Why owning a home is also throwing money away

Here's my comment on "Buying vs Renting" at John Chow's blog [with added personal details below]:

Some legal facts: In America, you never really own your home. If you don't pay your taxes, you will lose your home [by force if necessary], guaranteed. Also, thanks to rather recent U.S. Supreme Court ruling (Kelo vs New London), a majority vote by your neighbors is enough to take your land away, willy-nilly.

After paying Caesar, the homeowner isn't done since homes require maintenance: from the yard to various stuff which fall apart (roof, privacy fence, paint, water heater, A/C, etc.) which the owner has to eat [i.e., cannot be used to adjust the cost basis of the home per IRS instruction].

And then there are the repairs you must do like water leak, broken plumbing, electrical shorts, etc.

And then there's risk management and paying for various hazard insurance [talk about "throwing money away"]. In the US, earthquake and flooding insurances are extra and costs an arm and a leg.

And for newer homes, there is also the HomeOwner's Association or HOA which "manages" the community's look and feel [like approving remodeling or enforcing the grass height of the front lawn]. And they require annual if not monthly fees.

And some newer homes also require special fees to get firefighters to cover out-of-city-limit homes. This was a case in Central Texas when some owners found out that their fires couldn't be put out by local firefighters...

All the fees above are paid by homeowners but not the renters. [You can try to pass them all onto the renters but rent is dictated by the market not the owner's cost (problems).]


As for mortgage: it means "death pledge." Enough said!!

We owned two homes in the past [first was from 1995 to 2002 and second one from 2002 to 2005] and we did poorly: not only did we pay lots of money of the above fees but we also remodelled our first home before we sold [so we didn't get to enjoy it as much] and even though we made some profit on our first home, our second home lost us a lot of money so our net result was a big negative [enough money to buy a new car]. So, our home "investing" venture hasn't work out well for us. Anyway, we rent today and live debt free!

[On the other hand, we've been blessed with our stock investments so I can't complain....]