wrote in message
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Dr. Jonathan Smithers, MD Phd. wrote:
Chuck,
You are incorrect.



In groups where serious money routinely changes hands, equity in a
personal residence is not typically considered an investment asset.

Example:

A couple of years ago Smith Barney was offering some specialized
brokerage services for those clients with net assets above $10mm.
Specifically excluded from the calculations was equity in a personal
residence. (Darn it all, anyway, I was only $9.99mm from the finish
line before they threw that curve at me.)

Do a bit of research, and you will discover that for most financial
transactions beyond trying to qualify for the next overpriced property
or applying for a Home Depot credit card, home equity is either not
even taken into consideration or will be considered only up to a
predetermined, limited percentage of overall net worth.

Loans where the property will be used as collateral are going to be
exceptions, of course.



Let us compare owning vs. renting.

Example (real life) I have $30,000 in cash at present:

EXAMPLE 1:

If purchasing a house: I buy a 4 bedroom house for $150,000, putting the
$30,000 down. I owe the bank $120,000 and I put nothing into the house over
the years I own it other than the mortgage payment.

I then sell that house for $250,000, yielding $75,000 net after commision,
payments to the bank and expenses. My initial investment was $30,000. I
now have $75,000.

I then buy a house for $350,000, putting the entire $75,000 down. I owe the
bank $275,000 and I put nothing into the house over the years I own it other
than the mortgage payment.

I then sell that house for $450,000, yielding $133,000 net after commision,
payments to the bank and expenses. My intial investment was $30,000. I now
have $133,000

I downsize and look back at that $150,000 starter home I once owned. It is
now selling for $300,000. I buy it, put down my $133,000 in down payment and
thus owe the bank $167,000.

I eventually sell the house and move into a retirement community (paid for
by my insurance). The house sells for $325,000. After expenses and
commisions I net $155,000. My initial investment was $30,000.

I yielded a net profit of $125,000 on a $30,000 investment, *and* I had ZERO
living expenses over all those years.


EXAMPLE 2:

If renting a house/apartment: A $30,000 investment over 30 years at 5%
rate of return would yield a return of $130,000.

With an average cost of rental housing over 30 years for a 4 bedroom
apartment @ $000/month (a very low average) of $180,000, I yield a net
loss of -$50,000.

Compare to that the ownership scenario and realize almost a $1000,000
return.

RESULTS:

A net profit of $100,000 to own.

A net loss of $50,000 to rent.

The difference....$150,000 over 30 years on a $30,000 ownership investment.

My scenarios were very conservative.

Real estate is not an investment? Bull****. You know absolutely nothing
about real estate Chuck.