Why Buying A House Makes Zero Financial Sense | ft. Ramit Sethi

—
Show Notes:
(0:00) Intro
(3:30) Set your rich life intention
(7:30) Don't confuse luck with skill
(9:00) Sam's journey from owner to renter
(12:30) Do the math: Real cost of ownership
(16:30) Buy for desire
(18:30) Pay in cash for large purchases
(20:00) The 10 year rule
(25:30) Ramit's list of must-haves
(30:00) Sam's dream house
(33:00) Sam's war on stuff
(40:00) When to overspend
(44:00) Millionaires who rent

—
Links:

—
Check Out Shaan's Stuff:

—
Check Out Sam's Stuff:

My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano

[DADNation_]

“Why You Should Rent If You’re A Millionaire” fixed it for you

[alexstone]

I bought a house for 800k, sold it 10 years later for 1.3m and used the equity (around 600k) to buy a smaller house outright. No more rents or mortgage

[Joseph-xtqg]

This advice seems to mainly apply to living in a big city where property prices & maintenance & HOA are ridiculous. If you are living in a suburban area with a family, the math may work out VERY differently (e.g. in this discussion, they mention HOA of "thousands" per month (even up to $5k) -- my HOA in a suburb is $75/mo). My all-in mortgage payment is $1, 600/mo and rent for my same model house right now is about $2, 500/mo.

[hustlin_heev]

I agree with whats being said here and im not a millionaire.

I bought my home for $525K and put 20% down (105K) in Jan 2017.

Closing costs were almost 15K. I have a 30 year mortgage at 3.75%. So all in up front I was at 120K. When I moved in I didnt even have cash left for a bed and spent the next 2 weeks on the floor until I got a paycheck to buy some furniture. Ramit is right, dont forget about furniture!

I lived in it for 2 years before moving to Europe and renting it out. Because of HOA and rising property taxes in the bay area, I charge 3200 for rent and lose a couple hundred each month.

It has appreciated to a little over 600K, but I believe if I had taken that 120K and put it in the stock market 8 years ago it would be worth more now than what my home has appreciated.

What Ramit said is what I beleive: Unless you plan to live in your house at least 10 years, buying is not worth it!

[brandongilkey]

I lived in a house with a mortgage for 17 years. I thought I was happy. In 2020, I moved into apartment and I truly enjoy not having to make repairs.

[BigNate]

Financial planning is like navigation. If you know where you are and where you want to go, navigation isn't such a great problem. It's when you don't know the two points that it's difficult❤

[chrisjfacey]

Loved this episode, great info and viewpoint. HOWEVER, I would invite you, Sam, to think through your strategy of buying things at Target as being more environmentally friendly than Amazon. Why? 1) How did you get to Target? I assume you drove your 1 person vehicle (bet it’s a SUV or full size sedan due to 4 month old) to pick maybe 1-3 items. That Amazon/UPS/Fedex truck likely had 60-100 professionally optimized stops in close proximity taking into account only making right hand turns, traffic, etc. You probably did not do that and maybe even made a trip just for that usb thing. 2) The usb thing did not magically appear at Target. It was likely made in the same factory in China, was transported on the same ship in an adjacent container and only when it hit Target did its route become MORE environmentally unfriendly than the usb that was delivered within an optimized system.
Spoken with love from a fan who also happens to own a logistics business. Love the pod and loved this episode. Please consider this, maybe you can do an episode on it. Maybe you’ll prove me wrong.

[CamdenPellant]

My grandfather always used to tell me if you’re going to make a large purchase (car, house, etc) you have to keep it for a long time for it to be worth it.

He purchased his second house around 30 and he died in that house.

He had it paid off before he retired at 54.

Modest man who had a ton of money but never had the nicest stuff, he retired at a decent age and spent his time and money on experiences and he did it on a decent salary.

[miguelfuertes]

If sam sees a point about to be made he interrupts with the most random question to knock ramith off.

And these new hubspot ads are so fuckn annoying. Jeez

[HitsandHeadlines]

Buy a house, rent out a few rooms. Solved.

[ChrisMoSpeaks]

I definitely agree ! I tell this to all my friends. I NEVER want a house. Too much headaches. I sell roofs for a living and every time I go into a big house Malibu, palos altos, and Beverley hills and all I hear is the owners complaining about their house. No. Not for me haha #GenZHere

[Mistakes]

The quality of landlord/property management is a huge factor in renting and very difficult to assess accurately before moving in... so this is complicated. That being said, i ran the numbers on my house of 18 years and, including expenses, it "appreciated" pretty much at the same rate as inflation (and this was not linear. I only got that premium because I sold in 2021 after housing prices suddenly jumped).

[mogulsandmoonshots]

In CA, FL and TX the property tax and insurance on a house is almost as much as rent. Then you still have the mortgage and all the other ownership costs.

[TheBeverageConnoisseur]

My next move I planned on just renting. Every time I buy a house I need a new roof within ten years, a new septic system, etc. forget it. Over it.

[Daniel-vlzm]

Not sure much of this applies outside of the US, or atleast not in the UK. The mortgage payments are cheaper than equivalent houses for rent usually, and that money is, atleast partly, paying off that house. So the 'basic math' doesn't apply in the UK (or atleast in the southeast outside of London)

[nickbananto]

I think renting for your primary residence is smart while also owning a home that someone else rents. You get depreciation, income, and equity.

[justinrahardjo]

Definitely having that same feeling of wanting to go back to renting with all the house maintenance and upkeep.

Still kinda crazy that Sam still wants to be in a 5000 sqft house. Why not just airbnb a place when the inlaws are over?

[bradtrades]

One of the most important statements you made is about luck. My wife and I moved across the country to a very desirable and expensive city in the west. Houses were crazy expensive, so we sat on our cash (in the market) and rented, and mostly loved it. In 2012 we finally thought it was time to buy, and were glad to have had years to really learn the areas we liked best. Our home has now almost 3X in value (the luck part), and now have a sub 3% mortgage which we are happily not going to give up. Someone moving to our city today should probably rent, as it did for us many years ago. With a little thought and planning you can sometimes make your own "luck." P.S. Just found your channel- love it!

[richhands]

My three favorite channels: My First Million, Stock Brotha, & How Money Works. Make my week complete! 🔥 🔥 🔥

[GurtGobain]

I bought my duplex for 245k in 2017 and it's worth about 400k now. The best investment I've made. Plus no worries about landlords kicking you out or dropping by unexpectedly, you can customize how you want, etc.
Maybe this applies in San Francisco, New York, etc but not to people in the middle of Nebraska.
My financial discipline is also garbage like most people. So if i wasnt putting it toward my mortgage id just be wasting it on garbage, not buying more stonks