Faux House Owners Are No Better Than Renters
Your home isn’t yours until you own it outright; it’s the banks
Your average person won’t own their home until they complete 30 years of payments.
But that time continues to grow because many people get caught up in the “upgrade cycle.”
What Is The Upgrade Cycle?
Many people stay in their homes for the entire 30 years.
But just as many people don’t stay in their homes for the entire 30 years.
People’s approach to cars carries over into their approach to their homes.
Everyone doesn’t want to keep driving their paid-off cars, so what do they do instead?
They upgrade their cars.
Everyone doesn’t want to keep living in the same homes after gaining solid equity, so what do they do?
They upgrade their homes.
“Your Home” Isn’t Yours Until It’s Paid Off
“Homeowners” don’t want to hear this, but your home isn’t yours until you pay it off; it’s the banks, and they can rip it away from you if you miss too many payments.
Most people living in a home aren’t living in a piece of property they can call theirs because they don’t own it outright. That piece of real estate is still the banks.
And it’s the same thing for renters.
If you miss enough payments or your landlord decides you have to go, you’re out.
There isn’t one position that’s better than the other per se.
Both are still at the mercy of another party.
The only person in a better position than the other is the person with a robust financial portfolio and a fully stocked emergency fund.
The Common Theme Of Home Owners
Homeowners, many, not all, have a common theme — they’re “house rich” but cash poor.
But are they really house-rich if they don’t own their home outright?
If they have considerable equity, yes, they might be house-rich.
But they must sell their home to tap into that equity and liquidate their assets.
Renters Have A Few Advantages
You have a few things going for you when you’re renting:
No taxes
No maintenance costs
No decade-long-term contracts
The ability to invest more than homeowners tied down by housing costs
Houses come with costs, taxes, maintenance and upkeep fees, etc.
For many, these costs tear up their paychecks and leave no room for investing in their futures.
If you’re a renter, take advantage of not having a mortgage and all the costs of faux home ownership and use it to build your financial portfolio.
How To Measure Financial Success Between Renters & Faux Owners
The only way to measure financial success between a renter and a faux homeowner is by looking directly at their balance sheet.
1. Who has more assets (putting money into your pockets)?
2. Who has more liabilities (taking money out of your pockets)?
A home is not an asset until it’s putting money in your pocket.
If you want to succeed financially, you must focus your efforts on increasing your assets and decreasing your liabilities.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.