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  • Mark Twain once said: "Buy land, they're not

  • making it anymore."

  • Real estate is one of the oldest industries in the world.

  • It's not a coincidence that we have been told that a house is the best investment you can

  • ever make.

  • Of course, in the 21st century, we have far more investing tools than generations before

  • us had.

  • Derivatives, options, bonds are no longer the instruments that only the rich have access

  • to.

  • With a simple investing app on your 200 dollar smartphone, you can start trading stocks.

  • And besides, best-performing investments are not even coming from the rich but from the

  • bottom, such as the Cryptocurrencies that are challenging the status quo.

  • Regardless of all of these investments, real estate still remains the king of investments.

  • Because unlike anything else, it simple, you can touch it, and easy to understand.

  • You don't have to look far for some evidence,

  • once worlds richest man, bill gates is also pouring millions into real estate,, Bill Gates

  • now is America's Biggest Owner Of Farmland.

  • he purchased 242,000 acres of farmland across the U.S. — enough to make him the top private

  • farmland owner in America.

  • But regardless of how great this market is,

  • it still goes through ups and downs, and if you end up buying a house when the market

  • is at its peak, you are going to lose because sooner or later, the value of your house will

  • crash.

  • And there is a huge difference between buying a house and investing in real estate.

  • They might look as if they are the same thing, but your needs usually do not align with what

  • is better from an investing point of view.

  • So as a real estate investor, I want to share with you why millennials should not buy a

  • house, or at least, if you are buying a house, you have to consider all these factors that

  • I am about to share with you.

  • So give this video a thumbs up, and let's jump right into it

  • Bidding is a bad sign.

  • 
 A house with an asking price of 3.5 million

  • dollars was sold for 4.5 million dollars because the seller received 7 offers, and the price

  • bid kept rising to the point where the house was sold for an extra million dollars.

  • If you are the seller, that's a good sign.

  • If you are a buyer, then you might be wondering whether it worth paying an extra million dollars

  • or not.

  • And this is not a single case.

  • It's happening all across the market.

  • Even when it comes to houses that cost just a few hundred thousand dollars, people are

  • overpaying by 30, 40, or even 50 percent just to be the one who is going to buy that house,

  • and that's normal in a market when there is a shortage of houses.

  • This graph explains it all (show it from the

  • year 2000).

  • It illustrates the number of Monthly Supply of Houses in the United States.

  • Starting from 2010, when we got out of the last housing crash, the supply of houses was

  • at a stable rate, so house prices grew steadily, but there is a clear sign of how the number

  • of houses in the market dropped significantly in April 2020.

  • And even though we are almost out of this pandemic and the future seems a little more

  • predictable Than it was a year ago, the number of houses didn't increase much in the market.

  • And that's probably because the sellers are looking at how fast home prices are rising

  • and are like, "why should I sell when I can wait and keep getting wealthier doing nothing

  • unless I will get an offer that's really good?

  • I am not selling."

  • That's why in a single year, home prices rose by 17 percent.

  • In a single year, home prices rose as much as they did in the last ten years.

  • That's a good reason not to sell.

  • It's psychologically difficult to convince yourself to sell when everything is rising.

  • It really doesn't matter if it's a stock, bitcoin, or crypto.

  • When it's rising, for some reason, you imagine it's going to rise forever, and if it's falling,

  • you imagine it's going to fall forever; that's why people often quickly sell to minimize

  • losses

  • Most people are short-term thinkers and not long-term thinkers.

  • In these kinds of times, I like to remember what Warren Buffett said once: be "fearful

  • when others are greedy, and greedy when others are fearful."

  • Now is the time when everyone is greedy.

  • I am not saying there is going to be a crash or how much more prices are going to rise.

  • All I am saying is that just take a look at what's happening in the market.

  • Do you think you can find a good deal?

  • A good deal is to when the house price is at least slightly lower than markets average

  • so that you can renovate it, it will rise significantly in value, or you can rent it

  • out for a much higher price or at least a deal that's not above the markets average,

  • but that's never going to happen when you are in a bidding war against dozens of other

  • buyers

  • Don't get me wrong, owning a house is far

  • better than paying rent your entire life, especially if you are going to live in the

  • same area for a long time, even though homeownership comes at a higher price.

  • It includes renovation and other expenses.

  • However, you also have to consider the opportunity cost.

  • This is the cost that people don't count at all when they are thinking of purchasing a

  • house.

  • Every penny you use to buy a house is a penny that could be invested elsewhere like the

  • stock market, bitcoin or anything else, including your own business.

  • But let's take something more stable like the SP500.

  • An index fund that invests in the top 500 US companies.

  • It usually grows by around 10 percent in the long run, but lets be a bit conservative and

  • take 8 percent, just to be safe.

  • When you take a mortgage, it's a 30 year investment, you are going to become a homeowner, but you

  • have to keep making your monthly mortgage payments.

  • So let's take a look at what if you invest that money instead and rent a place.

  • Let's take a 300K dollar house.

  • With a 20 percent downpayment and 3 percent mortgage rate, you are going to pay 1017 dollars

  • per month.

  • That's significantly cheaper than renting since that house would be rented out for at

  • least 2000 dollars.

  • But if you count property taxes (300 USD), renovation which is another 1 percent of the

  • total price of your house ( 300 USD), insurance which let's say another 100 dollars, you will

  • end up with 1700 dollars

  • Not bad.

  • Buying a house still looks like a far better deal.

  • But now, let's count the opportunity cost.

  • That 60K dollars you paid upfront as a downpayment, let's say you are going to invest it in the

  • sp500, and as I said earlier, we are going to be conservative and take just 8 percent.

  • With the compound interest, it will grow to 603,759 dollars or 1677 dollars a month, which

  • makes your real cost of ownership 3377 dollars.

  • Of course, the price of your house is also going to rise but if we have learned anything

  • from 2008 crises, home prices can also crash.

  • Especially since home prices had risen by 17 percent last year, only time will tell

  • you how this astronomical rise is going to end.

  • But in order to invest in the stock market,

  • you have to understand how the stock market works and that means you have to spend months

  • to master it!

  • But I have some good news for you.

  • I have spent years investing in the stock market and to save you time.

  • I have summarised all my experience in the stock market into a short, straightforward

  • fully animated course and the best part is that it's available on skillshare and you

  • can get it for free if you use the link in the description.

  • At the end of the course, there is an assignment that I will personally check and provide you

  • with a feedback.

  • Anyways.

  • Buying a house isn't always a bad decision.

  • In fact, it can be a great decision, especially when you are setting down and building a family.,

  • but right now, when we are getting out of the pandemic, we are not sure if we are going

  • to continue working remotely or we are going to get back to how everything was pre-pandemic,

  • when there is a bidding war in the market.

  • Finding a good deal has never been more difficult.

  • Especially all the headaches you have to go through when buying a house.

  • You might buy a house now and then realize a year later that it was a mistake and life

  • is getting back to normal, so that house that seemed attractive during the pandemic is no

  • longer that attractive.

  • And who knows where the market is going to be at that time.

  • Chances that you will lose money on that house is way higher than you make money.

  • And now it's your turn to let me know in the

  • comments below what do you think about buying a house now?

  • Is it a good time or its better to wait until things calm down?

  • If you have enjoyed this video, You will also

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  • videos on business, investing, and the stock market that can potentially change your life.

  • And now give this video the thumbs up that it deserves, and make sure to subscribe if

  • you haven't done that yet.

  • Thanks for watching and until next.

Mark Twain once said: "Buy land, they're not

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Why You Will Regret Buying a House in 2021

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    Summer posted on 2021/06/16
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