I detest paying rent to someone else. Currently, I am renting a room as I finish the last month of my military career.
I am paying $800 monthly in San Diego as my family awaits my return to Florida. I feel many negative emotions every time I pay rent on the first.
I am a landlord by nature, not a renter. But I wasn’t always this way. By renting homes and having no control, I slowly converted to the dark side of being a landlord.
RE Lifestyles 1: Rental vs. REITs
People are telling you to rent. The new mantra online is to become a renter and stay a renter. People, this is hogwash.
You are almost guaranteed never to get ahead financially if you don’t own a home. You simply have zero control of your life if someone keeps raising the rent yearly.
A lot of the conversation concerns the hidden costs of owning a home—they are absolutely correct. Homeowners are barely breaking even or losing money annually compared to renters.
However, with some financial sophistication, homeowners will pull ahead massively. They will have many more options later in life, such as home equity loans, cash-out refinance, down-sizing or reverse mortgages.
Don’t Gamble with Retirement 3 + 4
What is the American Dream anyways? The original American Dream wasn’t about owning stuff; it was about class mobility.
People migrated to America because they could change their destiny, and their kid’s future, in one generation.
Unfortunately, debt is our birthright. When you add capitalism to a rigged marketplace, your dream of owning things is actually making others rich.
Over the years, the American Dream morphed into a massive house, nice cars, private schools, and fancy vacations.
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Even more dangerous is the ideal of “passive income,” where you can live the American Dream without working a full-time job.
Back to reality. When I joined the Marine Corps in 1999, my parents didn’t own a home. I remember feeling lost in boot camp because I didn’t have a house like everyone else.
My wife and I bought our first home in 2008, at the height of the market in Arizona. I promised myself that my kids would always have a place to call home. Always.
So we endured the bloodbath of our first property. It was a nightmare from 2008 to 2021. It sucked until one day; it didn’t.
The Wealth Accumulation Phase
It is funny that I started learning about money in 2019, and soon my fortunes started to change. I wonder if it was a coincidence (it wasn’t).
The reality is that owning a home is necessary for every family, but it doesn’t have to be risky or shady. We must understand that they have stacked the odds against us.
The truth about homeownership. The value of owning a home is insulation from inflation, protection from landlords, and the ability to leave wealth to future generations.
However, this is not an emotional decision but a financial path that can drain your resources if you let it.
What is Passive Income?
We now own three homes. Before my retirement, we were making $250,000 per year combined.
But, we have had roommates for four years, paying the entire mortgage of our primary residence. Therein lies the rub; I cannot afford to own our homes.
That’s why people online are telling you not to buy properties. Most homeowners (and car owners) don’t understand the word afford.
How much can you afford? Your home should be less than 33% of your monthly income. That should include your utilities as well.
If you want to get ahead, keep that number below 20%. If you’re going to become rich, keep it under 0%. Do any of these numbers seem possible?
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Unfortunately, we humans have begun to love “independence” to the point where we want to live alone, in a massive home, to avoid other people—including our families.
That’s when the capitalist comes in to take everything we own. “United we stand, divided we fall” is a good quote.
We moved from rural families, where we would all work together. Then we slowly moved to the cities to build nuclear families (two parents, two kids). Finally, they destroyed that in favor of being single parents.
How can someone afford a home, pay for childcare, save for college, and prepare for retirement? The simple answer is they cannot.
Living Overseas Passively 103: Retirement Income
Homeownership is a movement toward bringing back the family. The family unit must return in full force. That needs to be the new American Dream.
We have two boys (ages 17 and 12), and I must accept that they will need my support for longer. There is almost no path where they leave at 18 and build themselves into powerful young men by age 25 (except the military).
So they will need to work their butts off but remain under my umbrella of protection. I wasn’t raised this way, but the world has changed since my birth year of 1981.
The new path to homeownership. My kids’ path to homeownership is by working hand-in-hand with me. They can build businesses, get certifications, or climb the corporate ladders.
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However, the chance of them saving for a house down payment is slim to none. We will need to leverage the home equity and investments I made to get them over the hump.
Rich people have always known this, by the way. They always act as the bank or exert leverage to get their kids ahead.
Poor people say things like “Don’t depend on anyone” and “Become a responsible human on your own.” Again, this is hogwash.
If your kids are good humans, help them out. Why make someone suffer? Will it make them stronger? It will make them more callous, for sure; trust me.
Five Takeaways from “Mortgage-Backed Securities”
Conclusion. Yes, your family must own a home; it’s non-negotiable. However, the standard way of living and owning a property is changing.
We are returning to the days when generations lived together. Brothers and sisters shared a home for their entire lives.
People overseas never adopted this “everyone is independent” lifestyle. You are not free if you must work a job to pay your bills.
As we return to massive family units, we can work less and enjoy more—home equity will do the work for us.
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We can leverage home equity every ten to fifteen years to add another property to the family estate. Some kids can join the military to leverage the VA Loan to add to the family estate.
Before you know it, the family estate owns ten properties and can blaze its own path. They can write their own checks and negotiate their own loans amongst their assets.
But it has to start somewhere. Someone must endure the challenge of living together to “make things make sense.” My wife and I absorbed this pain by having roommates so we could own multiple properties.
We are starting our family tree of wealth. Yes, homeownership is out of reach for the individual, so change the game and work as a team. Good Luck!
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