If you invest in something, the expectation is you’ll get a return – as in of money. Cars (and trucks) typically cost you money; i.e., they depreciate. For that reason, to call them an “investment” is not too far removed, etymologically, from calling a drug that doesn’t prevent you from getting sick or spreading it to others, if you get sick, a “vaccine.”
That said, some cars depreciate a lot faster than others. And some provide a return in others ways.
As for example by being useful – and versatile.
Trucks and SUVs (especially the ones based on truck underthings) are very useful, which more than any other single factor accounts for their holding value better – and for longer – than cars.
Particularly most modern cars, which aren’t very useful anymore except as commuter conveyances for two or maybe four people as none seat more than that comfortably, for a trip of any distance. This includes even “full size” luxury cars, which are mid-size cars relative to the size standards of the early-mid’70s, before the effects of federal “fuel economy” regulations caused a general downsizing of cars. Besides which all of them have very limited cargo-carrying capacity (having shrunken trunks) as well as extremely limited – if any – towing capacity. 
The latter being – once again – a function of the government shadow banning the truly full-size sedans and wagons Americans once commonly drove, that could tow (being built on heavy-duty underpinnings very similar to what you’d find under a truck) and comfortable carry six adults, plus lots of cargo.
Trucks – and SUVs – became the American Family Car of choice circa the mid-’90s, when the car companies realized they could exploit a “loophole” (the gaslighting verbiage used by government-snugglers to describe avoiding an obnoxious government regulation) in the federal “fuel efficiency” regulations that allowed for a less obnoxious degree of regulation for “light trucks,” because in those days, government obnoxiousness was still somewhat curtailed by an obligation to feign an understanding of necessities. As in the necessity of trucks for people who need them for work – and to be capable of doing it – even at the cost of “fuel efficiency.”
As cars diminished – literally – in size as well as usefulness – trucks and SUVs became the best selling vehicles on the market. Accordingly, you’ll pay more for this investment – but you will lose less money than you would if you bought a car instead, because the truck or SUV will not depreciate as much or as fast.
And that’s a pretty good investment.
You will also see a return in terms of what you can do with a truck – or an SUV (especially one that is close kin of a truck and built similarly; for example a Chevy Tahoe, which is a Chevy Silverado 1500 pickup under its skin). The things you cannot do with a car, which encompasses more than towing and hauling (people as well as stuff). Trucks and SUVs are sturdier-built than new cars and for that reason, are less susceptible to expensive damage and are usually easier to repair when they are damaged. They also tend to be longer-lasting for the same reason.
Another return on your investment.
With some caveats.
Some of the newest (i.e., newest-design) trucks and SUVs may not be as long-lasting and are more vulnerable to expensive damage. These are models that have aluminum bodies (e.g., the current Ford F-150 and related Ford Expedition) and/or the kinds of engines you used to find only in cars as recently as just a few years ago. Meaning, inappropriately small – for the vehicle – engines that are heavily turbocharged (in terms of boost and also in terms of some having more than just one turbocharger) and for that reason are under a great deal of pressure, literally. The pressure built by boost imparts load, which as a general rule accelerates wear and tear. If you want a better investment, look for a truck or SUV that is powered by a V6 or V8 that doesn’t need a turbo (or two) to make it go.
Small trucks can be a good investment, too – though no one makes them new anymore. Still, they weren’t made that long ago. It is not-too-difficult to find circa early-mid 2000s Nissan Frontiers, Ford Rangers and similar. These can’t pull as much as a full-sized truck, but they are nonetheless capable of hauling a lot more in their beds than any car can carry in its trunk and – like their larger kin – are built more sturdily and for that reason tend to be harder to seriously hurt as well s more long-haul-durable.
There is one interesting new truck – sort of, too. It is the new Maverick, which is a hybrid truck (built on car-type underthings). Though not as durable as a traditional truck, it is still very useful. And it can hit 40-plus MPG, too – something no other truck can do. It’s also inexpensive, which is the best kind of investment. My review of this truck is here, if you’re interested in reading about it.
Probably the best investment you can make is in a truck or SUV that has a diesel engine, especially an older one with mechanical rather than electronic fuel injection. The reason for that being the former is much simpler – fewer parts, less to go wrong – and because those older mechanically injected engines can burn practically any form of oil. Including vegetable oil.
That is an investment in survivability.
Diesel-powered cars are also a great investment – and for the same as well as different reasons. Diesel-powered trucks are chiefly designed to be capable of pulling heavy loads. Diesel-powered cars are chiefly designed to be extremely economical to drive. Before the government de facto banned them from the market – not by passing laws but by imposing regulations – diesel-powered cars such as VW’s TDI (Turbo Direct Injection) Golf, Beetle and Jetta were capable of going more than 600 miles on a tank and 50 miles on a gallon of diesel fuel.
Naturally, the government could not permit that to stand.
It made electric cars look bad and it solved the “fuel efficiency” problem that the government claimed it wanted to solve. When VW solved it, the government put a stop to it. But you can still buy a diesel-powered VW. They were available through the 2016 model year. Chevy also made a diesel-powered version of its Cruze sedan.
Cars such as these can be seen as investments, too.
If you need to be able to get somewhere – and that somewhere is hundreds of miles distant – and gas isn’t available, for instance. And – like trucks and SUVs – diesel-powered cars provide a return in terms of longevity and lower depreciation, too.
The worst investment you could possibly make, would be an electric car. Or truck. These depreciate faster than any other kind of car – or truck – because of the ticking financial time bomb called the battery. Which – when it needs to be replaced – will cost you half as much as the car (or truck) cost to buy, relative to what the car or truck is worth when it needs a new battery.
Leaving aside what it will cost you in time.
Finally, there is the best kind of investment – and the one with the highest return. That of fun. If a car – or a truck – makes you happy, you’ve been enriched, irrespective of what you spent.
. . .
Got a question about cars, Libertarian politics – or anything else? Click on the “ask Eric” link and send ’em in! Or email me at [email protected] if the @!** “ask Eric” button doesn’t work!
If you like what you’ve found here please consider supporting EPautos.
We depend on you to keep the wheels turning!
Our donate button is here.
If you prefer not to use PayPal, our mailing address is:
EPautos
721 Hummingbird Lane SE
Copper Hill, VA 24079
PS: Get an EPautos magnet or sticker or coaster in return for a $20 or more one-time donation or a $10 or more monthly recurring donation. (Please be sure to tell us you want a magnet or sticker or coaster – and also, provide an address, so we know where to mail the thing!)
My eBook about car buying (new and used) is also available for your favorite price – free! Click here. If that fails, email me at [email protected] and I will send you a copy directly!
I’ve been thinking about this & how many people ‘invest’ in others. You know, they buy properties and hope the rent they get covers the expenses.
That may be a good plan, however; I’m often reminded of the scene from, ‘It’s a Wonderful Life’ and the main character’s mom answers the door to a house which is filled with boarders.
It looked like the owners were barely scraping by.
I suppose, this time is different? Idk.
“barely scraping by” can be better than nothing at all.
So, I wonder, what is a good plan?
“Invest in yourself” I have read, is the way to go. Idk.
Perhaps, a good pressure canner is a way to do that? Can you grow stuff? Myself, I like the All-American canners cause you don’t gotta buy a gasket (from working with cars, gasket failure is always in my mind) so they seem like a good investment… you get to preserve that which you grew.
A used one on The Cheap is the way to go, but the new ones look timeless, or close to that.
Growing sheet, raising stuff, there’s always a risk (a gamble, eh RG?) in this animated contest called life.
These people dealt with a pig which didn’t make it. There’s that risk:
‘My Homestead Pantry | Our Two Year Food Supply’
https://www.youtube.com/watch?v=kDzs8h5DIRw
Another investment might be, firewood? I really liked Doug’s take about, ‘Europe is hording FIREWOOD right now! Should Americans do the same?!?’
https://www.youtube.com/watch?v=g5EjDHb8OfY
Wish I had a wood stove right about now, that there’s another investment to consider. I am.
I ordered some Dachstein Woolwear, being warm in The Northland seems like an investment to me. I hope their quality lives up to what they advertise.
…Now, I just gotta find some good quality boots and a jacket.
Any of you in the Northland have any recommendations?
…I’ve just about given up on warm gloves for old men, $350 for a battery heated glove is just not a step I’m willing to take.
I’ll have to live with cold hands.
Tools?… I hope I’m covered there. I just bought my forever & last socket set which I wished I had when I was 18 yrs old & Full of energy.
…Do they still make those? … 18 yr olds, full of energy … & hope for the future? Idk.
Investing in one of those, might be, the best buy?
This article is on point and timely for me! I have a V6 CCLB Colorado. It’s a fine truck and all but my wife hates to drive it because “its a bus” to her! lol It’s got some aluminum body panels on it (I’m sure not because they’re better but they pared weight from the truck to offset the weight added by some Gov regulations) Problem is the paint is flaking off said parts. : ( I’m considering getting a Maverick to replace it. Will be a good buy as I’ll be able to get my brothers Ford discount. Finally….I just saw an old 60’s era Fram film featuring Bill “Grumpy” Jenkins. What did he tow his famous 68 Grumpy’s Toy with? A full size Pontiac sedan!
buy something that is collectible, then it might not depreciate,
other considerations….parts supply, simplicity….easy to work on, fuel economy, difficulty to resell, quality, engineering,
Speaking of “investing” Harley is losing $370 million on it’s Livewire motorcycles (its electric ones, that are expensive and little range). It tried to spin it off to raise money but not enough stupid people exist to fund this.
https://jalopnik.com/livewire-loses-almost-370-million-as-investors-flee-f-1849739338?
Hi Rich,
This news makes me happy! As soul-sucking and economically-functionally absurd as electric cars (and trucks) are, electric “motorcycles” are simply oxymoronic. No gears to shift, nothing to do other than rotate a grip. That makes them scooters – and motorcycle people don’t want a scooter, no matter how much it may look like a motorcycle.
Agree, but to be fair, Harley has entered a new market for them, adventure bikes, and by all first appearances they’ve outdid themselves with a new model called the Pan America, that is instantly competing with the two elephants in the room, the BWM GS and KTM 1290. I was so enamored with it, and watched what it did the first year, that I bought one, 2nd year. It is what most are saying about it. Wow. Good for Harley, I wish them well, and can’t wait for their middle-weight 975 to come out.
Even my Harley buds are saying “wow, that is really cool”. My non-Harley buds are saying “are you nuts?”. Come ride it before you judge.
And to parrot Eric words, it makes me happy for sure.
Buy an older car or truck then invest in your skills in repairing and maintaining it. Most of the older cars were engineered to last indefinitely, sans accident or abuse. And if the model was particularly popular, there are replacements or workarounds for nearly any failed component. A good resource are forums – I’m on several and I’ve yet to see an unanswered call for help for someone who asks a coherent question (hint: punctuation is free).
Also, as Zane mentioned, a number of imports are becoming available from the late ’90s (look up the 25 year rule). Stuff like small diesel pickups that were never seen in the US but very popular everywhere else in the world. Often near bullet-proof, modern, comfortable and still repairable. Yes, you won’t be able anything but maintenance parts at your local AutoZone, but there are a number of specialty US parts houses as well as affordable and quick international shipping.
When it comes to investments, this is the most important thing happening in the world: the two-year US Treasury yield back at the level of late 2007 — just before the eclownomy smacked the wall, crashed and burned. Chart:
https://tinyurl.com/3mpta8c8
When the Fedsters hike interest rates from zero to almost five percent in less than a year, everything turns to sh*t in the blink of an eye.
Life is short, one look and it’s over
Comes as quite a shock
All I got is some memories
Stuck in an old shoebox
And it won’t take long to forget ya
You know I’m never wrong
It’ll all be over by Christmas
No, it won’t take long
— Rolling Stones, It Won’t Take Long
Very good Eric.
I was lucky enough to have met a good mentor about 25+ years ago that taught me a little about the car biz, and studied how I used them. Within 2-3 car cycles (with loans) of 3 years each, I was in a new car/truck every 3+/- years for cash, no interest, no maintenance. It all came out to about $300/month just buying them upfront, and even now about the same believe it or not, and these are 50-60K trucks (was 40-50K trucks). and as Eric said it best, the best is when your happy and/or enriched, I am. I could probably even do a lot better but I don’t want to.
How. The. Fudge?
“I was in a new car/truck every 3+/- years for cash, no interest, no maintenance. It all came out to about $300/month just buying them upfront”
IF you, “for cash” how is it that it’s, “about $300/month”
HOW, is that, “buying them upfront”
What did you leave out of that equation?
Either: you paid cash, or you’re making how-much-a-month payments.
What am I missing here?
“Within 2-3 car cycles (with loans) of 3 years each” sure does sound like debt donkey territory to me.
Sorry Helot, I am not the best writer. All I mean to say is once I got out from under the loans, and I was able to trade a 3yr old truck in for a new one, and say I wrote a check for $10K for the new one. $10K/36months = $277/month. Of course it’s +/-, but that has been my experience for almost 20 years now. Even if it is $15K differential, my cost is $400/month, which is way less than 3yr loan for $50K which would be $1500/month.
Works for me.
On a $50K vehicle, I save $5K in loan interest, and have almost no maintenance other than maybe a set of tires, and some oil changes.
Any diesel worth getting has to be from the 90s and before, when the emissions weren’t so stringent and there was crap in it that’d mess it up.
I’m seeing import suv’s with turbo diesels and manuals, what’s a better option than that?
I’m not sure, but I’m guessing that he made payments to himself. Then he bought each vehicle for cash. He was ahead of the credit game, instead of behind it. Again, my guess.
You nailed it on the Maverick Eric, as an investment it seems pretty good. Like most things YMMV. If you purchased one for 19-22k when they came out, you did pretty well. I’ve been looking for one, after calling 5 different ford dealers and a couple of wholesalers the best I could find was about 24 k, but it has over twenty thousand miles. I was told if I ordered one I could expect it late next summer.
One investment I made last year that has done well is indoor growing equipment, and new 20′ metal shipping containers. Prices, in general are up 30-50% over the last year. The dividend is the stuff you can grow indoors, year round.
Seems most everything except Gold and Silver is in a stratospheric bubble, maybe cash will once again be king. If only for a brief instant, before the roll out of CBDCs.
Of course the best investment you can make is in acquiring new skills that may be in high future demand.
There’s someone I know who posted a meme on social media calling for a “Boycott of Tesla and Twitter” after Elon Musk’s acquisition of Twitter. The ironic thing is, many of the SAME people who call for that own a Tesla themselves to “Virtue signal” to the Gang Green crowd or they wish to FORCE the masses into buying a Tesla or other EeeeeeeeeVeeeeeee because “Carbon causes Climate Change!” Sometimes I wonder if these people have any critical thinking skills or if they just go by FEELINGS.
‘Feelings – Morris Albert’
https://www.youtube.com/watch?v=CyBcHUe4WeQ
The only *electric* investment I plan on making is installing a natural gas generator for my home in anticipation of the coming electrical shortage/outages to the Northwest. California leads the nation as always in lunacy and the grid is dilapidated due to forcing utilities to *invest* in green tech as opposed to replacing and upgrading aging infrastructure.
Electric cars won’t go far during power outages.
A dual fuel generator is in my plans as well. Probably a Westinghouse. Get an electrician to wire a connector to main house panel so I can plug it in when needed and use it for outbuilding the rest of the time.
Man, if you get a natural gas generator, you’re dependent on that line working. Imho, you got more control with a tank(s) of propane. From what little I’ve seen online, the price of propane seems a little less volatile than nat gas, I suppose YMMV? Idk.
My dad is getting one of those nat gas whole house gennies. I sure can see the allure of ’em. Esp when you’re old(er). Flip of The Switch, and all that. =The Easy Button.
So far, I’m Very happy with my Westinghouse 4500 iGen DF genny without a CO sensor. Very. Ya gotta lug it tho, something my dear old dad probably can’t do anymore, eventhough it wheels real easy.
[…God, I hope I don’t get really old where I can’t do stuff like that.]
Where I bought mine, today, a quick look, I don’t see where an option is for non-CO sensor. …From what I’ve read, a stiff breeze will shut off a CO sensor equipped genny. That’s Not, ‘A Good Thing’.
I have an older small Honda 2000i I swapped out the carb for a propane carb, I’m pretty happy with that, too.
…I’m bustin’ to tell you guys this, too:
After I stopped at a very cool guy’s setup to buy a load of kiln dried firewood (boy, do I ever need to put a woodstove insert into my fireplace) I stopped at a small town gun shop.
AS I walk into the shop,… what hangs on the wall to the entrance? …A hand made wooden signs which read:
No Mask Zone
I ’bout fell over dead. …I spent as much money there as I could.
Lepard likes……
cash, gold coins, silver coins and bitcoin,
And for stocks that are in commodity related businesses.”
“I have high quality companies in my portfolio that are trading at 3-5x EBITDA that are yielding 4%,” he says of some of hold gold mining stocks. “[Gold mining stocks] have been thrown out for dead.”
https://www.zerohedge.com/markets/bitcoin-going-2-million-next-5-years-lawrence-lepard
Pension funds hold about two thirds of their portfolios in this garbage so this is a huge problem. these pension funds are already unfunded….
the taxpayers will be bailing them out…it is worth it though, government parasites with their huge, gold plated, defined benefit pensions are worth bailing out…lol…
But it gets better… or worse.
You see, because pension funds were getting such a shitty return from their Gilts, (bonds) they pledged them as collateral so that they could go out and buy something that would provide a return (risky unprofitable “growth” mostly).
BlackRock has been selling pension funds a leveraged derivative based investment product called LDI……pension funds have used LDI to leverage their gilt..bond.. portfolios through interest rate swaps and repurchase agreements up to seven times – 7X! – to match their actuarial liabilities.
This is why for over three years now we’ve been warning about the entire risk parity trade.
Now it’s all blowing up.
We were early to see the danger but that sure beats the hell out of being late now, doesn’t it?
So anyway, back to the good ol’ Gilts, which have been pledged as collateral by those pinstripe suits at billion pound pension funds.
Well, their models never accounted for both bonds and equities to decline AT THE SAME TIME.
More defective computer modeling, just like the global warming bs computer models……
https://www.zerohedge.com/news/2022-11-02/huge-problem-pension-funds-hold-about-two-thirds-garbage
“We’re At The End Of A Major Era” – Von Greyerz Warns Of “$2.5 Quadrillion Disaster Waiting To Happen”
EvG explains, “Credit has increased dramatically through derivatives. All instruments being issued now by banks, pension funds, stock funds, it’s all synthetic. There is no real underlying payments in anything almost…”
” Therefore, my estimate for derivatives would be at least $2 quadrillion, and I think that is probably conservative. Then, we have debt on top of that of $300 trillion, and we also have a couple hundred trillion dollars of unfunded liabilities. So, we are talking about $2.5 quadrillion, and that’s with a global GDP of $80 trillion. So, there is a disaster waiting to happen, and especially because all this created money has created no value whatsoever…
These derivatives, at some point in the coming few years, will actually turn into debt. Central banks will have to cover all the outstanding liabilities of the commercial banks as we are seeing now with Credit Suisse, Bank of England and etc. This is going to happen across the board. Whether it’s called derivatives or called debt, as far as I am concerned, it’s the same thing. It will have the same effect on the world financial system, which will be disastrous, of course.”
EvG says the derivative markets were simply a way for financial institutions to carry debt and not show it on their balance sheets. In the end, everything will balance out. EvG goes on to say,
“Nobody can repay the debt, and they can’t even pay interest…So, therefore, when the debt implodes, so will the assets that were financed by this debt.
So, both sides of the balance sheet have to come down. Whether it comes down by 50%, 75% or 90%, I don’t know…
All I think about is risk, and the financial system will not survive in its present form.
https://www.zerohedge.com/markets/were-end-major-era-von-greyerz-warns-25-quadrillion-disaster-waiting-happen
gold up 3.26% today….silver up 7.82% today….bitcoin up 3.96% today….dow up 1.3 % today…
tesla residual value…..hahaha
when the battery is dead, at 100,000 miles or less, it costs $22,000 for the battery replacement, that is more then the car is worth….one persons solution…blow it up….
Watch a Tesla owner blow up his Model S with 66 pounds of dynamite instead of paying $22,000 to repair it, replace the battery…lol
https://www.businessinsider.com/tesla-owner-blows-up-car-instead-paying-repair-battery-video-2021-12?op=1
Each EV will use multiple batteries……
Remember that to get the same level of longevity that petrol and diesel cars an EV will go through three battery packs which is hell of a large carbon footprint, and very expensive the tesla battery is $22,000, it costs you $22.00 per 100 miles just for the battery.
3 batteries = $66,000, this makes ice cars look very, very cheap to own/run….haha
now you know why very few of the taxis are EV’s, charging times, higher fuel costs and very expensive battery replacement, hybrids or diesels are far better.
NOTE: tesla battery lasts 100,000 miles and costs $22,000 ( someone said there is also a $4500 recycling fee….haha) $4500 recycling fee…lots will probably get thrown in the bush…
EV vans are worse as they will burn through five or six battery power packs to last as long as the existing ice vans. 5 times $22,000 = $110,000 very very expensive, makes zero sense….lol
Re: EV semi trucks
There is zero EV heavy duty semi trucks. Why? charging times, these trucks quite often run 24/7, worse fuel economy, with batteries it would drop 50%, very high battery replacement costs, NOTE: these trucks easily go one million miles with ice diesel engines.
NOTE: EV vans are worse as they will burn through five or six battery power packs to last as long as the existing ice vans.
So in one million miles the semi truck would need 10 to 20 battery replacements, these trucks weigh 5 to 10 times as much as a tesla car much so if the battery cost 5 times as much it would = $110,000 per battery replacement. The Hummer battery is $30,000, a semi battery might be 2x to 5x that or more because semi weigh 5x as much…
The only thing that works in these big heavy trucks is ice diesel engines, that will not change.
There is zero EV heavy duty semi trucks, because these buyers aren’t stupid, they can do the math/research, they know about the EV bad fuel economy, very expensive cost to replace batteries, long charging times, fire risks, huge purchase prices, very short lifespan compared to a one million mile diesel…..only the general public is stupid enough to buy an EV.
People bought EV’s and thought they could drive almost for free, they wouldn’t have to buy gas anymore, they would save a lot of money.
The reality is a lot different….
TOTALS: cost per mile…….
Tesla EV using a home charger total cost per mile = $0.84
Tesla EV using a fast charger total cost per mile = $0.94
VW diesel total cost per mile = $0.35
Comparing cost per mile, 10 years, 100,000 miles:
Tesla EV and VW diesel
I saw rates somewhere at $0.14 per kwh at home, that is due to probably triple very soon.
in Europe it costs $0.72 per kwh, coming here soon.
I saw rates nation wide at fast chargers outside home at $0.40 per kwh
What test drivers are actually getting driving in the real world driving EV’s is they are getting 2.4 miles of range for every kwh
An EV just sitting loses:
tesla says a daily 3%-5% stationary range consumption.” (just parked) leakage, batteries leak power, ice cars don’t
90 kwh x .05 = 4.5 kwh lost per day leakage x $0.14 = $0.63 per day just parked = $0.02 per mile
Ice diesel:
The 2014 Volkswagen Golf BlueMotion diesel, capable of 73.5 mpg U.S. it has a 971 mile range, the perfect car.
VW diesel 100 mile fuel consumption = 1.36 gallons @ $4.00 gallon = $5.44 = $0.0544 per
mile
Tesla EV @ home 100 mile fuel consumption = 41.66 kwh @ $0.14 kwh = $5.83 = $0.0583 per mile
Tesla EV @ fast charger 100 mile fuel consumption = 41.66 kwh @ $0.40 kwh = $16.64 = $0.16 per mile
the tesla $22,000 battery is used up, worn out in 100,000 miles. = $0.22 per mile for the battery use,
the battery use cost is higher then the electricity used. A hidden cost, nobody told you about. maybe a lawsuit?
Tire costs
The tires on EVs tend to wear out faster due to the additional weight and extra torque that hits the road. Plus, EV tires typically have less tread to improve range and decrease noise, they need special more expensive HL rated tires.
Tesla tire size 235 35 20 $391.00
VW Golf tire size 225 45 R17 $119.00
In 100,000 miles if the tesla needs 4 replacement sets = $391.00 x 16 tires = $6256.00 = $0.06 per mile
In 100,000 miles if the VW Golf needs 2 replacement sets = $119.00 x 8 tires = $952.00 = $0.01 per mile
Tesla EV costs $50,000 depreciation over 10 years is $39,500 = $0.39 per mile
the VW diesel costs $24,355 depreciation over 10 years is $19,240 = $0.19 per mile
Tesla EV costs for maintenance and repair: $1000.00 per year = $0.10 per mile
VW diesel costs for maintenance and repair: : $1000.00 per year = $0.10 per mile
TOTALS: cost per mile…….
Tesla EV using a home charger total cost per mile = $0.84
Tesla EV using a fast charger total cost per mile = $0.94
VW diesel total cost per mile = $0.35
The VW diesel cost per mile includes the gas road tax, the Tesla EV doesn’t include that, but it will pretty soon….watch…
This doesn’t include insurance costs, if insurance costs $3.00 per day = $0.11 per mile
2014 Volkswagen Golf BlueMotion for sale… $6403.00….buy one…
https://www.motors.co.uk/volkswagen/golf/trim/bluemotion/year/2014/used-cars/
with the price of fuel now and the insane high prices of new cars, here is a good investment in transportation for you……2014 Volkswagen Golf BlueMotion for sale… $6403.00….buy one…
The 2014 Volkswagen Golf BlueMotion diesel, capable of 73.5 mpg U.S. it has a 971 mile range, the perfect car.,,,note EV’s get 20 mpg, EV trucks (Hummer) gets 10 mpg …..lol
Ah Hummer, brought back after nearly a decade and it still suffers from the same problem, only heavier and thirstier and a shit ton less reliable
Depreciation is the biggest cost in a car (unless it is a collectable car like an old air cooled 911)
this is the big hidden cost in Ev’s and hybrids, the deal killer, that depreciation would buy you a lot of fuel in your ice vehicle.
Electric cars depreciate over two times faster than their internal combustion engine counterparts, a serious black mark when it comes to tallying up your actual yearly cost to run your vehicle!
https://crestlineautotransport.com/blog/electric-vehicle-depreciation/
Study: EVs Cost More to Repair, Less to Maintain
Service Advantage Goes to Gas
Service visits – those that involve diagnosing and repairing a problem – were a different story.
During the first three months of ownership, EVs were 2.3 times as expensive to service as gasoline-powered cars. At the 12-month mark, repair costs were about 1.6 times what owners of gas-powered cars paid.
It’s Not Parts. It’s Labor
Why the extra expense?
Because EV problems took longer to diagnose and repair. Technicians spent 1.5 times as many hours working on EVs as they did on gasoline-powered cars. And those technicians cost more, to begin with. Working on EVs requires additional certifications most mechanics don’t have. Those that do charge about 1.3 times the average hourly rate.
Repairing Ev’s is a big problem now, nobody knows how to fix them, they are very dangerous to work on because of the very high voltage (lots of places won’t work on them for that reason), they are very complex compared to an internal combustion engine, they are new technology so people don’t understand them, so very difficult to diagnose. If you break down in L.A. there probably will be a repair place that can fix your EV, if you are in a small town somewhere good luck getting it fixed.
In ice vehicles most places would do no diagnosis, tech’s won’t do it because they aren’t paid to do it, so why should they. They would use the parts cannon….just keep replacing parts hoping it fixes it, instead of doing diagnostics properly, the customer got robbed.
Using the parts cannon on an EV could get expensive in a hurry, like a $4000 non returnable circuit board, it would be hard to hide your screw up.
There is an additional cost for the EV owner: the tesla $22,000 battery is used up, worn out in 100,000 miles. this works out to $22.00 per 100 miles it is costing you for the battery. So the EV owner has to pay another $22.00 per 100 miles to pay for the battery, the ice car owner doesn’t have that extra cost.
EV battery replacement costs…….
VW e-Golf Battery Replacement Cost
The cost of a replacement battery for a 2017 to 2018 VW e-Golf is said to be $23,442.91 by Pignataro VW in August 2021.
the tesla battery which costs $22,000 is used up, worn out in 100,000 miles. this works out to $22.00 per 100 miles it is costing you for the battery.
The tesla battery weighs up to 1800 lb,
the hummer battery is 3000 lb, will it cost $30,000+ ….lol
Mach-E battery at $25,319
Chevy Volt battery replacement cost $26,000
Ford F150 EV pickup battery cost…..$35,960
plus there is a $4500 recycling fee some say….lol
Each EV will use multiple batteries……
Remember that to get the same level of longevity that petrol and diesel cars an EV will go through three battery packs which is hell of a large carbon footprint, and very expensive the tesla battery is $22,000, it costs you $22.00 per 100 miles just for the battery.
3 batteries = $66,000, this makes ice cars look very, very cheap to own/run….haha
3 Ford F150 EV pickup batteries cost……$107,880
ev repair…
https://www.kbb.com/car-news/study-evs-cost-more-to-repair-less-to-maintain/
Both housing and vehicles are a financial liability, not an asset. One depreciates rapidly, and both require constant upkeep. I have no idea what it costs you to drive a new vehicle off the lot today, but at one time it was about 5k.
Unless driving is a significant pleasure for you. In which case having a “new” car is useless. You can get the same satisfaction, or more, from a used car.
Compact trucks, no longer available, drive circles around larger trucks if you go off road. Been there, done that.
‘an investment in survivability‘ — eric
Ford throws a Hail Mary pass to accommodate the dying middle class:
‘Ford wants to make “living in a van down by the river” a bit more comfortable.
‘Today Ford revealed the 2023 Ford Transit Trail Van, a new lifted model of its full-size van equipped with all-wheel-drive and more durable, off-road parts. It comes ready for “upfitting” to turn the vehicle into a living or sleeping space.
‘Ford touts the Transit Trail Van as a gateway into “van life,” a community of travelers who live in their vehicles. Photos released by Ford show the vehicle immersed in a scenic setting, including a couple who appear to be living by a river.’
https://www.cnbc.com/2022/11/03/ford-transit-trail-2023-targets-boom-in-rv-van-life.html
Doubtless ol’ Huckleberry Finn would own one, if he were still around. Now for a bracing splash of ice water:
‘The Trail Van will go on sale in the spring, starting at $65,975. The vehicle will be sold to consumers as well as commercial upfitters, which can spend tens of thousands of dollars customizing such vehicles.’
Yep, $100K is a typical entry price for a new, well-furnished live-in van. But if you just ditched your suburban house in a short sale, where you gonna find $100K?
Looks like Ford’s Trail Van is reaching the market about three years too late. 🙁
They even inserted a YouTube of the Chris Farley bit (to me the funniest piece of physical comedy ever) without even a hint of irony. Apparently, he was a cousin of Ford CEO Jim Farley. Go figure. Watch for Ford and others to offer these down by the river liver vans with 15 or 30 year financing. Still no toilet or plumbing, though.
I bought a truck so I can haul stuff, but I can sell it at anytime for probably more than I paid for it. I want the truck, not the money.
You can invest in equities in the stock markets, park your cash and collect dividends on utilities and manufacturing companies. They are good investments and last a long time. You do realize returns. Not that I haven’t made lousy bets, I have. Makes me cry.
An EV is not an investment if you have to spend 22 grand after 100K miles. There will be no gain, ever.
I watched a YT clip of a payloader with a full bucket of water drop the water onto the top of a small car. The car’s roof was completely crushed.
4 week t-bills. It beats what sealy or the money market account yields.
Eric,
I must differ with you on the matter of EV depreciation. While I can’t speak for the other EVs, Teslas DO NOT depreciate! They just don’t; in fact, late model used ones cost more than a new one does. I’ll insert links for two 2021 Tesla Model Ys for sale in your old stomping grounds, NoVA, outside of DC. Then, I’ll insert a link from Tesla that shows what a brand new Model Y costs. The New one costs less than the used ones. That doesn’t look like depreciation to me! Even if we add the $7,800 Tesla uses to show “savings”, the new Model Y retails for $65,990, which is little more than the used ones in NoVA. Sure, they show nominal depreciation, but that’s all; the Model Y for sale in Sterling, VA is only $1,000 than the new one. While that’s technical depreciation, it’s not the depreciation we’re accustomed to seeing with other cars. The links are below.
https://washingtondc.craigslist.org/nva/cto/d/great-falls-2021-tesla-model-long-range/7552631152.html
https://washingtondc.craigslist.org/nva/cto/d/sterling-2021-tesla-model-long-range/7552832035.html
https://www.tesla.com/modely/design#overview
Hi Mark,
The variable here is ignorance – of what happens to the value of an EeeeeeeVeeeee once its battery deteriorates and requires replacing. Most of the idiots who buy EeeeeeeeeVeeeeeees are unaware of this fact of life. They soon will be.
How can people be ignorant though? Don’t most EV owners use cell phones, tablets, laptops, and other devices powered by Li-Ion batteries? Don’t they see the deterioration of these batteries in their devices? If our devices’ batteries lose charge; if EVs use the same batteries; then how can they not put 2+2 together and figure out that the same will happen with their EV?
Mark,
Because they prefer to virtue signal, be “cool”, and follow the state propaganda than look at reality.
Not to mention that a laptop battery costs FAR less than the laptop, and even thousand dollar cell phones aren’t expensive compared to a Tesla.
A $100, or less, laptop battery is far less liable to bankrupt you than a $20k Tesla battery.
There is no apples to apples comparison.
Most people upgrade phones before the battery life is significantly reduced. And there’s a whole cobbled together infrastructure of charging too. Becuase all you need is a 5V/1A power source it’s pretty easy to come up with something. Heck, most popular phones have battery backup cases that will extend life to a week or longer, just because the required power is so low. In a pinch you can pick up a single-use charger at 7-11.
Electric car manufacturers hope they can be like Apple, get incredible turnover every 18 months with new features or styling. Problem with that idea is there’s no government imposed speed limit on processors or network connections so engineers are able to do whatever they can to increase them. Once you get a car that can do 80 MPH all day what’s the point of upgrading to one that does 100? It’s not like every town has a Nürburgring for weekend playtime. And in fact, the FCC has been increasing available wireless bandwidth (through auctions) to both cellular and WiFi over the last 30 years. The DOT has been doing everything they can to decrease highway speeds by not fixing roads and failing to plan for volume.
RK, folks may upgrade their phones every two years, but not their laptops. Most people keep their laptops for years-long enough to see battery degradation.
‘How can people be ignorant though?’ — MarkyMark
To quote ol’ Maynard Keynes again, “Markets can remain irrational longer than you can remain solvent.”
Lots of things appear to be mispriced in our profoundly distorted fiat-currency economy. If that’s true, then those prices should revert to fair value over time.
Tesla itself appears to be mispriced. A 12-month chart shows that TSLA shares sold for $400 a year ago, but this morning fetch only $215:
https://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=tsla&insttype=&freq=1&show=&time=8
Obviously that year-ago $400 price was too high, especially since Tesla’s sales have grown since then.
Steam vs Electric
Steam engines have the same advantage as an electric motor, instant torque at 1 rpm, but lots of advantages over an EV. An electric motor is far higher rpm so wears out far sooner.
Leno’s steam-powered 1925 Doble E-20 has 1000 lb ft of torque at 1 rpm. A tesla plaid has 1000 lb ft of torque but is scrap in 10 years, a steam car is all mechanical can last 100’s of years.
tesla cost $90,000, residual value after 10 years = zero. 1925 Doble E20 steam powered car cost $90,000 (2021 dollars) residual value after 94 years = probably millions of dollars.
Howard Hughes’ 1925 Doble E20 went 0 to 75 mph in just 5 seconds, with its engine turning over at less than 1,000 rpm, top speed 133 mph in 1925, with today’s technology the steam powered car might be quicker then anything.
The tesla plaid motors runs at up to 19,000 rpm, that sounds dangerous, will wear out quickly, electric motors are too high rpm. The steam engine goes 600,000 miles without an overhaul, after 100,000 miles the tesla battery is dead so it is worthless, scrapped.
With today’s technology you could have a heat source with close to zero emissions (hydrogen is zero emission). There is lots of different fuels that can be used, (no other engine can use so many types of fuels, we have gone backwards), available everywhere, some are free like scrap wood, you could use coal, 40% of teslas run on coal, indirectly in U.S..
If you want more secure, continuous mobility get a steam powered vehicle, there will always be some sort of fuel available, no other engine has that flexibility, the other advantages are, no spark plugs (ignition system needed), no cooling system, no transmission required, no electronics, 100% mechanical, goes 600,000 miles without an overhaul, the greatest dependability, lasts 100’s of years. 1500 mile range on 17 gallons of water.
They probably don’t want people to have steam powered vehicles, they last too long and give too much independence as in fuel availability.
A new EV needs huge voltage to recharge which is only available from a government controlled utility, so they control the power you need, an EV can’t use multiple types of fuel to run, this is all about control, less mobility, if you want less mobility and to be controlled by the government buy an EV.
https://www.hemmings.com/stories/article/steaming-sensation-1925-doble
Small note, Anon1: steam engines are NOTORIOUSLY difficult to operate! Just bringing the boiler up to pressure (i.e. raising steam) is a time consuming, laborious process. Then, there’s the matter of keeping it filled with water, so the boiler doesn’t explode. Oh, and you can’t just use any water in a steam engine; it has to be DISTILLED water! Otherwise, the impurities in water will mess up the boiler and associated plumbing. Finally, you want someone of today’s generation, with the attention span of a gnat, trying to OPERATE something so complex as a steam engine? GTFOOH! When one looks at the time needed just to raise steam, recharging an EV will seem quick by comparison!
There’s a reason why steam cars failed; it’s because, in the free market back then, people didn’t want to live with their complexities, inconveniences, and dangers. Compared to the then new ICEV, cars like the Stanley Steamer failed-just like EVs of the day. Steam powered cars couldn’t hold a candle to ICE cars then, and they can’t do so now.
Mark, all of your points were true in 1920, even 1950. But with a modern boiler management system, even a triply redundant one, with closed look microprocessor control, steam is overdue for a comeback. The only thing in the way is DOT, NHTSA, and general Communist government.
If that’s true, then either propane or natural gas would make splendid fuels! They’re clean, plentiful, and inexpensive-at least when energy production isn’t artificially reduced…
‘steam is overdue for a comeback’ — Ernie
A steam-electric hybrid, with say 30 miles of electric-only capacity from a 48-volt system, could be a winner. You get instant-on from the electric drive while the boiler warms up.
In terms of cool factor, it’s literally steampunk. If only Eeeeeeelon had pursued this route, instead of EeeVees.
Modern steam engine…no boiler…almost instant on…..
There is a modern steam engine to power vehicles that can burn various fuels, it is up to 60% efficient, that is better then any ice or EV vehicle, we have gone backwards from the old days with steam powered vehicles.
The controllers nightmare…an engine that can run on any type of fuel = independence
swap on into your car….lol
A modern steam engine here….
https://cyclonepower.com/#
Steam engines may be more efficient than IC engines, but they fall short of EVs’ efficiency; they achieve 85%-90% thermal efficiency, even when charging from a coal fired power plant. Steam and IC engines have to dump a ton of heat, whereas EVs don’t. If there’s cooling on an EV, it’s for the battery pack, not the motor.
‘If you invest in something, the expectation is you’ll get a return – as in of money.’ — eric
My first intro to discounted cash flow analysis came from a professor of Nicaraguan ancestry at LSU in Baton Rouge. [One of his favorite expressions: ‘The Northeast is into doomology; the South is into boomology.’] Discounting finds the present value of a future series of cash flows from an investment, such as a bond or a rental house.
tl;dr version is that as the assumed interest rate goes higher, the present value goes down.
So, as Jerome Powell and the gang hike interest rates higher, the present value of a financed vehicle sinks even lower compared to its purchase cost. It’s only a question of how much you’re going to lose, unless you want to assign a theoretical value to the vehicle’s utility.
In yesterday’s presser, Powell was quite blasé in response to questions about crumbling house prices. A house’s present value declines as mortgage rates are hiked. That is, the two key assets of middle-class households — houses and cars — are becoming costlier to buy, even as they sink in value.
This is what the deceased eclownomist Maynard Keynes sarcastically called ‘the euthanasia of the middle class.’ Making the lab rats completely dependent on Big Gov is the goal. And its achievement is in sight.
Indeed, Jim…
As regards housing: I think it’s been economic cancer to get people to consider a house an “investment” rather than a place to live. Even better if you own the thing – to the degree that’s possible given having to pay rent in perpetuity to the state, irrespective of having paid for the house, itself.
Thank HGTV for the malignancy.
I believe that dropping tactical nuclear weapons on the American suburbs in the late 80s would have done less long term damage to the populations than the installation of basic cable.
HGTV is particularly insidious because it seems to be the default channel for waiting rooms as of late — doctors, dentists, etc. “Non controversial” programming as long as you don’t see a downside of people putting themselves six figures in debt to enhance their home’s “curb appeal”.
I thought it was just me! At my local Ford dealer, they have HGTV on in the waiting room; I know, because that’s all I see when I take my car there for its scheduled service.
I love the HGTV memes…
“I work part-time at a daycare, and my husband breeds salamanders. Our budget… 1.3 Million.”
Hi Roscoe,
Yup. I get told fairly often that my kitchen is “dated.” And it is. It was built – along with my house – back in 1980. But it works just fine and I really don’t care that it’s “dated,” especially since I’m not in debt because I “updated” it!
Eric, I went to look at a house a mile or so down the road from me a few years ago- $80K- Nice little brick house with 5 acres. The kitchen looked to be untouched since about the early 60’s- blue-painted wooden cabinets; formica counter tops….something straight out of an old sit-com. It was glorious!
Conversely, I feel no love for these ‘modern kitchens’ with granite countertops and stainless or (even worse) black appliances, that have absolutely no character or warmth, and whose only attributes are ‘cold, modern, and busy’ (And more often than not, the people who have them rarely do any actual cooking).
If I ever build a house, it’ll have a simple retro kitchen…and I actually cook!
You mean you don’t like sterile white with black cabinets? /s
I just want a warm, rustic feel if I ever redid a house… and fans, definitely fans. I’m hot blooded and cook up easily
My sister lives with me, and that’s whats on all the time.
I swear my Bengals probably are planning to flip a house soon, since I leave the tv on for them as I leave in the morning so they don’t feel all alone. Personally don’t watch it, though the memes about hgtv are hilarious.
End of the day, just plan on moving far away from everyone, wanna be left alone, even if Uncle has other plans for people like us
‘it’s been economic cancer to get people to consider a house an “investment” rather than a place to live’ — eric
More than a third of the housing stock in our small, tourism-oriented town consists of vacation rentals — AirBnB, VRBO and the like.
Those who piled in within the past year already are underwater, despite having lower-rate mortgages. More pain awaits them.
Only a dozen years ago, housing was flattened like Wile E Coyote run over by an Acme semi truck. No one thought it could ever happen again, with the Fed’s QE-infinity levitating house prices like a magic beanstalk growing to the sky. 🙁
Hi Jim,
Yup. And when one doesn’t regard their home as an “investment” but rather a place to live, long term, one is immunized greatly against these spikes – and plummets – in home values.
I prolly could have sold my place for a preposterous sum last year. Of course, then I would have had to buy a new place, also for a preposterous sum. Since Id didn’t, I have a place to live that I like – and I’m not especially worried about what it’s worth because it’s worth to me is that I have a place to live!
Now imagine if you were in the corporate management track. If you’re in a position more than 3 years and don’t have a solid plan for advancement you’re going to go stale. So you set up the email alerts on the internal job postings page and watch for something that can get you more noticed than you are now. In many cases that means relocating to a new office. It’s the classic IBM (I’ve Been Moved) way. Not only does it mean your circle of friends is all in the company, it also means you’re never really getting ahead in the real estate game. Always buying when you have to instead of when you want to (or can afford to) means you don’t get the luxury of naming a price. And because you’re “advancing” too often you think you’re making big money so why not splurge on a bigger place too?
Not only that, but if you get far enough ahead you’re going to end up in a tier-1 city like Los Angles, New York or Chicago. Now your cost of living will be through the roof too.
If that’s the life you want, that’s great. It does come with perks I’ll never know. But they come at an enormous price.
The repetitious boom/bust in housing price has stimulated individuals to go into the business of collecting profits off of house purchase, expecting the boom to continue. And then it busts. The only legitimate “investment” I see in housing is owning it outright and not paying rent. Except the property tax rent. “Equity”, the difference between what you owe, and what it’s worth, is a tool of constant debt, forever and ever Amen.
Indeed Eric,
The property taxes I’ve paid over the almost 50 years living in our paid-for house eclipse what was paid FOR the house. Once upon a time I got out pencil and paper to calculate what that number was, but after going back only four years it already exceeded what was paid for the house. At that point I decided to stop and have a couple beers, not wanting to give myself a heart attack or stroke.
MIB,
I just calculated what I’ve paid in taxes, insurance, and maintenance, and it’s about 60% of what I paid for the house. I’ve only lived here a little over 12 years, BTW. Talk about sobering-YIKES!
Hi Mike,
Yup!
I have given serious though to attending a county supervisors’ meeting and asking: At what point have I paid my “fair share” to pay for the education (conditioning) of other people’s kids? I’ve paid something in the vicinity of $40,000 so far… and it won’t be long until, like you, I have paid more in property taxes than I paid for the property!
Hi Eric
Alaska has no property tax, very cool….
A primary home is not an investment. Very, very few people actually ever get a better return on it. Once you add in the interest, maintenance, homeowner’s insurance, etc. pretty much every home residence is a loss.
Rental properties, on the other hand, can be beneficial (especially if one pays cash and locates a good tenant). The expenses of the home are deducted annually including any building depreciation and the tenant’s rent should cover most annual costs (taxes, insurance, landscaping, etc). Purchase five or ten over the years and hold them and one has a pretty solid revenue into the retirement years.
Indeed. I own 5 small town houses, and several commercial buildings. The key is I paid cash, typically less than 5k, and do all my own maint/repairs. Every one of my little nest eggs throws off 7g/year in revenue. And is “worth” 20x what I paid for it. The key is to look for value, it usually looks like dirty work to most folks.
Goal here. Things work out the way I plan to, my current house can become a rental as I also invest in other places.
Also plan on getting into dividends, since why bother with the gamble when you can get a guaranteed return instead?
You guys, remind me of a phrase I read often on The Housing Bubble Blog: catch a falling knife.
Eager to save, for catching one? Idk.
Then, there’s this perspective, discounted by many:
“EvG goes on to say, “Nobody can repay the debt, and they can’t even pay interest. . . . So, therefore, when the debt implodes, so will the assets that were financed by this debt. So, both sides of the balance sheet have to come down. Whether it comes down by 50%, 75% or 90%, I don’t know. . .”
https://usawatchdog.com/2-5-quadrillion-disaster-waiting-to-happen-egon-von-greyerz/
Whatever happens, I wish you good fortune, my fellow freedomistas. I hope ya don’t get burned.
This is fabulous news, Ernie! Excellent work. My family does the same. I am anticipating some pretty good deals around the corner in the next 6-12 months. I am ready. 🙂
Oh, I missed this comment when I said, “you guys”… Gary North wrote a bit about how that was likely a very good plan, “Purchase five or ten over the years and hold them and one has a pretty solid revenue into the retirement years.”
I was sold on the idea for awhile & I know of a small town lawyer who ‘cleaned up’ over the Go-Go decades.
How-freaking-evah; over at The Housing Bubble Blog, I’ve read plenty of tales about how that plan turned sour for many.
“and the tenant’s rent should cover most annual costs”
One bit I recall, ~”rents are capped by wages”.
A modification I would add, ~”rents are capped by wages minus tenants expenses”.
Or, something like that. We’ll all see, soon enough, I imagine.
…Wages, always go Up, right?
Also, is ‘building depreciation’ the same as a tenant trashing the place? …Idk.
“should cover” …”etc)”
… Just thinking out loud here.
It’s been awhile since I stoped by
it’s … perhaps another smidgen of Jungarian Synchronicity this is today’s title:
‘I Don’t Think It’s A Good Idea To Buy When The Knife Is Falling’
http://housingbubble.blog/
“Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.”
Thank you for your post, helot. I am thankful for individuals like yourself that are so terrified of failure that they never even bet. It is the Ernies’ and Zanes’ of the world that cost me. I could find a foreclosed piece of property that is in an excellent location and just needs a bit of TLC that I could make a great ROI on. I put in a bid of $75k then Ernie comes along and puts in a bid of $80k, next thing I know I am in a bidding war because we both see the potential in this real estate.
Are we going into debt? Nah. We are paying with the profits of the homes that we have rented and/or flipped since 2009, when economists and naysayers told us real estate would never come back and we were catching a falling knife. Glad we didn’t listen.
“so terrified of failure that they never even bet.”
Um, where you get that, I don’t know.
Being a landlord just is not all that appealing. Good for you that your bet paid off, it is, however; gambling. Plenty of other gamblers were not as fortunate in their bet.
”Flippers’ F**ked As Mortgage Rates More Than Double In 10 Months’
“#Phoenix flipper: “Prices are declining and inventory is soaring. We’re looking to buy, rehab, and rent instead of flipping.”” …
https://www.zerohedge.com/personal-finance/flippers-fked-mortgage-rates-more-double-10-months
I wonder what increases in supply do to rents? Hmmm.
Will The Fed keep spiking the punchbowl like they did in 2008 so every gambler can be smug about their bets?
Who knows?
‘Don’t Tell Powell, But US Rents Just Tumbled The Most On Record As Economy Craters’
“… And the paradox: in two months is precisely when the (6-9 month delayed) OER inflation will peak and the Fed will be hiking with gusto…”
https://www.zerohedge.com/economics/dont-tell-powell-us-rents-just-tumbled-most-record-economy-craters
Happy Trails.
Hi Helot,
I am “hesitant” to be a landlord as well. Chiefly because I am not allowed to set terms and conditions. I am legally obliged to rent/do business with people I would prefer not to. And if the renters refuse to pay rent, it is no longer allowed to just kick their deadbeat asses out.
It isn’t for everyone and that’s fine, but life is a gamble, helot. Some have a riskier tolerance than others. You keep broaching this from the perspective that rental or investment properties are debt driven. For some, yes, they can get in over their heads. For others of us we pay cash so there is no mortgage to be held. The monthly rental income pays for the taxes, insurance, utilities (if included), and there is usually enough to put aside for future repairs and maintenance. If a landlord is holding a mortgage, they may have a negative revenue stream. That is a danger that anyone that accrues debt has to be aware of.
As for supplies going up, rents have gone up, too to keep pace with inflation. Will rents have to come back down in the coming months? Probably, but only when other costs are deflating as well.
If the market is bottoming – who cares? If it is a long-term rental or investment property it is going to be held for a number of years and markets are cyclical. Investors are going to look for deals, they will rehab and renovate, and resell when the market picks back up. If someone is trying to flip a house purchased in July, they are going to be on the wrong end of the stick. Long term rentals and investments have very different goals than short term flips. Ernie and I both discussed LT real estate investments.
Interesting take: “Will rents have to come back down in the coming months? Probably, but only when other costs are deflating as well.”
An outlook shared by manny, I’m sure.
“but only when other costs are deflating as well”
Like: gasoline, food, electricity, home heating fuels… hmm.
Things low income people, or even the middle-class, are unaffected by.
I disagree that life is a gamble. Life is the animated ‘contest’ for liberty (or, the embrace of slavery?) while buying real estate is gambling The Fed ‘Put’ maintains the high prices forever.
Have you seen the history chart of house prices going back to the year ~ 1500? As I recall, it’s a flat line until approx. the 1970’s. The Fed is the pump.
Anyway, Ernie comes in and bids $80,000? He said he only paid 5 Grand, sounds like pre-forclosure magic or something similar, yet, in my area at least, even at $80,000 you’re likely buying some pretty crappy houses, in some pretty crappy areas, with some pretty crappy tenants.
Like Eric wrote, I would not want to deal with them.
‘Weeks Away from Whole Shithouse Coming Down – Bill Holter’
“You are going to see massive deflation, deflation of asset prices. . . . It will be inflation of the things you need and deflation of the things you have.”…
https://usawatchdog.com/weeks-away-from-whole-shithouse-coming-down-bill-holter/
THE WOLF STREET REPORT: Housing Bubble Pops, and the Fed Can Let it Rip
https://wolfstreet.com/2022/10/30/the-wolf-street-report-housing-bubble-pops-and-the-fed-can-let-it-rip/