Renting is not throwing away money. Though markets vary, rent approximately equals the interest on the mortgage plus taxes plus insurance plus maintenance. The reason you could make money buying (or renting to own) is because of appreciation. US average appreciation for the same house (not new houses!) is around 2%, but since you only have to put 20% down, that could be a 10% ROI, at least initially. Markets with restrictions on building have been a lot higher appreciation than this, but there is the risk that there will be reform or autonomous vehicles, and then you could not just lose the money invested, but actually have negative value (as happened to many people around 2009).
Iâm not talking about the landlord/âproperty owner, Iâm speaking for the side of the renter⌠the people at the bottom of the pyramid⌠36% of people âthrow money awayâ renting someone elseâs apartment/âhome.
Iâm talking reforming this thought process where we are taking money from people, instead of making money together. Not âfor profitâ, but âwith profitâ. Share the wealth in a non-socialist way
Iâm talking about the same sideâIâm saying that if you can invest well, you can be better off overall putting the money for a down payment into the stock market and renting instead of buying a house. I know less about renting to own, but I would be surprised if it were better (you are still putting money into something with a marginal ROI of the interest rate on the mortgage, which is significantly lower than long term stock returns). Now if one were the type of person to spend the money if it were not going into a home, then the forced savings of owning a home could be better.
The problem with rent to own is the downpayment, and the locked in contract. Todayâs society simply doesnât allow the second to occur due to how often people switch jobs, remote working, etc, and too many scams have dissuaded people from doing the first.
The reason why the whole debate of is renting better than buying a home, is more so because of the added interest than the maintenance. Yes back in the day it was probably more of a fair trade, and of course I remember what happened back in 2008 (whole city blocks in Arizona were boarded up)..but thereâs so much money around now a days, and banks have so many other ways to make money, I think we can move past this stage in lifeâŚ
Itâs a broken system, like a pyramid scheme, and I canât believe itâs not talked about here. Especially considering 36% of the world is renting their housing. For example, a single parent bank teller makes $16.50/âhr @ JP morgan chase, paying less than median rent for a 1 bedroom in a city in california ends up being almost half her income, doesnât even make enough money to support a childâs lunch..let alone clothes⌠teachers, letâs not go there...because itâs not the wage that doesnât matter, itâs that wages donât increase nearly as much as housing costs.
But then again itâs not the banks fault for this, they give the opportunity to landlords to offer fair rents, and to not make as much profit, right? Just give out more mortgages, theyâll just raise the rent higher to pay them off⌠And then you can just bail out the banks again...
What is the best way to seriously help the most amount of people living in poverty? Make more money and donate to âmore effective charitiesâ? Seriously what is trump doing to America right now? Keeping people in poverty, keeping people stupid, so they worry more about their bank account not going below $0 this month or next, instead of policies, or climate change, or AI taking over, or the health of people in Africa, etc...
I feel as if most people here donât *really* care about this here, almost like what anand giridharadas talked about the biggest problem with the philanthropists is they donât really want to change the way the system works.. and just seeing how many negative votes Iâve been getting here on this post, about an idea to improve real estate, makes this all the more true. (but thank you denkenberger for hashing this out with me)
Back to my original post idea, and to use a venture capital analogy, real estate should be a way to provide some sort of equity share for all stakeholders[and please donât say new buildings being built increases land value which improves economic conditions, because we all know about gentrification]. Yes some startups donât give equity to employees until theyâve been there 2 years. SO why not do this with housing? The value of all stakeholders, simple ESG metrics⌠the same tragedy that happens to X (coffee, chocolate, cobalt, lithium, etc) still living in poverty in Africa, while the top of the production line are living life of luxury.. well what good is it to donate against malaria, if you would be more effective by paying the X resource harvesters in Africa enough income to begin with to support a clean home, clean water, clean infrastructure...?)
So my idea goes along the idea of the sharing economy, the wealth + some of the appreciation of the asset over time is distributed between money lender/âaka investor, to asset manager/âaka home owner, but what really matters most is the renter, which could be called an interim asset manager. Even giving them 60% equity⌠to be debated...
With this mindset, makes renters feel more inclusive in the community, perhaps they would take care of the buildings and neighbourhood more, care about the laws in the city, perhaps be inclined to take part in a circular economy for furniture/âelectronics..
There has been a lot of previous discussion within EA about systemic change; see here for an example. Many people think that the reason that places like San Francisco are so expensive is that they are desirable places to live. But actually it is this and that there are restrictions on building. There are lots of cities that are growing rapidly but do not have many restrictions on building, like Nashville (where I used to live), Houston, Denver, etc. that have relatively moderate long-term real estate inflation. There have been Open Philanthropy Project grants looking at land use reform, which would be the sort of systemic change that could reduce cost for both renters and buyers.
As for why EAs have deprioritized helping people in developed country poverty, it is generally because they are an order of magnitude richer than the global poor.
I think itâs kind of ridiculous, goes back to the emotional aspect of philanthropy in people will donate to something that makes them feel good instead of doing the biggest bang with their buck. Like Anand talks about..
Donating to distributing drugs in Africa is one such thing. You could impact invest in an application that sends people in Africa a reminder to take a TB shot, and save millions of lives⌠but Prevention is exponentially better. Stop donating money sending americans on trips to africa for âaidâ, just build better homes and infrastructure there, you solve many problems at once.
But if we can solve poverty in developed countries, there is just so much more money available for them to also become donors as well. Not even discussing âpovertyâ, lets just imagine if the 80% of people in the US who are living paycheck to paycheck, could loosen the amount of debt they have (which is mostly due to real estate). They wouldnât then all of a sudden take on more debt by buying more assets, they would save up. They would not have to work multiple jobs. They would volunteer, and donate.
Of the 100 million ânear relative povertyâ in the US, 43 million are yes below poverty lines.
Just imagine if we had 100 million people now who were making good money, didnât waste half their income on rent, could now also get a better education, learn about causes, and join us in donating (or impact investing) to the best cause around the world, for prevention.
It would be exponential. More so than half the causes here. And itâs systematic change that doesnât require a massive shift in politics. There are already opportunity zones, but they are still in the same field of extracting money. They arenât creating wealth for low-medium income populations. This is systematic change that can be done by investing.
Renting is not throwing away money. Though markets vary, rent approximately equals the interest on the mortgage plus taxes plus insurance plus maintenance. The reason you could make money buying (or renting to own) is because of appreciation. US average appreciation for the same house (not new houses!) is around 2%, but since you only have to put 20% down, that could be a 10% ROI, at least initially. Markets with restrictions on building have been a lot higher appreciation than this, but there is the risk that there will be reform or autonomous vehicles, and then you could not just lose the money invested, but actually have negative value (as happened to many people around 2009).
Iâm not talking about the landlord/âproperty owner, Iâm speaking for the side of the renter⌠the people at the bottom of the pyramid⌠36% of people âthrow money awayâ renting someone elseâs apartment/âhome.
Iâm talking reforming this thought process where we are taking money from people, instead of making money together. Not âfor profitâ, but âwith profitâ. Share the wealth in a non-socialist way
Iâm talking about the same sideâIâm saying that if you can invest well, you can be better off overall putting the money for a down payment into the stock market and renting instead of buying a house. I know less about renting to own, but I would be surprised if it were better (you are still putting money into something with a marginal ROI of the interest rate on the mortgage, which is significantly lower than long term stock returns). Now if one were the type of person to spend the money if it were not going into a home, then the forced savings of owning a home could be better.
The problem with rent to own is the downpayment, and the locked in contract. Todayâs society simply doesnât allow the second to occur due to how often people switch jobs, remote working, etc, and too many scams have dissuaded people from doing the first.
The reason why the whole debate of is renting better than buying a home, is more so because of the added interest than the maintenance. Yes back in the day it was probably more of a fair trade, and of course I remember what happened back in 2008 (whole city blocks in Arizona were boarded up)..but thereâs so much money around now a days, and banks have so many other ways to make money, I think we can move past this stage in lifeâŚ
Itâs a broken system, like a pyramid scheme, and I canât believe itâs not talked about here. Especially considering 36% of the world is renting their housing. For example, a single parent bank teller makes $16.50/âhr @ JP morgan chase, paying less than median rent for a 1 bedroom in a city in california ends up being almost half her income, doesnât even make enough money to support a childâs lunch..let alone clothes⌠teachers, letâs not go there...because itâs not the wage that doesnât matter, itâs that wages donât increase nearly as much as housing costs.
But then again itâs not the banks fault for this, they give the opportunity to landlords to offer fair rents, and to not make as much profit, right? Just give out more mortgages, theyâll just raise the rent higher to pay them off⌠And then you can just bail out the banks again...
What is the best way to seriously help the most amount of people living in poverty? Make more money and donate to âmore effective charitiesâ? Seriously what is trump doing to America right now? Keeping people in poverty, keeping people stupid, so they worry more about their bank account not going below $0 this month or next, instead of policies, or climate change, or AI taking over, or the health of people in Africa, etc...
I feel as if most people here donât *really* care about this here, almost like what anand giridharadas talked about the biggest problem with the philanthropists is they donât really want to change the way the system works.. and just seeing how many negative votes Iâve been getting here on this post, about an idea to improve real estate, makes this all the more true. (but thank you denkenberger for hashing this out with me)
Back to my original post idea, and to use a venture capital analogy, real estate should be a way to provide some sort of equity share for all stakeholders[and please donât say new buildings being built increases land value which improves economic conditions, because we all know about gentrification]. Yes some startups donât give equity to employees until theyâve been there 2 years. SO why not do this with housing? The value of all stakeholders, simple ESG metrics⌠the same tragedy that happens to X (coffee, chocolate, cobalt, lithium, etc) still living in poverty in Africa, while the top of the production line are living life of luxury.. well what good is it to donate against malaria, if you would be more effective by paying the X resource harvesters in Africa enough income to begin with to support a clean home, clean water, clean infrastructure...?)
So my idea goes along the idea of the sharing economy, the wealth + some of the appreciation of the asset over time is distributed between money lender/âaka investor, to asset manager/âaka home owner, but what really matters most is the renter, which could be called an interim asset manager. Even giving them 60% equity⌠to be debated...
With this mindset, makes renters feel more inclusive in the community, perhaps they would take care of the buildings and neighbourhood more, care about the laws in the city, perhaps be inclined to take part in a circular economy for furniture/âelectronics..
There has been a lot of previous discussion within EA about systemic change; see here for an example. Many people think that the reason that places like San Francisco are so expensive is that they are desirable places to live. But actually it is this and that there are restrictions on building. There are lots of cities that are growing rapidly but do not have many restrictions on building, like Nashville (where I used to live), Houston, Denver, etc. that have relatively moderate long-term real estate inflation. There have been Open Philanthropy Project grants looking at land use reform, which would be the sort of systemic change that could reduce cost for both renters and buyers.
As for why EAs have deprioritized helping people in developed country poverty, it is generally because they are an order of magnitude richer than the global poor.
I think itâs kind of ridiculous, goes back to the emotional aspect of philanthropy in people will donate to something that makes them feel good instead of doing the biggest bang with their buck. Like Anand talks about..
Donating to distributing drugs in Africa is one such thing. You could impact invest in an application that sends people in Africa a reminder to take a TB shot, and save millions of lives⌠but Prevention is exponentially better. Stop donating money sending americans on trips to africa for âaidâ, just build better homes and infrastructure there, you solve many problems at once.
But if we can solve poverty in developed countries, there is just so much more money available for them to also become donors as well. Not even discussing âpovertyâ, lets just imagine if the 80% of people in the US who are living paycheck to paycheck, could loosen the amount of debt they have (which is mostly due to real estate). They wouldnât then all of a sudden take on more debt by buying more assets, they would save up. They would not have to work multiple jobs. They would volunteer, and donate.
Of the 100 million ânear relative povertyâ in the US, 43 million are yes below poverty lines.
Just imagine if we had 100 million people now who were making good money, didnât waste half their income on rent, could now also get a better education, learn about causes, and join us in donating (or impact investing) to the best cause around the world, for prevention.
It would be exponential. More so than half the causes here. And itâs systematic change that doesnât require a massive shift in politics. There are already opportunity zones, but they are still in the same field of extracting money. They arenât creating wealth for low-medium income populations. This is systematic change that can be done by investing.