THROWING MONEY AWAY ON RENT - Why We Rent As An Investment - YouTube

well where are we today Teen well we  are actually back from the trailer  

wasn't that cold it was free freezing that  was Monday night yet today beautiful weather  

it's just like summer look we're in short  sleeves it's always warm in the apartment  

this is very true isn't it so i thought we  should have a little chat about finances what  

do you think i think that's a really good idea  and then specifically the cost of living because  

everybody has to pay to live they absolutely do  yes and you know one thing i was going to say is  

like Norm are we actually throwing away our  money renting absolutely Teen we're growing  

poorer by the minute and i guess you're going to  say married to me that was a reason i would never  

say that you're an asset oh great but the thing  about this whole question renting it's throwing  

your money away that's what we used to think as  homeowners we did didn't we you remember that  

absolutely all the time we had houses and here  here we were being mortgage poor no money yet we  

thought people who were rented were crazy crazy  people so it's the exact opposite basically we  

have learned a lot since we've been renting this  last five years yeah we have haven't we and then  

the the opinion is the exact opposite that  we found that renting is building an asset  

which is pretty amazing really isn't it it  is so when you think about it we've been  

here five years now so when we first moved in  basically what happened was you take out a lease  

and you are freezing what you're paying at the  market rate of that time and the reason you're  

freezing it is because we live in a province  that has rent control and so because of that  

the landlords are only allowed to put the rent up  by a government mandated amount so providing your  

in good standing with your rental payments they  can only increase it by a certain amount each year  

that's true isn't it so the other thing  that balances that argument is that  

if we left our apartment to move somewhere  else then the landlord could put this apartment  

up to market value which is a lot more  than what the annual rates would have been  

so if you look at the rates Norm that we've  actually been paying the last four years we've  

had relatively small ones haven't we of like 1.8  percent that's right each year now this next year  

is a little higher at 2.2 percent it is but  that's okay because it works out to be a very  

small amount really in the realm of things doesn't  it does so if we went to rent another apartment in  

this town where we live it's going to cost us we  worked out between three to four hundred dollars  

more per month to get the same thing that we  have right now I know that's amazing so if you  

look at an average of say let's call 400 we're  talking about nearly 5,000 a year that it would  

cost us to move back into back into our own  apartment which is kind of crazy so now so now  

we're building an asset and the other piece of the  jigsaw to this asset and the our argument about it  

is that also in this province we have the right  as tenants to sublet our apartment so now we  

know that these rents are going for three to four  hundred more per month than we're currently paying  

if we wanted to move somewhere else we could hold  on to this lease sublet and put 5,000 a year into  

our pocket as income yeah that sounds another of  our bright ideas doesn't it Norm it really does  

so that's where rent can become an asset and not  a liability absolutely but you know what Norm  

one of the things that people have  talked about and we're aware of too  

is that a lot of people are concerned about  legacy for their children and grandchildren  

and they kind some people are confused when they  think you move into that renting market that you  

haven't got that house to leave them so maybe you  could explain a little more to it's actually the  

reverse isn't it for us yeah we've had we've  had several comments in the comment sections  

of some of these finance ideas that we have  and Tina's right a lot of people are worried  

that renting they wouldn't have a legacy to give  to their children of a home of the family home  

and there's two points we've been through  where our parents have passed away  

and as the children in in my instance I  me my brother and I got the family house

but it was a blessing and a curse because  we had to clear out the family house  

58 years worth of always stuff a lot of hard work  for you wasn't it turned out my dad was a bit of a  

hoarder in the garage and so anyway we had a lot  of work to turn that house around clean it out  

and sell it for us to realize the asset  so that's one point and the other point  

is once you have your capital out of your house  we came up well i came up with this little story  

didn't i Tina loved it i loved this story so  if you think about the capital you get from  

selling your house as being an orchard so it's  an orchard full of trees full of apple trees  

or if you're in Florida full of orange  trees and so every year when the apples come  

you don't chop the tree down no to harvest the  apples hopefully not so you take the apples which  

we will use as the euphemism for interest so  the tree stays behind and you eat the apples  

yeah and that's what happens with your  capital if you invest it in reasonable  

investments that is safe for the future that  comply to your risk tolerance then all you're  

doing is spending the interest and you're  leaving the capital as your legacy for your  

children which you know when you think about  it sort of as sort of eating the apples is  

not taking away is it from the main thing i'm not  really fond of apples that much and in actual fact  

i think that our kids would think it that it's  a great idea they don't have a house to sell is  

already set up that's right so the other just in  closing the other thing about renting to consider  

is the mobility aspect we have sold about eight  houses in our marriage we moved around a wee bit  

and they can take up to a year to sell yeah our  last house probably was two years yeah from start  

to thinking about it we're in the countryside  there aren't as many people buyers are there  

no there weren't so all of our dreams of coming  into this apartment and living a new life  

took 18 months to two years to come to fruition  whereas anybody renting can just give the  

notice either 30 or 60 days and you're gone you're  gone to your new life so that's just another  

positive thing isn't it it really is so we  just really wanted to leave that with you  

keep eating the apples and don't chop the  tree down and then you've got the legacy  

for the children you do indeed so this was  just another one of our brain waves yeah  

just sort of and we're so glad you could join us  but we also hope that everybody is staying safe  

staying well and enjoying life at the minute  yeah have a great weekend great week great day  

yeah and we'll catch you on the next  video thanks for watching bye bye