00:00:00
If you don't get in the game of home
00:00:02
ownership and you rent in your 20s and
00:00:04
you rent in your 30s, you're going to
00:00:06
turn around in your 40s and having not
00:00:08
built any net worth.
00:00:09
>> Am I not better off renting and
00:00:13
investing in the stock market
00:00:16
versus buying a house?
00:00:18
>> I want to bust this myth because what
00:00:19
happens is people come on, they go, "The
00:00:21
stock market over the last 20 years has
00:00:23
averaged over 10% annually." People go,
00:00:25
"The returns are better in the stock
00:00:27
market than real estate." Yeah, but
00:00:29
that's not apples to apples comparison.
00:00:31
Why? When you buy a piece of real
00:00:34
estate, when you buy a home, people
00:00:36
don't typically pay cash for their first
00:00:38
house, they put down 20% and they borrow
00:00:42
the other 80%. Take a $200,000 home, you
00:00:45
put 40 grand in, $200,000 home goes to
00:00:49
400,000 in 10 years. This has happened
00:00:52
to so many people in the last 5 years.
00:00:54
So, they've made 200,000 in profit. They
00:00:58
didn't put in 200,000, they put in 40.
00:01:01
So, they got a five times return on
00:01:03
their down payment. They go to sell
00:01:05
their house.
00:01:07
They don't pay taxes on the gain because
00:01:09
when you own a home, at least in the
00:01:10
United States, you own a home for over
00:01:12
two years. If you're single, you get
00:01:14
$250,000 in taxfree gains. If you're
00:01:17
married, you get over half a million
00:01:18
dollars in taxree gains. You get tax
00:01:21
deductions on the mortgages. So, what
00:01:24
happens is people come here and they go,
00:01:25
"You know what? You shouldn't be you
00:01:27
shouldn't be tied down. You need to be
00:01:29
flexible when you're young. You don't
00:01:32
want to have the responsibility
00:01:34
and you should take the extra money and
00:01:36
you should put it in a mutual fund. And
00:01:38
you know what happens in the real world,
00:01:39
Stephen? People don't do that. They rent
00:01:42
an apartment that's nicer than what they
00:01:44
can afford and they spend all their
00:01:46
money and then they turn around in their
00:01:48
mid30s and they have no equity because
00:01:51
they haven't bought anything and they
00:01:53
also haven't saved money. It is an
00:01:56
absolute freaking myth that people take
00:02:00
this extra money that they could have
00:02:02
used to buy a house and they're going to
00:02:04
put it in the stock market. They don't
00:02:06
do that. Certain influencers that are
00:02:08
out there promoting the idea that
00:02:11
renting is better than buying a home.
00:02:13
And when you look into why do these
00:02:15
people promote it? Either A, it's a
00:02:17
stick because it gets them clicks on the
00:02:19
thumbnail, b they're selling something
00:02:22
else. They're trying to get you to
00:02:24
invest in their real estate. They're
00:02:27
selling you in a coaching program.
00:02:29
They're selling you, you know, to come
00:02:31
to their live event. But I'm telling
00:02:33
you, when you look at average Americans,
00:02:35
average, I'm talking about ordinary
00:02:37
Americans, when you look at where their
00:02:38
wealth is, it's in home equity and it's
00:02:40
in the stock