MMM has at least two rental properties and is a phoney.
He can teach his kid to be a rentier by borrowing long and taking advantage of the separation between the value of labour vs assets when fiat money is over-issued by private banks.
And how to run a web-site about being frugal whilst deriving rental income from three families who cannot save because they are busy working hard to keep MMM pumping out half-truths on the internet.
Can we all take up three times as many houses as we need and live off the rental income siphoned off from the labour of others? No.
"MMM can teach his kid how to make money on investments in real estate and make profits from renting his owned (financed) assets.
He can also teach his kid how to share what he's learned about not over-spending on depreciating assets."
Then there's something in there about people who choose to rent being taken advantage of by people who choose to be landlords, but I don't understand it well enough to take your meaning.
How many rental properties does the man who says a bucket of grain is actually a big deal? Guess.
> This was achieved not through luck or amazing skill, but simply by living a lifestyle about 50% less expensive than most of our peers and investing the surplus in very boring conservative Vanguard index funds and a rental house or two.
Just a couple of extra people (maybe two families) working and giving a big slice of their income. Everyone can do this, right? Wait. If we all do it how can we all live off part of the wages of at least two wage earners?
> purely financially, owning is not better than renting; rent is not wasted money, at least not more than the fingerquotes rent you spend when you live in your own place.
Only if you're having no kids which you plan to leave some wealth to inherit. Owning a home is the way for the lower/ middle class to build up trans-generational wealth. Let's just take the following example:
1. I buy a home today and pay it off in 30 years (standard schedule).
2. I get a kid in three years.
3. The kid is ~30 when I become a pensioner and move off to Croatia to smoke pot all day and night... meaning the kid can either move with his family into my fully paid off home, rent it out or sell it off at 4-5x the "original" value. Either way, my kid can keep a vast proportion of his paycheck and either save it up or investing it, thus creating wealth.
If I will spend the rest of my time renting, however, I will leave nothing for my kid to inherit and use as leverage to build their own wealth.
>Rent is the best and safest form of passive income.
HAHAHAHAHHAHHAAAAA!!!!!!!!!!!!!!!!!!
No it isn't. Renting it a LOT of work and it isn't for everyone. You have to find good tenants, but that is a crapshoot. Everytime someone moves out you gotta spend time getting the place ready for the next people, advertising it, then showing it. If your tenant stops paying you have to evict them, but that takes time and you lose money in the meantime. Then when you finally get them out of there, you can sue them for back rent and win a judgment, but if they don't have any money to pay you with, you aren't getting it. Once in a while you got a tenant who leave the place a BIG HUGE MESS that you can't even imagine, that's a few week job. Then you gotta deal with things like being woken up in the middle of the night when people have locked themselves out. If something breaks, it might costs thousands of dollars to fix. If you don't have DIY skills and time, then the cost of labor is going to kill you.
If you are renting to more wealthy people, these things might not come up as often.
If you had LOTS of money, a property manager, staff, then it might be different, but not in any way risk free.
I have family who were doing a REAL lot of work just to break even at property rentals. Then ran into the above issues.
>In the end I'll now own two houses I do whatever I want with and my renter will own nothing."
Uh, you realize that when you buy a house, you end up paying tens, sometimes hundreds of thousands of dollars in interest beyond the value of the home?
That's what the renter owns: money, in his pocket, compounding interest for decades.
This is the reason why there's an economic calculation to be made. If you're paying the $1000 per month to rent a place that you could buy for a monthly mortgage, maintenance and tax cost of $1000, then, yes, you're an idiot for renting. But this doesn't happen in the real world, outside of the recent history of extremely fast-rising house prices and low interest rates.
I see that as a red herring. The key if you are going to rent is to save the difference between what your rent is and what your mortgage + other costs of ownership would be and put that capital to work for you through other investment vehicles. In America there is this convoluted idea that 'everyone should own a home'. It's a ridiculous premise and should be nothing more than a pipe dream for many people who do currently own a mortgage on a home.
> Renting is throwing away money; it goes into someone else's pocket and it's gone.
Holy shit this is insane. Do you actually believe renting has no benefits?
When you purchase a property you’re on the hook for that mortgage payment for the next 30 years. Buyers absorb an enormous amount of risk. Maintenance is time consuming and expensive.
Renters can leave whenever they like and have no long term financial ties to the state of the property.
I guess everyone needs someone to fight against huh?
> Your example doesn’t really make sense - someone living paycheck to paycheck would default on a mortgage even if they got one. It’s for those people that renting makes the most sense.
you just made my point for me — there is a class of the population that is forced into spending a third (often more!) of their income on housing, which is being hoarded by another class. no different from a feudal serf being forced to turn over their hard-won harvest to the nobility. but sure, they can go find another manor to live on, they’re under no obligation to give their labor to this particular lord...
> If you honestly believe being a landlord is such a slam dunk you should take out a mortgage, buy a property somewhere in United States (there are places as cheap as $50K) and rake in the cash.
I'm sorry, but I am not sociopathic enough to profit from other people misfortune (not being able to to buy a roof over their heads). Not everything is about making as much money as you can squeeze from other people.
> becoming a landlord is the most reliable path to easy wealth
I think anyone who thinks that, has not actually tried buying a house to rent it out (or thoroughly done the numbers at least).
> provides both enough cashflow to cover costs and interest servicing
Here's the problem, it does not. Try finding a property that you can buy and then rent for more than your total costs. I've been looking for more than 10 years and have yet to find such a thing. Maybe price/rent ratios are different in New Zealand.
> magine spending waaay too much of your income on your house, not a huge house by any stretch of the imagination, something seen as average to small in the rest of the country.
Then sell it and stop being that person. There's no obstacle. The interests of the landlords financial situation requires no extra care, let alone at the expense of tax payers or citizens at large.
Everyone person that buys a house is responsible for that decision, and punishing renters to protect them is straight up poor payers for the rich.
> How can a smart, presumably educated person not know that rent counts as economic activity?
Of course it's "economic activity". But if I sublet to someone that sublets to someone that sublets to someone that lives in an apartment, that's a 4x increase in money flow but there's no production of goods or services at all.
It makes sense to have the cost of building and maintaining homes represented somewhere, but rent is a poor proxy for that.
>'Renting' in its essence does not involve doing anything: it does not mine resources, manufacture use objects, or provide a service. Rich people buy up scarce assets and then charge a fee for their use.
So if someone doesn't have enough accumulated capital or credit to buy a property to live in, tough luck. You can't legally rent from someone. I guess rely on charity or sleep on the streets? Seems unreasonable.
He can teach his kid to be a rentier by borrowing long and taking advantage of the separation between the value of labour vs assets when fiat money is over-issued by private banks.
And how to run a web-site about being frugal whilst deriving rental income from three families who cannot save because they are busy working hard to keep MMM pumping out half-truths on the internet.
Can we all take up three times as many houses as we need and live off the rental income siphoned off from the labour of others? No.
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