Home Ownership is Over Rated | Investing Is The Way Forward (on paper)

Hello SPIers. Does it make sense to even buy a family home anymore? I was at a family BBQ a few weeks back and my younger cousin was telling everyone about how she was looking at houses and getting on the property ladder. I get why people want to own a home, I bought my property when I was 19 in 2004 and 19 years on, I still remember that feeling of walking into it the first time after getting to keys and thinking, this gaf is mine, I can do whatever to it. What an amazing feeling but that was near 20 years ago and I've learnt a few things from then. Screw, truth be told, ive got bitter, ba-haha

Anyways, at the BBQ, everyone was saying well done to my cousin for saving hard to get a deposit and that owning a house was the bee's knees. Of course, I pipe up and said, "freaking scam, you'll be trapped in debt for 20-30 years to own some bricks and be broke so you can give your much-loved bricks to your future kids who will only sell the bricks for money."

Her mum, my auntie fires me a look that could cut through ice and says "Owning your own house is the holy grail in life" My stepdad looks at me and says "Paying rent is dead money", and 3-4 others agree with him. An uncle said to me, "why do you think renting is better than owning? I've never heard anyone say that before" I replied back, "Give me 15 minutes and I'll show you"

I asked my cousin 1/ how much have you saved for a deposit? 2/ how much are you looking to take a mortgage for? and 3/ How long are you looking to take a mortgage?

She replied back with 1/ £40,000, 2/ £150-160k and 3/ 30 years

I grabbed a fresh beer, nabbed a tablet from my niece and went off into the living room which was empty and got to work. I logged into my office live and opened Excel.

I got to googling a few things, mainly the cost of a 160k mortgage at today's rates over 30 years and the SP-500 average return over the past 20 years. I have been very light on the costs of sweet home ownership. Over the course of 30 years maintenance on an ageing house can rack up. I've not even included heating, electrical are plumbing work that would need to be done over 30 years so i was being nice (and leaving for myself something to fire back with should someone question my costs). I would be like, HaHa!!, but im not including heating, electrical or plumbing work.(check mate)

Here is what I came up with for buying a house and the results for getting tricked into debt for half your adult life.

Being from the UK, rates are a council tax that pays for bin collection, water services and the local council to keep the place in tip-top condition. As said above I putting in costs to replace everything once, like the kitchen, etc, and bear minimum costs to make a point. I said £500 per year for decorating and maintenance which is nothing. To value to the house in 30 years, I double the value every 20 years so 200k times 2.5 for 30 years is 500k.

There you have it, you'd end up with £45,000 profit at most worth £20,000 in spending power in 30 years. Most people will not sell their home and be happy to be mortgage free and save £900 per month having paid £400k for a £500k house. They will still be required to pay everything else like maintenance, upgrades, rates and whatever else.

I kept a few open tabs to show that i was not bullshiting the numbers.

(Google search result)

As for renting, its was alot easier to do. You rent for the same cost as a mortgage. Assuming your rent cost increases by 4% per year on average and the SP-500 returns an average of 9% per year, these are the numbers we get.

You might never own a house but you have the freedom to move around at your own free will, are just rent the same place for decades. I lived in Thailand for 14 months in my 20s but was lucky my step-sister needed a place so rented out easily. Most people would miss that opportunity because they would feel tied down to a home/mortgage. With renting, if something goes wrong, pick up the phone and it'll get fixed, boiler breaks, not your problem, water pipe bursts, hey it's slippy Sunday and it's going to cost the landlord double for weekend rates to get a plumber, boo-hoo. You'll be making enough from your SP-500 investment to pay rent forever and some more.

Based on these numbers and assuming you never invest another penny, you'd be earning roughly £50k per year (£20k spending power after 30 years of inflation). You you were you save 5-10% of your salary into this each year, it could be over a million in 30 years. You could pay a mortgage and save also but you'd be starting from £0 instead of £40k.

I was armed and ready and marched into the kitchen and sunroom where most people were with tablet in hand. I called my cousin over and set the tablet on the kitchen table and explained it all to her. She looked shocked and then others started to look. The older ones mostly said you cant turn £40k into £530k in 30 years otherwise they would be rich. I held back from saying, your personal work pension is bullshit and you never started with 40k plus when you bought a house, the cost of an average 3 bedroom with decent-sized gardens was like 2 years salary. Im a savage normally but I show respect and reply back to the elders with a "yea..." and confused looked on my face like, you can see it right there bro, 9% compounded over 30 years bro, whats so hard to understand bro?

My mum says to me "Why do you have to make everything so complicated? Everyone buys a house when they grow up and paying rent just doesn't make sense, you're just filling your landlord's pockets for doing nothing"

My brother inlaw tells me "my head is wrecked and im always waffling shite" and my step dad standing beside him tells me to "maybe cut down on the weed mate". Oh!,SSUK was the butt of a few jokes but whatever, they'll see in 10-15 years from now and then "burn" on them.

Anyways, that was the end of that. If I'd shown them possible returns with crypto im sure after 30 years £40k could be 7 figures but why waste having to explain what crypto is for them to say they dont understand it?

My own experience with home ownership?

I bought a 2-bedroom apartment for £52k in 2004, it's worth around £90k today (peaked at £130k in 2008). I have a few months, maybe 13-14 before the mortgage is paid off and I am paying back around £1.80 for every £ borrowed so by the time im done, I'll have paid back £94k for something worth £90k, not including the over 5 figure number on keeping it in good condition plus I spent around £20k on it when I bought it, took me 6-7 months of renovating before I moved in. It's currently rented out and the rent pays the mortgage and some leftovers that build in an account for if ever something needs fixing asap.

I can see from your POV, I am a hypocrite because I do have a mortgage and am a landlord sorta but I've been renting for almost 10 years and I enjoy not having to pay are even bother with things that need to be replaced/updated around the house. My landlord let me keep a dog and we can decorate as long as we dont paint the place lime green.

Either way, I took that mortgage out 20 years ago when I was 19 and because it has 2 bedrooms and I have a wife and 2 kids, it was not big enough. I privately rent it to a guy I knew in school and he's been my only tenant to date. I've never increased the rent because he takes pretty good care of the place and I let him get a dog as well.

If I could go back, I remember my bank account peaking at around £45k. I would have rented from day 1 and invested my 20k deposit plus 20k renovation money into the stock market and be sitting on £220k worth of stocks earning an average £20k a year in growth.

Anyways, my cousin still intends to buy a house because she has been saving the deposit for 4-5 years and she's going to make whatever house she buys totally amazing and custom for herself and her partner. She'll end up with some new build and the layout will be the same as every other estate house built in the past 15 years, lol. Built fast for profit with a garden you could not swing a cat in with 10 other houses being able to see into it.

Lastly, buying a house outright is the best way to buy a house. You'd pay pretty much half the cost of whatever size your mortgage is. I understand the cost of a mortgage that stays the same gets "cheaper" because of inflation and increased wages but rates are changing all the time as we can see currently and most of us will have to remortgage to a better deal every few years which accrues legal fees.

Whatever makes the masses happy makes them happy. SPI will stick to HIVE, HBD and BTC baby. We started with around $14k just over 4 years ago and today it's worth over $130k after topping out in late 21 at just over $500k. Crypto gains and losses eat property profits and loses alive! You buy 1 full BTC and wait 30 years, what you think it would be worth in dollars in they are still be used?

Facts!

The cost of the avg family home is many times higher today when compared to the salary earned per year going back 20, 30, 40+ years ago. My apartment was 3x my salary as an apprentice baker back in 2004. My salary has increased 3x since then but the cost of the avg house in my area is closer to 5x my salary. The days of a 20-year mortgage for the normal 1st-time buyer are gone and it's 30-40 years now. Save hard for 2-5 years to get a deposit, buy a house for £200k and pay back £400k over 40 years and be broke most of the time, mostly in the first few years as you make everything your own style.

Well, this turned into a longer post than expected. I thought it would be a good idea to explain why I personally think mortgages are bullshit by explaining my personal experiences.

I think the results speak for themselves, property prices increase faster than wages and it's getting to the point where a house deposit can be enough to start a kick-ass investment that will take care of you much better in your old age. I used a modest number of £40k which resulted in 530k. If you started with £80k, you'd end with over £1 million. If you invest into crypto you might earn more than 95 on average, there are many variables, i use the sp-500 as a base point. Making £50k per year is enough to live on a cruise ship maybe 😏

What do you think? Im i totally wrong?

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