Property : rent vs buy?

and no investing in stocks is not worse than investing in property, if thats the case goldman sachs would have an entire portfolio of properties. 20% annual ROI is not impossible for stocks unless you buy the market only.

This isnt an investing thread but

1) Everything I have said only applies to buying your primary residence, so the Goldman Sachs argument is silly. Buying multiple properties isnt anywhere near as good an investment since the cost of your leverage is far, far higher and you have to pay CGT on the profits.

When you buy your primary residence, the mortgage interest repayments are roughly equal to the rent you would otherwise be paying, so the leverage '(i.e. the interest payments) is essentially free. If Goldman Sachs could get interest-free loans then they would be borrowing as much as possible. Thats kind of the point - buying your house is essentially like getting a huge interest free loan, since the money you pay in interest is the money you are no longer paying in rent.


2) 20% ROI is completely impossible unless you expose yourself to huge amounts of risk. You could get 20% by (eg) leveraging up 3x on S&P futures but theres a good chance your going to bankrupt if theres a market downturn.

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This is the million dollar debate again, i want to know what people on here thinks. Should you buy a property early or rent first?

The upside of buying is you can lock down a house before it appreciates its value and end up being twice as expensive. But on the other hand the interest rates means you are probably going to pay twice its value anyway. You can rent out your newly bought home and let the tenant pay your mortgage meanwhile you live elsewhere cheaper. When your mortgage ends you own a house, compare to the renter who will own nothing.

Meanwhile if you rent you would be paying to someone else while you own nothing at the end of it. But the upside is you have spare cash and could invest in something that outperforms the real estate and become wealthier, and then buy your property later with cash or with very little mortgage. Also you would have a ton of freedom, one of the biggest problem with buying is once you tie yourself down to a 30 year mortgage, you lose your freedom, and freedom itself can be an important asset. Say if you hate your job and want to quit or if you want to take some risk and go further study or if you want to seek better opportunities, you would think twice as you need to keep the money coming in to pay your monthly fees.

Discuss.

Those are outliers that had a lucky year. If you stood outside the casino at 3am in the morning then you'd doubtless find people who won 5 figure sums on roulette.

Note that the 2 year returns for all those funds are drastically lower than the 1 year returns, i.e. they made a lot less in the previous year (i.e. they had a lucky year). Getting over 15% consistently would be considered absolutely stellar for a hedge fund and would make them one of the top funds in the world (there are a few that do achieve this, but you can still argue over how much of it is due to luck and survivorship bias)

2) 20% ROI is completely impossible unless you expose yourself to huge amounts of risk.

2 years return still between 15-25 % range. You said it impossible i showed you its possible, but not for everyone so thats a decision to be made by each individual.

you can never lose money on a house, if you buy a house you can either make the money back in rent, or sell it years later for *more* money due to inflation

I would much rather pay to own something than pay to not own something xD

Would you rather pay for something that's going down in value, or rent? Prices can, and do, go down. Property has historically been a good long-term bet, but it isn't without its costs (maintenance, insurance etc), and you may need to wait ~10 years if you buy at the wrong time.

I wouldn't buy as a monetary investment. I'd buy so that I have a home that I could pass onto my kids and what not, it would be mlre a stability thing for the future rather than to make a profit

That's a good approach IMO, although, with house prices where they are, it's a long-term payment commitment. Many will need to sell to fund retirement / nursing home fees.

It is not possible without considerable risk.

rent is dead money

you can never lose money on a house, if you buy a house you can either make the money back in rent, or sell it years later for *more* money due to inflation

That is really naive, and a major driver for price bubbles. Lots of people have lost money on houses. Look at the 10 year graph here (and below) - if you'd have bought at the peak in 2007, you'd have to have waited until 2015 to get the same price. That doesn't include stamp duty and the various other fees that you need to pay to buy and sell, or depressed regions.

Renting is dead money. You are paying someone to live on what is effectively their house. You don’t get it returned to you when you move out. (Deposit maybe)