David L. Farquhar, computer security professional, train hobbyist, and landlord
What salary do I need to buy a house? I struggled with that question in my 20s and it probably kept me renting a year or so longer than I really needed to be. Then again, considering the housing crisis of 2007-2008, renting a year or so longer was a small price to pay to avoid potentially making the biggest financial mistake of my life.
One of the reasons for that financial crisis was not enough people asking that question. A second reason was banks being dishonest about the answer.
A lot of people will say if you are asking is it worth it to buy a house, the answer is automatically no. As a homeowner and landlord, I think the answer is more complicated than that, so I’m not going to be quite that cynical.
Is it worth it to buy a house? Frankly, it depends.
Paying off debt involves some nasty math, and when you go to pay off investment property, it’s no exception. That’s why it’s so controversial. When I was in college, my university used this kind of math to weed students out, so it should come as no surprise that the lending industry booms, and so many hucksters make a fortune hawking questionable ways to get out of debt.
I have a better way, and you won’t pay me anything for the advice. Read on.
Is rental property a good investment? It certainly is if you do it right.
Here’s what you need to know.
As a landlord, I’ve dealt with some difficult tenants, and I’ve noticed they all tend to use very similar tactics. Setting boundaries is a necessity to keep things under control, and in the end keep all of your tenants happy while keeping yourself sane.
Buried unfortunately deep in August’s Social Engineer podcast was some outstanding advice from British TV star R. Paul Wilson, who turned scamming into prime-time BBC TV for several seasons.
Wilson, who literally has sold someone a bridge that he of course didn’t own, has lots of experience on both sides of scamming, so his experience is invaluable. I was just disappointed that we had to listen to 45 minutes of Christopher Hadnagy and David Kennedy arguing before we could hear it, so I’ll cut through the garbage.
Last week, a former classmate shared a Dave Ramsey article about early savings. Ramsey stated a teenager could save a couple thousand a year, stop saving in their 20s, and still retire a multimillionaire. I agree with the sentiment completely, but I’m concerned that Ramsey overstates how rich that person can expect to become.
Ramsey’s favored investment vehicle is a mutual fund that tracks the S&P 500.
The problem with the article is that he assumed an annual return on investment of 12 percent, which is well above every reasonable historical estimate I’ve ever heard of S&P 500 rates of return. Forbes agrees. Ramsey is basing his number on a subset of history, not all available history.
So my buddy, we’ll call him Bob, runs Data Loss Prevention (DLP) for a big company. DLP is software that limits what you can do with sensitive information, in order to block it from going out of the company. The NSA wasn’t using DLP back when Ed Snowden was working for them; they probably are now.
Sometimes DLP blocks people from sending their own personal information. Doing so is their right–it’s their information–but from a security point of view, I’m really glad DLP kept them from e-mailing their entire life around in plaintext.
So, the reaction to my story about my coworker’s 10-year-old going all Scooby Doo on the guy who had the nerve to steal his dad’s car was definitely mixed. Most people, of course, lauded the 10-year-old’s detective work. Others pointed out the dark side.
And there is a dark side.
I see the advice all the time not to buy a house if you can’t afford it, but rarely do I see a good explanation of what that means.
It’s really easy. Let me explain it, as someone who paid off a 30-year mortgage in five years and now co-manages rental property and has to determine if someone can afford to rent from us or will be over their head. And no, just because I’m a landlord doesn’t mean I think everyone should rent. There are definitely times when buying makes sense. Read more