Bedroom Maintained Mobile Home In Town For Cheap Price!. Why Rent When You Can Own: Fill & Download for Free

Don’t buy a house to live in if you live in a primary market (Seattle, CA, Hawaii)., Instead buy rentals in secondary markets like Birmingham, Atlanta, Indianapolis, Kansas City, Memphis, Little Rock, Jacksonville, Ohio, or other tertiary markets.Sophisticated investors focus on the numbers… which require the Rent-to-Value Ratio of more than 1% is needed to be able to cashflow after expenses. You find the Rent-to-Value Ratio by taking the monthly rent dividing by the purchase price. For example a $100,000 home that rents for 1,000 a month would have a Rent-to-Value Ratio of 1%.Home ownership is part of the American Dream. In the minds of many, psychologically and mentally, it represents security, stability, and financial independence. Renting has traditionally been seen as throwing money away, as many people also see homeownership as a financial investment in their future thanks to the popular belief that property will only ever rise in value, even if the recession of 2008 demonstrated otherwise.The reality is that allowing for inflation, house prices have increased by just 1% during the last century, representing an extremely poor return on investment, and one that has been easily outperformed by the stock markets and direct investment in businesses and hard assets. Research has shown that the net value of homeowners is, on average, 44 times greater than that of non-homeowners, however, it’s unclear whether this is a correlation or causation.So should you buy or rent? The truth is that there’s no ‘one size fits all’ answer to that question. Every individual has different circumstances that determine if buying or renting their home is best for their long-term financial prosperity. This guide is about you making the right financial decisions for you. It’ll examine the pros and cons of buying and renting, what you should take into account before making a decision, and the relative financial considerations of a mortgage versus rent.If you are a numbers guy here is the spreadsheet (Is a Home a Good Financial investment).Join the movement of high income earners who are renters (Rich and Renting: Understanding the Surge of High-Earning Renters - Rentonomics) cause they did the math and did what made sense.*I spent $300 dollars for an editor to get the grammar and spelling right on this article. I am sick and tired of seeing young families make this mistake.**What’s in this guide?**This guide will cover everything you need to consider about purchasing a home, renting, and purchasing a property to rent. This includes:* The advantages and disadvantages of renting* The advantages and disadvantages of buying* The costs associated with renting vs buying* Choosing a property* Taking on a home loan* Using your home to finance your future* Buying a property to rent* Useful resources**Financial freedom**Firstly, this guide is about helping you to achieve financial freedom. What the wealthy do to achieve security and optimize investment returns is not always conventional wisdom. When financial freedom is your goal, there are two simple principles to follow:1. Prioritize purchases/acquisitions that make you money2. If a purchase/acquisition doesn’t pay you and you are speculating on increasing home values, don’t do it.While this may seem black and white, sticking to these principles will again depend upon your individual circumstances. See the difference in how the poor, the middle-class, and the wealthy live financially:For some, buying will generate the most financial opportunities, for others it’ll be rentingHint: If you can’t save money to save your life then buying a home acts as a forced savings account, which will benefit you in the future.So let’s look at the case for each.Rent or buy? What to considerBefore going any further in this guide and considering whether buying or renting a home is the best option for you, there are a few important things you should bear in mind as you continue. These are:* Are you comfortable living with unknown and variable costs? Or prefer having your costs fixed?* Do you like to personalize your home, or are you happy to live with other people’s choices?* How much space do you really need? Do you really need 2,000 square feet and that 4th bedroom to raise a family or is that your ego’s need to *keep up with the Joneses* talking?* How much time and work are you prepared to put into the upkeep and maintenance?**Renting**Chances are that you’ve been told repeatedly that renting is like flushing water down the toilet. That you are paying money out each month and twenty years later you have nothing to show for.The wealthy do not believe this misnomer and see housing as just another line item in their personal finances.Our changing lifestyles mean that renting can be a sensible option for many people which can actually help you achieve your financial dreams.So what are the advantages of renting?**Flexibility and mobility**The biggest argument in favor of renting over buying is the flexibility and mobility it offers. If you have to – or want to – move regularly, then renting allows you to easily pick up and relocate. Equally, if you decide you don’t like the property/neighborhood after all, that your commute is too long, or that you want to get your kids into a better school district, you have the flexibility to do that. Remember, gone are the days where you stay a loyal employee for decades. Often many professionals need to be mobile to compete for the best positions and salaries. Many of my friends in IT and Tech report dusting off the resume after they have reached the 6-month employment milestone. Having geographical mobility is essential in competing for the best jobs.**Liquidity in difficult times**Renting can often be cheaper than buying. Some rents even include utilities, and when things break, it’s not your problem, call the landlord – it’s their problem! That means you have more available cash. Don’t forget that life is unpredictable and things change. Perhaps your income goes down, unexpected bills occur, your mom falls in the shower and can’t get up, or your deadbeat brother-in-law hears of the rental properties you are picking up and needs a place to hang out and join your family. The beauty of renting is that if your financial circumstances change, you have the option of moving to a cheaper property without too much difficulty instead of selling the home in a fire sale due out of distress.**Credit ratings**Not everyone has a perfect credit history. Experts estimate that around a third of all American adults have a credit score below 601 (How Many Americans Have Bad Credit?) and so are considered a poor or bad risk. This greatly reduces the likelihood of qualifying for a regular home loan, meaning that borrowers would have to pay higher interest rates on any borrowings. If you fall into this category, buying is unlikely to be worth the expense.Note: Don’t let real estate or lending brokers trick you into using the “scarcity tactic trick” where they say interest rates are at all-time lows! Buy now because it’s not getting any lower! Remember they get paid when you buy or originate a loan. Locking in a low-interest rate is a poor reason to go into a 30-year commitment for something you should not buy in the first place, even at a 0%.**Buyer’s remorse**A survey by *Trulia * (https://www.trulia.com/blog/trends/regrets-2017/)found that 44% of American homeowners had some form of buyer’s remorse, and around a fifth had actually been prevented from changing their situation because of making a mistake when purchasing a home. With renting, if you’re not happy, you’re free to move at the end of your lease. Paying a couple of dudes to move your stuff from time to time is pretty cheap in the grand scheme of things.**Local costs**If the area you live in has high property taxes, high insurance costs, or low rent-to-value ratios, then the math on renting makes sense. The rent on identical properties can vary hugely based simply because of their location, for example a $100,000 house might be leased for $500 a month in one town but $1,500 in another. Where rent to ratio values are low, renting is the savvier decision. Often primary markets such as San Francisco, Seattle, Los Angeles, New York, Washington DC, Honolulu, (are cool places to live but) have low rent to value ratios, as a result of too much wealth living there driving up the overall market. Investing in secondary and tertiary markets where the rent to value ratios are high means that the income more than supports the mortgage and expenses, for positive cashflow. Examples of these locations are Atlanta, San Antonio, Houston, Indianapolis, Birmingham, Memphis, or Kansas City. In these areas, it may make sense to buy a primary residence to live in.**The disadvantages of renting**Of course, while there are many advantages to renting, there are also drawbacks that can’t be ignored, and each individual needs to decide if the benefits outweigh the disadvantages.**Not feeling at home**Tenants are rarely allowed to decorate the property the way they would like. Decor is usually neutral and can feel clinical. Personalization is usually limited to putting up pictures and damage caused by doing so must be rectified before the tenant leaves. If personalization is important to you, then get over it… nah just kidding**Rent Increases**Rents usually rise annually. In some areas, rents increases are limited by local regulations. In most instances he landlord is free to increase it by as much as they like. In areas that are very popular, rent rises can be a significant increase to reflect increasing market demand.**Lack of security**While renting offers flexibility, it also lacks security. Your landlord might decide that they want to sell the property or have someone else live there. If you’re on a month to month lease, typically your landlord only needs to give 30-60 days’ notice.Moving residences costs money, and you’ll need to find a deposit plus up to two months’ rent in advance for a new property, alongside the fees listed below. And that’s all before your landlord returns your deposit.Tip: Building a relationship with your landlord could be invaluable. If you are renting a home in a primary market where the numbers don’t make sense, then chances are that you’re dealing with an amateur landlord. Often amateur landlords just want reliability and rent paid on time, as opposed to top dollar. You may be able to sign a longer rental agreement or just be given a further heads-up if the landlord is looking to make any moves with the property. They may need you more than you need them so try to negotiate a lower rent by signing a longer rent or a fair rent escalation factor.**Lack of tax breaks**Homeowners brag about claiming extra tax write offs on their mortgage interest against their tax bill. This is true that tenants can’t claim anything against their rent but this argument is a very weak one and likely dogma created by brokers to motivate you to create more transactional commissions.Spending 100 dollars’ interest to deduct it on your taxes is actually one of the dumbest pieces of financial advice I have ever heard. They’re basically telling you to incur expenses to save a fraction of it. The tax benefits that you get as a real estate investor will blow the mortgage interest tax deduction out of the water due to taking other expenses as and operational business, depreciation, and not to mention the overwhelming greater return on investment if you bought a rental property than buying a primary residence to live in. And if you have seen the 2018 new tax laws it’s just a matter of time until the tax deduction for the regular person is going to be phased out. The middle-class just can’t catch a break!**Additional costs**Taking out a new lease incurs a number of costs. These can vary with state and your circumstances, but typically include:* **Broker’s fee**: whether or not you need a broker will depend on where you want to live. In many big cities, landlords or property managers frequently won’t consider any applications that haven’t come through a broker. Typical fees vary between one month’s rent and 15% of the total annual rent. However, this is not the case in most circumstances but I’m just trying to be a good journalist here.* **Application fee**: this covers the cost for credit and criminal background checks. Usually cost between $35-75 per person.* **Security deposit**: we’ve already mentioned this, and it’s generally set at one or two months’ rent. However, some property types, especially condominiums, charge a move-in fee as well. This covers the charge of updating mailboxes, reprogramming buzzers, etc. This can range from $100-$200.Based on a $1,000 monthly rent:**Fee type****Minimum****Maximum**Broker’s fee$1000$1800Application fee$35$75Security deposit$1000$2000Move-in fee$100$200**Total****$2135****$4200****What about my furry friend?**Many rentals will charge a cleaning fee or surcharge for a pet. Due to people abusing the “service animal” loophole this is usually at the landlord’s discretion. However, more and more people are single or don’t have a roommate, landlords are becoming more accepting of our four legged friends. In fact, many landlords including myself see your pet ownership as a sign that you are more of a dependable long term tenant – minus the crazy cat lady/man with more than 3 cats.**But my spouse wants to buy our own home?**If you are in a Primary market the prevailing market rent to value ratios under 1% usually means that if you rent you will be able to live in a much nicer home than if you bought, assuming you had the same PITI mortgage payment.Say you are looking at a $1,600 mortgage on a $350,000 home (typical 20% down payment). Now consider taking that same $1,600 monthly payment you will be amazed that you would be able to live in a nicer home. This does not even take into account the hidden costs of homeownership that we will talk about in a bit – and you can dive into the numbers with the accompanying spreadsheet (Is a Home a Good Financial investment).And by the way, have you ever driven a rental car? It’s a lot more fun when you are not worried about a dent or paint chip here or there.**Purchasing a home**Now we’ve looked at the pros and cons of renting, we’ll do the same for purchasing a home or property, what to consider when taking out a mortgage, and how your home could be used to finance purchasing a property to rent.Supersize me “homeowner style”Average sizes of homes have increased according to the U.S. Census Bureau. In 1973 the average home was 1,525 sq. ft. Today that number approaches 2,500 sq. ft. That’s almost a 64% increase in square footage on the average home!Despite the average family size decreasing from 2.9 persons per household in 1973 to 2.5 persons today, kitchens have doubled in size in those 4 decades along with the average ceiling height in a home rising by more than a foot. But more space in a home ultimately means more space for “things” and the increase in maintenance costs. Add to the mix cheaper and faster construction methods and you have the beginnings of a bubble.The graph below illustrates Robert Shiller’s data. Shiller, a Yale University Economics Professor, shows how housing prices have changed over time using an arbitrary starting point of 100 adjusting for inflation.**Difference between a home and a property**This might seem like a strange concept, but there is a difference between a home and a property. Why? A home is somewhere you live, where you invest emotionally as well financially. It’s your anchor. A property can be anything from a piece of land to a luxury penthouse, but where you don’t intend to live and is purchased as an investment.Buying a home is a huge commitment. No-one can argue with that. While home ownership is usually associated with stability and security to many, that stability and security can be a double edge sword become if your circumstances change.When our parents and grandparents bought their homes, they probably expected to stay in the same area, near their families, working for the same employer for most of their life. If they wanted a new job, chances were that they’d find one in the same area. People didn’t often move away from their roots.Employment trends have changed where very few jobs are for life anymore. And many people – especially professionals – find themselves looking further afield for work. Perhaps the perfect job is on the other side of the country. What do you do? Being tied into owning a home can restrict where you can work and, therefore, your earning potential.Homeownership also ties up your cashflow, and the more expensive your property, the more that’s true.The biggest mistake I see young couples make is not having a personal balance sheet that has a net positive cashflow. This cashflow is the oxygen for investing and learning about investing. Along with just plain overspending, buying a house is the biggest cashflow suck in the middle-classes’ budget.For an analysis of the opportunity costs – check out the accompaniment spreadsheet that outlines the numbers.**The Big Questions**Before deciding to purchase your home, you need to understand what your priorities are. Without understanding these, you could easily make a costly mistake. Let’s call these The Big Questions, and they are:* What do you want your financial situation to be in five or ten years’ time? What would your desired savings be? Are those savings realistic and achievable if you purchase a home?* What space do you consider essential? How much do you own? Are you willing to downsize and declutter if necessary? Are you someone who likes to be able to get away from the other people in the house and have your own space? Would you be prepared put your ego aside to live with a smaller home if this gives you financial freedom?* How much time are you prepared to spend on renovation, repairs, and maintenance?* I know what you young parents are thinking… and I ask you do your kids really need a yard? They’re on their electronics all the time anyway. And with you taking that higher paid job to afford the mortgage they will never see you.**The advantages of homeowning*** Depending on the area, mortgage repayments *can *be lower than rent.* Unlike renting, where a landlord can decide not to renew your contract, you can live there as long as you like as long as you make your monthly payments and ever-increasing property taxes.* A fixed rate mortgage means that your costs are predictable.* The interest and property tax on the mortgage are tax deductible. Note: BS Flag!* For those who struggle to save, a home is a forced savings plan.* The value of the home *may** You have an asset you can sell or refinance if you need access to cash.**The disadvantages of home ownership*** It’s a very long-term financial commitment. How many of us can imagine where we’ll be in thirty years? 5 years even?* Mortgage payments may not be cheaper than renting. And purchasing a property requires a down payment plus considerable closing costs. Money today is more valuable than in the future especially if you can invest and make 10-20% per year.* Any maintenance and repairs are your responsibility. There’s no way to predict what might go wrong, and costs can add up.* Should you want or need to move, selling a home can take some time, making you less mobile.* The value of your home may fall, depending on the economy.* You can have terrible neighbors who start a side business selling Meth or, potentially more impactful, have the next door teenager start their own garage band.* If your life circumstances change, e.g. your wages fall and you can’t afford the mortgage, then you’re stuck in the situation until you’re able to sell.* Have you ever seen those scummy “buy your home for cash” ads? It works because everyday people run into problems and one day it might be you. (Sorry, that was a low-brow sales technique!)**The History of a Mortgage**Majority homeownership in the United States is mostly a recent phenomenon. Until the mid 1940’s, most Americans did not own their places of residence.Big banks and their activities could be argued to have been the catalyst for the “American Dream” of homeownership becoming the majority statistic post-1950. The National Bank Acts of the 1860’s kick-started this gradual change. US Treasury securities now backed the US National Currency and standardized practices of US national banks. And by the 1890’s, American banks saw the popularity of Mortgages rise.These early mortgages at the turn of the 1900s were in stark contrast to those that we see today. A typical homeowner in 1916 would pay up to 50% down with a 5-year interest-only-structure whereas a typical homeowner will save for 20% with the standard 30-year plan.Amortized interest front loads the fees and interest in the beginning of the terms and greatly advantages the bank instead of the homeowner. For more discussion on this phenomenon check out this webinar (https://simplepassivecashflow.com/home)on the topic to pay your mortgage off much faster with instead of simple interest.**What to consider when taking on a mortgage**The vast majority of people purchasing a property, whether it’s for their own use or to rent, will need a mortgage. A mortgage is a long-term commitment, typically thirty years in the USA. Fifteen years is the next most popular option. On average, most people now occupy the same home for around nine years (How Long Do Most Families Stay in Their Home?).Purchasing a home isn’t cheap. Lenders typically require a 20% down payment, which immediately reduces your available funds. You’re then tied into an ongoing financial commitment that reduces your cashflow for years to come. Even though the high level of competition in the mortgage market means that interest rates are generally competitive, mortgage payments are still a significant chunk of your income.If you are also a real estate investor looking for additional income be mindful that one of the biggest factor’s in getting a loan is the debt-to-income ratio. Having a large mortgage (loan) without the income coming in from your primary residence will greatly impact this ratio.**Fixed rate mortgages vs adjustable rate**We all know that interest rates vary. Most Americans opt for fixed interest mortgages, preferring to know what their costs will be for the foreseeable future. The downside is that any drop in rates can be taken advantage of only through refinancing, which incurs additional costs.While Adjustable Rate Mortgages (ARMs) are available, and often have lower interest rates initially, rates can rise dramatically if the economy changes, making them a higher risk. However, homeowners can always refinance.**Costs of taking out a mortgage**As mentioned above, there are a number of costs associated with securing a mortgage, which can become significant. Although they can vary depending on the state and municipality, these costs, typically are:* **Mortgage application fee**: around 1% of the total loan, payable on the application even if the loan isn’t approved. This is why it seems like everyone is trying to give you a loan because it’s really profitable to be a lending broker.* **Home appraisal charges**: even if you stay with the same lender, they may want to appraise your home to confirm the current market value. Charges vary between $225 and $700.* **Loan origination fees**: a charge applied by the lender for processing the loan, before the application is sent to the underwriter. Usually between 0.5% and 1%. The smaller the loan, the higher the percentage is likely to be as both require the same amount of work.* **Documents preparation fee**: a charge for preparing key documents, including the refinance mortgage, note, and truth-in-lending statements. Typically, $200-500.* **Title search fee**: before lending, the lender wants to check that the home’s title is free and clear of liens and encumbrances. It’s usually carried out by a separate company which will check court records, prior deeds, and property databases. Usually $700-900, which includes insurance to protect the borrower against any losses caused by legal issues relating to the search.* **Recording fee**: set by local or State government, these are the fees for recording the refinancing publicly. Varies between $25 and $250.* **Survey fee**: to ensure that the property boundaries are followed and are not being encroached on by adjacent properties. Usually between $175-300.* **Inspection fee**: not always necessary, but some lenders require an inspection of the home’s plumbing, electrical and HVAC systems and roofing, and check for potential infestation. $175-300.* **Attorney fees**: again, not always required, but some states require attorneys for both the borrower and lender to confirm that the closing documentation is correct. Typically, $500-1000* **Flood certification**: if a property is in a federally-designated flood zone, homeowners may be required to add flood or life of loan insurance coverage. Certification costs between $50-150.**Fess on a $100,000 mortgage:****Fee type****Minimum****Maximum**Application fee$1000$1000Home appraisal$225$700Loan origination fees$1000$1500Document preparation fee$200$500Title search fee$700$900Survey fee$150$400Inspection fees0$300Attorney fees0$1000Flood certification0$150**Total****$3275****$6450**These are all in addition to a 20% down payment.While these costs may be negotiable to an extent, they still add up. It may be possible to roll the costs into the loan, but will then attract interest alongside the capital amount, and may push up the interest rate.**Choosing a home**Part of the purpose of this guide is to help you achieve financial freedom. Choosing the right property will make a real difference to the possibility of doing this, so careful consideration needs to be given when purchasing a home. Remember you are competing with other emotional buyers. It’s a race to the bottom, and based on the “greater fools theory” where there will always be a greater fool paying more.**Property size**When buying a home, people often choose to buy the biggest and most expensive home they can afford. A logical fallacy is to think “this is my forever home where my 5 kids and grandchildren will hang out!”It’s not surprising as homeowners want the best for themselves and their family. But purchasing the best home on the market and being financially solvent is mutually exclusive. Instead, buyers should consider taking on a smaller, cheaper property. Not only will mortgage costs be lower, so will maintenance and taxes, and you’ll have better cash flow which can be the foundation of your financial freedom.**Apartments vs houses**Apartments offer a number of benefits. Again, they are usually cheaper than houses and are easier to maintain. Even better, emergency costs are shared by all the residents in the building, reducing the cost of repairs.As investors, we like investing in apartments as opposed to homes. Simply put tenants can only screw up 6 sides of the property in an apartment (ground, ceiling, and 4 walls) whereas a home has a total 10 sides and a yard at their disposal. Factor this into your decision as you evaluation the hidden maintenance cost.**Cheaper properties**A cheaper property means the down payment needed is smaller. If you have a large enough amount, the funds could be used as a down payment on two or more properties for an immediate investment. Alternatively, as lower costs free up cash, these savings can be used to purchase another rental property which is proven to snowball into more and more investments.**The problem with a fixer-upper**If you’re buying a home, you want it to increase in value. Taking on a fixer-upper can seem like a way of guaranteeing this, which is why it’s become a very popular option with people who can’t afford a decent house in a good area. But while taking on a fixer-upper can seem attractive there are a number of common mistakes that inexperienced buyers make which end up costing them money rather than making it. These are:* Rushing into a purchase without fully costing out the necessary work or considering all the holding and sales costs.* Buying an overpriced value home rather than a fixer-upper. A true fixer-upper should be around 10-20% under the local market value.* Not checking the floorplans and layout to ensure that they’re accurate and workable, leading to considerable expenditure to correct it.* Finding out that the property has foundational or structural issues.* Underestimating the cost of repairs.* Underestimating the work required.* Not considering whether it’s an area that people are likely to want to live in. This is especially true if adjacent properties are boarded up or also require extensive work.* The repairs are NOT financed, so require more funds out of your pocket, which again cripples your precious investment capital. In terms of the finances and return on your equity this is where you hurt the most.**Using your home to purchase other properties**Another way of purchasing other properties is to use the equity you’ve built up in your home. This can be done by a complete refinance of your home or you could consider taking out a HELOC (Hacking your debt with a HELOC - Simple Passive Cashflow).HELOC stands for ‘home equity line of credit’ or, more simply, ‘home equity line’. In some ways, it’s similar to a mortgage, as it is a debt secured against your property. It differs from a mortgage in two significant ways. These are:* A home equity *loan* (mortgage) is a lump sum, paid at once. A HELOC allows homeowners to borrow or draw money on multiple occasions usually over a period of 5-10 years, as the need arises, up to a maximum amount.* As mentioned above, a home equity loan usually has a fixed mortgage rate, while a HELOC normally has variable interest rates linked to Bank Prime.Typically, during the first 5-10 years, borrowers need to pay back only the interest on the sum(s) they have borrowed. Repayment periods begin after the borrowing period and are usually between 10-20 years. The repayment amount is calculated by dividing the capital accessed by the number of months in the repayment period. However, borrowers should be aware that some lenders require the capital to be repaid in its entirety at the end of the drawdown period.Some lenders won’t allow a second charge to be secured against properties, so borrowers should seek permission from their mortgage company first.**Advantages of HELOC*** HELOCs are a convenient way of funding one-off needs, such as a down payment on a second property, or renovation.* Interest is paid only on the sum borrowed, and during the drawdown period, borrowers can repay just the interest.* Upfront costs are very low. The cost for taking out a $150,000 HELOC loan is typically less than $1000 and may be paid by the lender without a rate adjustment.* Some HELOCs can be converted into fixed-rate loans when a drawdown is taken.**Disadvantages of a HELOC*** HELOCs are adjustable rate mortgages (ARM) but are much riskier than a standard ARM thanks to the way the interest is calculated. If the interest rate increases on 30 April, then the HELOC rate will rise on 1 May. There are also no interest rate caps.* Ensuring that the HELOC is repaid can require considerable financial discipline, especially if the capital must be repaid at the end of the drawdown period.**Buying a property to rent**As fewer people are buying their own home, there is a strong demand for rental properties across the country. This demand has been fueled by factors such as the 2008 economic crash, the high number of people with poor credit ratings, stagnant wages, rising house prices, and the increased mobility of the workforce.Owning one or more rental properties can be a good investment in your financial freedom. But it requires careful consideration. It’s not like buying a home. When you buy your home things like space, schools and amenities will be your primary focus, and you’re likely to spend more to get your perfect house.When choosing a rental, you need to look at the local market. Check with local real estate agents what type of properties are in demand and choose accordingly. It may be that single bed apartments are snapped up, or that there’s a shortage of family homes. Buying in the best locations with the best school districts will lead to more competition and overpaying for the asset and its income stream.If you do your homework, buying a property to rent can be profitable over time. It’s a way of generating a passive income, while also building up savings through increasing the equity in the property. In many cases, renting will cover the mortgage and the taxes, if not generate a small profit on top.**Renting out your home**Should you want to relocate or want to improve your cashflow, renting out your own home is a possibility. However, this option comes with a number of potential complications – both financial and emotional – that need to be considered.Financially, you’ll need to inform your mortgage company when your home stops being your residence. Different mortgage lenders have different rules for borrowers who convert their homes into rental properties. It’s common for them to require you to live in your home for at least two years. Typically, interest rates for buy to rent properties are higher because of the increased risk to the property, and you may need to refinance.When you purchase a home, you invest in it emotionally as well as financially. You decorate it in your preferred style. You make memories there. You have a connection. Then strangers live in your home. Perhaps they’ll be good renters and take care of it as if it were their own. But perhaps they won’t and seeing what was once your home damaged can be a devastating experience. Even if you find good tenants, seeing someone else in your home can be an emotional experience. With a property bought purely as an investment, it’s much easier to be dispassionate and deal calmly with any issues.**Factors to consider when buying a property to rent**Just as with deciding whether to rent or buy your home, deciding where – or even whether – to buy to rent needs to be carefully considered.**Rent to value ratios**The Rent-to-Value Ratio is a quick calculation real estate investors run to determine if a property will cashflow. Take a $100,000 home that rents for $1,000 a month, the Rent-to-Value Ratio would be 1% ($100,000/$1,000). One of the biggest factors to consider when buying a rental property is the rent to value ratio. In some areas, such as Seattle, Los Angeles and the East Coast, properties are expensive to buy, but rents are relatively low. In these areas, rent to value ratios (c:\Users\emmat\Downloads\Simple Passive Cashflow - Simple Passive Cashflow\rv) can be less than 0.75%, meaning that there is little chance of even covering the costs, making purchasing a property a poor decision. In areas where housing is cheaper to buy and rent to value ratios are much higher, then it makes sense to purchase a property and rent it out. Some markets you can find these Rent-to-Value Ratios over 1.5% in solid areas.**Type of property**As already mentioned, knowing the local market and which type of properties are in demand is important. A property sitting empty is costing you money, not generating it. However, even knowing that, there is still the decision as to whether it’s better to take on a more expensive property that will attract a higher rent, or two or more smaller ones that may have a higher rent to value ratio even though the rents are lower.**Location**In real estate, the mantra is ‘location, location, location’, and that’s just as true for rental properties. Getting the location of the property right is just as important as choosing the right property type. If the market wants apartments in the city and large houses in the suburbs, buying an apartment in the suburb could be a costly mistake.Location opens up other possibilities such as vacation properties. These can range from city apartments, beach or lake-front houses, to near big tourist attractions, anywhere that people are keen to visit. With the development of sites such as AirBnB, it’s easy to advertise properties for short-term rentals. While the property is likely to be empty at times this could easily be offset by the higher amounts that you can charge, and you can get to enjoy the property too.**Resources**Hopefully this guide has given you plenty to think about, and you now feel confident that you’re in a position to make decisions that will benefit your financial future. However, the right decision needs the right information, and so we’ve included these rent-vs-buy calculators from *Find Real Estate, Homes for Sale, Apartments & Houses for Rent | realtor.com®* (Rent Vs. Buy Calculator) and* Real Estate Listings, Homes For Sale, Housing Data* (Rent vs Buy Calculator - Is it cheaper to buy or rent) to provide a personalized breakdown to assess whether buying or renting in your neighborhood of choice is most financially beneficial option for you.**Closing**The wealthy (not necessarily the rich) believe that *home* is not a *place* or *house*. It is the people that make a *home*. All too often a big house (the dream) is paired with long commutes and stressful jobs which minimizes the time away from home and what really matters.The wealthy don’t attempt to keep up with the Joneses. They keep things simple and spend their resources (time and money) on the essentials and make sound financial decisions.On an emotional note, although buying a home goes against everything from an investment standpoint there is something to be said about the security of owning especially if you have a family with kids.

You should do this NOW.Don’t buy a house to live in if you live in a primary market (Seattle, CA, Hawaii)., Instead buy rentals in secondary markets like Birmingham, Atlanta, Indianapolis, Kansas City, Memphis, Little Rock, Jacksonville, Ohio, or other tertiary markets.Sophisticated investors focus on the numbers… which require the Rent-to-Value Ratio of more than 1% is needed to be able to cashflow after expenses. You find the Rent-to-Value Ratio by taking the monthly rent dividing by the purchase price. For example a $100,000 home that rents for 1,000 a month would have a Rent-to-Value Ratio of 1%.Home ownership is part of the American Dream. In the minds of many, psychologically and mentally, it represents security, stability, and financial independence. Renting has traditionally been seen as throwing money away, as many people also see homeownership as a financial investment in their future thanks to the popular belief that property will only ever rise in value, even if the recession of 2008 demonstrated otherwise.The reality is that allowing for inflation, house prices have increased by just 1% during the last century, representing an extremely poor return on investment, and one that has been easily outperformed by the stock markets and direct investment in businesses and hard assets. Research has shown that the net value of homeowners is, on average, 44 times greater than that of non-homeowners, however, it’s unclear whether this is a correlation or causation.So should you buy or rent? The truth is that there’s no ‘one size fits all’ answer to that question. Every individual has different circumstances that determine if buying or renting their home is best for their long-term financial prosperity. This guide is about you making the right financial decisions for you. It’ll examine the pros and cons of buying and renting, what you should take into account before making a decision, and the relative financial considerations of a mortgage versus rent.If you are a numbers guy here is the spreadsheet (Is a Home a Good Financial investment).Join the movement of high income earners who are renters (Rich and Renting: Understanding the Surge of High-Earning Renters - Rentonomics) cause they did the math and did what made sense.*I spent $300 dollars for an editor to get the grammar and spelling right on this article. I am sick and tired of seeing young families make this mistake.**What’s in this guide?**This guide will cover everything you need to consider about purchasing a home, renting, and purchasing a property to rent. This includes:* The advantages and disadvantages of renting* The advantages and disadvantages of buying* The costs associated with renting vs buying* Choosing a property* Taking on a home loan* Using your home to finance your future* Buying a property to rent* Useful resources**Financial freedom**Firstly, this guide is about helping you to achieve financial freedom. What the wealthy do to achieve security and optimize investment returns is not always conventional wisdom. When financial freedom is your goal, there are two simple principles to follow:1. Prioritize purchases/acquisitions that make you money2. If a purchase/acquisition doesn’t pay you and you are speculating on increasing home values, don’t do it.While this may seem black and white, sticking to these principles will again depend upon your individual circumstances. See the difference in how the poor, the middle-class, and the wealthy live financially:For some, buying will generate the most financial opportunities, for others it’ll be rentingHint: If you can’t save money to save your life then buying a home acts as a forced savings account, which will benefit you in the future.So let’s look at the case for each.Rent or buy? What to considerBefore going any further in this guide and considering whether buying or renting a home is the best option for you, there are a few important things you should bear in mind as you continue. These are:* Are you comfortable living with unknown and variable costs? Or prefer having your costs fixed?* Do you like to personalize your home, or are you happy to live with other people’s choices?* How much space do you really need? Do you really need 2,000 square feet and that 4th bedroom to raise a family or is that your ego’s need to *keep up with the Joneses* talking?* How much time and work are you prepared to put into the upkeep and maintenance?**Renting**Chances are that you’ve been told repeatedly that renting is like flushing water down the toilet. That you are paying money out each month and twenty years later you have nothing to show for.The wealthy do not believe this misnomer and see housing as just another line item in their personal finances.Our changing lifestyles mean that renting can be a sensible option for many people which can actually help you achieve your financial dreams.So what are the advantages of renting?**Flexibility and mobility**The biggest argument in favor of renting over buying is the flexibility and mobility it offers. If you have to – or want to – move regularly, then renting allows you to easily pick up and relocate. Equally, if you decide you don’t like the property/neighborhood after all, that your commute is too long, or that you want to get your kids into a better school district, you have the flexibility to do that. Remember, gone are the days where you stay a loyal employee for decades. Often many professionals need to be mobile to compete for the best positions and salaries. Many of my friends in IT and Tech report dusting off the resume after they have reached the 6-month employment milestone. Having geographical mobility is essential in competing for the best jobs.**Liquidity in difficult times**Renting can often be cheaper than buying. Some rents even include utilities, and when things break, it’s not your problem, call the landlord – it’s their problem! That means you have more available cash. Don’t forget that life is unpredictable and things change. Perhaps your income goes down, unexpected bills occur, your mom falls in the shower and can’t get up, or your deadbeat brother-in-law hears of the rental properties you are picking up and needs a place to hang out and join your family. The beauty of renting is that if your financial circumstances change, you have the option of moving to a cheaper property without too much difficulty instead of selling the home in a fire sale due out of distress.**Credit ratings**Not everyone has a perfect credit history. Experts estimate that around a third of all American adults have a credit score below 601 (How Many Americans Have Bad Credit?) and so are considered a poor or bad risk. This greatly reduces the likelihood of qualifying for a regular home loan, meaning that borrowers would have to pay higher interest rates on any borrowings. If you fall into this category, buying is unlikely to be worth the expense.Note: Don’t let real estate or lending brokers trick you into using the “scarcity tactic trick” where they say interest rates are at all-time lows! Buy now because it’s not getting any lower! Remember they get paid when you buy or originate a loan. Locking in a low-interest rate is a poor reason to go into a 30-year commitment for something you should not buy in the first place, even at a 0%.**Buyer’s remorse**A survey by *Trulia * (Trulia's Research: Original Reporting on Housing Trends, News, and Special Reports that 44% of American homeowners had some form of buyer’s remorse, and around a fifth had actually been prevented from changing their situation because of making a mistake when purchasing a home. With renting, if you’re not happy, you’re free to move at the end of your lease. Paying a couple of dudes to move your stuff from time to time is pretty cheap in the grand scheme of things.**Local costs**If the area you live in has high property taxes, high insurance costs, or low rent-to-value ratios, then the math on renting makes sense. The rent on identical properties can vary hugely based simply because of their location, for example a $100,000 house might be leased for $500 a month in one town but $1,500 in another. Where rent to ratio values are low, renting is the savvier decision. Often primary markets such as San Francisco, Seattle, Los Angeles, New York, Washington DC, Honolulu, (are cool places to live but) have low rent to value ratios, as a result of too much wealth living there driving up the overall market. Investing in secondary and tertiary markets where the rent to value ratios are high means that the income more than supports the mortgage and expenses, for positive cashflow. Examples of these locations are Atlanta, San Antonio, Houston, Indianapolis, Birmingham, Memphis, or Kansas City. In these areas, it may make sense to buy a primary residence to live in.**The disadvantages of renting**Of course, while there are many advantages to renting, there are also drawbacks that can’t be ignored, and each individual needs to decide if the benefits outweigh the disadvantages.**Not feeling at home**Tenants are rarely allowed to decorate the property the way they would like. Decor is usually neutral and can feel clinical. Personalization is usually limited to putting up pictures and damage caused by doing so must be rectified before the tenant leaves. If personalization is important to you, then get over it… nah just kidding**Rent Increases**Rents usually rise annually. In some areas, rents increases are limited by local regulations. In most instances he landlord is free to increase it by as much as they like. In areas that are very popular, rent rises can be a significant increase to reflect increasing market demand.**Lack of security**While renting offers flexibility, it also lacks security. Your landlord might decide that they want to sell the property or have someone else live there. If you’re on a month to month lease, typically your landlord only needs to give 30-60 days’ notice.Moving residences costs money, and you’ll need to find a deposit plus up to two months’ rent in advance for a new property, alongside the fees listed below. And that’s all before your landlord returns your deposit.Tip: Building a relationship with your landlord could be invaluable. If you are renting a home in a primary market where the numbers don’t make sense, then chances are that you’re dealing with an amateur landlord. Often amateur landlords just want reliability and rent paid on time, as opposed to top dollar. You may be able to sign a longer rental agreement or just be given a further heads-up if the landlord is looking to make any moves with the property. They may need you more than you need them so try to negotiate a lower rent by signing a longer rent or a fair rent escalation factor.**Lack of tax breaks**Homeowners brag about claiming extra tax write offs on their mortgage interest against their tax bill. This is true that tenants can’t claim anything against their rent but this argument is a very weak one and likely dogma created by brokers to motivate you to create more transactional commissions.Spending 100 dollars’ interest to deduct it on your taxes is actually one of the dumbest pieces of financial advice I have ever heard. They’re basically telling you to incur expenses to save a fraction of it. The tax benefits that you get as a real estate investor will blow the mortgage interest tax deduction out of the water due to taking other expenses as and operational business, depreciation, and not to mention the overwhelming greater return on investment if you bought a rental property than buying a primary residence to live in. And if you have seen the 2018 new tax laws it’s just a matter of time until the tax deduction for the regular person is going to be phased out. The middle-class just can’t catch a break!**Additional costs**Taking out a new lease incurs a number of costs. These can vary with state and your circumstances, but typically include:* **Broker’s fee**: whether or not you need a broker will depend on where you want to live. In many big cities, landlords or property managers frequently won’t consider any applications that haven’t come through a broker. Typical fees vary between one month’s rent and 15% of the total annual rent. However, this is not the case in most circumstances but I’m just trying to be a good journalist here.* **Application fee**: this covers the cost for credit and criminal background checks. Usually cost between $35-75 per person.* **Security deposit**: we’ve already mentioned this, and it’s generally set at one or two months’ rent. However, some property types, especially condominiums, charge a move-in fee as well. This covers the charge of updating mailboxes, reprogramming buzzers, etc. This can range from $100-$200.Based on a $1,000 monthly rent:**Fee type****Minimum****Maximum**Broker’s fee$1000$1800Application fee$35$75Security deposit$1000$2000Move-in fee$100$200**Total****$2135****$4200****What about my furry friend?**Many rentals will charge a cleaning fee or surcharge for a pet. Due to people abusing the “service animal” loophole this is usually at the landlord’s discretion. However, more and more people are single or don’t have a roommate, landlords are becoming more accepting of our four legged friends. In fact, many landlords including myself see your pet ownership as a sign that you are more of a dependable long term tenant – minus the crazy cat lady/man with more than 3 cats.**But my spouse wants to buy our own home?**If you are in a Primary market the prevailing market rent to value ratios under 1% usually means that if you rent you will be able to live in a much nicer home than if you bought, assuming you had the same PITI mortgage payment.Say you are looking at a $1,600 mortgage on a $350,000 home (typical 20% down payment). Now consider taking that same $1,600 monthly payment you will be amazed that you would be able to live in a nicer home. This does not even take into account the hidden costs of homeownership that we will talk about in a bit – and you can dive into the numbers with the accompanying spreadsheet (Is a Home a Good Financial investment).And by the way, have you ever driven a rental car? It’s a lot more fun when you are not worried about a dent or paint chip here or there.**Purchasing a home**Now we’ve looked at the pros and cons of renting, we’ll do the same for purchasing a home or property, what to consider when taking out a mortgage, and how your home could be used to finance purchasing a property to rent.Supersize me “homeowner style”Average sizes of homes have increased according to the U.S. Census Bureau. In 1973 the average home was 1,525 sq. ft. Today that number approaches 2,500 sq. ft. That’s almost a 64% increase in square footage on the average home!Despite the average family size decreasing from 2.9 persons per household in 1973 to 2.5 persons today, kitchens have doubled in size in those 4 decades along with the average ceiling height in a home rising by more than a foot. But more space in a home ultimately means more space for “things” and the increase in maintenance costs. Add to the mix cheaper and faster construction methods and you have the beginnings of a bubble.The graph below illustrates Robert Shiller’s data. Shiller, a Yale University Economics Professor, shows how housing prices have changed over time using an arbitrary starting point of 100 adjusting for inflation.**Difference between a home and a property**This might seem like a strange concept, but there is a difference between a home and a property. Why? A home is somewhere you live, where you invest emotionally as well financially. It’s your anchor. A property can be anything from a piece of land to a luxury penthouse, but where you don’t intend to live and is purchased as an investment.Buying a home is a huge commitment. No-one can argue with that. While home ownership is usually associated with stability and security to many, that stability and security can be a double edge sword become if your circumstances change.When our parents and grandparents bought their homes, they probably expected to stay in the same area, near their families, working for the same employer for most of their life. If they wanted a new job, chances were that they’d find one in the same area. People didn’t often move away from their roots.Employment trends have changed where very few jobs are for life anymore. And many people – especially professionals – find themselves looking further afield for work. Perhaps the perfect job is on the other side of the country. What do you do? Being tied into owning a home can restrict where you can work and, therefore, your earning potential.Homeownership also ties up your cashflow, and the more expensive your property, the more that’s true.The biggest mistake I see young couples make is not having a personal balance sheet that has a net positive cashflow. This cashflow is the oxygen for investing and learning about investing. Along with just plain overspending, buying a house is the biggest cashflow suck in the middle-classes’ budget.For an analysis of the opportunity costs – check out the accompaniment spreadsheet that outlines the numbers.**The Big Questions**Before deciding to purchase your home, you need to understand what your priorities are. Without understanding these, you could easily make a costly mistake. Let’s call these The Big Questions, and they are:* What do you want your financial situation to be in five or ten years’ time? What would your desired savings be? Are those savings realistic and achievable if you purchase a home?* What space do you consider essential? How much do you own? Are you willing to downsize and declutter if necessary? Are you someone who likes to be able to get away from the other people in the house and have your own space? Would you be prepared put your ego aside to live with a smaller home if this gives you financial freedom?* How much time are you prepared to spend on renovation, repairs, and maintenance?* I know what you young parents are thinking… and I ask you do your kids really need a yard? They’re on their electronics all the time anyway. And with you taking that higher paid job to afford the mortgage they will never see you.**The advantages of homeowning*** Depending on the area, mortgage repayments *can *be lower than rent.* Unlike renting, where a landlord can decide not to renew your contract, you can live there as long as you like as long as you make your monthly payments and ever-increasing property taxes.* A fixed rate mortgage means that your costs are predictable.* The interest and property tax on the mortgage are tax deductible. Note: BS Flag!* For those who struggle to save, a home is a forced savings plan.* The value of the home *may** You have an asset you can sell or refinance if you need access to cash.**The disadvantages of home ownership*** It’s a very long-term financial commitment. How many of us can imagine where we’ll be in thirty years? 5 years even?* Mortgage payments may not be cheaper than renting. And purchasing a property requires a down payment plus considerable closing costs. Money today is more valuable than in the future especially if you can invest and make 10-20% per year.* Any maintenance and repairs are your responsibility. There’s no way to predict what might go wrong, and costs can add up.* Should you want or need to move, selling a home can take some time, making you less mobile.* The value of your home may fall, depending on the economy.* You can have terrible neighbors who start a side business selling Meth or, potentially more impactful, have the next door teenager start their own garage band.* If your life circumstances change, e.g. your wages fall and you can’t afford the mortgage, then you’re stuck in the situation until you’re able to sell.* Have you ever seen those scummy “buy your home for cash” ads? It works because everyday people run into problems and one day it might be you. (Sorry, that was a low-brow sales technique!)**The History of a Mortgage**Majority homeownership in the United States is mostly a recent phenomenon. Until the mid 1940’s, most Americans did not own their places of residence.Big banks and their activities could be argued to have been the catalyst for the “American Dream” of homeownership becoming the majority statistic post-1950. The National Bank Acts of the 1860’s kick-started this gradual change. US Treasury securities now backed the US National Currency and standardized practices of US national banks. And by the 1890’s, American banks saw the popularity of Mortgages rise.These early mortgages at the turn of the 1900s were in stark contrast to those that we see today. A typical homeowner in 1916 would pay up to 50% down with a 5-year interest-only-structure whereas a typical homeowner will save for 20% with the standard 30-year plan.Amortized interest front loads the fees and interest in the beginning of the terms and greatly advantages the bank instead of the homeowner. For more discussion on this phenomenon check out this webinar the topic to pay your mortgage off much faster with instead of simple interest.**What to consider when taking on a mortgage**The vast majority of people purchasing a property, whether it’s for their own use or to rent, will need a mortgage. A mortgage is a long-term commitment, typically thirty years in the USA. Fifteen years is the next most popular option. On average, most people now occupy the same home for around nine years (How Long Do Most Families Stay in Their Home?).Purchasing a home isn’t cheap. Lenders typically require a 20% down payment, which immediately reduces your available funds. You’re then tied into an ongoing financial commitment that reduces your cashflow for years to come. Even though the high level of competition in the mortgage market means that interest rates are generally competitive, mortgage payments are still a significant chunk of your income.If you are also a real estate investor looking for additional income be mindful that one of the biggest factor’s in getting a loan is the debt-to-income ratio. Having a large mortgage (loan) without the income coming in from your primary residence will greatly impact this ratio.**Fixed rate mortgages vs adjustable rate**We all know that interest rates vary. Most Americans opt for fixed interest mortgages, preferring to know what their costs will be for the foreseeable future. The downside is that any drop in rates can be taken advantage of only through refinancing, which incurs additional costs.While Adjustable Rate Mortgages (ARMs) are available, and often have lower interest rates initially, rates can rise dramatically if the economy changes, making them a higher risk. However, homeowners can always refinance.**Costs of taking out a mortgage**As mentioned above, there are a number of costs associated with securing a mortgage, which can become significant. Although they can vary depending on the state and municipality, these costs, typically are:* **Mortgage application fee**: around 1% of the total loan, payable on the application even if the loan isn’t approved. This is why it seems like everyone is trying to give you a loan because it’s really profitable to be a lending broker.* **Home appraisal charges**: even if you stay with the same lender, they may want to appraise your home to confirm the current market value. Charges vary between $225 and $700.* **Loan origination fees**: a charge applied by the lender for processing the loan, before the application is sent to the underwriter. Usually between 0.5% and 1%. The smaller the loan, the higher the percentage is likely to be as both require the same amount of work.* **Documents preparation fee**: a charge for preparing key documents, including the refinance mortgage, note, and truth-in-lending statements. Typically, $200-500.* **Title search fee**: before lending, the lender wants to check that the home’s title is free and clear of liens and encumbrances. It’s usually carried out by a separate company which will check court records, prior deeds, and property databases. Usually $700-900, which includes insurance to protect the borrower against any losses caused by legal issues relating to the search.* **Recording fee**: set by local or State government, these are the fees for recording the refinancing publicly. Varies between $25 and $250.* **Survey fee**: to ensure that the property boundaries are followed and are not being encroached on by adjacent properties. Usually between $175-300.* **Inspection fee**: not always necessary, but some lenders require an inspection of the home’s plumbing, electrical and HVAC systems and roofing, and check for potential infestation. $175-300.* **Attorney fees**: again, not always required, but some states require attorneys for both the borrower and lender to confirm that the closing documentation is correct. Typically, $500-1000* **Flood certification**: if a property is in a federally-designated flood zone, homeowners may be required to add flood or life of loan insurance coverage. Certification costs between $50-150.**Fess on a $100,000 mortgage:****Fee type****Minimum****Maximum**Application fee$1000$1000Home appraisal$225$700Loan origination fees$1000$1500Document preparation fee$200$500Title search fee$700$900Survey fee$150$400Inspection fees0$300Attorney fees0$1000Flood certification0$150**Total****$3275****$6450**These are all in addition to a 20% down payment.While these costs may be negotiable to an extent, they still add up. It may be possible to roll the costs into the loan, but will then attract interest alongside the capital amount, and may push up the interest rate.**Choosing a home**Part of the purpose of this guide is to help you achieve financial freedom. Choosing the right property will make a real difference to the possibility of doing this, so careful consideration needs to be given when purchasing a home. Remember you are competing with other emotional buyers. It’s a race to the bottom, and based on the “greater fools theory” where there will always be a greater fool paying more.**Property size**When buying a home, people often choose to buy the biggest and most expensive home they can afford. A logical fallacy is to think “this is my forever home where my 5 kids and grandchildren will hang out!”It’s not surprising as homeowners want the best for themselves and their family. But purchasing the best home on the market and being financially solvent is mutually exclusive. Instead, buyers should consider taking on a smaller, cheaper property. Not only will mortgage costs be lower, so will maintenance and taxes, and you’ll have better cash flow which can be the foundation of your financial freedom.**Apartments vs houses**Apartments offer a number of benefits. Again, they are usually cheaper than houses and are easier to maintain. Even better, emergency costs are shared by all the residents in the building, reducing the cost of repairs.As investors, we like investing in apartments as opposed to homes. Simply put tenants can only screw up 6 sides of the property in an apartment (ground, ceiling, and 4 walls) whereas a home has a total 10 sides and a yard at their disposal. Factor this into your decision as you evaluation the hidden maintenance cost.**Cheaper properties**A cheaper property means the down payment needed is smaller. If you have a large enough amount, the funds could be used as a down payment on two or more properties for an immediate investment. Alternatively, as lower costs free up cash, these savings can be used to purchase another rental property which is proven to snowball into more and more investments.**The problem with a fixer-upper**If you’re buying a home, you want it to increase in value. Taking on a fixer-upper can seem like a way of guaranteeing this, which is why it’s become a very popular option with people who can’t afford a decent house in a good area. But while taking on a fixer-upper can seem attractive there are a number of common mistakes that inexperienced buyers make which end up costing them money rather than making it. These are:* Rushing into a purchase without fully costing out the necessary work or considering all the holding and sales costs.* Buying an overpriced value home rather than a fixer-upper. A true fixer-upper should be around 10-20% under the local market value.* Not checking the floorplans and layout to ensure that they’re accurate and workable, leading to considerable expenditure to correct it.* Finding out that the property has foundational or structural issues.* Underestimating the cost of repairs.* Underestimating the work required.* Not considering whether it’s an area that people are likely to want to live in. This is especially true if adjacent properties are boarded up or also require extensive work.* The repairs are NOT financed, so require more funds out of your pocket, which again cripples your precious investment capital. In terms of the finances and return on your equity this is where you hurt the most.**Using your home to purchase other properties**Another way of purchasing other properties is to use the equity you’ve built up in your home. This can be done by a complete refinance of your home or you could consider taking out a HELOC (Hacking your debt with a HELOC - Simple Passive Cashflow).HELOC stands for ‘home equity line of credit’ or, more simply, ‘home equity line’. In some ways, it’s similar to a mortgage, as it is a debt secured against your property. It differs from a mortgage in two significant ways. These are:* A home equity *loan* (mortgage) is a lump sum, paid at once. A HELOC allows homeowners to borrow or draw money on multiple occasions usually over a period of 5-10 years, as the need arises, up to a maximum amount.* As mentioned above, a home equity loan usually has a fixed mortgage rate, while a HELOC normally has variable interest rates linked to Bank Prime.Typically, during the first 5-10 years, borrowers need to pay back only the interest on the sum(s) they have borrowed. Repayment periods begin after the borrowing period and are usually between 10-20 years. The repayment amount is calculated by dividing the capital accessed by the number of months in the repayment period. However, borrowers should be aware that some lenders require the capital to be repaid in its entirety at the end of the drawdown period.Some lenders won’t allow a second charge to be secured against properties, so borrowers should seek permission from their mortgage company first.**Advantages of HELOC*** HELOCs are a convenient way of funding one-off needs, such as a down payment on a second property, or renovation.* Interest is paid only on the sum borrowed, and during the drawdown period, borrowers can repay just the interest.* Upfront costs are very low. The cost for taking out a $150,000 HELOC loan is typically less than $1000 and may be paid by the lender without a rate adjustment.* Some HELOCs can be converted into fixed-rate loans when a drawdown is taken.**Disadvantages of a HELOC*** HELOCs are adjustable rate mortgages (ARM) but are much riskier than a standard ARM thanks to the way the interest is calculated. If the interest rate increases on 30 April, then the HELOC rate will rise on 1 May. There are also no interest rate caps.* Ensuring that the HELOC is repaid can require considerable financial discipline, especially if the capital must be repaid at the end of the drawdown period.**Buying a property to rent**As fewer people are buying their own home, there is a strong demand for rental properties across the country. This demand has been fueled by factors such as the 2008 economic crash, the high number of people with poor credit ratings, stagnant wages, rising house prices, and the increased mobility of the workforce.Owning one or more rental properties can be a good investment in your financial freedom. But it requires careful consideration. It’s not like buying a home. When you buy your home things like space, schools and amenities will be your primary focus, and you’re likely to spend more to get your perfect house.When choosing a rental, you need to look at the local market. Check with local real estate agents what type of properties are in demand and choose accordingly. It may be that single bed apartments are snapped up, or that there’s a shortage of family homes. Buying in the best locations with the best school districts will lead to more competition and overpaying for the asset and its income stream.If you do your homework, buying a property to rent can be profitable over time. It’s a way of generating a passive income, while also building up savings through increasing the equity in the property. In many cases, renting will cover the mortgage and the taxes, if not generate a small profit on top.**Renting out your home**Should you want to relocate or want to improve your cashflow, renting out your own home is a possibility. However, this option comes with a number of potential complications – both financial and emotional – that need to be considered.Financially, you’ll need to inform your mortgage company when your home stops being your residence. Different mortgage lenders have different rules for borrowers who convert their homes into rental properties. It’s common for them to require you to live in your home for at least two years. Typically, interest rates for buy to rent properties are higher because of the increased risk to the property, and you may need to refinance.When you purchase a home, you invest in it emotionally as well as financially. You decorate it in your preferred style. You make memories there. You have a connection. Then strangers live in your home. Perhaps they’ll be good renters and take care of it as if it were their own. But perhaps they won’t and seeing what was once your home damaged can be a devastating experience. Even if you find good tenants, seeing someone else in your home can be an emotional experience. With a property bought purely as an investment, it’s much easier to be dispassionate and deal calmly with any issues.**Factors to consider when buying a property to rent**Just as with deciding whether to rent or buy your home, deciding where – or even whether – to buy to rent needs to be carefully considered.**Rent to value ratios**The Rent-to-Value Ratio is a quick calculation real estate investors run to determine if a property will cashflow. Take a $100,000 home that rents for $1,000 a month, the Rent-to-Value Ratio would be 1% ($100,000/$1,000). One of the biggest factors to consider when buying a rental property is the rent to value ratio. In some areas, such as Seattle, Los Angeles and the East Coast, properties are expensive to buy, but rents are relatively low. In these areas, rent to value ratios (c:\Users\emmat\Downloads\Simple Passive Cashflow - Simple Passive Cashflow\rv) can be less than 0.75%, meaning that there is little chance of even covering the costs, making purchasing a property a poor decision. In areas where housing is cheaper to buy and rent to value ratios are much higher, then it makes sense to purchase a property and rent it out. Some markets you can find these Rent-to-Value Ratios over 1.5% in solid areas.**Type of property**As already mentioned, knowing the local market and which type of properties are in demand is important. A property sitting empty is costing you money, not generating it. However, even knowing that, there is still the decision as to whether it’s better to take on a more expensive property that will attract a higher rent, or two or more smaller ones that may have a higher rent to value ratio even though the rents are lower.**Location**In real estate, the mantra is ‘location, location, location’, and that’s just as true for rental properties. Getting the location of the property right is just as important as choosing the right property type. If the market wants apartments in the city and large houses in the suburbs, buying an apartment in the suburb could be a costly mistake.Location opens up other possibilities such as vacation properties. These can range from city apartments, beach or lake-front houses, to near big tourist attractions, anywhere that people are keen to visit. With the development of sites such as AirBnB, it’s easy to advertise properties for short-term rentals. While the property is likely to be empty at times this could easily be offset by the higher amounts that you can charge, and you can get to enjoy the property too.**Resources**Hopefully this guide has given you plenty to think about, and you now feel confident that you’re in a position to make decisions that will benefit your financial future. However, the right decision needs the right information, and so we’ve included these rent-vs-buy calculators from *Find Real Estate, Homes for Sale, Apartments & Houses for Rent | realtor.com®* (Rent Vs. Buy Calculator) and* Real Estate Listings, Homes For Sale, Housing Data* (http://www.trulia.com/rent_vs_buy/) to provide a personalized breakdown to assess whether buying or renting in your neighborhood of choice is most financially beneficial option for you.**Closing**The wealthy (not necessarily the rich) believe that *home* is not a *place* or *house*. It is the people that make a *home*. All too often a big house (the dream) is paired with long commutes and stressful jobs which minimizes the time away from home and what really matters.The wealthy don’t attempt to keep up with the Joneses. They keep things simple and spend their resources (time and money) on the essentials and make sound financial decisions.On an emotional note, although buying a home goes against everything from an investment standpoint there is something to be said about the security of owning especially if you have a family with kids.

Bangalore in the early eighties?Sigh!Where should I begin?Okay, here you go. I am writing randomly whatever thoughts and memories flood my nostalgic mind.In the early eighties, I was a young man in my early thirties, a qualified structural design engineer, specialising in the design of steel structures in Industrial buildings, and working for a leading consultancy organisation in Bangalore.Transport in Bangalore:======================The excellent network of bus routes you see today, including Volvos etc, did not exist.You depended on the BTS buses (BMRTC buses were called BTS buses those days. BTS stood for Bangalore Transport Services)Japanese motorcyles were not available. They came during the nineties after the great economic liberalisation introduced by the Narasimha Rao/Man Mohan Singh Combination. Only Ambassadors and Premier Padminis (earlier called Fiats) dominated the roads. The 800cc Maruti came later. Autorickshaws were the only means for private transport but they were not allowed to seat more than two passengers. This was later relaxed to three. The ubiquitous horse drawn Jatkaas around city market, Malleswaram and Chamarajpet and Basavanagudi had just been withdrawn. No cycle rickshaws existed here as in Delhi.New Scooters were available only at a premium price. Vespa and Lambretta were popular. You had to wait for years to book and get a new one.So scooters had a fancy second hand price (More than the new one)Vijay scooter came later. Kinetic Honda made an appearance in the mid eighties and attracted a lot of attention due to the battery operated self starter and the gearless transmission.I used to ride a Yezdi motorcyle (250 cc two stroke engine) that gave me 29 to 30 kms per litre of petrol. I used to get a conveyance allowance of Rs 60 per month. Not bad! Petrol cost only Rs 3.11 per litre when I bought my motor cycle.Those who valued economy, chose the Rajdoot (175 cc, two stroke engine) that gave 40 kms per litre and started rather easily with just one light kick. The Yezdi wallas had to kick harder and more often to get it started. But the chaps say they loved the noise made by the Yezdi and had contempt for the sputter that Rajdoots produced. Most young motor cyclists had contempt for scooter riders and called them "effeminate". But most motorcyclists later switched over to scooters after getting married and having kids and becoming more mature in their thinking!I had bought a brand new Yezdi motor cycle from Haji and Sons at St Marks Road for Rs 6250/- (on the road price) in 1976 and sold it in 1984 for Rs 7000/-We envied the guys who went around on a Bullet. Other than Policemen and the house building contractors (also called "Bullet Maistries") very few ordinary young men rode a Bullet.It was expensive and the mileage was low.In 1983-84, I finally bought a second hand Bullet, just for prestige, not utility. I paid 8000/- and it was cheap because my brother who was emigrating, sold it to me at a discounted price under pressure from my mother. I sold it a year later for just Rs 10,000/- and it was a distress sale because I needed the money urgently. I inserted an ad in Deccan Herald and the day the ad appeared, right at 7 am in the morning, there stood a Bullet Maistry, outside my door with a thousand rupees in cash, and who offered it to me telling me not to sell it to anyone else and promising to bring the rest of the money before noon.The market price was at least 12000/- for a five year old Bullet that had already covered over 60,000 km.Real Estate:===========Banashankari, JP Nagar, and Indiranagar were developing localities. All these Hallis, Sandras, and Puras did not exist and they all remained villages, struggling to cope with modernisation. To be considered as living in a good locality, it needed to be some "Nagar" planned by the BDA.Multi-storied residential apartment complexes could be counted one one's fingers. The few that existed were all commercial. Unity Buildings at JC Road near the town hall was a prestigious landmark, till it was eclipsed by the Public Utility building on MG Road and later by the LIC building near the GPO.People never thought of buying an apartment. That was considered a Bombay life style. Malleswaram started the apartment boom sometime in the nineties. Large sites with owners dead and whose children had emigrated were sold to developers and a new trend started in the nineties and the old sprawling mansions with Mangalore tiled roofs were demolished to make way for Apartments.Till the eighties, people here liked to buy a small plot and build a house of their own. Most middle class homeowners bought a 30'x40' plot and built a small two bedroom, hall and kitchen house. Some put up a stair case outside the house, adjacent to the compound wall and built an upstairs portion usually for letting it out.Many of these houses did not have overhead tanks. Water pressure was sufficient to reach the first floor. BWSSB was doing a great job, supplying Kaveri Water to thirsty Bangalore when the Tippagondanahalli reservoir was found inadequate to meet the city's needs. The overhead tanks came later.Those with better resources opted for 60'x40' sites and built a larger house with a garage too.We had contempt for apartments. We could afford to do so. Plots were available and all locals (Kannadigas) and also outsiders who had lived here for 5 to 10 years were eligible to apply for and be granted a house site at greatly subsidized rates. Land acquisition problems did not exist. Farmers were glad to offer their lands to BDA and litigation was rare. They could see the city expanding towards their fields. They were growing old. Their children did not show interest in agriculture. They saw wisdom in selling when the prices were attractive and they could get in a lump sum much more than what agriculture yielded. Besides many were also given some plots of land after the development, as part of the deal, which they hatched for a few years and sold for much greater prices.In 1978, I had progressed sufficiently in my career to be able to afford to rent an independent house with a sit out, hall , two bedroom, kitchen, and single bathroom and toilet with an attached garage located on a 60'x40' plot in Jayanagar 7th block for Rs 450/- as monthly rent. The house could have fetched more if it had been better planned and if it had had a mosaic floor instead of the commonly used redoxide cement floor. A stair case from the sit out lead us to an open terrace.I lived happily there for 5 years and the rents increased from 450/- to 700/- when I finally vacated it. In 1984, I bought a site from the BDA at an auction in JP Nagar and built my own house. I spent Rs 5 lakhs totally(including the site value) on a two storied house with all modern amenities and finishings and with a built area of 1900 sq feet. HDFC financed a portion of it and the interest rate was 14 percent.Shopping:Malls did not exist. Most of us went to MG road and Commercial Street for fancy shopping and combined the shopping experience with an ice cream treat at Lake View or had our "tindi" at India Coffee house and watched a movie at Plaza, or Galaxy or Rex. You never needed to know Kannada in this part of Bangalore. The middle class locals went to shops around the Majestic area, Chickpet , Balepet. For daily needs the vegetable vendors brought them to our homes, pushing their carts and shouting out the prices of the individual vegetables. In South Bangalore where I have lived all along, those who had a fridge, went to Gandhi Bazaar for vegetables till the Jayanagar shopping complex was finally completed. Large families or groups of families who had cars would go directly to City Market and buy more at better prices and share the purchases.While Nandini Milk was popular, many families with elderly members, who were living with their adult children were not too happy with milk in plastic satchets and chose to get their milk from milkmen who brought the cow to their gates and milked it in their presence. You don't see that happening now.In 1974 when I landed in Bangalore the Jayanagar shopping complex was under construction. The Janata bazaar there (and also the one at Kempegowda Road) were the nearest we had that resembled a department store and it was a novelty for housewives with their kids when they could walk into a shop and explore the shelves, with a trolley and pick up what they wanted. But queues at the payment counter were long. They did not have modern methods of scanning bar codes and preparing and printing bills and of course no credit cards existed so the experience was not so pleasant. The vast majority still patronised the usual "Ganesha Stores" or "Manjunatha Stores" or "Raghavendra Stores" around street corners and each locality had at least one with these standard shop names. Their only competitors were the Muslim Malayalees from Kerala who set up their own chain (popularly called Kaaka shops) and you could identify them easily from the "secular" names displayed on the boards.Usually "National Stores", "Royal Stores" "Simla Stores" etc,Restaurants:None of today's Darhshinis, and Saagars existed. Eating houses were much lesser in numbers. The really famous ones had very modest interiors and were usually called "Bhavans" like Udupi Bhavan, Gopalkrishna Bhavan etc. The Kamaths, and Pais dominated and they monopolised the Grade II eating houses. Their only competition came from the chain of Janatha Hotels all over the city which served the same stuff at prices less than Kamat and Pai restaurants.Some modest and cramped eating houses had established reputations that they frankly did not quite deserve. I never understood why Vidyarthi Bhavan at Gandhi Bazaar and MTR near Lalbag north gate was hyped up so much. I have visited both and at MTR, after those experiences that taxed my patience, I swore never to visit them again. I had no grouse against quality. I admit the stuff they served was superlative and rich in "tuppa" (Ghee) and they served divine coffee in silver tumblers. The coffee might get cold but not the silver cups!But the waiting time to get a seat was killing. It would take more than half an hour sometimes to get a place to sit. What was more irritating was that as I sat enjoying my masala dosa with an appetite aggravated by the long wait, another customer would be waiting right behind my chair and also holding it with one hand as if to say, "This seat is reserved for me and I am going to sit on it as soon as this fellow gets up". While eating I could feel this waiting customer's glare on my back wondering how long I am going to continue sitting and why I was not hurrying up.Half the pleasure of eating out was lost due to these experiences.Theatres and entertainment.Multiplexes did not exist. We had superb movie theatres with great audio at Galaxy, Nartaki, Santosh, Rex, Lido etc and also cheap ones for desi films that did not need all the sophistication.I remember being greatly impressed by the Sound system in the movie McKenna's Gold which I saw at Galaxy.Majestic area had about 21 theatres, (I think) and most of them have been demolished.TV was introduced around 1980 in Bangalore, years after Delhi and Mumbai. There was just one channel in Black and white, and the programs started around 5 pm and the transmission was in Kannada till 8:30 pm. The Kannada news was read out at 7:30 pm. After 8:30 pm, all the regional centers around the country hooked up with Doordarshan Delhi and the programs were in Hindi and English. This caused considerable heartburn in Non Hindi speaking states.TV was free. We had a crude looking antenna on our roof tops that received the signals. DVDs, VCRs, and cable television did not exist. The Ramayana and Mahabharata were telecast by Doordarshan and the streets used to be empty during the telecast and the only other time this happened was when India and Pakistan were playing a cricket Match.Dr Rajkumar was a stalwart who dominated Kannada Cinema. Vishnu Vardhan and the Nag brothers (Late Shankar Nag and Anant Nag also had their own following. Lokesh and Srinath were not so popular. Puttana Kanagal,GV Iyer and others were legendary and Aarti was the leading actress if I remember right.Electronics:Personal computers, laptops, tablets, cell phones etc DID NOT EXIST!Having a landline phone on your table with a direct line, in the office and not having to go through the switch board and having an extension number was a prestigious perquisite for senior executives only. STD calls were rare and expensive. Bosses locked up their phones fearing "misuse" by their subordinates. Even these bosses were required to maintain a register logging all their STD calls and recording the date, time and duration. Imagine if you youngsters were required to do all this today!You will never realise the value of these blessings. Old timers like me have had the rare privilege of being productive professionals who managed to get a lot of work done without these aids and slowly adapted to these modern devices and gadgets and learned to use them. Heck, during the first few years I did all my design calculations using a slide rule. Calculators came later.I was better off than most of my colleagues. I was a computer literate fellow, having learned the new subject called Fortran Programming while doing my engineering studies and I was among the handful of engineers in my organisation who could write a few lines of code to solve simple programming problems. But minicomputers, PCs, did not exist and we used the IBM 360 mainframe computer at Indian Institute of Science. I used to ride my motor cycle all the way from KR Circle (where my office was located) to IISc campus and punch the cards there and submit my deck of cards for processing. I would come back next day to collect my output. Any mistake of even one byte, in the code or in the data would render our effort and trip fruitless and I would have re-punch those cards and resubmit, and return the next day. IISc maintained a queue system for jobs submitted by their customers. They rented out computer time to us. All jobs that could be processed in less than two minutes were called Quick. Those that took more than two minutes but less than 10 minutes were called "Express" jobs and those that took longer were called "Jumbo". Even longer jobs were scheduled during the night shift.Jobs that take a fraction of second today, to process, used to take 5 to 10 minutes those days and sometimes even half an hour.We punched our code and data on cards, and fed them into the card reader of the mainframe computer to get printed output. It was only later that the VDU terminal was invented in the early eighties and soon it rendered obsolete punched card or paper tape input. It also obviated the need for printing the output and we would print on fast line printers only if the output seen on the VDU terminal appeared okay. Terminals displayed in black and white only. Only text and numbers, not images. It was a novel thing those days and the highlight was the introduction of remote processing where the inputs would be received from VDUs and keyboards located at the customer's premises and the processing would be done at IISc's DEC System 10, using modems and telephone lines. The speeds were nothing to boast about but those days we had not known what "broad band" or any band was and any speed was impressive as it saved us a trip to IISc.Slowly minicomputers invaded Bangalore but they were primitive compared to today's laptops. We had 8" floppy disks, (360K capacity) followed by storage mediums for PCs viz 5 1/4" disks with 360 Kilo bytes capacity followed by 3 1/2" floppy disks with 1.44 Mb storage capacity.Just as cars and mobile phones are being advertised today, the eighties saw the advent of the first personal computers in Bangalore and the computer culture spread here faster than at other cities. HCL and Wipro were the main contenders for the top slot and Siva PCs made by Sterling Computers at Chennai (sorry, Madras as it was called those days) who sold the Siva brand of computers, Eiko, Uptron etc offered cheaper competition. The machines were shockingly primitive with barely 64 K to 128K core memory. Our office paid Rs 80,000/- for the first HCL PC we bought. It was "state of the art", a PC-AT (Advanced technology, as it was called) and had a 'whopping" 40 Mb as hard disk storage space and a crude low resolution colour monitor and the memory was an "astonishing" 512K! There was no mouse those days. We used the arrow keys on the keyboard to navigate and called up drop down menus using hot keys. Software developers boasted that their software was "user friendly" and "menu driven" in order to beat the competition.The One Mega barrier took some more years to breach and the Giga was simply not even known as a word! Project that price (Rs 80,000/- ) during the early eighties and see it's equivalent in today's prices and you will get an idea how special a computer was. No wonder these PCs were housed in special air conditioned rooms and in my company, the systems department would not allow any of us to enter the computer room with our shoes on. They were the high priests in charge of the machine and treated it as a deity kept in some sanctum sanctorum and would discourage us from using them thinking that we, the country bumpkins, would damage them. Most of us were computer illiterate any way and were easily bluffed into believing all the hype that they trotted out. With just basic knowledge of word processing, and spread-sheeting (using Word Star, and Lotus 123)and an ability to churn out a few lines of simple code in Basic, they posed as systems experts and impressed the top management with tables and reports neatly printed out on the noisy dot matrix printers in vogue then. Our office used these PCs more as glorified typewriters than as computing machines. Bosses were impressed by buzz words like Lotus, Dbase and Wordstar and I lost count of how many times I explained the difference between bit and byte to my boss. He never understood till his retirement!Needless to say, the Internet did not exist. I got introduced to it in the late nineties and my first internet connection at home used the telephone line and the download speed was 4k per second. It was useless for anything except for email without attachments.Other office equipment:The photo copying machine was still very primitive. Xerox was becoming famous. Just as any steel almirah was called a Godrej those days, any photo copy started to be called a Xerox copy. Before their advent, the copying technique had just been introduced and it used some kind of oil that smelt of a mixture of kerosene and machine oil. You had to expose the orginal several times once for each copy and keep the copy sandwiched between two glass sheets with micro fine carbon balls and allow the balls to roll over the sheet to produce a readable copy that smelt for a day of oil before the smell died out. It was a messy affair.More popular was the stencil that could be used instead of plain paper and mounted on the roller of a standard typewriter and then mounted on a "cyclostyling" machine (The Americans called this the mimeographing machine) to produce any number of copies.Telex was the mode of communication between offices for urgent messages. The messages were often received in garbled condition and important words and figures would be typed twice to ensure correct reading. Full stops and commas were written as (STOP) and (COMMA), Figures would be repeated in words and digits to avoid miscommunication.Most of the routine standard communication was in typed letters and posted using Snail mail. The common man used Telegrams for urgent communication. They paid by the word. So standard messages like "Reached safely", "Congratulations" "Best wishes for a happy married life" , "May heaven's choicest blessings be showered on the young couple" etc were given code numbers and these numbers could be quoted to save on expense.The fax machine came much later and create a sensation. Today emails make even faxes look primitive.Routine letters were typed on Manual typewriters (later on electric typewriters) using carbon paper for copies and sent by post or special company couriers for large companies. College Boys and girls during the admission season would be frantically going around looking for "gazzetted officers" who were important because they had the power to "attest" a copy of their mark lists and certificates which were painstakingly typed out. A batallion of typists sat under trees near the Passport office, Registrar's office and other Government departments, typing out documents for customers.Games and socialising:Children played games.They were physically active. Video games were unknown.We, adults, went out and met friends and relatives at their homes and entertained them during return visits. There was no "social media" like Twitter, or Facebook. We spread rumours and indulged in Gossip the old fashioned way using our tongues and hearing gossip with our ears. We laughed cried, joked and quarreled directly not using a computer screen and the internet! TV and internet that has now replaced all live human interaction did not exist. A movie was a special treat to be looked forward to and talked about for days afterwards. A visit to a circus or zoo was a super special treat for the children. Drama had a market and a willing audience.Classical music during Ramanavami was looked forward to.You had asked me about the area near Pallavi talkies, Banashankari and Cubbon park.The present Kempegowda tower there did not exist. The large dome built by L&T housing the indoor stadium did not exist.The direction of traffic movement was totally different. Nrupathunga Road was two way, and so was District office road.Banashankari induced fear! So far away! I thought it was a forest area before I saw it for the first time and felt charmed by the ups and downs and the views of the landscape. The Banashankari temple attracted crowds on certain days and the Kanakapura Road and Bannerghata road was used by us for driving our motorcyles at high speeds for continuous long stretches to recharge our batteries in the motorcycles! Hardly any traffic existed on these roads once you left Jayanagar and rode further south.I could reach Bannerghata National park in twenty minutes from my house in JP Nagar.Cubbon park had practically no encroachments. All roads were two way . None of the entrances was blocked. The Seshadri Memorial library was always full of readers. My kids enjoyed the toy train ride and we often visited Bal Bhavan for attending the programs there. I wonder if any modern kid goes there now.The above is just a limited list of topics that I have chosen to write about.The list of topics I have not written here is even larger but I know your patience is limited and before you run out of it let me stopI thank Chetan Achar who asked me to answer this question.Feel free to ask me anything else you are curious about in the comments section and I will do my best to answer.RegardsGV