Post: #1

Interesting idea. Any thoughts?

Quote:By Auren Hoffman

We will soon own a lot less stuff

The next few decades will witness a massive decline in ownership. Renting, not owning, will become the primary way people in the first-world consume.

The last century saw an enormous increase in ownership. This change was spurred by a few factors:

Wealth: society grew much richer over the past 100 years.

Convenience: having your own property available to you all the time, e.g., your car, has been much more convenient than the alternative.

Technology: the advent of big-box stores and the Internet made it easier and cheaper to own than before.

And thus, we have way too much stuff. In fact, everyone, even the some of the poorest Americans, have tons of things we don’t need and no longer want.

But this will change. We will soon become a nation of renters. We might still own the very essential things (like our smart phone) or things that are used very often (like underwear), but there will be little need to own things we use only occasionally (a fancy pair of shoes, most jewelry, or that really nice pizza-making set).

The things we might want to rent fall into three categories:

Things we need occasionally, like specific cookware. We'd like to use that lovely baking set 3-4 times per year, but we don't want it cluttering up your cabinet everyday.

2. Things we need for a finite period of time, like baby’s clothes. We might want to hang on to one or two cherished items, but most of our baby’s clothes go to waste after the child grows.

3. Things we need only once, like a hotel room. When I go to Kansas City for two nights, I am not going to buy a house.

Paradoxically, some of the same forces that have made it so easy to buy will soon make it much easier to rent.

Technology: Much of the newest technology in the last decade has focused on renting rather than owning. It is no longer smart to buy music – you can rent every song in the world from Spotify. Instead of buying movies, you can watch them on demand on Amazon Prime or Netflix. ZipCar gives you the flexibility to drive whatever car you fancy at the moment – sometimes you’ll want a sports car and other times you’ll want an SUV. Attending a ritzy party? You can rent that designer ball gown from RentTheRunway.com instead of spending a fortune to own it.

Unpredictability: Our world is now perceived as more unpredictable than it was a generation ago (especially for Americans). A hard-earned asset like a house was once a sign of stability, but in the past ten years owning a home became a ruinous liability for many. Without certainty about the future, ownership is high risk.

Convenience: While owning is often more convenient than renting, technology and business model changes have made renting really easy (and, in some cases, even easier than owning). For example, with car sharing services you don’t have to worry about obtaining insurance or finding a parking spot.

Population Density: More people are choosing to live in dense urban areas. This means we all have less room for stuff. Shrinking living spaces makes it increasingly impractical to own things like winter sports gear, larges tools like table saws, and other occasionally used items. Additionally, renting is much easier when there is a high concentration of people because warehouses and depots can reach high utilization.

Environmental Awareness: Creating stuff we own but no longer need is a big contributor to environmental harm. As some of the population grows more concerned about the health of the environment, many will consider renting a less wasteful way to consume. While recycling helps mitigate the damage caused by the things you own, renting leaves an even smaller footprint.

Over the next 20 years, we’ll see a huge movement toward a renter’s world. The second order affects of this shift will be both positive and negative. Positively, people will be able to have more choice, convenience, and opportunity to experiment. Negatively, the decline in ownership will undoubtedly hurt economic growth, with potentially catastrophic implications for countries like China that make much of the world’s stuff.

Like with many economic problems, change is dictated by our ability to solve market inefficiencies. The things we own that we don’t use regularly are wastefully underutilized, and it is only a matter of time until those inefficiencies were cured. That time, the time of renting, is nearly upon us.

http://blog.summation.net/2013/12/the-co...rship.html

Post: #2

half true. I can't see owning a house(owning several would be OK.) I don't need much stuff and don't need to rent really anything, but I can't see women not buying glittery trinkets. I'd guess that article was written by a chick that never heard the old adage 'if it floats, flys, or fucks it is cheaper to rent then buy'

Post: #3

It really signifies the decline of the American way of life

1950--goal was to get a job, work hard, own a car, own your own house/land--become king of your castle.

2013--goal for 20 somethings is to move out of their parents' home, rent a house for life from Blackstone Private Equity, rent a car for life, rent furniture. They have been reduced to nothing more than perpetual sharecroppers.

We have gone from a ownership society to rent serfs who waste of all their money paying rent, interest, fees, and finance charges on things they will never own. They are unable to ever build any form of real wealth.

The big problem here is the change in power dynamic. Owners have power while rent serfs have none.

Post: #4

I agree big picture with an exception. owning land used to mean freedom now owning a house means you are beholden to the school board/zoning board/board of selectmen/etc. In Americas suburbs you likely need a permit to put a garden shed in your backyard, doesn't faze people at all. My town you are supposed to get a permit to hold a yard sale. Empire is definitely in decline.

Post: #5

(12-19-2013 07:14 PM)Flavius Aetius Wrote:  It really signifies the decline of the American way of life

1950--goal was to get a job, work hard, own a car, own your own house/land--become king of your castle.

2013--goal for 20 somethings is to move out of their parents' home, rent a house for life from Blackstone Private Equity, rent a car for life, rent furniture. They have been reduced to nothing more than perpetual sharecroppers.

We have gone from a ownership society to rent serfs who waste of all their money paying rent, interest, fees, and finance charges on things they will never own. They are unable to ever build any form of real wealth.

The big problem here is the change in power dynamic. Owners have power while rent serfs have none.

(12-19-2013 07:21 PM)gfly Wrote:  I agree big picture with an exception. owning land used to mean freedom now owning a house means you are beholden to the school board/zoning board/board of selectmen/etc. In Americas suburbs you likely need a permit to put a garden shed in your backyard, doesn't faze people at all. My town you are supposed to get a permit to hold a yard sale. Empire is definitely in decline.

Solution? Own for capital appreciation, passive income, and asset diversification. Rent your actual living quarters.

Post: #6

(12-19-2013 07:14 PM)Flavius Aetius Wrote:  We have gone from a ownership society to rent serfs who waste of all their money paying rent, interest, fees, and finance charges on things they will never own. They are unable to ever build any form of real wealth.

The big problem here is the change in power dynamic. Owners have power while rent serfs have none.

Smart men buy when its worth owning and rent when it is not worth buying. In the last financial crisis if a renter lost a job, he simply moved to another state for a new job. Owners certainly had no power when they were upside down on their mortgage and therefore could not relocate for another job. Like most things in life, there is no hard and fast rule.

But I would say this: Do not rent or lease anything that you cannot afford to buy. That is debt slavery. If you can afford to buy it, however, then either buy or lease it depending on whatever is in your best interest.

Post: #7

People have already been renting for decades due to credit, they've just been duped into believing they "own" an "asset". In my opinion, it's possibly even worse to get a car or anything else with a loan than to rent because you almost inevitably get left holding the bag for a liability that has depreciated massively in value. Most other consumer items also fit this pattern.

That article also erroneously refers to a house as an asset. An asset is something that makes you money (on an ongoing basis). A liability is something that costs you money (on an ongoing basis).

Unless you rent a house out, it is purely a liability (it costs money in interest, taxes, repairs, etc.) until you sell it. Even then, you don't necessarily make money (though some do). My parents always talk about how much money they made from selling a particular house back in the day. Yet they'd conveniently miss the fact that the house they moved into had also increased in cost by exactly the same amount over the same period, so all they were doing was trading A for A, but paying some fees along the way. Most people only make money from selling houses if they downsize.

I have already downsized a lot of things (though still not enough) because I don't like owning liabilities. Financially, legally, socially, they are massive albatrosses around your neck. Well over 90% (maybe even 95%) of my net worth is in assets, not liabilities dressed up as assets. My "stuff" actually makes me money, rather than costing me money. The future is wide open for people who understand this and can take advantage of it, especially via things such as geoarbitrage.

I came to this understanding of people owning assets vs liabilities via Robert Kiyosaki. I think a lot of what he does is purely self-promotion, but he's right on the money on this point.

Post: #8

(12-19-2013 07:55 PM)Tail Gunner Wrote:  In the last financial crisis if a renter lost a job, he simply moved to another state for a new job. Owners certainly had no power when they were upside down on their mortgage and therefore could not relocate for another job. Like most things in life, there is no hard and fast rule.

Cherry picking a few idiot homeowners who bought at the top of the market does not invalidate the power principle of ownership vs serfdom (renting).

Owners of financial assets (stocks, bonds, real estate) or businesses exercise 100% of the aggregate power in this country. Look at the Forbes 500 list, no renters there--just owners of capital and businesses. During the financial crisis the owners (wall street banks, super elite) instructed the US government to bail them out with taxpayer money. Power. Because of QE, owners of stocks and financial assets have been made whole and then some. Power.

The average working class renter lost his/her job during the financial crisis, which financially ruined them because their job was their only source of income. They did not get trillion dollar bailouts, instead they got to pay for the bailouts LOL. They got a few months of unemployment insurance and food stamps as a consolation prize. True, some were able to move for job opportunities--but that was a tiny minority. Most are now trapped in low paying service jobs where they are not even allowed to work full-time (because of Obamacare).

I would much rather be an owner than a renter.

Post: #9

There will be (and already is) a lot of reframing necessity as "choice". "I really don't want all that stuff" - says the guy with no money and no prospects. "I really don't want a woman in my life" says the fat, high estrogen MGTOW.

In harsh conditions, we adapt psychologically. Not saying there is anything wrong with that. But recognise the decline for what it is. The ownership class, will prosper while the rest tell themselves they're satisfied with a shoe-box sized rental, junk food and a smartphone.

Post: #10

(12-19-2013 08:25 PM)Feisbook Control Wrote:  That article also erroneously refers to a house as an asset. An asset is something that makes you money (on an ongoing basis). A liability is something that costs you money (on an ongoing basis).

Unless you rent a house out, it is purely a liability (it costs money in interest, taxes, repairs, etc.) until you sell it.

You say that a owning a house (paying a mortgage) is a liability. For a human being who has to live somewhere you have 2 choices: either rent or buy. By renting you get nothing out of it (equity) and it bleeds you dry forever--which makes renting a liability too. So unless you want to be homeless or are already rich enough to buy a house in cash, your only other alternative is to buy.

If you buy, you at least gain equity in your home every month by paying your mortgage. For the past 4-5 yrs it has been cheaper to buy than rent. Interest and property taxes are tax-deductible (rent is not), along with the $250,000 capital gain exclusion on selling your house (if you live there more than 2 years) makes owning better than renting in most cases.

Also, you can monetize your equity from your home at advantageous rates (under 6.0%)--cant do that by renting. I know many people who have taken out HELOC's on their house and used it as a down payment for an investment property. This is how you accumulate wealth.

Post: #11

(12-19-2013 08:25 PM)Feisbook Control Wrote:  That article also erroneously refers to a house as an asset. An asset is something that makes you money (on an ongoing basis). A liability is something that costs you money (on an ongoing basis).

Unless you rent a house out, it is purely a liability (it costs money in interest, taxes, repairs, etc.) until you sell it.

No, an asset is store of value.

And in your analysis, you forget that you get something out of it called utility. And you also prevent an alternative expense called rent.

If you are replacing rent with paying down your own debt with tax deductible interest, there are many instances in which owning is preferable to renting.

Financially rational as it were.

Post: #12

Homes should of never been pegged as assets. As a necessity for life it has. I asset value. Food is the same, you shit out the money you spend on fold literally but nobody cries as it being a poor choice of money.

Own result shit like and and real assets. Our fathers built their homes and land they owned. Most people now don't even own the and under their home. Most condos are air rights and most sub-divisions have classes where you have no title to the land.

Own outright and I you can't... Rent it. Owning a single home in 2013 is a burden more then anything else.

As far as business goes I would think of ways to fleece women. Maybe renting them out luxury goods for a month or two and they can rotate shit. I know it's being done now to an extent but it would be key to look at ways to exploit that market.

Post: #13

@Flavius

I'm not opposed to ownership, but you are really framing the issue by painting it black and white: "You are either an owner or a serf."

So if I am renting an apartment in Manhattan, 2 minutes away from 1Oak, I am a serf? But if I own a patch of dirt out in the middle of North Dakota I am a great and noble member of the elite land owning class? LOL, serf it is then!

Post: #14

(12-19-2013 09:17 PM)kosko Wrote:  Own outright and I you can't... Rent it. Owning a single home in 2013 is a burden more then anything else.

Exactly. If you have a mortgage on a home, you don't own it. Even if you don't have a mortgage, skip a few property tax payments and see how long you own it.

Home ownership in the U.S. is a joke. There are countries where you can only buy a home if you pay cash. That requirement keeps home prices low, because there is no price inflation created by easy credit (similar to the college tuition bubble in the U.S. created by easy student loans).

There are countries where you make a single property tax payment when you buy your home -- and then never again. People in the U.S. are brainwashed to stay on the credit treadmill.

Post: #15

(12-19-2013 10:01 PM)MHaes Wrote:  @Flavius

I'm not opposed to ownership, but you are really framing the issue by painting it black and white: "You are either an owner or a serf."

So if I am renting an apartment in Manhattan, 2 minutes away from 1Oak, I am a serf? But if I own a patch of dirt out in the middle of North Dakota I am a great and noble member of the elite land owning class? LOL, serf it is then!

The article that started this discussion was about the new trend in renting vs. owning and even some feeble arguments about why this is a positive trend (saves the environment garbage, convenience etc).

This really makes me mad--which leads to some colorful language (serf/lord, etc) on my part, but it serves to emphasize a point.

I contend, I think most people agree that owning assets is superior to renting them. It is a sad state in America where ownership of basic things like a place to live (house, condo, land), car, and even furniture is no longer possible for the average american. All courtesy of our corrupt politicians and their ruinous economic policies.

America used to be an ownership society (even for the middle class), which was unprecedented in world history-- where this privilege was only afforded to the elite. Now with outsourcing, the decline real wages, inflation, etc-- renting (e.g.paying financiers) is the only route for most Americans. Most of the people I know in their twenties have to have roommates just to pay their rent.

Financial freedom will never come through renting, only from owning. It does not matter what you own-- real estate, business, stocks, etc--the point is you own something (an asset), which produces value for you either through capital appreciation and/or recurring unearned income.

This is so you don't have to live paycheck to paycheck like the average american or become like the average baby-boomer who has less than 50K available for retirement.

They are the poor people greeting you at Walmart or bagging groceries despite the fact they are 71 yrs old and have a bad hip. Some of my friends laugh at them. I don't because for all I now that could be me if I don't plan accordingly.

So I live dramatically below my means so I have money to invest. I own a used 6 yr old car paid for in cash ($7000). I will own it until the day it stops running. Compare that to my work colleagues who rent their Mercedes S class whatever with 6,000 due at signing and $500 lease per month. Outside of some bargain priced suits for work, I shop at the UCLA thrift store instead of buying the latest fashion items. I don't have plasma screen tv's, iphones, tablets, and other stupid depreciating luxury items. Hell I don't even have cable (that is like $720 a year), use air conditioning, or heat.

Because I live below my means, I own a house (or I will in 29 yrs) with an attached guesthouse I rent out to someone. The rest of my savings I put into dividend paying stocks, which pay me quarterly income. My goal is financial freedom and not being held hostage to a corporation for employment. When the time is right (I need around 25% equity) I can monetize my equity (in the house I do not own) and buy an investment property where someone pays my mortgage for me.

Post: #16

(12-19-2013 11:08 PM)Flavius Aetius Wrote:  It is a sad state in America where ownership of basic things like a place to live (house, condo, land), car, and even furniture is no longer possible for the average american. All courtesy of our corrupt politicians and their ruinous economic policies.

America used to be an ownership society (even for the middle class), which was unprecedented in world history-- where this privilege was only afforded to the elite. Now with outsourcing, the decline real wages, inflation, etc-- renting (e.g.paying financiers) is the only route for most Americans. Most of the people I know in their twenties have to have roommates just to pay their rent.

I agree with these statements -- one hundred percent. Nixon took the dollar off the gold standard to inflate the money supply to pay for social welfare programs and the Vietnam War. That is what caused this mess.

Up until 1971, when the U.S. went off the gold standard, a man could work and pay off a small mortgage in fifteen years while the wife stayed home with the children. Or they could simply save and pay for a home in cash, because a house cost only one or two years salary.

Why are working men now strapped with 30-year mortgages and why do average homes cost many times the average salary? It is a massive wealth transfer from the middle class to the non-working benefit-collecting poor (via social welfare programs), through the mechanism of a debased currency that inflates prices. Only the drastic expansion of credit (slavery) has allowed the middle class to retain a somewhat relative standard of living.

Throughout history, governments always print more money to pay down government debt. That always results in inflation and higher prices, which explains why it now takes two incomes and a 30-year mortgage to buy a house. Printing more money is impossible to do when a currency is backed by a finite asset (e.g., gold). That keeps a lid on debt and inflation.

If this was common knowledge, there would be rebellion in the streets. But it is too complicated for the average person to understand. This is why I always encourage guys on this forum to swallow the red pill for business and economics.

Post: #17

I am not saying owning a property is a bad thing all the time (more to follow below). There certainly are times when a person would be crazy to rent. I am simply responding to the mantra that it is always good to own a property. For many people it is a massive albatross around their necks. Yet supposedly, housing prices only ever go up. Didn't we hear this circa 2006? How did that end?

Perhaps my own situation is unique, but here is part of it.

About eighteen months ago, I bought a property in Taiwan that I had been renting. I believe I bought it at a significant discount to what it is really worth and I will make money from it if/when I sell it. Yet I bought it assuming that I would either 1) never sell it, 2) not make any money from selling it, i.e. that such a thing would be a bonus. I took an extremely conservative approach to it, perhaps to the point of absurdity, I admit.

I then started renting out one half of it to tourists. I then realised that there was enough demand for that that I could rent out the other half, so I moved out and opened the other half up in the middle of this year. I now rent a small place nearby and pay in monthly rent what I can make (gross) from renting out a single room for one night for my property, or what I can make (net) for less than two nights from one room. It would, therefore, be crazy not to engage in such arbitrage. Further to this, I have a low rate, fixed rate loan on the house. The money I earn through working is a multiple of the loan repayments per year, as is the amount I get from my stock investments each year. The rate of return on my stock invetments is also a multiple of the fixed rate loan I have on the property. I have been renting the first half of my house out for approximately a year, the second half for approximately six months. In that time, it has paid for its own mortgage for the year and made money besides. It should return the equity I put into setting it up in 3-5 years.

Yet everyone thinks I am crazy for not living in the house (as much because it's big and I could show off in doing so -- such things being immensely important for the sheep who make up the middle class) and renting a smaller place nearby. Some of those people have bought their own apartments. Other people have plunged massive money into setting up their own tourist related businesses, assuming they would get rich doing so. Large parts of Taiwan have an insane property bubble that everyone is extremely eager to jump into. I think I was quite lucky finding what I found, but I probably still would not have bought it just to live in (given that buy to rent ratios are so skewed here, and also that it really is far too big for my own needs) and I also would not have bought it to rent out to others if I hate not 1) got it for a steal, 2) been able to work out ahead of time how to keep set up costs extremely low.

I have never lived in a house or apartment in Taiwan where my landlord or landlady could possibly have been making money from me as a renter. In my first place, for instance, my rent was so low that a few minor repairs and replacing a refrigerator (furniture and major appliances are often included in the package here) probably wiped out all 2.5 years of rent I paid to my landlady. She was obviously banking entirely on making huge capital gains from the property. That's pretty risky, in my opinion. Yet that has been the case in every single place I've lived in here. Every single landlord has told me about lofty dreams of flipping his place. I've known lots of other would-be real estate moguls also.

Aside from that, in other areas of my life I also generally live quite within my means and practise frugality. My car was second hand and cost me $2,000, which I paid cash for. This is not about being a renting serf. This is about forging my own way and not being the sheep that gets fleeced, or worse yet, skinned. I am pretty likely to be financially independent within five years. Next year, I am going to start another business which is also in line with some of the things I have expressed above. Hopefully, it will go well and I will write up a data sheet for it within a couple of years.

To reiterate the above, if I lived in my hometown of Melbourne, it probably would make more sense to buy than rent (though there's also a property bubble there). Yet why would I want to live in the West? It's a sinking ship of fat welfare collecting single mothers. Screw that for a joke. As I said, I don't want to be the guy who gets fleeced or skinned for that.

Post: #18

The western world still operates on the feudal model, you only 'own' property until it becomes attractive to the king/government - at which point it's their property and you're just a tenant.

If you're paying, you're the customer not the shopkeeper.

Pay a mortgage, the bank owns your house.

Pay property tax, the government owns your house.

When laws like 'eminent domain' are in place, the government is allowing you to occupy the property only while it's convenient for them to do so.
http://systemicfailure.wordpress.com/201...rking-lot/

"I'd hate myself if I had that kind of attitude, if I were that weak." - Arnold

Post: #19

It's a nice piece and I get why you'd post it, but it runs counter to the advice I got. Since that was advice from someone who is a serious rags-to-riches case and it worked for me, I'll share it here:

1). Buy *modest* property you can afford (more below on how to do this). The problem most people make is they start out with something too expensive.

2). Work freelance. Pay it off. Most 30-year mortgages can be paid off in 10-15.

3). Spend a few years accumulating savings with the money you'd normally be spending on the (now paid-off) mortgage or rent.

4). Take around a quarter of that savings and invest in safe mutual funds that pay a solid dividend, like 8-10 percent. (Try to pick ones with very little movement price-wise to help ensure you don't lose money. It's boring and safe, but you are getting the dividend. Around 1-2 dollar movement over 2-5 years is good.)

5). Those dividends become an income stream. Reinvest when they dip, then skim the profits when they're up. The income stream grows and you can cover your expenses with this "workless salary."

6). By then you should be able to either retire or just work at whatever you feel like. OR you can turn around, rent your paid-off property out, and move, using that rent stream to pay a mortgage.

The way to start the above process, BTW, is buddy up to a real estate type and get an inside line on foreclosures (the good ones) or properties that have to move fast (re-location or whatever). If you can get in at below-market prices, that's your ticket.

It also helps if you learn how to invest beyond just buying dividend-paying mutual funds, but the stock market isn't for everyone.

At any point in this process, you can sell and trade up, of course. But you'll be doing it with that much more equity in your place, so you'll be ahead of the game.

Post: #20

great article that breaks down the myth of the financial benefits of
home ownership http://jlcollinsnh.com/2013/05/29/why-yo...nvestment/

Post: #21

What happened to the US from the 1920s to the 1960s was a complete historical aberration.

Even going back as far as the 1700 and 1800s, America was lucky to have an abundance of land they could just give away to European peasants. This is over. In some of the most successful economies in the world, home ownership is not a necessity. If anything, it slows you down, makes you less mobile.

The American dream was "life liberty and the pursuit of happiness", not "buy more shit".

Post: #22

(12-20-2013 10:03 AM)bacon Wrote:  great article that breaks down the myth of the financial benefits of
home ownership http://jlcollinsnh.com/2013/05/29/why-yo...nvestment/

The financial benefits of home ownership are overstated. Still, at the end of the day, you have a little piece of this earth that you call your own. That is pretty priceless, imo.

Post: #23

(12-20-2013 11:58 AM)SpecialEd Wrote:  

(12-20-2013 10:03 AM)bacon Wrote:  great article that breaks down the myth of the financial benefits of
home ownership http://jlcollinsnh.com/2013/05/29/why-yo...nvestment/

The financial benefits of home ownership are overstated. Still, at the end of the day, you have a little piece of this earth that you call your own. That is pretty priceless, imo.

What is so priceless about that?

Post: #24

If you loose your job, your portfolio takes a dive,etc...you have: 1.) A Place to Live, 2.) A hard asset you can sell. That gives me peace of mind. And personally, I find the whole 'nomadic' living craze to be overrated. I enjoy traveling but I like the idea of having a home to come back to.

Post: #25

(12-20-2013 01:35 PM)SpecialEd Wrote:  If you loose your job, your portfolio takes a dive,etc...you have: 1.) A Place to Live, 2.) A hard asset you can sell. That gives me peace of mind. And personally, I find the whole 'nomadic' living craze to be overrated. I enjoy traveling but I like the idea of having a home to come back to.

Wouldn't I still be guaranteed place to live if I had the equivalent of a house in liquid assets, even after an adverse event?

On the other hand, if you stop paying your property taxes...