FranLab is getting evicted

[Bud]

Why bother if there is sheep who finances your flying lessons. All you need to do is make another cute crying video and you are good for the next few months.

[MK14]

Why bother if there is sheep who finances your flying lessons. All you need to do is make another cute crying video and you are good for the next few months.

Not necessarily.
As I see it, they are acting like a small, independent, highly specialized, video production company.  Producing, some fun, entertaining, and technically/historically interesting/useful content.

Hypothetically.  If we go back to the 1980s (and also, closer to modern day media types), and they produced the same content.  Which was then put onto VHS/Betamax/V2000 video tapes of the period.  Some people would be tempted, especially with some of their content.  To pay to rent (and maybe even buy), some of their production videos.

E.g. A pack, containing a large number of their recently restored/copied vintage film (educational) clips, and some of their best Youtube videos.  As a VHS, DVD/Blu-ray boxed set or via a video distribution service (Netflix etc).

So I do think, they are producing stuff of value, to some people.  If it is not up some peoples street.  Then that is fine, as there are other sources of videos/information and so on.

[EEVblog]

True but personally I would use an investment fund (which I actually did) in order to spread the risks better and make sure to get some interest.

Agreed, and in the long run equity funds have actually outperformed property.

Surely not when you factor in paying rent and moving because you got booted out etc. You'd have to have an awfully big investment fund for the interest and growth on that to pay for your rent and then have some left over.
Say $700/wk here in Sydney to rent an ordinary home, that's $36k/year. You'd need an investment fund of at least $800k to $1M to pay for that. You should have just bought the house.
Your house also doesn't care about bad finanical years or market cycles.
The numbers would work out pretty much like that video I posted above, just insert a home instead of an office.
I could get that same spreadsheet and run the numbers again for home ownership.
About the only time that home ownership doesn't make sense is if you move often and will do so for a majority of your life.

Not to mention owning a home is itself a liability, you have to maintain it.  Not a big deal if you live in it, but more hassle if you don't (and don't even think about being a landlord.)

Owning your own home is the single best bit of life advice I could give someone.
Of course that's not for everyone, but for most people it's the best advice possible.

[james_s]

Agreed, and in the long run equity funds have actually outperformed property.

Not to mention owning a home is itself a liability, you have to maintain it.  Not a big deal if you live in it, but more hassle if you don't (and don't even think about being a landlord.)

Plus there's a global housing shortage, it feels immoral to buy properties if they aren't used to live in.

When you rent, you have to pay someone else to maintain it. It doesn't remove that liability, it just adds a layer. You are paying off someone else's investment and paying them to maintain it, then when you move you walk away with nothing.

There is a global excess of people, if the population were not growing so rapidly there would be no shortage of housing, and as long as your investment home isn't sitting empty, owners of rental properties are providing a valuable service, they're supplying housing to people who for whatever reason are unable or choose not to own one themselves.

I was 25 when I bought my house, it was a terrifying process that left me flat broke for a few years and it is not without ongoing challenges but it is by far the best life choice I have ever made. Now 18 years later I can see the light at the end of the tunnel and will have mine paid off in full within a year or two, meanwhile a comparable home would cost substantially more than I could afford today on my salary to rent. I would be forced to relocate to somewhere cheaper or live with roommates, instead I have a nice 3 bedroom detached home that is mine.

[nctnico]

Not to mention owning a home is itself a liability, you have to maintain it.  Not a big deal if you live in it, but more hassle if you don't (and don't even think about being a landlord.)

Owning your own home is the single best bit of life advice I could give someone.
Of course that's not for everyone, but for most people it's the best advice possible.

Just a note: the way I read it tom66 means that owning a home you don't live in (but rent to others) does not have to be the best investment because that house will need maintaining. Likely to higher standards than your own home where you can make your own choice to live another year with a leaky window or fix it next week.

[EEVblog]

When/if such a moment occurs.  They then would need to move, somewhere.  That could be a time, to move in the right direction, by buying (or renting, as a possibly less good choice), somewhere much more, longer term, affordable and practical.

She has actually said she would buy if she could, as the loan repayments aren't far off the rent, but the problems are:
1) She won't consider leaving downtown Philly under any circumstances
2) She can't get a loan because her Patreon income is not considered income by the bank, it's donations. And Youtube ad income is considered dodgy too. That sucks but it's banking reality.
3) Gentrification in Philly means there are practically no options left for a large combined space (live+lab+workshop+storage).

I have suggested that there might be means to circumvent problem #2 by using some unusual corporate structure where she actually gets a wage.

[EEVblog]

Not to mention owning a home is itself a liability, you have to maintain it.  Not a big deal if you live in it, but more hassle if you don't (and don't even think about being a landlord.)

Owning your own home is the single best bit of life advice I could give someone.
Of course that's not for everyone, but for most people it's the best advice possible.

Just a note: the way I read it tom66 means that owning a home you don't live in (but rent to others) does not have to be the best investment because that house will need maintaining. Likely to higher standards than your own home where you can make your own choice to live another year with a leaky window or fix it next week.

Oh, totally different story for an investment property.
Pro Tip: No one ever gets genuinely rich from investment properties. Investment properties are more what you have when you are already pretty well off and want to diversify your investment portfolio.
Huge numbers of aussies don't understand this and think you'll get rich if you have 10 investment properties all negatively geared (making a loss which is tax deducitible here) 

[EEVblog]

I was 25 when I bought my house, it was a terrifying process that left me flat broke for a few years and it is not without ongoing challenges but it is by far the best life choice I have ever made. Now 18 years later I can see the light at the end of the tunnel and will have mine paid off in full within a year or two, meanwhile a comparable home would cost substantially more than I could afford today on my salary to rent. I would be forced to relocate to somewhere cheaper or live with roommates, instead I have a nice 3 bedroom detached home that is mine.

 

[Kasper]

Agreed, and in the long run equity funds have actually outperformed property.

Not to mention owning a home is itself a liability, you have to maintain it.  Not a big deal if you live in it, but more hassle if you don't (and don't even think about being a landlord.)

Plus there's a global housing shortage, it feels immoral to buy properties if they aren't used to live in.

When you rent, you have to pay someone else to maintain it. It doesn't remove that liability, it just adds a layer. You are paying off someone else's investment and paying them to maintain it, then when you move you walk away with nothing.

There is a global excess of people, if the population were not growing so rapidly there would be no shortage of housing, and as long as your investment home isn't sitting empty, owners of rental properties are providing a valuable service, they're supplying housing to people who for whatever reason are unable or choose not to own one themselves.

I was 25 when I bought my house, it was a terrifying process that left me flat broke for a few years and it is not without ongoing challenges but it is by far the best life choice I have ever made. Now 18 years later I can see the light at the end of the tunnel and will have mine paid off in full within a year or two, meanwhile a comparable home would cost substantially more than I could afford today on my salary to rent. I would be forced to relocate to somewhere cheaper or live with roommates, instead I have a nice 3 bedroom detached home that is mine.

I agree and will add another benefit to home ownership: home renos.  It allows home owners to create work for themselves and to learn the joy of working hard and accomplishing things.  It usually has a flexible schedule, pays fairly well and can be learned through youtube.  I might be laid off soon and I'm not stressed because I have savings from selling a house I renovated and I would enjoy the opportunity to do lots of renos on the current home while job hunting. 

[Quarlo Klobrigney]

There's always a rewarding career as a Walmart night shift stocker or 7-Eleven clerk to fall back on.
They're big in the overcrowded crime infested cities.
Job security....

[MK14]

She has actually said she would buy if she could, as the loan repayments aren't far off the rent, but the problems are:
1) She won't consider leaving downtown Philly under any circumstances
2) She can't get a loan because her Patreon income is not considered income by the bank, it's donations. And Youtube ad income is considered dodgy too. That sucks but it's banking reality.
3) Gentrification in Philly means there are practically no options left for a large combined space (live+lab+workshop+storage).

I have suggested that there might be means to circumvent problem #2 by using some unusual corporate structure where she actually gets a wage.

The downtown Philly bit, I can imagine reasons in my mind, which makes it make a lot of sense.  It would be their final decision, anyway.
Such as, viability of living there, given how close shops and things are to where they live and public transport there.

Many people seem to criticize the apparent safety, of Fran's choice, of where it is safe to live.  So, let me again, give a differing viewpoint.

If a person has lived in a particular area, for a very long time.  They can get very accustomed, to the way things work in that area, and how the people there move about, look and act.  This can enable a person, to rapidly sense if things don't feel right, or look out of place, or someone looks odd or risky.
That can allow, a person to handle the situation and live there in relative safety.

Whereas an outsider, may have a much harder job, sensing/detecting, when the situation or people, in the area, are acting funny/odd/dangerously (unless it is blindly obvious).  Which can lead to them having a much greater risk of harm, in that area.

That can also give a person, a high level of feelings of security, even if it is not really that safe.

When a person has lived in the same place a long time.  They can know, exactly where to go, to fulfill their needs.  Which can save a lot of time and hassle, making life much more efficient.

They may well have a number of friends in that area, built up over many years.  They may also have a large number of contacts (for electronics and things), in that area.

In other words, from a practical point of view, they could have a good point for wanting to continue to live there.

It is very easy to take a video camera, and film some really bad parts of an area, like the one linked to, earlier in this thread.  But similarly, a video of some of the best/nicest/safest parts of where they live, could also be filmed, I presume.

2) and 3), make a lot of sense.  The banks have their rules and final say, so if the bank says NO!, then no it is.  3), seems to be what started all these sad "Sorry, I'm having to leave this place", videos, that Fran has made.  So, I can see that the writing is on the wall (the time is beginning to run out), and Fran's Youtube channel, probably can't stay the way it is, for much longer.
Perhaps months, rather than years.

So, from what you have said, in your post, quoted above.  It sounds like they may end up, renting somewhere in downtown Philly, if they have to leave their existing sets of premises.  Which may mean either significant downsizing of their Youtube and other adventures, or even just renting somewhere big enough to live in and that's it.

BigClive, seems to just live in a normal home.  But still seems to keep/create a fairly busy/active/full Youtube presence.  Maybe, Fran could do similar, and just not get involved with the things that need lots of space and/or storage room.

[Fraser]

The good old days of Fran videos…. Recreating the Russian SPUTNIK satellite audio oscillator 

https://youtu.be/b8KduFyLevk

I actually enjoyed watching this video and would watch more like this, if produced. Good old fashioned electronics fun It took me back to my childhood of experimenting with relatively simple Germanium transistor circuits. My transistor of choice was the AC128, soon replaced in my experiments with the venerable BC107, BC108 and BC109 silicon transistors.

Fraser

[EEVblog]

The good old days of Fran videos…. Recreating the Russian SPUTNIK satellite audio oscillator 
https://youtu.be/b8KduFyLevk
I actually enjoyed watching this video and would watch more like this, if produced. Good old fashioned electronics fun

Those are the kinds of video that you only need a single room and a small lab for.
I don't know how much her (shared space) factory costs to rent, but I'd make the hard choice now and shut it down to save cost. She said she didn't use it for 18 months during covid and was still paying rent.
Her collection in the two sorage units I think is important and provides a huge lot of her interesting content.
If it came to the crunch, spend a few weeks sorting what stuff you'll potentially make videos on over the next 10 years and ditch the rest, keeping just the one storage unit.

Anyway, I should stop speculating, we can revisit this after the next money crisis video, which I sadly expect within the next 6 months. I hope that's not the case, but I think it's more likely than not.

[EEVblog]

BigClive, seems to just live in a normal home.  But still seems to keep/create a fairly busy/active/full Youtube presence. 

Didn't he buy a new place fairly recently?
There was a place with the death trap elevator, but I think that fell through? That sounded like fun!
I can say that getting a new place is always exciting.

[MK14]

BigClive, seems to just live in a normal home.  But still seems to keep/create a fairly busy/active/full Youtube presence. 

Didn't he buy a new place fairly recently?
There was a place with the death trap elevator, but I think that fell through? That sounded like fun!
I can say that getting a new place is always exciting.

I've NOT heard anything about him moving (but maybe I missed some announcement, as I tend to avoid his livestreams).  He does somewhat frequently, apparently work on various jobs, in different places.  Where he seems to stay at, for a few days or weeks, I don't think he makes it clear for exactly how long.  But when he does, he seems to take some kit with him, and carry on creating his Youtube videos, in the hotel room, or wherever he/they are staying.

Maybe that is where this deathtrap lift, comes from?

In all fairness to Fran.  They somewhat often, seem to undertake projects, which do need quite a lot of space, such as that big, human like statue machine thing, I've not really paid too much attention to.  But sadly, a lot of that activity, would have to go, if they end up going down into just a somewhat small, normal, rented dwelling, in the area they want to live in.

So, they'd have to stick with small hand-held PCB, types of electronics Youtube videos, a bit like BigClive does.  But, somehow, I just can't see such a transformation, taking place, smoothly or perhaps at all.  Because if such big time downsizing, were to take place.  It would probably already have begun, many years ago.

I.e. It could end up being an all or nothing situation with Fran (from what you seem to be indicating), and things simply grind to a halt.  Because by the time the end is near, it is sort of too late, to reshape things, in a wild hurry.  More dramatic, shedding of excess/all stored stuff, may need to take place.

As you seem to have been saying.  It would be much better to decide NOW, what is probably going to happen anyway, and use the time to gently/peacefully move towards the final outcome.  Rather than leaving things, until they eventually, fail.

[sokoloff]

Plus there's a global housing shortage, it feels immoral to buy properties if they aren't used to live in.

The owners and the occupants don’t have to be the same people, though.

In order for someone to be able to rent, someone else had to step up and commit by plunking down money to buy/build the place the tenant can now more flexibly rent.

[unknownparticle]

Owning your own home is the single best bit of life advice I could give someone.
Of course that's not for everyone, but for most people it's the best advice possible.

Totally agree.  My father literally bullied me into buying my own house in my mid 20's, I clearly recall him saying, "you will thank me for this eventually" !!!  How right he was, bless him, no longer with us, taken well before his time.  At the time it felt like a noose, almost no disposable income, lots of obligations and seemingly everyone with a hand in my pocket!  Comical to look back on now, most people could pay for that house with a credit card now, for what it cost then!  I've moved a few times since and am so grateful for my insistent father looking into my future for me!  Had I left it just another 5 years I would have found it almost impossible to buy, I would have been a tenant for the rest of my life.
Of course the housing market is now rigged, drastic and deliberate under supply creating ever increasing demand, with incomes stagnating. Even graduate professionals are struggling to afford to buy their first house here in the UK, so what chance do low to average income earners stand?!  All made worse by the lack of affordable rent social housing, caused by the big sell off in the 80's.
Although I do own my own house I really wish I hadn't allowed two extra property owning opportunities pass me by. Both local, actually on the same road and both drastically below market price due to the owners having to sell in a recession.  It would have put me in a very tight financial situation with the economy in crisis, so no disposable income again for the foreseeable future. Had I bit the bullet I could have retired early on the rental income alone!!  Ah well, hindsight and all that!
So yes, my advice is also, buy your own home if at all possible, everything else is secondary.

[tom66]

When you rent, you have to pay someone else to maintain it. It doesn't remove that liability, it just adds a layer. You are paying off someone else's investment and paying them to maintain it, then when you move you walk away with nothing.

There is a global excess of people, if the population were not growing so rapidly there would be no shortage of housing, and as long as your investment home isn't sitting empty, owners of rental properties are providing a valuable service, they're supplying housing to people who for whatever reason are unable or choose not to own one themselves.

I was 25 when I bought my house, it was a terrifying process that left me flat broke for a few years and it is not without ongoing challenges but it is by far the best life choice I have ever made. Now 18 years later I can see the light at the end of the tunnel and will have mine paid off in full within a year or two, meanwhile a comparable home would cost substantially more than I could afford today on my salary to rent. I would be forced to relocate to somewhere cheaper or live with roommates, instead I have a nice 3 bedroom detached home that is mine.

To be clear, I'm very much in favour of owning your own home.  I just completed two months ago on our first home, and looked at what our prior landlord had relisted the old house at: the same as our mortgage repayment.  Now, that does implicitly include some maintenance, but there is no benefit in the long run to paying that rent.  So I am very glad we are now homeowners (and it looks like I was very sensible fixing the mortgage for 5yrs in June @ 3% - we use ARMs a lot in the UK)

What I'm less clear on is the benefit to property as an investment outside of somewhere to live.  I think it's overhyped, and the market is due a correction sooner or later.  Probably not a catastrophic one, but I could see prices dropping by 10-20%. I'm in it for the long run, so this doesn't bother me.

Re global population, you may well argue it is too high, but you are not going to reduce it, so what are you to do?  I would much rather see more people own homes than rent them, because in the longer term that means that they will not be paying rent into retirement and they will have an asset to pass on to their family.  It is a societal failure to collect wealth in the hands of just a few landlords who were lucky to leverage one property after another into a passive income stream that only they benefit from.  We do need landlords, but we could easily cope with less of them, I suspect.

[unknownparticle]

Well done on becoming a home owner, you won't regret it
As far as investment is concerned, if you look at the stats, property out performs ALL other investments, OVER TIME.  Technically though, you are unlikely to liquidate your home to realise the asset growth. Although, it is an easy asset to loan money against, if needed to improve the property, start a business etc. And of course, you can climb the property ladder by virtue of increasing equity.

[tom66]

Well done on becoming a home owner, you won't regret it
As far as investment is concerned, if you look at the stats, property out performs ALL other investments, OVER TIME.  Technically though, you are unlikely to liquidate your home to realise the asset growth. Although, it is an easy asset to loan money against, if needed to improve the property, start a business etc. And of course, you can climb the property ladder by virtue of increasing equity.

Disagree for the UK.

Real data on sales prices:
https://landregistry.data.gov.uk/app/ukhpi/browse?from=2000-09-01&location=http%3A%2F%2Flandregistry.data.gov.uk%2Fid%2Fregion%2Funited-kingdom&to=2022-09-01&lang=en

If you bought the average house in the UK in 2000 (£90,912) and sold it today (£294,559) you would have seen a 3.24x return on investment.

Sounds great, right?  But that's only a compound of about 5.5%.  Meanwhile, the S&P500 over a similar timespan has seen about 11.8% per annum (https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp)

Sure, you can get rent from a house (maybe 2-3% of the price), but to buy a house you need to tie up a lot of capital and have a mortgage, which is subject to the vagrancies of the mortgage market and your ability to keep repayments up.  Meanwhile you can go and buy 1 share of S&P500 for about £50 from Vanguard and... well, that's the extent of your investment.  The most you can ever lose is that.

Now of course historical results are no guarantee of future results blah blah, but manifestly the housing market is a worse vehicle as investments go and I'm not sure why there's so much obsession over using it as one.

[sokoloff]

Because of leverage. If I have $250K and a good income to my name, no one will lend me $1.3M to invest in the S&P 500. Banks were falling all over themselves to lend me $1.3M to buy a $1.5M house.

I could invest $250K at 10-12% in the S&P (plus pay rent!) or I could invest $1.5M at 3-5% while putting up only $150K or so.

[PlainName]

Sounds great, right?  But that's only a compound of about 5.5%.  Meanwhile, the S&P500 over a similar timespan has seen about 11.8% per annum (https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp)

But to get that 11.8% return you would firstly have to have the entire £90k upfront, and secondly essentially lose it for the term. Meantime you're still paying an increasing amount of rent. That's like buying the house for cash AND then paying for a mortgage on it.

OTOH, buy the house and it's essentially free until you cash in, whereupon it's better than a pension pot.

[tom66]

Because of leverage. If I have $250K and a good income to my name, no one will lend me $1.3M to invest in the S&P 500. Banks were falling all over themselves to lend me $1.3M to buy a $1.5M house.

I could invest $250K at 10-12% in the S&P or I could invest $1.5M at 3-5% while putting up only $150K or so.

Yes - but that mortgage isn't free.  About 6% if you were to fix it for say 30 years (I'm aware ARMs are less common in the US and it's more common to fix for 15 or 30 years, right?)  So if you're borrowing $1.3m over 30 years at 6% that's about $7,800 per month in repayments assuming a capital repayment mortgage.   The value of the $1.5mn property climbs by say ~5% per annum or $6,250 per month at the start, assuming historical norms remain.  So the monthly gain is mostly taken up by the mortgage payment.  At the end of all of it you've paid $2.8m (plus initial downpayment ~$200k) to buy a property that is now worth say $6.5mn (great!) but if you'd stuck that same $7,700/m in the market and let it compound at 11.8% simple annual gain that would be $3mn.  Very similar outcome but with much lower risk.  So while you get a bit more you have exposed yourself to huge risk owing the bank a large amount of money on an asset which may or may not be worth more by the end.

That's what I don't get by people saying property is a good investment, it's really quite an average-to-poor one by historical standards.  Property isn't liquid either.  It takes a while to sell and buy, it requires upkeep and constant repayments, maybe property/land tax too depending on the locale.  I can stop and start contributions into my stock savings at any moment if I want.  I can draw the whole amount down with a few days of notice if I want too (of course, it could be losing me money to do so, but the same risk applies to property, you could have to sell in a down market too.)

[sokoloff]

Yes - but that mortgage isn't free.  About 6% if you were to fix it for say 30 years (I'm aware ARMs are less common in the US and it's more common to fix for 15 or 30 years, right?)  So if you're borrowing $1.3m over 30 years at 6% that's about $7,800 per month in repayments assuming a capital repayment mortgage.   The value of the $1.5mn property climbs by say ~5% per annum or $6,250 per month at the start, assuming historical norms remain.  So the monthly gain is mostly taken up by the mortgage payment.  At the end of all of it you've paid $2.8m (plus initial downpayment ~$200k) to buy a property that is now worth say $6.5mn (great!) but if you'd stuck that same $7,700/m in the market and let it compound at 11.8% simple annual gain that would be $3mn.  Very similar outcome but with much lower risk.  So while you get a bit more you have exposed yourself to huge risk owing the bank a large amount of money on an asset which may or may not be worth more by the end.

Rent isn't free either. If you're putting "that same $7700/mo in the market", who is paying your ~$5000/mo rent?

That's what I don't get by people saying property is a good investment, it's really quite an average-to-poor one by historical standards.  Property isn't liquid either.  It takes a while to sell and buy, it requires upkeep and constant repayments, maybe property/land tax too depending on the locale.  I can stop and start contributions into my stock savings at any moment if I want.  I can draw the whole amount down with a few days of notice if I want too (of course, it could be losing me money to do so, but the same risk applies to property, you could have to sell in a down market too.)

It's proven over multiple generations to be the single most reliable way for the middle-class to become more secure in their finances.

[Nominal Animal]

That's what I don't get by people saying property is a good investment, it's really quite an average-to-poor one by historical standards.

I always thought they meant "compared to renting and investing elsewhere".  In other words, that renting, long-term, is such a negative "investment" that as soon as you can, you should buy your own property to live in.  It is a much better strategy than renting but investing in some other instruments, unless your work requires you to travel all the time (so you end up renting anyway).