Most Millennials regret buying a home

27 Replies

@Account Closed

Congratulations to you in your success!

I believed you just answered your own question

"Just take me a bit of work, common sense and patience."

Some people don't do research or don't understand, not everything is "common sense" and most people have no patience. 

@Account Closed You did the right thing. I'm still shocked that most people have trouble "trusting" the stock market which I feel is a testament to their poor research skills. 

9/10 times an investor will out ahead if they buy the S&P500 index and follow their asset allocation strategy. That's it ... no more complexity required.

Rent is not wasting money. At least, not in most major MSAs. If anything, the amount of flexibility and control you have over your living situation (especially in the early years) is unmatched. This is true for professional, mobile white-collar workers with in-demand careers: technology, engineering, healthcare, finance, law and similar professions (STEM and other high-paying fields).

@Account Closed of course it depends on what real estate market you live in. You refer to large upfront costs, but most millennials buying their first home are able to leverage very low down payments, like 3%. You mention waiting 5 years, well I can tell you that house purchases I made 5-7 years ago have gone up substantially in value, as have rents. 

I would not buy a condo in any market. When the market shifts, condos are the first to lose value and the last to increase in value (might be why you are getting a deal now). Condos are also challenging because of HOA - many don't even allow renting.

Really it is mostly about timing. Anyone that invested in the stock market from 2012-on has made significant money, because it has been a good bull run. We all have to be careful to not confuse our timing success for fundamental success. As any market matures (stock or housing) it get's harder to pick winners and sustain the same returns. 

The flip side of your argument for renting the last 5 years is how much money was wasted on monthly rent. Let's say your rent was $1000 per month, that would be $60,000 that you paid out. Had you purchased, that same $60,000 would have partially gone to principal pay down. House prices were substantially lower 5 years ago than they are now. Assuming a 3% down payment, your cash return on buying 5 years ago would be pretty good.

Most of us on BP do both.  We have RE and paper securities.  There have been some good and lengthy discussions about the pros cons of RE vs the market here on BP.

I hold a lot of cash for RE opportunities that I could put in the market, but Dow 25k and all the trade wars, tweets, et al out of my control make me a bit anxious.  I've never had a seller of a stock call me and offer  me a 30% discount for a quick cash buy because his brother died and he owns the house now and it makes him sad and it needs too many repairs for a loan.  

 Stocks have never let me purchase with leverage of 5-20:1. Margins can be called and when they are it will always be at the wrong time, when things are down.  I saw it many times in my fin svc days as a 7. Margin borrowers are all geniuses til the tide goes out.

Banks won't lend you money to purchase securities,  even their own Stock, but fall over backwards to lend you money against RE. Why is that?

On the flip side, stocks have never given me drama or moved out or needed repairs, snow removal, etc.  There is or should be room for both asset classes in a wealth-driven portfolio.

Buying a home and house hacking is going to bring you better returns the the stock market will though

If you go from paying 1000 a month rent to only covering say vac rate / cap x ect
You’ll save 600-700 a month right there
If you down payment is say 20k
And you are saving 8400 a year that’s 40% return
Not including equity , tax savings , long term benefit of raising rent. Ect

I am a millennial and I have never regretted buying my personal residence... And LOL at it's not very hard to pick winning stocks and get incredible returns I'm just going to leave that one alone. Good luck with your investing.

Its almost as if, and this may come as a shock to some folks,  there is no universal optimum way to invest . It may depend on the individual's personal attributes, their income streams, location, timing, luck, and a host of other variables. No one has perfect information.

@Account Closed did what was right for him given his circumstances, but a successful outcome does not automatically mean all the right choices were made. 

Its not very difficult to pick winning stocks and get incredible returns. Just take me a bit of work, common sense and patience.

Why don’t more people and Millennnials simply do the same as I’ve done?

A rising tide lifts all boats and don't confuse luck and skill, especially in the short term.

Its not hard picking stocks, at least not in this current environment. The challenge us doing it when it's a bearish market. Unless you have gone through that then you can't relate. Similar to folks who bought real estate at peak and the market tanked in 2008. I invest in both real estate and equity. My returns over past two years for one condo is 35% (unrealized) and for my stock IRA portfolio is over 100% . However the big difference is leverage. That 35% return in RE equals more money for me due to the size of the investment $200k. I think one should definitely be investing in both, otherwise you're not maximizing you're returns.

Originally posted by @Account Closed :

I took the difference between what we paid in rent versus buying and invested in the stock market. That allowed me to have far greater market returns then a index fund or any real estate i could have bought. We are talking about 85% on average on a compunded basis between investing and trading even with all the losers too. 

Why don’t more people and Millennnials simply do the same as I’ve done?

Most people can't get 85% ROI on Wall Street. If you can do that on Wall Street, but not in real estate, than obviously Wall Street should be your niche... do what you're good at, not what you aren't good at. Real estate isn't for everyone, especially not someone with a talent-set such as yours, able to pull off what 95% of people can't. The same way that GCs are a 'natural' fit for fix-n-flip, listing agents are a 'natural' fit for buying distressed properties, and I as a mortgage lender am a 'natural' fit for finding and exploiting mortgage guideline loophopes/niches, you're obviously a 'natural' fit to invest in the stock market. Keep doing your thing, it's clearly what is right for you! It similarly wouldn't make sense for Warren Buffett to mess around with investing in a fourplex, or for Bill Gates to get in the fast food business. For you, the opportunity cost of tying up a down payment on real estate would be missing out on that 85% ROI... wouldn't make sense.

Sure stocks do great now at the highest we have ever done and at the top of the cycle .. wait a few years for the “ correction “ ..then we will really see what does better . When stocks tank will you still get that incredible return ? When good jobs are cut people lose their houses and they can’t live in a car with the family .. they have to rent . That’s where RE investors have the advantage .

Originally posted by @Dennis M. :

Sure stocks do great now at the highest we have ever done and at the top of the cycle .. wait a few years for the “ correction “ ..then we will really see what does better . When stocks tank will you still get that incredible return ? When good jobs are cut people lose their houses and they can’t live in a car with the family .. they have to rent . That’s where RE investors have the advantage .

lol... You realize when "stocks" go down, that means the economy is going down i.e. real estate valuations get affected. God forbid you have a liquidity issue at that exact same time, then you're stuck holding an illiquid asset in a declining market.

As @Bill F. said there is no one universal way of making money. But drinking the Kool Aid and jumping off the deep end doesn't help anyone. 

Originally posted by @Omar Khan :
Originally posted by @Dennis M.:

Sure stocks do great now at the highest we have ever done and at the top of the cycle .. wait a few years for the “ correction “ ..then we will really see what does better . When stocks tank will you still get that incredible return ? When good jobs are cut people lose their houses and they can’t live in a car with the family .. they have to rent . That’s where RE investors have the advantage .

lol... You realize when "stocks" go down, that means the economy is going down i.e. real estate valuations get affected. God forbid you have a liquidity issue at that exact same time, then you're stuck holding an illiquid asset in a declining market.

As @Bill F. said there is no one universal way of making money. But drinking the Kool Aid and jumping off the deep end doesn't help anyone. 

 I am buy and hold investing. I would not sell a cash flowing asset property especially in a downturn economy  .ita true liquidity will suffer but I don’t plan to sell or maybe not even finance so they’d okay too . I’ll take those former homeowners who need a spot to lay their heads that lost their money and home in the bad  market 

Originally posted by @Dennis M. :
Originally posted by @Omar Khan:
Originally posted by @Dennis M.:

Sure stocks do great now at the highest we have ever done and at the top of the cycle .. wait a few years for the “ correction “ ..then we will really see what does better . When stocks tank will you still get that incredible return ? When good jobs are cut people lose their houses and they can’t live in a car with the family .. they have to rent . That’s where RE investors have the advantage .

lol... You realize when "stocks" go down, that means the economy is going down i.e. real estate valuations get affected. God forbid you have a liquidity issue at that exact same time, then you're stuck holding an illiquid asset in a declining market.

As @Bill F. said there is no one universal way of making money. But drinking the Kool Aid and jumping off the deep end doesn't help anyone. 

 I am buy and hold investing. I would not sell a cash flowing asset property especially in a downturn economy  .ita true liquidity will suffer but I don’t plan to sell or maybe not even finance so they’d okay too . I’ll take those former homeowners who need a spot to lay their heads that lost their money and home in the bad  market 

You might not be a millennial (the OP was talking about millennials) or a millennial outlier who's done exceptionally well for himself at an early age. 

The fact that you would opportunistically take from former owners (good strategy and timing), shows that asset illiquidity is the biggest issue facing millennials or folks with lesser means than you i.e. the same issue I was talking about. 

Originally posted by @Omar Khan :
Originally posted by @Dennis M.:
Originally posted by @Omar Khan:
Originally posted by @Dennis M.:

Sure stocks do great now at the highest we have ever done and at the top of the cycle .. wait a few years for the “ correction “ ..then we will really see what does better . When stocks tank will you still get that incredible return ? When good jobs are cut people lose their houses and they can’t live in a car with the family .. they have to rent . That’s where RE investors have the advantage .

lol... You realize when "stocks" go down, that means the economy is going down i.e. real estate valuations get affected. God forbid you have a liquidity issue at that exact same time, then you're stuck holding an illiquid asset in a declining market.

As @Bill F. said there is no one universal way of making money. But drinking the Kool Aid and jumping off the deep end doesn't help anyone. 

 I am buy and hold investing. I would not sell a cash flowing asset property especially in a downturn economy  .ita true liquidity will suffer but I don’t plan to sell or maybe not even finance so they’d okay too . I’ll take those former homeowners who need a spot to lay their heads that lost their money and home in the bad  market 

You might not be a millennial (the OP was talking about millennials) or a millennial outlier who's done exceptionally well for himself at an early age. 

The fact that you would opportunistically take from former owners (good strategy and timing), shows that asset illiquidity is the biggest issue facing millennials or folks with lesser means than you i.e. the same issue I was talking about. 

Well  I would not be opportunistic to do so . I would not deliberately try to profit off someone’s misery .i can’t help the choices they made in life with their income and investments .I’m just saying it’s a natural consequence of not planning and putting their eggs in one basket could result in them becoming renters in a down economy