The Great Debate: Buying vs Renting Your Home

Summary

Podcast Summary: The Stacking Benjamins Show – "The Great Debate: Buying vs Renting Your Home"

Hosts and Guests

• Joe Saul-Sehy: Host of The Stacking Benjamins Show
• OG: Co-host, participating minimally in this episode
• Jesse Kramer: Guest, host of the Extreme Money podcast and Heavy Metal Money
• Chris Luger: Guest, leads the Twin Cities Stacking Benjamins meetup group

Release Date: May 2, 2025
Podcast Network: StackingBenjamins.com | Cumulus Podcast Network
Episode Focus: An in-depth debate on the financial merits and drawbacks of buying versus renting a home, inspired by James Altucher's article "Why I'm Never Going to Own a Home Again."

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Introduction to the Debate [02:22 - 05:00]

Joe Saul-Sehy introduces the episode's central theme: Buying vs. Renting a Home. He highlights the differing perspectives within the financial community, setting the stage for a robust discussion. The episode features Jesse Kramer and Chris Luger, both experienced in personal finance, to weigh in on the debate.

Notable Quote:

Joe Saul-Sehy [02:22]: "Buy versus rent, the age-old topic. You've been there."

Case Against Buying: Financial Drawbacks [05:00 - 14:37]

Chris Luger presents a strong argument against homeownership, emphasizing the underestimated costs and minimal return on investment (ROI).

• Large Down Payments:

  • Chris Luger [09:26]: "I put about 20%... $48,000 down."
  • Utilizing the Rule of 72, he calculates that his $48,000 could have grown to approximately $300,000 over 23 years with an 8% annual return, compared to the minimal appreciation of his home from $240,000 to $450,000, yielding an ROI of merely 0.05%.

• Closing Costs and Additional Expenses:

  • Joe Saul-Sehy [10:47]: "What am I talking about? 150 be 150."
  • Jesse Kramer [11:43]: Highlights that both buying and renting have significant opportunity costs.
  • Chris Luger [10:32]: Details maintenance expenses totaling around $35,000 over 23 years, including new appliances and carpet.

• Maintenance Responsibilities:

  • Chris Luger [23:06]: "I had to get new carpet, new appliances... $35,000 in maintenance costs."
  • Contrasts with renting, where maintenance issues are typically handled by landlords, saving renters both time and money.

• Tax Implications:

  • Joe Saul-Sehy [29:07]: Points out the responsibilities of property taxes and the risks of losing ownership through tax defaults.

Notable Quote:

Chris Luger [09:26]: "I actually did the numbers on my own house... my annual rate of return was like 0.05%."

Challenges in the Buying Process [14:37 - 28:27]

The discussion delves into the complexities and hidden costs associated with purchasing a home.

• Unexpected Closing Costs:

  • Joe Saul-Sehy [15:38]: "Nobody thinks about this."
  • Jesse Kramer [15:42]: Explains the frustration of high closing costs relative to the work done, such as $16,000 for a $1 million house.

• Professional Fees and Negotiations:

  • Chris Luger [17:15]: Advocates for the value of professional services despite high fees, emphasizing time savings and expert negotiations.
  • Jesse Kramer [20:32]: Shares a stressful experience where last-minute paperwork almost derailed a home closing, highlighting inefficiencies in the system.

• Operational Inefficiencies:

  • Joe Saul-Sehy [21:26] and Sherman [21:32]: Discuss the challenges of handling large transactions, such as wiring $680,000 promptly and securely.

Notable Quote:

Joe Saul-Sehy [15:38]: "You're paying for saving time, but the same people that get super analytical about management fees are like, no, but I love real estate."

Case for Buying: Intrinsic and Long-Term Benefits [43:14 - 59:17]

While the initial discussion heavily leans against buying, the second half presents compelling arguments in favor of homeownership.

• Emotional and Community Value:

  • Jesse Kramer [45:07]: Emphasizes the intrinsic value of owning a home, such as stability for raising a family and creating a sense of belonging in a community.

• Long-Term Equity Growth:

  • Sherman [50:27]: Notes that the longer one stays in a home, the more financial sense ownership can make due to property value appreciation over time.
  • Joe Saul-Sehy [50:40]: Affirms that long-term ownership reduces the financial viability of renting.

• Customization and Control:

  • Chris Luger [53:15]: Highlights the freedom homeowners have to modify their property without landlord restrictions, adding personal and potentially financial value.

• Forced Savings Mechanism:

  • Joe Saul-Sehy [53:15]: Points out that homeownership can act as a forced savings plan, especially for those who struggle with traditional investment vehicles like 401(k)s.

Notable Quote:

Jesse Kramer [45:07]: "Raising your family in one place... gives your family a sense of home that has a really nice intrinsic value."

Market Efficiency and Behavioral Considerations [55:48 - 58:27]

The panel discusses the efficiency of the housing market and how individual behaviors impact the buying vs. renting decision.

• Market Efficiency:

  • Jesse Kramer [55:48]: Suggests that the housing market is efficient in balancing buying and renting through supply and demand dynamics, ensuring fair pricing and availability.

• Behavioral Finance:

  • Joe Saul-Sehy [57:48]: Argues that homeowners might make financially suboptimal decisions due to emotional attachment, whereas renters are less likely to misuse funds tied up in property.

Notable Quote:

Jesse Kramer [55:48]: "It's like the market's efficient in finding the right price."

Conclusion and Takeaways [59:05 - 64:20]

The hosts and guests wrap up the debate by acknowledging that both buying and renting have their unique advantages and challenges. The decision ultimately hinges on individual financial situations, long-term goals, and personal preferences.

Key Takeaways:

• Buying a Home:

  • Potential for long-term equity growth
  • Emotional and community benefits
  • Freedom to customize and control one’s living space
  • Serves as a forced savings mechanism

• Renting a Home:

  • Lower upfront costs and fewer maintenance responsibilities
  • Greater financial flexibility and liquidity
  • Avoidance of property-specific financial risks and taxes

Notable Quote:

Joe Saul-Sehy [58:27]: "What you do with the money, what you do with the decision that you made... It's the opportunity cost."

Additional Elements

• Trivia Challenge: The episode includes a light-hearted trivia game where participants guess Yoda's age, adding a humorous interlude to the financial discussion.

  Notable Interaction:

  Sherman [36:32]: Guesses Yoda's age as 965 years old.

  Jesse Kramer [36:49]: Attempts to calculate based on hearsay, landing between 850 and 900 years old.

• Humorous Banter: Throughout the episode, the hosts engage in playful conversations and jokes, maintaining the show’s signature light and friendly tone.

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Final Thoughts

"The Great Debate: Buying vs Renting Your Home" offers listeners a balanced exploration of the financial and personal implications of both homeownership and renting. By presenting real-life experiences, financial calculations, and personal anecdotes, the episode equips listeners with the insights needed to make informed housing decisions tailored to their unique circumstances.

Recommended for:
Individuals contemplating the financial viability of buying versus renting a home, financial enthusiasts seeking diverse perspectives, and listeners interested in nuanced discussions on personal finance topics.

Connect with the Hosts and Guests:

• Joe Saul-Sehy: StackingBenjamins.com
• Jesse Kramer: Extreme Money Podcast | Heavy Metal Money
• Chris Luger: Extreme Personal Finance Show | Twin Cities Stacking Benjamins Meetup

Listen and Subscribe: Available on Cumulus Podcast Network and all major podcast platforms.

Transcript

[Joe Saul-Sehy]

This message is brought to you by Navy Federal Credit Union. May is Military Appreciation Month and we're celebrating the military community that goes above and beyond every day along with Navy Federal Credit Union. For over 90 years, Navy Federal's mission has been to support and uplift all active duty veterans and members of military families. And this May is no different. It's a special time to recognize the profound contributions they make. Learn more@navy federal.org Navy Federal Credit Union Our members are the mission Navy Federal is insured by NCUA Small Business Owners State Farms there with small business insurance to fit your specific needs. Whether you're starting a new venture or growing an existing one, State Farm helps you choose the right coverage to protect what matters most. Working with a local State Farm agent helps you understand your coverage options, offering local support to help you achieve your goals. Focused on turning your passion into a thriving business. Knowing your insurance can change as your business grows. Stay Farm here to help you succeed with your business like a good neighbor, State Farm is there.

[Doug]

Hello there, Peabody here. And this is the Wayback Machine.

[Sherman]

We're traveling through time.

[Joe Saul-Sehy]

And this is my boy, Sherman.

[Doug]

Speak, Sherman.

[Sherman]

Hello.

[Doug]

Good boy. Live from the basement of the YouTube headquarters, the stacking Benjamin Show. I'm Joe's mom's neighbor, Doug, and here's a question. Buy or rent one Finfluencer Oh God, I just threw up in my mouth a bit saying that word. Said he will never own a house again. What's he thinking? We'll debate it with our crack team of financial podcasters and bloggers and also the three people on this episode. But that's not all, of course. We'll pause halfway through to see who's going to win today's edition of my year long trivia challenge. And now a guy who loves 0 down but even more loves 02 later, it's Joe Saul Sey.

[Joe Saul-Sehy]

Hey there stackers. Happy Friday to you. Welcome back to the Stacking Benjamin Show. Sit back and relax because we're about to have a good time talking about buying versus renting a house. So if you know somebody who thinks that buying a house is a horrible idea, you should never buy a house, or if you have somebody that says renting is throwing money away, we're going to take both of those sides today. But let's introduce you to the merry band of characters that we have with us. First of all, across the card table from me right now, Mr. OG is barely here, but he's here. He made it. Glad you could join us.

[Sherman]

I'm emotionally here does that matter?

[Joe Saul-Sehy]

Emotionally invested in this topic, right?

[Sherman]

Indeed.

[Joe Saul-Sehy]

Buy versus rent, the age old, age old topic. You've been there. And a guy who. Let's see if he's done it both ways as well. Jesse Kramer's here. Jesse, have you done it both ways?

[Jesse Kramer]

Have I bought and rented? Yes, I have bought and I have rented.

[Joe Saul-Sehy]

So you have experience galore when it comes to both of those topics, including.

[Jesse Kramer]

In some recent markets, by the way, which is a little bit crazy. Crazy. Sorry, Joe, keep going.

[Joe Saul-Sehy]

Well, wait a minute. Buying in a recent market or renting in a recent market.

[Jesse Kramer]

Sorry, Buying. Buying and selling in recent markets. It's a wild world out there.

[Joe Saul-Sehy]

Like buying when you should have sold and sold when you should have bought.

[Jesse Kramer]

Tbd.

[Joe Saul-Sehy]

Oh, foreshadowing. I love that part of the show. And let's. We don't need any foreshadowing for this guest. He is the man behind the Extreme Money podcast and Heavy Metal Money, and the guy who we could just do ands all day with this dude because he also leads the Twin Cities co. Leads, I guess, the Twin Cities stack of Benjamin's meetup group. Chris Luger is here. How are you, man?

[Chris Luger]

Hey, I'm doing well. Thanks for having me, Joe.

[Joe Saul-Sehy]

Yeah. So let's talk about, first of all about the Extreme Money show, which is, as if you couldn't tell by my voice, is written in all heavy metal font because you have to tell everybody about what you do.

[Chris Luger]

Yeah, it's the Extreme personal Finance show, man. We talk about saving, investing, earning, spending. All turned up to 11.

[Joe Saul-Sehy]

See, Jesse likes that too, because just like, I got the name of his show wrong when he was on. Yeah, I've known Chris forever and I managed to mess up the name of your show.

[Chris Luger]

It's all good, man.

[Joe Saul-Sehy]

See, Jesse, equal opportunity.

[Jesse Kramer]

Can I tell a story, Joe, of my recent listener who reached out to me, please? I had a listener reach out to me from New Zealand, wanted to connect via Zoom. Just have a quick chat. We had a really nice chat. And he's like, you know what, Jesse? I do like your new name change, but I also really liked it when it was the better interest, which for.

[Joe Saul-Sehy]

People following along at home, it never was.

[Jesse Kramer]

It never was the better interest. It's just what Joe called it for like six months. So the fact that Joe's mistakes are now infiltrating their way out into the real world and making my life harder. Thank you very much, Joe.

[Joe Saul-Sehy]

And what did I tell you, Jesse? It's what the show should be called until you decided that now I'm going to try to get this new name right, but instead of having it be the Personal Finance Podcast for Long Term Investors.

[Jesse Kramer]

Almost. Almost.

[Joe Saul-Sehy]

Personal Finance for Long Term Investors podcast.

[Sherman]

That's it.

[Joe Saul-Sehy]

There we go. See, I'm messing up everything. Let's see if I can mess up the next spot, which is. Oh, Chris, we didn't ask. Have you also done it both ways?

[Chris Luger]

No.

[Joe Saul-Sehy]

You know what?

[Chris Luger]

I have never rented.

[Joe Saul-Sehy]

Never rented.

[Chris Luger]

Never. Because like you mentioned, growing up renting was throwing away money. Everyone in my family told me so. So I bought my first house at age 20 when I moved out of my dad's place.

[Joe Saul-Sehy]

Wow. Age 20. All right, well, we've got Chris here, we've got Jesse here, we got Og here, we got Doug and I. We're going to hear first from a couple sponsors who make sure this goodness is all free. You don't pay a dime for it. And then we're going to talk buying versus renting. We're going to talk out of both sides of our mouth. Talk both sides of this argument. This message is brought to you by Navy Federal Credit Union. May is Military Appreciation Month and we're celebrating the military community that goes above and beyond every day with Navy Federal Credit Union. Navy Federal was created for the military community. It is dedicated to ensuring that its members feel celebrated and honored every single day. For over 90 years, Navy Federal's mission has been to support and uplift the military community. And this May is no different. It's not just a credit union. It's also a partner dedicated to helping its members achieve their financial goals. All active duty veterans and members of the military families are eligible to join. Navy Federal is excited to celebrate Military Appreciation Month as a special time to recognize our troops and the profound contributions that they make. Learn more@navy federal.org Celebrate Navy Federal Credit Union. Our members are the mission. Navy Federal is insured by NCUA Small Business Owners. State Farms there with small business insurance to fit your specific needs. Whether you're starting a new venture or growing an existing one, State Farm helps you choose the right coverage to protect what matters most. Working with a local State Farm agent helps you understand your coverage options. Offering local support to help you achieve your goals. Focused on turning your passion into a thriving business. Knowing your insurance can change as your business grows. Stay Farm here to help you succeed with your business. Like a good neighbor. State Farm is there. You know, in this community, I think most people think, Chris, what you said is not true. So I want to start with the case for Renting all the time. Let's start with the obvious one. In this community, by the way, if you're brand new to this, people who are finance nerds, they think buying a new car is a trap. They think that owning a home can be a money trap. So generally think a lot of things that society in general that you won't hear elsewhere. But then the second half, I'm going to want you to argue the other side. Let's argue where renting is throwing money away. The piece that was the inspiration for this, by the way, comes from James Aler. James writes this piece called why I'm Never Going to Own a Home Again. So we're going to use his point to kind of walk us through this. You don't need the piece in front of you stackers, but if you want it, just go to stacking benjamin.com today's show notes and click on the link because we'll have it there for you. James writes, many people have said to me in the past month, I'm going to buy a home. Or what do you think of the idea of me buying a home? I like the second batch of people. They're my friends and it seems like they are sincerely asking for my advice and I'm going to give it to them whether they meant it or not. And he's talking about, I'm going to tell you not to buy a home. So the first one, the first one, and let's start with you, Chris. First one he says, is your cash is gone. You got to write a big fat check for a down payment. But it's an investment. You write say to me, he says, it's not an investment. You're out just a bunch of cash for that downstroke. What do you think of that?

[Chris Luger]

Yeah, I used to say that all the time. You say it was an investment. It is not. It is not with maintenance, with not only maintenance, but the taxes, the insurance, all of the stuff that you're going to be paying. I actually did the numbers on my own house, believe it or not. So I've been in this house for 23 years, and the amount I paid for it was about 240 back then. It's now worth about 450. And if you look at all the money I've paid for, you know, after 20 years, I had to get new carpet, new appliances, that type of thing. You added up my. My annual rate of return was like 0.05%.

[Joe Saul-Sehy]

Wow.

[Chris Luger]

I mean, it's, it's pretty bad. So I don't Think of it as an investment. It is not. And I.

[Joe Saul-Sehy]

Hold on. Let's talk about. Let's talk about just this piece, which is the cash being gone. How much cash did you put toward that down payment?

[Chris Luger]

I put about 20%.

[Joe Saul-Sehy]

Okay, so what'd you say it was? 220?

[Chris Luger]

240.

[Joe Saul-Sehy]

240. So you put roughly $48,000 down.

[Chris Luger]

I did. Because I sold the previous house and I sold a bunch of stock. Correct.

[Joe Saul-Sehy]

So if we use this thing called the Rule 72, which is, you know, you take the interest rate you think you're going to get, you divide into 72. It's this mathematical magical equation tells you how long it's going to take your money to double. Let's say that you would have gotten 8% on your money. Is that fair?

[Chris Luger]

I think that's fair, yeah.

[Joe Saul-Sehy]

So 8%. So every nine years it would have doubled. So $48,000 down. You bought it at what age?

[Chris Luger]

Gosh, what was I. I don't know.

[Joe Saul-Sehy]

How many years ago?

[Chris Luger]

2002? Yeah. 23 years ago. Correct.

[Joe Saul-Sehy]

Okay, so 23 years ago. So every nine years it would have doubled. Yeah, so it would have doubled two and a half times. Roughly. Meaning.

[Chris Luger]

You're making me sick to my stomach, Joe.

[Joe Saul-Sehy]

48, 000 becomes 96, 000. I gotta round this to a hundred thousand just so I can do this live. But 50 becomes a hundred half of another double. 125, 000 bucks you would have had versus that money just. Just sitting there.

[Chris Luger]

Jesse's saying more than that.

[Joe Saul-Sehy]

What am I talking about? 150 be 150.

[Jesse Kramer]

Well, I think you. I think you forgot a double, didn't you? It doubles from 48 to 100. That's the first doubling. And then it would have doubled again from 100 to 201.

[Joe Saul-Sehy]

You're right.

[Jesse Kramer]

To 250.

[Joe Saul-Sehy]

To 100. Sorry.

[Jesse Kramer]

100 and you get half your double. Yeah.

[Joe Saul-Sehy]

That's $300,000. Thank you. Our math whiz, Jesse Kramer is here, everybody. Weird that I was a financial planner. Thank you.

[Chris Luger]

I think also think of all the other expenses you've also paid, right? So insurance. Think of the insurance. 2,500 bucks a year over that many years is like.

[Joe Saul-Sehy]

Hold on, we're going to read through his list. You're covering all of them. Luger.

[Chris Luger]

Sorry?

[Joe Saul-Sehy]

Luger's taken that. Luger, that gun. And he's using every bullet right here at the beginning, Jesse, the cash, gone. Does that factor into your decision making?

[Jesse Kramer]

Did it factor in it didn't really factor into my personal decision making. I mean, the way I view it, both of them, if we want to look strictly at the financials, I mean, they're both losing propositions. I think you can be charitable, and it's something I did yesterday in preparation for this talk. If you want to make some charitable assumptions, you could say that buying a house is going to come out, like you're probably going to lose something like 1 or 2% a year on it. Like, if you do some sort of IRR math, I think renting has got to be worse because I'm not sure what the redeeming quality of renting is as far as getting money back. I mean, if you want to do what you just did there, Joe, and you want to look at opportunity costs, I mean, they both have these massive opportunity costs. But the thing is, you know, right, Chris could have $300,000 more today if he hadn't bought that house in 2002. But you can't live inside of a portfolio, as far as I know, Right. You have to have some sort of a roof over your head. But maybe the dangerous part is where some people, they only look at some of the numbers involved and they convince themselves that buying a home actually is a net positive investment, that it is going to grow over time and they're going to be able to pull more out of it than they put in. I think it's kind of hard if you really look at all the numbers involved, I think it's hard to come to that conclusion.

[Joe Saul-Sehy]

Well, and is that, oh, gee, is that kind of a false comparison altogether is doing when he takes a look at this downstroke and comparing it to an investment, or is it. Is that accurate?

[Sherman]

Well, I think the thing that we're missing here is you're looking at it in a vacuum, obviously. And I think that's what Jesse's saying is like, at the end of the day, it's not. You can't just look at one component of this. There's multiple layers of it. But you're assuming, hey, if I would have kept my 40,000, in our case, our down payment was 100k 10 years ago. And so you could do the same calculation and say, well, you'd have 200 grand today. But my balance sheet didn't change When I put $100,000 into my house versus $100,000 in cash, I moved it from one line item on my balance sheet to another line item on my balance sheet on even the same side of the balance sheet. It was a cash asset and then it became a real estate asset. And so the question is, is what happens to that cash or what happens to that real estate versus the other thing it was in. Now obviously you could have said, well, you might have invested that hundred K and in 10 years that money would have doubled. You'd have 200,000.

[Joe Saul-Sehy]

Yeah, like we talked about with Chris's house.

[Sherman]

Yeah, but what happened to the value of the house? The house that we bought has doubled in value. It's also done that rule of 72. Now we live in a different community than some places and maybe that's just a short period of time, but I don't look at that a hundred thousand as wasted. It would just, I, I didn't consume it, you know, I didn't spend it on Amazon. It just moved on the balance sheet to asset of real estate and it's grown there. What's the difference?

[Joe Saul-Sehy]

That is true, Chris. I mean, your money in the house did double once during that period. So it did, it did make some money.

[Chris Luger]

Yeah, I think now that I'm older and maybe wiser, I, I do think of the opportunity cost growing it faster.

[Joe Saul-Sehy]

Yeah. Well, number two, speaking of cost, closing costs, right. Nobody og thinks about this. I mean, the same people that get super analytical about the management fee on a mutual fund or the 1% fee the advisor charges are like, no, but I love real estate.

[Sherman]

I'll pay the 6% commission all day long and, and 5% closing costs. But advisors are the real crooks. Yeah, I mean, this is a cost to do in business. And I think there's a couple of things here. First of all, from a value standpoint, I think that if you have a good, just like anything, you know, it's, it's not a cost, it's an investment. When you have professionals on your team. And if you're getting a good value for the check that you're writing for that professional, you'd pay it over and over and over again. If every time you put $10 in a slot machine you got 11, you would just think about, how fast can I put $10 in? You wouldn't say, well, that's ridiculous that it's $10. I'm only getting a dollar. That's ridiculous. It's like, no, I mean, you're getting something. So if you've got a great relationship and you can lean on that relationship and that person frees you time, frees you money, or frees you from making mistakes that you might have made on your own and only you can be the judge of that, by the way.

[Joe Saul-Sehy]

Right.

[Sherman]

You can't say, well, I might have made that mistake or I prevented you from potentially making that mistake. Can't prove a negative. But if you think that you're getting good value for that, then you pay what you pay. But it's a cost, it's definitely a line item. And the same thing with the banking fees associated with the purchase. The banks are going to make money, the title companies are going to make money, the insurance companies are going to make money on that, and I'm probably getting ahead of the game. But then there's all the other stuff that goes into purchasing a house too, like inspections and your time and all the stuff that kind of wraps around that one line item that you see. My closing costs are $14,000 for this mortgage.

[Chris Luger]

Oh, gee, I got a question for you. Or actually just a point. So you mentioned the closing costs and the professionals I absolutely agree with. Not only are you paying for saving time, but their expertise and how well they can do the negotiation on your behalf. I mean, I'll pay for that every time.

[Sherman]

Yeah, that's all part of that, I think some of. Again, when you just see the dollar amount, it gets a little frustrating, right? Because you see, hey, I bought a million dollar house and I got an $800,000 mortgage and my closing costs are, you know, $16,000. And you just go, 16? What are you talking, $16,000.

[Joe Saul-Sehy]

What? What? For what?

[Sherman]

And then, you know, title insurance is what title insurance costs. And you know, there's stuff in there that's negotiable, obviously. And if you've got a good relationship, hopefully that person will go to bat for you and help negotiate those things down. But remember, these people make money too. There's layers of costs in transactions because of the fact that the person who's sitting at the desk pouring through your box of financial documents needs to eat. They've got to put food on the table too. And the bank's got to pay them. And this is how they do it.

[Joe Saul-Sehy]

You know what's interesting, Chris, is that, you know, the negotiation piece is the part that I have the biggest problem with just because I really, I like thinking about how people are paid. Like people talk about commission based financial planners are going to want you to buy this fund because they get a commission, right? They're going to want you to buy this annuity. And we just got to remember, and again, a lot of times we make commission based people the devil when I know a bunch of people that work on commission, who are phenomenal people and are great at what they do and they do the right thing. But we still got to remember how they get paid. If you're buying a house, your real estate professionals being paid a percentage of the final price. And so having them negotiate on my behalf and they don't get paid until the deal's done. Like, there have been some real estate professionals I've dealt with that I could clearly feel was just like, yeah, no, no, no, we gotta, we got to wrap this thing up. And I realized with one professional in particular, I'm thinking of, like, I felt like there was a car payment looming that they need, they needed to make and it didn't have anything to do with me. Exactly. Even better. You know, it's funny, Jesse, when it comes to closing costs, James Altucher writes lawyers, title insurance, moving costs, antidepressant medication. When he looks at that number, Og talks about, like, would you remember buying your first house and seeing the closing document and how much this was going to be?

[Jesse Kramer]

Yeah, I do. It was 2017 when I bought my first little starter home on the western suburbs of Rochester. And it is always a little disappointing because I think something I've learned about the real estate industry is that they really do churn, meaning, like the attorneys who specialize in real estate closings, the agents, the bankers, the mortgage lenders, like, it's kind of all they do. And they're really efficient at, you know, here are the documents you need to sign. Here's the way this works, here's the way that works. And when you see how efficient and quick they are, and then to think that, man, again, going back to OG's example, like, for a million dollar house, they just slap on a percentage. It's, you know, it's 2%, it's 3%, it's whatever the closing costs are. And you're like, it was $30,000 for how much work? Like 10 hours of work or whatever it may be. Like, that's where it is a tough pill to swallow.

[Joe Saul-Sehy]

I feel like they should be better, Jesse, at telling me what documents I need before 10 minutes before the meeting. I feel like every single property I.

[Sherman]

Buy, we just had a client that was buying a property and, you know, obviously really stressed, big deal. And I said, listen, we need the information 72 hours. Your title agency will give it to you. Six hours. We cannot fund it in six. Like, it's just not possible for us to get all the transaction stuff done on our side to verify it, to make sure it's Secure. It's just not possible. When you drop it in our lap at 4 o'clock in the afternoon to get you the money by 7:00am I'm telling you, it's not possible. That's what they're going to do. So tell them, don't do that to me. Josh said he can't help. And sure enough, he called on Tuesday and went, all right, hey, we're ready to close. Here's the number. They said it's going to be about 680,000. I'm like, oh, so we just send an about number via wire? Like, what are you talking about?

[Joe Saul-Sehy]

How do we do.

[Sherman]

How do we send about ish. Ish, Give or take, you know? Ah, you're good.

[Chris Luger]

Well, you can use that little tilde button on the keyboard.

[Sherman]

It's like, yeah, just about ish. Round up. Schwab accepts that we sent you 700 ish just to round up. You guys are going to send us money back, right? You know, he was frustrated, obviously, and to your point, Joe, it's like, surely you could figure this out. I don't know. Call me crazy two days in advance.

[Joe Saul-Sehy]

Yeah.

[Sherman]

This is the largest single transaction that anybody usually makes in their entire lifetime. And I'm not throwing a bunch of shade here. I'm just saying it feels like they're used to such big numbers all the time that it's like, oh, yeah, it's a 681, 722 decimal, 41. Just wire that. Just whenever you can. Just get. You're like, I'm wiring three quarters of a million dollars. I'm going to take my time and make sure I don't move the wrong decimal point or send it to the wrong place. So give me a second of breath here.

[Joe Saul-Sehy]

That poor woman we had on the show Shannon, who accidentally sent it to.

[Sherman]

A hacker and sent the wire money to the wrong place.

[Joe Saul-Sehy]

$40,000.

[Sherman]

Bye.

[Joe Saul-Sehy]

Yeah, it amazes me because I'll ask them OG point blank. I know there's going to be stuff you're going to need to last it. No, we're good. No, we're good. And then 24 hours before we are not good. And I'm the one holding up closing if I don't get them the stuff. Like, right now.

[Sherman]

Yeah, the lone guy said he needs your most recent pay stub. You're like, really?

[Joe Saul-Sehy]

You didn't know that? Like a month ago.

[Sherman]

Didn't know that Four days ago. You just. Today's the day you decided you needed it.

[Joe Saul-Sehy]

Okay, Chris, when you did your calculations the third thing on James list is maintenance. So let's go there next. It sounds like this is what dragged down your ROI when you were looking at how well you did with your money by owning this house.

[Chris Luger]

Yeah, I estimated over the 23 years, I probably just repairs and maintenance, it probably was around 35 grand. Just because after 20 years, I got new appliances. I had a couple times I had to repair, like my washing machine. Then also after 20 years, I got all new carpet throughout the entire house. I mean, that was like 13 grand just for that. And then Covid, I did a bunch of stuff, you know, because I was trapped in my house, because that's what everybody did. I know. So I, like you said 17 trips a day to Home Depot. Like, I did a lot of that. So you add all that up, you know, it. It definitely starts eating in. Where again, if you were renting, something breaks, you just make a call, they come out, they repair it, they replace it, they fix it where it's. My water heater goes out, I need to get a new water heater.

[Joe Saul-Sehy]

I feel like besides having all this money for the downstroke that I don't need, I get to keep that and I get to deploy it elsewhere. Jesse, I really feel like this is the place where renting might win biggest, because when everything, anything goes wrong. When you were renting, I bet you just made one phone call and said, hey, landlord, send somebody over because the dishwasher is broken.

[Jesse Kramer]

I mean, that's fair. But I'm going to, I'm going to throw a little of wrench in the system here, because if renting truly was this miracle where you are, you are benefiting from renting, right? Like you're gaining money from renting. It's net positive for you as the renter. Clearly we would have a bunch of really poor failing landlords out there who weren't making a dime. You know, landlord. Being a landlord might as well be a charity, Right? Because you're just giving your money away to the renter. Well, okay, yeah, I'm being facetious here. Being a landlord, I mean, someone's being pretty successful at being a landlord. Hence all the rental properties we see out there in the world. And as far as I can tell, unless there's someone else involved, it's a zero sum game. And every dollar that the landlord profits would be a dollar that the renter is not benefiting from. Okay. My point is, yeah, I'm sure the maintenance, specifically, it is better being a renter than being a homeowner. Like from my experience, no doubt about it. But still, I just go back to this idea that. Go ahead.

[Joe Saul-Sehy]

Well, just like one of the biggest mouse in social media, Grant Cardone drives a hard wedge in the middle of what you're saying there, Jesse. He's like owning a property that you live in is a waste of money. Renting to somebody else is a phenomenal use of money. He's got these, those as two totally different realms. In fact, I think Cardone and his family even rent a place while they looking at some of these high end things that they show on social media. He even rents. So I mean he's, he's talking specifically about a house that you live in, Jesse.

[Jesse Kramer]

Yeah, I mean, I guess show me the math, right? What's, what's the phrase? I can't think.

[Joe Saul-Sehy]

Show me the money.

[Jesse Kramer]

Yeah, you know, there's some phrase out there about like in God we trust, but all else bring data. I think that's what it is. So bring the data, show me the numbers. Grant Cardone, that shows it. Because I'm just trying to wrap my head around it. It just, on its face, it doesn't make sense. It doesn't make sense. If Grant Cardone was living in the same exact place he's living in now, but he was owning it, he would be making a worse financial decision than if someone else is owning it. Well, that means that someone else therefore is losing in their current setup and in a capitalist society. That doesn't make sense. That landlords would consistently and constantly be losing because no one would do it then. It just doesn't make sense.

[Sherman]

Well, I think, Jesse, the difference is that being a landlord is profitable. Being an owner of your own house is not profitable. You're not the opposite of a landlord.

[Doug]

Well, there's no income.

[Sherman]

Yeah, you're missing the income part of it.

[Jesse Kramer]

How can a landlord be profitable though, unless the tenant is unprofitable?

[Chris Luger]

I don't think one has to win, the other has to lose.

[Jesse Kramer]

How is that possible in a zero sum game?

[Joe Saul-Sehy]

Jesse, I see what you're saying. Here's, here's a differentiator for me. I talked about on Monday show about how we just started this construction project. This construction project. Everybody that knows what the construction project is, know that this is financially stupid. This is absolutely stupid. If I was, if I own this as a property to rent out to somebody else, I would not do this because the ROI is horrible. But I'm not moving again and I'm not doing it for a profit motive. I'm doing it, because I work from home, I live in this house. I want to be in this badass space that we're building out behind our house. But when you look at what it's going to cost, I think it's because homeowners do things that are not great with the property when it comes to resale value. Or, or they make emotional decisions, not ROI based decisions. I think that's where homeowners lose the zero sum game. But to your point, it's not because renting is a miracle. Like, it's fantastic.

[Jesse Kramer]

Well, yeah, I mean, I guess just to expand on your example there, Joe, you're right. So if I'm a homeowner, I get to choose to do things in my house that might be dumb financially. Right? You're absolutely right.

[Joe Saul-Sehy]

That's coming in the second half of this because I do think that's an upside of owning.

[Jesse Kramer]

But if I'm a tenant, what you're saying there is, well, I don't get to choose if I do the dumb thing with my money. My landlord gets to choose if they're going to do the dumb thing with their money. And my argument is, well, if there's something that you want that's really nice to be done to your rental that you're renting out as a tenant, and you go to your landlord and you're like, hey, can you please put a marble fountain in my kitchen? It's what I've always wanted. That landlord is going to say no. Like, my point is the landlord is not going to do stupid things with their money so that you as the tenant benefit and that they, as a landlord, lose out on that.

[Joe Saul-Sehy]

But does that make it better off for you then too, as the tenant because you didn't do something stupid with that money?

[Jesse Kramer]

Well, what it means is that you're.

[Joe Saul-Sehy]

Not, you're not efficient use of money.

[Jesse Kramer]

Right. You're not getting capital improvements to your living space that you want. That. That's what it means, I think.

[Joe Saul-Sehy]

Well, next on this list is taxes. You don't have to pay any of the property taxes, the holding taxes. You've said this before, og, you don't really own your house, even when you pay off the mortgage.

[Sherman]

Yeah.

[Joe Saul-Sehy]

Miss a few tax payments, we'll see who actually owns that property.

[Sherman]

Yeah. In different municipalities have different rules for, you know, senior citizens and that sort of thing.

[Joe Saul-Sehy]

Squatting after you don't pay the property tax.

[Sherman]

Also, that. Yeah, I don't, I don't know that that gets a little too political. You, you, you squat in A rental and it takes you five years to get kicked out, but you don't pay your property taxes and they'll be there on Tuesday. But no, I mean, you have property taxes and you have insurance that you, I mean, you. So you don't have to have insurance if you don't own any money on the house. But there's an ongoing cash flow responsibility. I think that one of the big misses that people have in that calculation of buying versus renting is they just purely look at the rent expense versus the mortgage or maybe they look at the rent expense versus the mortgage and taxes and insurance and they go, oh, well, this is dumb. My rent payment's 2,000amonth. My mortgage payment would be 1950. This is a great deal. Like I'm gaining equity on this. Forgetting the fact that insurance goes up every year, property taxes go up every year. And to kind of put a footnote on the maintenance costs, I think that the average maintenance cost if you're keeping up with your home is roughly 1% of the house value. I think every year, if your house is worth 500k, I bet that you're putting 5 grand a year on average into that place just to, you know, keep it up the way that you need to keep it up. Whether it's like a big expense like Chris is talking about. Like, hey, every so often we put new carpet in because that's what we, you know, wore out and the kids are gone. And now I want to have some better utility or if it's required maintenance like AC repair or, you know, water line breaks or something like that. But I bet if you added it up, you know, Chris, you were saying 35k over the, you know, you're not counting stain for the fence or like you said, the one off trip to Home Depot where you had to get a wrench to fix the, you know, whatever.

[Joe Saul-Sehy]

It's thing for the stuff.

[Sherman]

It's the things with all the stuff. It's. There's our refrigerator just started making a weird noise. Like we can't even figure out what the noise is for. When you get water out of the, out of the water thing, it just goes.

[Joe Saul-Sehy]

This is an ongoing multi year saga.

[Doug]

This is the appliance we hear about more than any other thing in OG's house.

[Sherman]

What are you talking about?

[Doug]

Refrigerator.

[Sherman]

Refrigerator is fine. I think you're confusing me with somebody else.

[Joe Saul-Sehy]

No, you had this problem, What, a year, 18 months ago?

[Sherman]

Maybe we've never had this problem.

[Doug]

There was the, should we just buy a new condenser or Buy a new refrigerator.

[Joe Saul-Sehy]

Anyway, let's get to the last two on this list because I really want to argue the other side where I. Because I feel like Jesse's already kind of headed in that direction. Number E. What is he? ABCD number five, I guess that would be. James writes, you're trapped, which means that if you decide to move. I had this happen. I became a landlord inadvertently because we were moving to Texarkana and the market in Detroit got so bad I was trapped in that house like I wasn't going to be able to get rid of that house. So you are trapped when you own the property. And then the last one on his list is, he says, ugly. All of the ugliest types of investments. It's a liquid, it's high leverage, there's no diversification. And well, those are the three big ones as I scroll up. And no diversification. Could need to be a little bit more definitive. I think we all grasp those. It'll be interesting to see the other side of this though. Let's do the positive side for owning a house here in a second. Why you should own a house. We're going to do that in just a moment. But at the halfway point of every Friday show we have this phenomenal year long competition between our three frequent contributors. Chris Luger, you're going to be playing for team Paula Pant today, which is amazing because Paul is on a two game win streak which by the way corresponds with the fact, Doug, that the pol has not been here the last two weeks. She seems to be winning by. By not being here. So no pressure, Chris, but. But she seems to be winning with her surrogates like you. But do you want the good news or the bad news about how this is going to go?

[Chris Luger]

I always take the bad news first.

[Joe Saul-Sehy]

Well, the bad news is, is that you are still type for last. Right, Doug?

[Doug]

Yes. Of the people in second place, you're.

[Joe Saul-Sehy]

The closest to third place because you were third place. What is the score, Doug?

[Doug]

The score, Joe, is Paula most recently achieving a tie at three and a half points. That would just happen last week. Jesse also has three and a half points. By the way. The half point for those of you who were not with us maybe a month ago was somehow negotiated by Jesse and Paula who wanted to split a point.

[Chris Luger]

Wow.

[Doug]

So somehow they. Yeah, I.

[Joe Saul-Sehy]

And they wanted to trade it for a player to be named later, which we didn't allow to happen.

[Jesse Kramer]

I don't like real estate agents can split a commission but we can't split a point. What's this?

[Doug]

The most I would grant them was a half point each. So Jesse and Paul are now tied for last place at three and a half points. Just one and a half points behind OG who has five points.

[Joe Saul-Sehy]

One of these two people, though, Doug, is going to get within half a point if they stop OG from becoming a freight train again like he was at the beginning of the year. So, Chris, those are the stakes.

[Sherman]

I was told to make it competitive.

[Joe Saul-Sehy]

You got to throw a couple games. The Chicago Black Sox scandal on stacking Benjamin's. All right, we know what the stakes are. Doug, you've got the trivia. What are we talking about this week?

[Doug]

I would love to share the trivia with everybody. Joe. Hey there, Stackers. I'm Joe's mom's neighbor, Doug. You know, I've been digging in and reading about great marketing lately. You know, I love a win win scenario. So I've been thinking out of the box about value added solutions for this podcast. I'm going to ramp things up and really think out of the box. Get everybody in a circle. I'm just picking up all these great phrases. One book says that the customer should be Luke Skywalker and the brand should be Yoda. Well, that makes sense. Here in mom's basement, we like thinking of our stackers as Luke. Luke Skywalker or heck, even Rey Skywalker now. Right. So I guess that would make us Yoda then. I guess. I know Joe's pretty old, but Yoda's even older.

[Joe Saul-Sehy]

Oh, my God.

[Doug]

How much older? Not that much. Here's today's question. How old is Yoda in the Star wars movies? I'll be back right after I go draw up a diagram to explain to Jesse who Yoda is. It's going to take a while.

[Joe Saul-Sehy]

Jesse was quoting Star Wars, I think, the first week you were on this show.

[Doug]

Yeah, but he's like, he's, he's young. He's into the new Star Wars.

[Jesse Kramer]

Which movie are we talking about here? There's a long saga. The timeline of Star wars, of the movies that's out. It's kind of long.

[Joe Saul-Sehy]

Well, we've got, I believe this is from the first one, A New Hope. We'll go with this age in A New Hope.

[Sherman]

Cool.

[Joe Saul-Sehy]

So that means. Oh, gee, you're going first. The Star wars movies. To Jesse's point, it made a ton of Benjamin's ton of money. How old is Yoda?

[Sherman]

I mean, how old was he when he died? Is that what you mean?

[Joe Saul-Sehy]

How?

[Sherman]

Spoiler alert.

[Joe Saul-Sehy]

If you're saying spoiler alert out of what, 50 year old movie or 40 year old movie? Do you think it might be your problem, not ours?

[Sherman]

So I'm going to say that Yoda, I feel like I should know this. I'm going to say he was 965.

[Joe Saul-Sehy]

965. And you just pulled that out. Just.

[Sherman]

That sounds like a random. Nailed that right on the money. Based on your response.

[Joe Saul-Sehy]

No, like you're thinking he's a. I don't know if you're right or wrong. What I'm saying is, okay, usually Doug, he's got like an 85 minute explanation.

[Sherman]

No, I was literally, as he was talking about it, the only thing that I thought in my head was I remember there's some old people in the Bible and for some reason in my mind I was thinking that they had some sort of connection to that. Like they used that same time frame. As the oldest Bible person, I don't know why I thought that.

[Joe Saul-Sehy]

The fact that you didn't point that out to us in glaring detail.

[Sherman]

Well, you just asked for it. You know, time is money.

[Joe Saul-Sehy]

It also shows how badly he wants to get on the road. As soon as we're done recording, just give me 965.

[Sherman]

Put me down for 965.

[Joe Saul-Sehy]

Yeah. All right, Jesse, he's got 965. 65 long years old. How about you?

[Jesse Kramer]

I was actually, I was a little disappointed when OG said that because I'm pretty sure somewhere in the recess of my brain, I mean, I grew up on Star wars, right. I thought Yoda was in like the upper 800s. So to hear OG say 965, I was a little bit bummed because that's gonna, it's gonna make my guessing a little bit harder. But still, I'm gonna guess 8:50.

[Joe Saul-Sehy]

8:50.

[Jesse Kramer]

Yeah.

[Joe Saul-Sehy]

Those darts are kind of close together, Chris.

[Chris Luger]

I know.

[Joe Saul-Sehy]

What if he was 26 and just.

[Doug]

Didn'T put his nightly. His, his cream on at night?

[Sherman]

26.

[Chris Luger]

In Yoda years, they're gonna, I mean, I have friends that are really. They're gonna take away my geek cred card because I know I'm gonna get this wrong. But in my head, when you asked the question in my head, it was 928. I know that's really close, but I'm saying 928, you're going right in between these two dorks.

[Joe Saul-Sehy]

9:28. We always told Paula, don't trust your gut. We've always said that because Grogu was.

[Chris Luger]

Only like 50, right?

[Joe Saul-Sehy]

Was only what really Grogu was only 50 years old.

[Jesse Kramer]

Yeah.

[Joe Saul-Sehy]

Really?

[Doug]

Yeah.

[Joe Saul-Sehy]

And he's talking about Mandalorian for people that don't know what the hell we're talking about. Yeah, Doug's got no idea.

[Doug]

I have no. No clue. Who?

[Sherman]

What?

[Chris Luger]

Oh, my God, Doug.

[Joe Saul-Sehy]

Fantastic series. And I can't wait to watch Andor. I'm so excited about the Andor the new season coming.

[Chris Luger]

I tried twice to get into it. I just could not do it. Joe.

[Joe Saul-Sehy]

Oh, I agree with JD Roth on this one. It's the best one of all.

[Doug]

Okay, different podcast. You're on the wrong podcast.

[Chris Luger]

Sorry.

[Joe Saul-Sehy]

All right, who's gonna win this thing? We're gonna let you know in just a minute.

[Doug]

That's your money saying it's time for a McDonald's run.

[Joe Saul-Sehy]

Because with new McValue at McDonald's, you.

[Jesse Kramer]

Get more than you expect.

[Doug]

Like buy a six piece McNuggets and add a McChicken for just a dollar.

[Jesse Kramer]

Your money says let's go get more than you expect. With new mig. Value, prices and participation may vary.

[Sherman]

Valid for item of equal or lesser value.

[Joe Saul-Sehy]

You know that feeling when someone shows.

[Doug]

Up for you just when you need it most?

[Joe Saul-Sehy]

That's what Uber is all about.

[Sherman]

Not just a ride or dinner at your door.

[Jesse Kramer]

It's how Uber helps you show up.

[Joe Saul-Sehy]

For the moments that matter.

[Jesse Kramer]

Because showing up can turn a tough.

[Sherman]

Day around or make a good one even better.

[Joe Saul-Sehy]

Whatever it is, big or small, Uber is on the way.

[Sherman]

So you can be on yours. Uber on our way.

[Joe Saul-Sehy]

At Capella University, you can learn at your own pace with our flexpath learning format. Take one or two courses at a time and complete as many as you can in a 12 week billing session. With Flexpath, you can even finish the.

[Doug]

Bachelor'S degree you started in 22 months for $20,000.

[Joe Saul-Sehy]

A different future is closer than you think with Capella University.

[Doug]

Learn more at capella.edu.

[Joe Saul-Sehy]

Fastest 25 of students. Cost varies by pace. Transfer credits and other factors. Fees apply. Oh, gee. You kicked off this love fest with just shy of a thousand. And everybody seems to be gathered around with 965. How you feeling?

[Sherman]

I feel pretty good. Yeah. I mean, it's. I'm in the ballpark, apparently.

[Joe Saul-Sehy]

Because Jesse thinks you are. Jesse. 850. Chris came over top of you. 9:28. You feeling good?

[Jesse Kramer]

I'm feeling good. I think, you know, by my math, I'm kind of doing it right now. What if it's like 890 or lower? I think it's me. And if it's 890 or above. It's Chris, because I was going to say, like, I still think he was somewhere in the upper eight hundreds if my trivia memory is right.

[Joe Saul-Sehy]

Chris, you've got a small window there in the middle by kicking the field goal. You feeling good at all? I.

[Chris Luger]

You know what? I am feeling good.

[Joe Saul-Sehy]

You are feeling good. All right. Everybody feels confident. One of these three, Doug, are going to be, I guess, proven correct. Two of the three are going home empty. Who's winning?

[Doug]

Hey there, Stackers. I'm basing based marketing thought leader and guy who's been told he's got a great lightsaber. Joe's mom's neighbor, Doug. Did you hear about what Yoda said the first time he saw Star wars in 4K HDMI? What about the time Joe asked him what his favorite dinosaur is and Yoda answered Doceratops? Because there is no try, Joe. There's only do. There's only Doceratops.

[Joe Saul-Sehy]

Please, God, give us an answer. Make an end. I know how people feel when I go on with the dad jokes.

[Doug]

So how old is Yoda? Well, I'll tell you that Darth Vader's offspring, OG was off by 65. My nemesis, Jesse was off by 50. Chris, Paula, only off by 28 because the correct answer is 900, meaning Paula has now got sole possession of second place.

[Joe Saul-Sehy]

Unbelievable. Jesse, your gut instinct. Right on.

[Doug]

Oh, more importantly, Chris gets to remain a nerd with all of his buddies, right?

[Joe Saul-Sehy]

You don't think I'm a nerd? Go listen to that episode of Stacky Benjamin's Fast Forward through all the important buy versus rent stuff and just listen to how I did on the trivia. Nice job, Mr. Luger.

[Chris Luger]

Thank you.

[Joe Saul-Sehy]

It's fabulous. And OG, your instinct was correct. And yes, that was me going, how the hell do you get that close.

[Doug]

With your first guess?

[Joe Saul-Sehy]

I should have Doug. I should have disguised that maybe slightly better.

[Doug]

Yeah, it's like, really?

[Sherman]

I thought I hit it right on the number based on that response. Yeah, you were feeling pretty good.

[Joe Saul-Sehy]

You were so close. I'm like, nobody's gonna get that he's 900 years old. And then Jesse's like, I think it's high, like 8 90s. I'm like, oh, my God, I would.

[Doug]

Have been Paula if I were playing I. Because I'm just not a Sci Fi guy. I would have no idea. I would have said he was like, 74.

[Joe Saul-Sehy]

Based on Paula's results lately, we're gonna tell her this, and she's never coming back.

[Chris Luger]

She doesn't watch Any movies, Right?

[Joe Saul-Sehy]

She doesn't. Well, she. She joined a theater now where she goes and watches, like one a month. Okay, that is her. Yeah. She's turned over a new leaf, but.

[Chris Luger]

She'S got, like 40 years of ketchup to do.

[Joe Saul-Sehy]

She's got so much catch. Imagine if you hadn't seen movies until just lately. What a cornucopia.

[Chris Luger]

Dude. This is true story. I was out on a date the other day that it does happen on a date.

[Joe Saul-Sehy]

That's a true story. Yeah. Yeah.

[Chris Luger]

And I asked, I said, hey, what's a movie that you could watch over and over again? Like, what's one of your favorite movies? And she said, why would I ever watch a movie twice? And I was like, thank you for the time. I gotta go.

[Doug]

Scene.

[Joe Saul-Sehy]

We are not a match.

[Chris Luger]

Yeah.

[Joe Saul-Sehy]

Yes. Say we're not a match without telling me we're not a match. That's fantastic. Hopefully that was right at the beginning. Was that, like, question one? It was. Oh, God.

[Chris Luger]

Very odd conversation after that.

[Jesse Kramer]

Check, please.

[Joe Saul-Sehy]

Just a great night. Let's go into the other side of this argument, Jesse. This is renting is throwing money away. Let's buy a house. What's the pro side? You never hear in the financial community about the upside of let's buy the property.

[Jesse Kramer]

Well, you kind of have full discretion over anything you want to do, I guess. Again, going back to the numbers, if we want to stick to the numbers, I still want to see someone show me that buying a house really is going to be throwing more money away. I kind of have a hard time believing that based on all the number crunching that I've done. But I'm open minded to it. And then there's again, maybe I'm now a bit more of a family guy than I was, say, five years ago. But I think the idea of raising your family in one place that you get to call your own in one neighborhood, et cetera, et cetera, et cetera, one school district, whatever it may be, it kind of gives your family a sense of home that I think has a really nice intrinsic value to it. So the list goes on from there, but that's where I'll start.

[Joe Saul-Sehy]

I was just thinking while you were talking when you said, I want somebody to show me the chart. And I realized that I just saw one. But what I also realized, Jesse, was that the chart kind of points out something that you pointed out in the first half of the show, by the way. It points it out the wrong way. It points it out a way that looks like it's apples to apples. And it's not Jeremy Schneider, Personal Finance Club. I generally like his charts, but I do find some of them misleading. I find some of them just, frankly, Jeremy, I find some of your charts misleading. And one of them is he had a chart talking about this that if all of the things are equal, the monthly expenses to buy a house versus the monthly expense to rent, so you make the rent equal your mortgage payment. He said you still have all of these other costs on top of it. Right. If you're a homeowner. If you're a homeowner, you've got property tax, you've got homeowners insurance, you've got your own maintenance costs, you've got all this other stuff that we talked about the first half of today's show. But I just realized while you were talking, Jesse, how that is wrong. Because if it was apples to apples, your point earlier on is the landlord has no upside. The upside is those numbers are not going to be the same because the landlord needs to make some money. So you're gonna be living in a crappier house if you rent than if you had the mortgage payment for the same amount of money. Does that, does that track?

[Jesse Kramer]

Yeah, no, that's correct. And I think I even. I was, while you were talking, I was searching for, for Jeremy's post rent versus mortgage. Your rent is the most you'll pay, your mortgage is the least you'll pay. And then he shows these extra fees and he kind of shows the rent and the mortgage being equal.

[Joe Saul-Sehy]

Yeah, he shows equal. Which is, is to your point, not going to be. Because if you actually put the two houses next to each other, there's no way in hell you're going to rent the house for the amount that you would have for that mortgage payment.

[Jesse Kramer]

I think that there's also equity involved too. So. Go ahead, OG there's also.

[Sherman]

No, I was just going to say from a landlord standpoint, you know, we, we had a rental, two rentals for a while, multifamily. It was very clear to me when I bought this place that the previous owners used all of the available cash flow for themselves. Like, they, it was very clear. They were like, every dollar we can wring out of this, we are taking. Because you could tell they were not interested in upkeep, they were not interested in maintenance, they were not interested in.

[Joe Saul-Sehy]

Saving that for you.

[Sherman]

They were. Well, where they saved it for me was the value of the property was commensurate. Was commensurate. There we go. It was also Commiserating. I was commiserating a lot on that property was commensurate with what, what was going on in both the rent income and profits and then also the status of the building. And so when we went in and bought it, I was very clear that I was not interested in the cash flow of it. If it broke even, that would be great. If it made money, I was interested in taking all the available cash flow to buy the equity side of it, if that made sense. And so this guy bought the property at 750k, sold it to me at 300. I have no idea how much cash he took out of it, but he owned it for 20 years. I bought it for 300, lost my, you know what on it for two years in terms of cash flow. I was upside down, 40k a year for 2 years, sold it for 750. Because we rehabbed apartments and we improved the landscaping and we resurfaced the parking lot and we did the roof and like we did the stuff that made it beneficial on the equity side of it. So I don't know that it's exactly fair. And maybe this helps you, Jesse, or helps your point or it doesn't help your point, but you know, when you think about the landlord like they have to make money, you know, you make money different ways. It doesn't always have to be break even cash flow wise. I was very comfortable with losing money, 50, $80,000 over this two year period because I knew that whenever I sold it, that's when I got my payday. You're never going to find an apples to apples comparison on this because if you start with the concept of housing cost, cost for dwelling, you can always say, well if you bought it, you would, maybe you would want to have a little bit nicer place or maybe you'd want to live in a different neighborhood or you would never buy a two story, you would only buy a single story, but you're happy to rent a two. You know what I mean? Like there's no way to compare what maybe what this guy is trying to decide on or you know, what the article's about. It's, it's so personal, it's ridiculous.

[Joe Saul-Sehy]

But I think we can, I think we can draw a few truisms and one is the longer you stay in a house, the more renting makes less sense and the long equity value of.

[Sherman]

The house goes up.

[Joe Saul-Sehy]

Absolutely.

[Sherman]

First house that I. Okay, so here's another personal example. Our first house that we bought, we bought a four bedroom colonial because we had zero kids. It made a bunch of sense to have 3,000 square feet by ourselves.

[Joe Saul-Sehy]

All those bedrooms, right?

[Sherman]

Had to have all those bedrooms and we had no kids. For five of the 10 years we lived there. We had no kids. We sold the house for the same price we purchased it for. Ten years later. The terms that we had on the mortgage was interest only. So we paid effectively a rent payment to the bank for 10 years. We had a little bit of principal on the mortgage because we had a primary mortgage and then a HELOC separately. So the HELOC was actually making. We were making a dent on the heloc, not the primary. How effed up is that? So weird.

[Joe Saul-Sehy]

So weird.

[Sherman]

Anyways, the long and short of it was 10 years later, we walked out of there with $7,000 in our pocket. Barely enough to afford Stevens to pack our stuff and ship it to Dallas after 10 years of those payments. Now, you could have said in that example, well, dude, if you'd have just rented a place, you'd have come out way ahead. Well, yeah, but if I was going to rent a place, I would have rented a two bedroom apartment, not a four bedroom house. And to your point earlier, Joe, maybe it would have prevented me from doing the dumb thing of buying a freaking big giant house that I couldn't afford all that money with no money down and interest only and you know, whatever, all that other sort of mistake. So, you know, again, I just come back to. It's hard to make a apples to apples comparison here because you're trying to prove that you would make the same decisions given two different sets of circumstances.

[Joe Saul-Sehy]

And let's talk about that too, Chris. You know, you talked about how your money didn't grow all that quickly, your rate of return, pretty low. But we look at these things and we go, if I would have only had an index fund. Well, let's do that. When you actually look at the numbers of people that own index funds and you look at their returns. Which company did that? OG Fidelity went and looked at their people. Was at Schwab. Some one of the big companies went and looked at their average investor. The average investor makes enough dumb decisions with their investment that the primary property, the fact that you have this trapped equity in there for a lot of people and they say my house is my retirement. Right. You know, you heard that a lot from older people. My, my house, that's, that's, that's where all my, my equity. That, that's my. I don't need the 401k. I got my house. Well, that may be a little more true than we think it is for the average person and how poor we are at actually investing. The forced saving for some middle America is actually a good thing.

[Chris Luger]

I think for those people that are doing very little to save for retirement, it is something that they are counting on for sure. I think the argument of why someone would own or buy a property, I think there's just something to be said about having a paid off home, owning it, a place you can call your own. And I can do as many stupid decisions as I want, right? I can knock holes in the walls, I can run Cat 5 cable throughout every nook and cranny. I can do the things that I want to do and I don't care. I don't have to ask permission. I don't. There's just something to be said about that.

[Joe Saul-Sehy]

Is that a 1980s video game behind you?

[Chris Luger]

It is.

[Doug]

I was just looking at that.

[Chris Luger]

I think that's a Sega Genesis. I have classic NES as well.

[Doug]

But dude, your nerd card is safe. Don't worry about it, man.

[Joe Saul-Sehy]

I was like, great points, Chris. Is that a video game? Glad you made those points, Jesse. Anything else in the one for buying category?

[Jesse Kramer]

Well, I thought when Chris was just talking right there, a thought popped into my head, Joe, and maybe this doesn't exactly answer your question, but you know.

[Joe Saul-Sehy]

What does answer my question? Thoughts do pop into your head from time to time.

[Jesse Kramer]

That's the eternal question. What's that hollow sound Jesse's knocking on his forehead? So what do we call a market when there's millions and millions of participants buying and selling? Everyone's looking out for their own best interest and they, through their own supply and demand and their own choices, they find an agreed upon price. What do we call a market that behaves that way?

[Joe Saul-Sehy]

Open market.

[Jesse Kramer]

Yeah, that's a good, that's a good answer. That's a fair answer. I was going to say efficient. That's what I was going to say, Doug. And so part of this whole argument today, or anytime someone comes forward and they're like, no, it is absolutely renting or like, no, it is absolutely buying, that's the smartest thing to do with your money. What they're saying in essence is that like the market's not quite efficient and that their argument has to be the better one. And so this thought kind of popped into my mind that it's like, huh, considering that you have here in the US you have hundreds of millions of people who are making their living decision on where to live. And what to pay and all that kind of thing. To think that that market isn't at least somewhat efficient in finding the right price or that, you know, in other words, that like that market isn't somewhat efficient at balancing the scales between renting and buying. I gotta think there's some of that probably going on behind the scenes that if we really did look at the numbers, we might be surprised to see they're more even than we think.

[Joe Saul-Sehy]

I don't. I get that part of your thinking, but. Oh, gee, don't you think he's talking more about rental real estate than real estate that you know?

[Sherman]

No. I mean, from a big macro standpoint, I would agree with that. I mean, if there's a lot of rental properties being built that are not supported by market demand, then what's going to happen? The rent prices are going to go down and then someone new that moves to the community is going to say, what do I do? I need housing, I need to find some housing. What should I do? Should I go buy a house or rent one? And they'll look around and they'll say, well, renting is so much less expensive because of this inefficiency that has now materialized that it makes more sense for me to. I mean, you can see that's going on in little micro communities across the country. You know, we live here in Texas, Joe. So, you know, and in Austin's a great example. Tons of people moved in, they built a ton of multifamily housing and a ton of single family housing. And now people went, oh, it's hot in Texas. Maybe it's not as cool as we thought in Austin. And so now there's a little bit of an exit from. I don't think probably net net, but maybe. In any event, I'm reading the articles on this of like, there's a little bit too much housing. There's a little bit. It's too overbuilt. That's what they'll say, right? Built a little too much, built quickly. And so that's going to manifest itself in lower housing prices or lower rental prices. And to Jesse's point, an educated consumer with all the facts will make the most efficient decision for them in those circumstances. I mean, if the material required to build your deck tomorrow was five times as much as what you thought, are you still building it? Or would you say I should wait, I should do something different? Now that I have that information, maybe I'll use a different material. Maybe we'll make the plans a little smaller, you know, What I mean, like you, you will do something new with, with new information, with a radical change. So I, I can get behind Jesse's perspective.

[Joe Saul-Sehy]

I do think a lot of people, behaviorally, when you think about I only rent this place, you're not going to make some of the behavioral moves to spend money on things that you would spend it on if you own the place.

[Sherman]

No, from a big picture, like I think Jesse's point maybe is from a bigger picture. If you just think of the word housing needs shelter.

[Joe Saul-Sehy]

Yes.

[Sherman]

I'm going to make an efficient decision based on the facts that are at hand. And if there's such a disparity between one or the other, then it will gravitate to that, it will change the pricing of that back to more of an equilibrium and then it becomes a personal choice versus wildly radical financial one.

[Joe Saul-Sehy]

I think that's a great place to leave it because what you left it on my topic, because I think it is, I think it is what you do with the money, what you do with the decision that you made. Right. If you make a decision to purchase a house and you're only going to live there three years or you're going to put a, you know, expensive thing on the back of your house like I am, well, then so be it. That's going to influence what you do with the rest of your money. It's that opportunity cost that we were talking about and for savings. And I think it's great, Chris, that you, you did the ROI behind that decision kind of as a cautionary tale, but I don't know. That ended up badly. I think you like where you live.

[Chris Luger]

I do. And I think that the fact, I mean you mentioned too, Jesse, about having a place to raise your kids, a community, a neighborhood, the friends they grew up with. I wasn't going to move anytime soon. And yeah, I do.

[Joe Saul-Sehy]

Well, let's find out what each of you are doing. Oh gee, we mentioned that you're out of here right after this many big plans this weekend.

[Sherman]

Yes, huge plans. So a little bit after school activity Saturday morning and then a very, very important husband wife golf tournament, affectionately known as the Divorce Open. I was just gonna say because when you play alternate shot with your bride, invariably you one of you, and I'm not gonna say who, I'm not gonna point fingers, but one of you leaves the other person a two foot putt for par and the other person leaves them a seven foot for bogey and you just go, how is that possible? And I don't want to throw someone's putter into the lake because that doesn't make any sense. But no, it'll be fun. We're, we have no expectations this year. We're going to have some fun with it. And then Mrs. Og's birthday's on Monday, Cinco de Mayo. She's got somewhat of a milestone ish birthday in her mind.

[Joe Saul-Sehy]

She gets a big party every year on her birthday.

[Sherman]

Every year, the entire southern half of America celebrates for her.

[Joe Saul-Sehy]

I even made sure when I was.

[Sherman]

In Detroit, I celebrated south of America. Yeah.

[Joe Saul-Sehy]

A lot of the world celebrating that day. That's fantastic. Let's have our guest of honor go last. Jesse, what's happening at the Personal Finance for Long Term Investors podcast, better known as the Better Interest Show?

[Jesse Kramer]

Well, I think we'll see. You know, as we're talking, there's still a couple a week left or so in April, but I'm pretty sure April is going to be our best month of all time, which is an exciting thing. We're about to release an episode with Bill Yount from Catching up to Fi. And then following up from that is going to be, I think, an AMA episode. And then we're very excited to have Don McDonald's talking real money. Talking real money. Exactly right. So fun things happening over.

[Joe Saul-Sehy]

Not talking about Don. You're talking about Don.

[Jesse Kramer]

Don Correct. Amazing radio voice.

[Joe Saul-Sehy]

Oh, my God. Just incredible. And see, he makes it about him every time, Jesse. Every time. Doug's like, don't forget there's somebody El with the radio voice. Chris Luger. Thanks for hanging out with us again, brother.

[Chris Luger]

Oh, thank you so much for having me. This was fun.

[Joe Saul-Sehy]

So what's happening at the Extreme Finance Better Interest podcast?

[Chris Luger]

The Extreme Personal Finance show.

[Joe Saul-Sehy]

That too.

[Chris Luger]

Yeah. Yeah. We got some great episodes coming up. I got one coming up talking about is real estate investing. Right. For everyone. How some people think, you know, they don't want anything to do with real estate investing at all. So we're going to talk about the pros and cons there. We're also got an episode coming up talking about how to prioritize your passions and purpose in life, especially after you've reached five. So how do you do that when there's so many other things that you want to do? So, yeah, a lot of fun stuff. You can find out everything over at.

[Joe Saul-Sehy]

Heavymetal Money, watching all kinds of movies with people who are not that date.

[Chris Luger]

That's right.

[Joe Saul-Sehy]

Yeah. Great times, everybody. If you've hung out with us live on YouTube. Thanks a ton. If you want to hang out with us live on YouTube. We're normally here Tuesday after or, excuse me, Wednesday afternoons. We're recording at a weird time today because of our schedules, but if you want to hang out on a Wednesday afternoon, come join us, please. If you know somebody that needs to listen to this because they haven't truly thought through the buy versus rent thing, give them the name of the podcast. Pass this along to somebody that needs to hear it. Otherwise, give us a review and Doug will read those on the show, on our crazy Monday, Wednesday show.

[Doug]

As long as they mention me in the review. Those are the ones I read.

[Joe Saul-Sehy]

That's the oldest thing. All right, that's going to do it for today. Doug, what's the three things we should have on our to do list at the end of today?

[Doug]

Well, Joe, first, take some advice from Chris. He says it's better to be a renter because if you're a homeowner, you got to make sure the carpet matches the drapes. Did I get that? Did I get that right? Chris? I think I nailed it.

[Chris Luger]

No, I think what I said was that I can't think of anything. I can't remember what I said because that was pretty funny. I totally got distracted. That was pretty good.

[Joe Saul-Sehy]

Second, this is the best to do list ever already. Okay, number one, I don't know.

[Doug]

So basically I nailed it.

[Chris Luger]

You nailed it.

[Doug]

Second, Jesse said you need to own a home so you can be like Family Guy. Jesse, would you say you're more like Peter or Stewie or maybe Lois?

[Jesse Kramer]

I thought for sure you were going to make a comment about the carpet in in Joe's mom's basement.

[Chris Luger]

That was a good one.

[Doug]

Look at the time.

[Joe Saul-Sehy]

Wow. We got to finish this up. What's the big lesson, Doug?

[Doug]

About the big bro? I can't even talk after that. But the big lesson, buying versus renting. Don't overthink it. I guarantee you there's a corner in your neighbor's basement they never look in and that is where you put your blow up mattress. Problem solved.

[Joe Saul-Sehy]

Thank God you said mattress.

[Sherman]

Mattress, yeah.

[Doug]

Thanks to Chris Luger for joining us today. You'll find the extreme personal finance show wherever you. You're listening to us right now. We'll also include links in our show notes at stacking benjamin's.com. thanks also to Jesse Kramer for hanging out with us today. You'll hear the latest episodes of the personal finance show for long term investors wherever. I'm sorry, I'm out of breath. Wherever you are listening to us right now. Is there an acronym we can use for that show title or something. Thanks also to OG for joining us today. Looking for good financial planning help? Head to stackingbenjamins.comog for his calendar. This show is the property of SB Podcasts, LLC, Copyright 2025 and is created by Josal Sehive. Joe gets help from a few of our neighborhood friends. You'll find out about our awesome [e-mail] along with the show notes and how you can find us on YouTube and all the usual social media spots. Come say hello.

[Joe Saul-Sehy]

Oh yeah.

[Doug]

And before I go, not only should you not take advice from these nerds, don't take advice from people you don't know. This show is for entertainment purposes only. Before making any financial decisions, speak with a real financial advisor. I'm Joe's mom's neighbor, Doug, and we'll see you next time back here at the Stacking Benjamin Show.