David Sidoni regrets renting in his 20s and breaks down the math: eight years of $1,250 monthly rent cost $104,000 with nothing to show. Buying a $150,000 condo instead would have built roughly $10,000 in equity after mortgage payments and getting his down payment back.
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Yes, I believe in my philosophy that all renters should explore buying and stop renting as soon as they can, no matter the market. Why do I think that I don't care? Well, it's not because I'm trying to sales pitch you, but it's because I strained my hamstrings multiple times, kicking myself in the butt for missing out when I was in my 20s and renting instead of buying. I freaking blew it big time. And then I learned how bad I blew it when I got into real estate and I made it my mission to start a revolution so nobody out there gets lulled into doing nothing and ends up making the huge mistake I did. You're either going to be freaked out because you've got fear of the process or worse, what is happening right now. That means you're going to be reacting to what happens right in front of you. People putting on the brakes because the haters are saying the good times are.
Over, so don't do it.
Side note on that, I love how every time that people claim that buying a home right now is stupid, they hardly ever, ever explain any of the math or the facts behind why they've come to that decision. They just say people are cheap and following the trend. Or they say it's gonna crash, so don't be an idiot. Just buy when it's low.
Stupid.
And then of course, they do that with no figures to back it up. End of side note. So let's get into my story to help you sift through the negative headlines, the trolls, the fear mongers, the impatient and negative and cynical people that are coming out of the woodwork all sudden to warn you of this impending doom. To see how this might work, let's take my personal history of my twenties to see how ignorant and dumb I was. Sounds like fun, doesn't it? In 1991, I was turning 21 years old and I didn't have a clue. I didn't even think buying was an option for me in any capacity. Not even close. I mean, I wasn't even really like, afraid of the process because I didn't even think it was possible. To say buying a home wasn't on my radar would imply that I even had a radar for anything like that. The thought wasn't even in my universe, nowhere near my brain matter. So I remained blissfully ignorant, uninformed. And besides, I wanted the freedom to.
Live my life, man.
So I rented. Looking back on it with what I know now, I blew it. Only now, as an old dad and a dude do I realize I missed the real freedom and to live my life. Oh, I said old drink, everybody thinks that you're gonna lose your freedom. You can't live your life. Well, I could have made hundreds of thousands of dollars with so, so little effort by doing just the bare minimum. I mean exactly what I did, paying my monthly housing bill, which I did every single month, I just paid it to the wrong person. It would not have cramped my lifestyle. In fact, the condo I would have purchased would have been actually a lot sweeter than most of the many, many apartments that I lived in. And like I said, many, many apart prevented me from having to move every other year. And I would never have to worry about rent increases. And let me say it again, it would have been no different in my pocketbook. I still would have been free to live my life and go wherever my whims desired, still could have had freedom, but with the huge added bonus of more financial freedom in my 30s. But instead I kept busting my butt in my 30s because the only return I got from those years in Hollywood when I was paying all my money to the landlords was a fifteen hundred dollar security deposit I got back instead of a cash flowing asset that could have provided huge returns to me in my 30s and beyond if I wanted to so that I could be experiencing real financial freedom in my 30s and 40s. So 28 years later, I started a podcast out of sheer madness over the hundreds of thousands of dollars that I lost by not buying a condo in 1991 when I was a perfect candidate to buy a home at the very young age of just 21. So this story is one of the two big reasons I started the podcast. Like I said, blah blah, blah. Over a decade in the business, I saw how savagely like bad sav, savagely, not the good savage. You know, I saw how wretchedly savage the real estate industry treated first time home buyers. So I decided to start a people's revolution, like an underground paper trying to rally all the masses to overthrow a dictator. But then number two, what we're getting into today, the big reason why I started this is because it was my story. From all my years of watching all those time travel movies, I learned that when you do get a chance to go back in time, you're probably gonna have a very limited window to communicate with you younger self. So I wanted to make sure that older me could explain the big mistake I was making a younger me, so I would avoid the screw up. So my plan was make a podcast and I could simply Leave younger me copies of the podcast to help make sure that they make the right moves in life, since I'm pretty sure that it's going to be a tight window when I do run into them and there's like time, space and everything coming around. So I'm probably not going to have much more time than me just to be able to look at them, hand the podcast and say, no time to explain. And then whoosh, I'm gone. Now, I understand it's going to be confusing that they I'm handing them a podcast, but you know, I'm probably going to transfer it into like a cassette tape or whatever I was using back in 91. So here is the sad story from my past that I'm happy to bring to you as a learning tool for all of us here in the present. I could have purchased a set of renting in my 20s. And here's the kicker. The market wasn't heading up. I don't mean slowing down. I mean it was flat in my 20s. It started to go down immediately after my 21st birthday. The same month that I put a $3,000 security depos down for my Hollywood apartment. Now, if I had Doc Brown to take me back and given 20 year old me the podcast and I'd realized the market was going to drop like right when I moved up to Hollywood, sure, maybe I would stay at home for another year or so and save my money up and then I would have purchased the condo for $150,000. But let's say I didn't have him. You know, let's say I just went ahead and instead of putting three grand down for an apartment on my 21st birthday, that I ended up buying a condo for $150,000. Well, the first thing you're going to.
Say to me is, dude, you were just turning 21. How could you commit to live there forever? I mean, what happens if, you know, that job ended and you got a job someplace else?
This statement has cost more first time homebuyers a lifetime of financial freedom and security than I can fathom. Now, I want to be clear. I am not an investment podcast. I do believe in real estate investing, but I also believe that this podcast mission is to help the underserved. And, and that's you guys, the regular old first time homebuyer. You know, after I interviewed that 19 year old kid from TikTok Cortland, there's even an extra layer on that for many of you. Why even rent at all? Now for most of you, the Answer is I'm waiting for the market to go down, and I'm thinking that that's the smart play. Well, here's my story about not buying in a bad market, not a good market or an okay market like we're in right now, but I'm talking about a bad market. If I had purchased on my 21st birthday, the market was going down, like, immediately after that. It bought, barely got back to break even in this scenario when I would have moved out in 1998. So that means I would have bought, the market would have gone down, stayed down, and then come back up right in these eight years that I'm about to talk about. In that time. Over those eight years, I averaged 1250amonth in rent. I had a roommate some of those times. So I factored that in and I calculated it all up. I paid $104,000 in rent. Now, this is $1991. That's a lot more today. Now, how would that $104,000 in rent compare to if I'd purchased? Well, I did the MA. It would have been about $125,000 in mortgage payments on $150,000 condo. Now, those payments would have reduced the principal, taking it down to $110,000 in remaining mortgage. Now, remember how I said the home went down and went back up? Well, Now I'd spent 125,000, which, yes, it's more than $104,000. But the home that I bought, even though it was the same price as when I purchased it, and that was break even, I would have gotten back my down payment of $30,000 PL thousand dollars, because I'd paid it down to $110,000. So even though I broke even, I actually made $10,000. So now you subtract that from the $125,000 that I spent, and that takes me down to $115,000. So now the difference is I could have owned something that was the same price for $115,000, or I could have rented for 104,000 doll. It.
