Kim Kiyosaki | Should You Buy or Rent Your Own Home?

Should you rent or buy your own home? And why you start so your personal.

Residence, that's, that's, it's not an investment. It's, it's a real personal endeavor. And I can tell you, I've been personally, I was renting for several years recently and I got tired of, the reason I bought a home is because I got tired of the landlords not making the house pretty. I, I wanted, I wanted to do things to it and, and I'm not going to put my money into a rental house because then I leave and all that stays. So I wanted my own place where I could do what I want and, and, and make it my own. So for that reason, it's a, that's a personal reason. You have to go there. But the other reason is, and this is more on the, on the financial side of things, when we, when we look at investments, there's a gap. And I learned this from one of my investing partners and he talked about when the gap between your mortgage payment on your home and renting is great, like it's a lot less to rent than to pay the mortgage, then it makes sense to rent. But when that gap is really small and there's not much difference between what you're going to pay for a mortgage and what you're going to pay for a rent, then maybe you would consider buying a house because then possibly that would give you equity and that value possibly could go up. So on the technical side, that's the argument. On the more pragmatic side of things, what do you think?

Well, I'm glad you brought in some variables. That is the answer is it depends. At the moment in the uk, rents are really high. So why would you spend so much on rent? Now there are so many very big American influencers that are saying, you know, never buy your own home because it's a liability. Now you said it's an investment, it's not an investment. I would argue, and it might be a technicality here, I would argue that it's not an asset technically because it doesn't pay you money, but I would argue that it could be an investment. You raise your children there, you live there. All the repairs and maintenance are going to capitalizable and depreciable. They go into adding the value of the property. So I would argue it's not an asset, but it could be an investment.

Also.

No one seems to say this, and I want to put this on record, everyone says you should rent and not buy, but all rent is dead money. And only some Mortgage is dead money because the rest of it is paying down the house that you could own outright in 15 to 25 years and it could have doubled or more in value or tripled in value. What do you say to that?

I would say one. One thing people say is real estate always goes up. We know that's not true.

It is in the UK. Well, I mean, in 1952 the average house price was less than $5,000 and now it's more than 250,000.

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Pounds and of course, yes, you have that, but yeah, I mean, I don't. It might be different in America, you see, because we don't. We have stricter planning and maybe less land that we can develop on. But I mean, in fact, you go back to 1088, all the landing the UK and the housing on it was about £1 million in 1088. And in London you can't get a garage for now for a million pounds. So I'm going to put it out there and say it will always go up, like money always goes up with inflation.

Of course, I think you also have to take into account the value of your currency. So for example, in the US we've lost well over 50% of our value of our money, probably more than that. So you take that into account and your house, you know, may not be worth as much. But also in the long term, typically, yes, because of inflation and because of the value of the currency, it would go up. But I look at, I look at Rob in 2007, okay, this is right before the big, the big real estate crash here in the U.S. so we're renting, we're renting out apartments and we've got an apartment that's like $800 a month rent. And people weren't qualifying for it. They couldn't qualify for it, but could go down the street and qualify for no down payment. No, no, what's the word I'm looking for? No qualifying. No. No money. No money down. No qualifying. And they walk away with a $130,000 house and a mortgage. And, and we're looking at ourselves going, this is about to come, this is about to come down. This makes no sense. So a lot of people got hurt, but that's a short, and that's also a short term play because we, we don't buy and sell. We, we buy and hold for the long term. So we did, we did great at that time because there was a lot of cheap property out there to buy and Dave Ramsey wouldn't be happy, but we got in a lot of debt.

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Couple of good points there.

I want to this recent budget should warn you that your pension is not safe and secure and they're coming for your inheritance. Do you even know how much is in your pension or where your pension is invested? Add to this the recent inheritance tax grab on your pensions and the risk of a market crash.

You probably didn't know this and I.

Didn'T until recently, but physical gold can be added to your pension pot. Gold is inheritance tax free and has grown 700% in the last 2020 years. You probably know from my content I'm investing heavily in silver and gold and that's why I've partnered with Direct Bullion. Myself and Nigel Farage are brand ambassadors and Direct Bullion can help you with gold to protect and grow your pension. I buy my gold and silver from Direct bullion and I don't earn any money on any purchases of gold or silver if you buy direct from Direct Bullion. So if you go to robmore.directbullion.com you can get a great price on your silver and gold and you can get the Pension Gold Investing Guide completely for free. As you know, I don't do many strategic partnerships and when I do I do them with people who are credible, who've been doing it a long time, who invest in things that I invest into and gold and silver's going wild. I'm investing heavily in gold and silver and I recommend you check out robmore.directbullion.com draw that out. Inflation.

So yeah, of course Silverworm is saying your property might have doubled in here in the UK 10 to 15 years, but you have to adjust that to inflation. But at the same time you have to adjust your living expenses with inflation and your living expenses go up, of which rent is one of them. I still don't understand why I'm the only human alive that is saying that all rent is dead money. It is all rent is dead money. It's not a part of you. Owning a home is paying down the mortgage and owning an asset, well, it will be an asset one day. Oh, and what about the other thing? You know, having a house and equity, a security, you can get loans because in the UK if you haven't don't own your own home, you're not going to get a loan to buy a load more investments if you don't even have your own home. It's securitizable on for other loans. And you know, if you need some emergency money, you might be able to refinance your house.

What about that?

We've done that. We did that many years ago. There was an investment that we came across, a great investment. It was a commercial property and it's still one of our best performing properties today. And so we did take out a second mortgage on our house in order to buy it. But when we did it, we knew what the cash flow was going to be. So we knew that we could that loan was going to make us a lot more money than not taking it out. So we took out the loan, bought the property, the cash flow from the property paid for the loan, plus quite a bit extra. So yeah, that's again, you just got to be smart. You got to know what you're doing, not put yourself in a financial headlock that a lot of people do because they hear, oh, debt's good, so they go get debt. But they haven't really looked at the investment and really studied it and really gone over the numbers. And again, as I said, when I look at numbers, I want to go worst case scenario because if a worst case scenario hits, I want to make sure I'm still okay. When you say all rent is dead D E A D, is that what you're saying? Yeah, yeah. You're just given it, you're just, it goes, goes nowhere.

Yeah, I mean I know people say, well, you need to live somewhere. Yeah, you do, but it's just you're lighting up money and it's disappearing to live. You could live. Why don't you live with your parents for another two years and then buy, or why don't you buy a small room in a multi letter of six instead of renting a whole apartment and then, and then buy, yeah, buy a.

Buy a four, four unit building, live in one, rent out the other three.

There you go. Kim Kiyosaki agrees with Rob Moore.

I think that's one of the best ways, especially for young people today.

Yes.

To get, if once they get that, a little, little bit of a down payment to, to buy like a duplex, a, a three plex, a fourplex building and live in it and rent the rest out. Plus you're going to learn a lot about property management.

That is, that's the key. Because you're right that a lot of people who shouldn't really have been given a loan were given a loan back in, you know, pre 2008. But on the other side of it, the best way to learn how to manage good debt is to start having some good debt. And the best way to learn how to build a real estate portfolio is have a very small one.

Exactly. Okay, so you agree with me now.

Yes.

I always say any investment, start really small, start with a little money because you're going to learn so much. If I put a hundred dollars into an investment, I'm going to watch it, I'm going to pay attention to it because I, it, it's, it's how I learned. It's. I, I said, you know, start small, but you got to get in the game because once you're in the game, that's when the real education starts.

This episode was brought to you by Disruptive Media, helping bold entrepreneurs stand out through podcasting, video and social content. Visit disruptive media.co.uk to learn more.

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This episode was brought to you by Disruptive Media, helping bold entrepreneurs stand out through podcasting video and social content. Visit disruptive media.co.uk to learn more.

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