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Comment by kyberias | Hacker News Reader

> It is better to live in a modest home and have separate income property than to just own a huge/expensive house that you live in.

Explain this logic, please. How is it "better"? Using which criteria?

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Sorry, I should have been more clear. For my wife and I, we value long term stability, wealth building, and flexibility more than an extravagant home to live in.

I totally understand people who prefer a better current lifestyle if a large expensive house makes them happy.

But a McMansion would give you all those things too and work better at it. Oh I see, if you can actually afford it, that came to mind while I was typing this. Is your advice primarily against over leveraging?

Well, if you can afford a two smaller houses instead of your McMansion, the second house might be able to pay its own mortgage while accumulating in value, in addition to the house you currently live in.

But thats not what parent's comment was about either. And even yours seems to be about not overextending yourself so that you have disposable income/capital to do more with.

Is that the crux of your argument?

Maybe the general disagreement here comes from an inequality vein. You know, McMansions are nothing to brag about, they aren't like... real ... mansions. Just cookie cutter larger homes that are dime a dozen.

Not sure I buy that. The tax and loan guarantee advantages of your primary residence in the US are huge. It's almost certainly more advantageous in most markets[1] to put $N of real estate into a single residence worth $N than it is buy two $N/2 homes and try to rent one. Details matter, talk to an accountant, yada yada.

[1] That is, assuming a decent appreciation of home values. In Detroit, say, this advice wouldn't hold because the homes are worthless investments and you want the rent income instead.

This is a bit of a naive view of the tax view within the US. I can't and won't compare the tax advantages of primary residences within the US to other countries, and they are good you're right. However, loan interest can be deducted as an expense on loans on rental properties. [1] This is not the only expense that can be deducted. Almost all expenses including your time can be deducted if you set things up properly.

As an investment vehicle, there are very few investments which can be diversified as much as rental properties. In my experience there are also very few investments with the level of return of rental properties. [2]

[1] I am not a lawyer, a CPA, or a tax attorney. I do have all three of these people on retainer. If you would like to know how set this up and make sure to get the most advantageous tax positions and financial positions from your investments, please hire people like this to tell you what to do. Also, do not forget to interview a few attorneys and tax professionals before hiring.

[2] My experience: I currently own 12 properties of three different rental categories in 3 different states.

Renting a home you can usually get back your mortgage (I have two rentals and they do).

Also cheaper homes will appreciate more. For example a $1M home can only go up so much if that's already the top end of a market but two $500k homes can go up a lot more.

One risk in buying a huge/expensive house is that you might not use all of it. As a result, you end up paying property taxes and insurance fees for what amounts to underutilized housing space. Then again, if you have the wealth to buy an expensive house, it may not matter as much.

One criteria that may soon see a resurgence in popularity is that of morality. [1]

[1] https://www.currentaffairs.org/2017/06/its-basically-just-im...

+1 thanks! that was a good read, and gave me a different perspective (or one I had not thought much about).

That argument would hold more water if the economy were a zero-sum game.

It's fine if the wealthy choose to give away some or all of their wealth, but it must be voluntary. Anything else is called "theft" - or the closely related concept of "taxation".

the article seems to be OK with it being voluntary (more or less?). I think it's just making the point that it's immoral not to give it away. maybe instead of "stealing" excess wealth we can just shame it more than we do now.

From the essay: "For example, it is sometimes claimed that CEOs get paid too much, or that the super-wealthy do not pay enough in taxes. My claim has nothing to do with either of these debates. You can hold my position and simultaneously believe that CEOs should get paid however much a company decides to pay them, and that taxes are a tyrannical form of legalized theft."

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