40:37,680
Speaker 1: you know, have them live there and pay you rent.

886
00:40:37,920 --> 00:40:39,880
Speaker 1: Anything that you can do to kind of maximize that

887
00:40:40,000 --> 00:40:42,440
Speaker 1: house and take it from being like this liability, this

888
00:40:42,640 --> 00:40:47,360
Speaker 1: drain on your finances every month into kind of positive territory.

889
00:40:47,680 --> 00:40:49,839
Speaker 1: That's a huge wind. That's huge, man, and it makes

890
00:40:49,920 --> 00:40:53,120
Speaker 1: just like this immense ultimate impact on your finances. Yeah, certainly,

891
00:40:53,120 --> 00:40:54,960
Speaker 1: and that's I mean, really that's what we're trying to do.

892
00:40:55,040 --> 00:40:56,680
Speaker 1: It's been a minute since we've talked about this on

893
00:40:56,719 --> 00:40:59,960
Speaker 1: the podcast, but we're looking to sort of create an

894
00:41:00,040 --> 00:41:03,200
Speaker 1: airbnb apartment. Originally we talked about sort of digging out

895
00:41:03,280 --> 00:41:05,120
Speaker 1: some of the space that I've got this unfinished space

896
00:41:05,120 --> 00:41:07,840
Speaker 1: I have under under our house. I have since decided

897
00:41:07,920 --> 00:41:10,080
Speaker 1: that that probably isn't going to work out a k

898
00:41:10,280 --> 00:41:12,560
Speaker 1: A wimped out. Yeah, I wimped out, slash and just

899
00:41:12,600 --> 00:41:15,279
Speaker 1: got way too freaking busy. But we're also going to

900
00:41:15,360 --> 00:41:17,520
Speaker 1: be adding on to our current living space as well.

901
00:41:17,600 --> 00:41:20,240
Speaker 1: And so we're finding a way to potentially offset the

902
00:41:20,320 --> 00:41:24,360
Speaker 1: expenses from our mortgage while also we are adding onto

903
00:41:24,400 --> 00:41:26,839
Speaker 1: the usability and the functionality that we have in our

904
00:41:26,880 --> 00:41:29,000
Speaker 1: current home, and we're you know, we're owning that as well.

905
00:41:29,400 --> 00:41:31,799
Speaker 1: We know that okay, with this, we're going to see

906
00:41:31,800 --> 00:41:34,600
Speaker 1: a return on our investment, certainly, but we're also doing

907
00:41:34,600 --> 00:41:36,840
Speaker 1: this knowing that we're most definitely going to be getting

908
00:41:36,880 --> 00:41:39,400
Speaker 1: some utility out of the additional space, and that we're

909
00:41:39,400 --> 00:41:40,840
Speaker 1: not talking about the finish space that we're playing to

910
00:41:40,920 --> 00:41:42,960
Speaker 1: right out. We're talking about the space above that, right

911
00:41:43,000 --> 00:41:45,719
Speaker 1: So that's where we are, and that's just part of it.

912
00:41:45,760 --> 00:41:47,600
Speaker 1: I feel like we're being honest with ourselves. We know

913
00:41:47,680 --> 00:41:50,880
Speaker 1: that this is isn't for investment purposes and to have

914
00:41:51,000 --> 00:41:54,120
Speaker 1: an r o I on the project, but it's also

915
00:41:54,280 --> 00:41:58,279
Speaker 1: partly to increase the utility of our own home. Yeah,

916
00:41:58,280 --> 00:42:00,319
Speaker 1: And I think like, if you're single and you're buying

917
00:42:00,360 --> 00:42:02,279
Speaker 1: a home, these are these are just great things to

918
00:42:02,320 --> 00:42:04,239
Speaker 1: think about. If you're married and you're buying a home,

919
00:42:04,560 --> 00:42:08,200
Speaker 1: these are great things to talk about, uh with your partner,

920
00:42:08,480 --> 00:42:10,040
Speaker 1: at what do we want? You know, what do we

921
00:42:10,120 --> 00:42:12,640
Speaker 1: want out of this home? Do we want something that

922
00:42:13,000 --> 00:42:17,120
Speaker 1: absolutely minimizes our negative financial impact so that we can

923
00:42:17,200 --> 00:42:19,880
Speaker 1: save and invest as much money as possible and you know,

924
00:42:19,960 --> 00:42:22,680
Speaker 1: retiring ten years. Or do we want to live in

925
00:42:22,680 --> 00:42:25,359
Speaker 1: a nicer house in a nicer community because we've got

926
00:42:25,440 --> 00:42:27,799
Speaker 1: kids and it's really important that they live in that

927
00:42:27,880 --> 00:42:30,239
Speaker 1: we live in this neighborhood and raise them. You know,

928
00:42:30,320 --> 00:42:32,759
Speaker 1: right here, there are all all sorts of questions that

929
00:42:32,800 --> 00:42:34,680
Speaker 1: you need to answer when you're thinking about where you

930
00:42:34,680 --> 00:42:36,239
Speaker 1: want to live, you know, and for a little more

931
00:42:36,280 --> 00:42:38,840
Speaker 1: on that, like we said, go back to episode number fifteen,

932
00:42:39,040 --> 00:42:40,880
Speaker 1: Renting Verse buying a home, and I think there are

933
00:42:40,880 --> 00:42:42,799
Speaker 1: some things in there you can take away, but yeah,

934
00:42:43,000 --> 00:42:45,239
Speaker 1: a lot of this does come down to lifestyle, and

935
00:42:45,320 --> 00:42:47,759
Speaker 1: so it doesn't have to be the best investment ever.

936
00:42:48,000 --> 00:42:50,040
Speaker 1: You know, we think it's really important to make wise

937
00:42:50,080 --> 00:42:52,960
Speaker 1: investments and to put a decent chunk of what you

938
00:42:53,000 --> 00:42:56,759
Speaker 1: make every month towards investing. But a home doesn't have

939
00:42:56,840 --> 00:42:59,160
Speaker 1: to be that for you, right, And it's smart to

940
00:42:59,160 --> 00:43:00,640
Speaker 1: think about all these things because as you go in

941
00:43:00,800 --> 00:43:03,560
Speaker 1: to be conscious of the fees and the transaction costs

942
00:43:03,719 --> 00:43:05,960
Speaker 1: involved in housing. But when it comes down to it,

943
00:43:06,040 --> 00:43:09,360
Speaker 1: you know, we all have things that aren't investments. We

944
00:43:09,440 --> 00:43:11,360
Speaker 1: buy things that bring us an amount of happiness or

945
00:43:11,520 --> 00:43:15,319
Speaker 1: utility and don't provide us cash returns right on. They're

946
00:43:15,360 --> 00:43:18,400
Speaker 1: not expecting your pants to go up in value necessarily.

947
00:43:18,880 --> 00:43:21,279
Speaker 1: But maybe I don't know right or or or my

948
00:43:21,320 --> 00:43:24,279
Speaker 1: new balances right to provide a return on investment. But

949
00:43:24,440 --> 00:43:27,000
Speaker 1: those are things that we need and are utilitarian to

950
00:43:27,000 --> 00:43:29,319
Speaker 1: a certain extent, and a home can be that for

951
00:43:29,360 --> 00:43:30,880
Speaker 1: you to you just kind of want to go in

952
00:43:30,960 --> 00:43:33,680
Speaker 1: eyes wide open, know the costs that are involved, and

953
00:43:33,680 --> 00:43:36,160
Speaker 1: maybe think a little bit more about getting something more

954
00:43:36,160 --> 00:43:39,520
Speaker 1: reasonable that impacts your finances less and could potentially actually

955
00:43:39,920 --> 00:43:42,879
Speaker 1: be a little productive in its addition to your financial state.

956
00:43:43,160 --> 00:43:45,359
Speaker 1: And now that we've mentioned like the rent verse by

957
00:43:45,440 --> 00:43:47,600
Speaker 1: episode a few times now, it might be helpful for

958
00:43:47,680 --> 00:43:49,879
Speaker 1: you if you're trying to figure out, Okay, how much

959
00:43:49,920 --> 00:43:52,640
Speaker 1: is it actually going to cost me to purchase a home,

960
00:43:52,680 --> 00:43:54,799
Speaker 1: not just purchase at home, but maintain the home versus

961
00:43:54,840 --> 00:43:57,080
Speaker 1: how much I can find a place to rent for that,

962
00:43:57,200 --> 00:44:00,400
Speaker 1: I would suggest a rent versus by Calculator and Zillo.

963
00:44:00,640 --> 00:44:03,000
Speaker 1: They've got a great one online and we'll have a

964
00:44:03,040 --> 00:44:04,719
Speaker 1: link to that in our show notes. But essentially you

965
00:44:04,760 --> 00:44:07,160
Speaker 1: do a little bit of research and you see what

966
00:44:07,320 --> 00:44:10,399
Speaker 1: the market rates are for a home in the area

967
00:44:10,440 --> 00:44:12,879
Speaker 1: that you're looking at purchasing, as well as the rental rates,

968
00:44:13,200 --> 00:44:15,360
Speaker 1: and then they prompt you to fill in some of

969
00:44:15,360 --> 00:44:18,040
Speaker 1: the additional information like insurance and costs of maintenance, just

970
00:44:18,080 --> 00:44:20,120
Speaker 1: all those other things, and then they kind of spits

971
00:44:20,120 --> 00:44:22,279
Speaker 1: out the number, and from there, hopefully you can make

972
00:44:22,320 --> 00:44:25,480
Speaker 1: a more informed decision based on what you can afford

973
00:44:25,760 --> 00:44:29,040
Speaker 1: and not necessarily think, oh, well it's okay, because I

974
00:44:29,080 --> 00:44:31,080
Speaker 1: can spend a little bit more knowing that this is

975
00:44:31,520 --> 00:44:33,640
Speaker 1: going to be a great investment, because, like we said,

976
00:44:33,719 --> 00:44:36,000
Speaker 1: it may not be a great investment. Yeah. And if

977
00:44:36,040 --> 00:44:38,640
Speaker 1: you're keen to invest in real estate and you want

978
00:44:38,680 --> 00:44:40,680
Speaker 1: to know how to actually do that, because we just

979
00:44:40,719 --> 00:44:42,480
Speaker 1: told you that your primary home isn't going to do

980
00:44:42,520 --> 00:44:45,280
Speaker 1: that for you, well consider becoming a real estate investor.

981
00:44:45,320 --> 00:44:47,279
Speaker 1: And we've got a couple of shows that help you

982
00:44:47,320 --> 00:44:49,760
Speaker 1: think about that. You know, go back to our library

983
00:44:49,760 --> 00:44:51,759
Speaker 1: of episodes and you can learn a little bit more

984
00:44:51,800 --> 00:44:54,120
Speaker 1: about becoming a real estate investor. And if you want

985
00:44:54,160 --> 00:44:56,880
Speaker 1: to become a real estate investor, on like the Triple

986
00:44:56,960 --> 00:45:00,799
Speaker 1: Easy method, right, like completely passively compell lately passively because

987
00:45:00,840 --> 00:45:03,040
Speaker 1: there's a real estate investor. People call that passive income,

988
00:45:03,320 --> 00:45:05,120
Speaker 1: and I understand why they say that, but I also

989
00:45:05,239 --> 00:45:06,799
Speaker 1: kind of hate it because it takes a lot of

990
00:45:06,800 --> 00:45:08,680
Speaker 1: work to be a real estate investor. But if you

991
00:45:08,680 --> 00:45:12,160
Speaker 1: want to do it completely passively, consider investing in a REET,

992
00:45:12,719 --> 00:45:16,160
Speaker 1: a real estate investment trust. And there are a lot

993
00:45:16,200 --> 00:45:18,560
Speaker 1: of these out there, right, but Vanguard in particular, we

994
00:45:18,680 --> 00:45:21,080
Speaker 1: like them. They've got a great one. So the symbol

995
00:45:21,120 --> 00:45:24,759
Speaker 1: for Vanguards is v G s l X, and it

996
00:45:24,760 --> 00:45:27,480
Speaker 1: has a point one to expense ratio, right, and so

997
00:45:27,560 --> 00:45:31,080
Speaker 1: that rates invests in office buildings, hotels, and other properties.

998
00:45:31,280 --> 00:45:34,319
Speaker 1: So you're kind of getting in on real estate at

999
00:45:34,360 --> 00:45:38,040
Speaker 1: this incredibly low expense, a well diversified portfolio, real estate

1000
00:45:38,400 --> 00:45:40,600
Speaker 1: all across the country and all sorts of different types

1001
00:45:40,600 --> 00:45:44,880
Speaker 1: of buildings with this incredibly low expense ratio. That's a

1002
00:45:44,960 --> 00:45:48,759
Speaker 1: great way to passively and easily invest in real estate.

1003
00:45:48,960 --> 00:45:50,440
Speaker 1: And you know what, you can buy it today and

1004
00:45:50,440 --> 00:45:53,640
Speaker 1: trade it back tomorrow, so that's awesome. Yeah, So if

1005
00:45:53,680 --> 00:45:55,560
Speaker 1: you really do want to become a real estate investor,

1006
00:45:55,600 --> 00:45:57,319
Speaker 1: those are two ways to do it, and there are

1007
00:45:57,360 --> 00:45:59,480
Speaker 1: a lot of websites actually, right out right now that

1008
00:46:00,280 --> 00:46:03,880
Speaker 1: that wants you to invest in private real estate transactions,

1009
00:46:04,080 --> 00:46:06,080
Speaker 1: and the costs on those are really high too, and

1010
00:46:06,160 --> 00:46:09,279
Speaker 1: so I would say consider avoiding those um that have

1011
00:46:09,800 --> 00:46:14,799
Speaker 1: oftentimes two to five cost to invest in private real

1012
00:46:14,920 --> 00:46:18,000
Speaker 1: estate transactions and instead look at a REAT because through

1013
00:46:18,040 --> 00:46:20,799
Speaker 1: a company like Vanguard, they're so low cost and they're

1014
00:46:20,800 --> 00:46:24,080
Speaker 1: so well diversified that you're getting a very similar product

1015
00:46:24,360 --> 00:46:27,080
Speaker 1: at essentially a fraction of the cost. Are you invested

1016
00:46:27,080 --> 00:46:29,960
Speaker 1: in any reats? Yes, so I am not invested in

1017
00:46:30,239 --> 00:46:32,680
Speaker 1: any reads, and I'm not either. That's because and I

1018
00:46:32,680 --> 00:46:34,480
Speaker 1: don't think either of us need to be investing, as

1019
00:46:34,480 --> 00:46:36,400
Speaker 1: we're already kind of doing real estate on our on

1020
00:46:36,400 --> 00:46:38,960
Speaker 1: our own turn. Yeah, we're pretty heavily into real estate already,

1021
00:46:39,000 --> 00:46:41,799
Speaker 1: and so you have to be invested in that. All

1022
00:46:41,840 --> 00:46:45,080
Speaker 1: my actual investments that aside from real estate, I want

1023
00:46:45,200 --> 00:46:47,319
Speaker 1: completely in the stock market because I already have heavy

1024
00:46:47,320 --> 00:46:49,680
Speaker 1: exposure to real estate. Let's go ahead and get back

1025
00:46:49,680 --> 00:46:52,560
Speaker 1: to this beer. Yeah, man, So we had the brewery

1026
00:46:52,680 --> 00:46:58,200
Speaker 1: True Ruse sour Blonddale aged in oak barrels. Dude, this

1027
00:46:58,200 --> 00:47:01,680
Speaker 1: this was the delicious early in Yeah, by far, the

1028
00:47:01,719 --> 00:47:04,759
Speaker 1: best three something dollar beer I've had uh. I want

1029
00:47:04,760 --> 00:47:07,680
Speaker 1: to say maybe in my entire life, Like, right, I think,

1030
00:47:08,000 --> 00:47:09,879
Speaker 1: have you ever ever had a better deal on a beer?

1031
00:47:09,920 --> 00:47:12,560
Speaker 1: Because sometimes, like the discount beers, like there's maybe some

1032
00:47:12,680 --> 00:47:14,759
Speaker 1: slight off flavors or they're not quite as fresh if

1033
00:47:14,800 --> 00:47:16,879
Speaker 1: they're like an I P A or something like that.

1034
00:47:16,920 --> 00:47:19,879
Speaker 1: But this just blew my socks off. It's so good. Yeah,

1035
00:47:19,960 --> 00:47:22,200
Speaker 1: sometimes you can find good beers on the discount shelf,

1036
00:47:22,239 --> 00:47:24,760
Speaker 1: but this is like a rare gem from the discount shelf,

1037
00:47:24,840 --> 00:47:27,080
Speaker 1: so a really good one. I'm glad we got to

1038
00:47:27,080 --> 00:47:30,400
Speaker 1: have this one together. Yeah, and spend almost nothing. Okay, man,

1039
00:47:30,480 --> 00:47:34,000
Speaker 1: let's do a quick recap. Your house is an awful investment.

1040
00:47:34,239 --> 00:47:36,480
Speaker 1: It possibly could be a great purchase for you, for

1041
00:47:36,560 --> 00:47:39,640
Speaker 1: you in your lifestyle where you are in life. However,

1042
00:47:40,160 --> 00:47:42,960
Speaker 1: it's just not a great investment. There's a lot of

1043
00:47:43,040 --> 00:47:45,359
Speaker 1: other ways you can invest your money where it would

1044
00:47:45,360 --> 00:47:47,960
Speaker 1: work out better for you. Yeah, we're gonna get better returns, right,

1045
00:47:48,000 --> 00:47:54,160
Speaker 1: because homes traditionally offer poor returns. If you look historically,

1046
00:47:54,480 --> 00:47:57,960
Speaker 1: real estate increases at a four percent clip and the

1047
00:47:57,960 --> 00:48:01,560
Speaker 1: stock market returns over the same period are over ten percent.

1048
00:48:01,800 --> 00:48:04,560
Speaker 1: That's a huge disparity. Another way, your house stinks at

1049
00:48:04,600 --> 00:48:07,080
Speaker 1: being an actual investment is that it is unproductive in

1050
00:48:07,120 --> 00:48:09,960
Speaker 1: generating money. You have a lot of equity, a lot

1051
00:48:09,960 --> 00:48:13,799
Speaker 1: of cash just sitting there in this huge expense and

1052
00:48:13,880 --> 00:48:17,040
Speaker 1: it doesn't do anything for you. Another reason why your

1053
00:48:17,080 --> 00:48:21,319
Speaker 1: house stinks as an investment is that it is too expensive.

1054
00:48:21,520 --> 00:48:23,920
Speaker 1: It's an expensive investment. You have to go all in

1055
00:48:24,120 --> 00:48:26,200
Speaker 1: just to kind of get your foot in the door, uh,

1056
00:48:26,280 --> 00:48:29,080
Speaker 1: to even get started. Uh. And it costs a lot

1057
00:48:29,080 --> 00:48:31,920
Speaker 1: of money to maintain. You're looking at one percent of

1058
00:48:32,000 --> 00:48:35,399
Speaker 1: the purchase price. And also to buy and sell a home.

1059
00:48:35,719 --> 00:48:38,000
Speaker 1: There are a ton of expenses associated with that that

1060
00:48:38,080 --> 00:48:42,520
Speaker 1: make it cost prohibitive to be an actual great investment. Yeah,

1061
00:48:42,600 --> 00:48:46,200
Speaker 1: those transaction costs are nasty. And the lack of diversification

1062
00:48:46,400 --> 00:48:49,760
Speaker 1: is another reason that a home is a terrible investment. Obviously,

1063
00:48:49,800 --> 00:48:52,799
Speaker 1: you're tied to a specific geographic location. I mean, you

1064
00:48:52,840 --> 00:48:56,879
Speaker 1: really can't get more undiversified than buying a specific house

1065
00:48:56,920 --> 00:48:59,799
Speaker 1: in a specific neighborhood in a specific town. And not

1066
00:49:00,000 --> 00:49:02,759
Speaker 1: to mention all the external factors that are completely out

1067
00:49:02,760 --> 00:49:05,480
Speaker 1: of out of your control when it comes to taxes,

1068
00:49:05,560 --> 00:49:09,120
Speaker 1: government decisions, or just terrible neighbors. That's right, man, you

1069
00:49:09,160 --> 00:49:12,880
Speaker 1: can't be the diversification of an SMP five index fund

1070
00:49:13,040 --> 00:49:15,400
Speaker 1: or even like the total Stock Market index fund. Right.

1071
00:49:15,640 --> 00:49:18,000
Speaker 1: And another reason why your home is not a great

1072
00:49:18,080 --> 00:49:21,279
Speaker 1: investment is because it is unproductive in generating money. There

1073
00:49:21,360 --> 00:49:24,640
Speaker 1: is a lot of equity, a lot of capital just

1074
00:49:24,680 --> 00:49:27,839
Speaker 1: sitting there in the home, and that money is not

1075
00:49:27,960 --> 00:49:33,000
Speaker 1: earning you any money unless you house hack. And that's

1076
00:49:33,040 --> 00:49:34,759
Speaker 1: something we want to challenge you guys to do. It's

1077
00:49:34,800 --> 00:49:37,480
Speaker 1: a creative way. It's it's a way to sort of,

1078
00:49:37,560 --> 00:49:40,080
Speaker 1: you know, reframe the way you think about your primary

1079
00:49:40,120 --> 00:49:43,960
Speaker 1: home as something that is a fake investment just because

1080
00:49:44,000 --> 00:49:45,640
Speaker 1: you live there and you think it's going to appreciate

1081
00:49:45,880 --> 00:49:49,239
Speaker 1: to an investment that is actually creating real returns and

1082
00:49:49,320 --> 00:49:51,560
Speaker 1: real value for you. Yeah, And ways to do that

1083
00:49:51,600 --> 00:49:53,960
Speaker 1: are to rent out a room to a friend or

1084
00:49:54,040 --> 00:49:56,759
Speaker 1: someone you know, or to buy a multifamily home from

1085
00:49:56,800 --> 00:49:59,479
Speaker 1: the beginning. That is the best way to actually start

1086
00:49:59,520 --> 00:50:02,160
Speaker 1: building in real estate, as opposed to buying something that

1087
00:50:02,239 --> 00:50:04,719
Speaker 1: is going to be a millstone around your neck just

1088
00:50:04,840 --> 00:50:08,279
Speaker 1: bleeding you dry financially every month. That's right, man. And

1089
00:50:08,320 --> 00:50:09,920
Speaker 1: now it's trying to wrap it up. So thanks to

1090
00:50:09,920 --> 00:50:12,120
Speaker 1: everyone for listening our home on the web is how

1091
00:50:12,239 --> 00:50:13,960
Speaker 1: to money dot com. We'll have some show notes up

1092
00:50:14,000 --> 00:50:15,440
Speaker 1: there for you. Yeah, and if you like what you

1093
00:50:15,560 --> 00:50:17,440
Speaker 1: hear and you found this podcast helpful, let us know

1094
00:50:17,520 --> 00:50:20,320
Speaker 1: by giving us a review on Apple Podcasts. We appreciate

1095
00:50:20,360 --> 00:50:22,200
Speaker 1: it and we'd love to hear from you, and be

1096
00:50:22,280 --> 00:50:25,000
Speaker 1: sure to subscribe while you're there. Until next time, Man,

1097
00:50:25,400 --> 00:50:43,400
Speaker 1: best friends out best friends out houses be lazy.