Why it still makes sense to Buy vs. Rent

Nearly a full third of households are still renting...but if you are one of them, you could be paying a hefty price. Additionally, the children of the baby boomer generation are close to or at the home buying age, but these "echo boomers" could mistakenly decide to put off the purchase of a home because of all the noise about a "bubble" in home prices.

Is there a "bubble"? The simple answer is "no". Even if interest rates move a bit higher, it won't be enough to cause a nationwide slide in home prices. The key to a healthy housing market is the job market. If the payment on a new home might be slightly higher due to increased interest rates, it generally won't stop someone from purchasing the home of their dreams...but if they feel their job is in jeopardy, it might be enough to stop them from making a move. So with the currently low levels of unemployment and the beefy gains in job creations, it looks like the housing market will remain vibrant. Although it will be difficult to sustain the double-digit gains that much of the country has seen, price declines are highly unlikely. Expect a more moderate rate of appreciation, perhaps closer to the historical 6-7% range, which is still very good.

It is important to note that housing tends to be localized. So if the job market in your area is weak, housing prices could under perform the rest of the country.

But this talk of a housing bubble has been going on for a few years now, and those who were unfortunately victimized by continuing to rent instead of purchasing a home are painfully mulling over their missed opportunity. But is it too late? Even with the more moderate levels of appreciation expected…procrastinating on that home purchase could cost you a bundle.

Let's look at an example. If you are paying rent at $1,500 per month and your landlord increases your payment by a modest 5% each year, you would wind up paying just about $100,000 over a 5-year period! Worse yet, after forking over $100,000, you still would have nothing to show for it.

And speaking of having nothing to show for it - how about any improvements you might make to a rental property? It's not uncommon for renters to freshen up the paint, install new light fixtures or plant some nice flowers outside. But guess what…all your efforts, labor and the benefit of that improvement belong to the landlord, not to you.

With the extensive variety of programs to help buyers obtain a mortgage with little to even zero down payment, the very same money could have been used towards home ownership. Even using a standard 30-year fixed program, a mortgage of $300,000 could be obtained with a total monthly mortgage payment - including property taxes and insurance - of around $2,200. Assuming a 25% tax bracket, this would be equivalent to the average amount spent on rent during the same period after your tax benefit.

And the benefits of home ownership are quite considerable. Because the mortgage is being paid down each month, equity is being built. After 5-years, the $300,000 mortgage would be reduced to $279,000, adding $21,000 to your net worth. Home appreciation can add an even bigger chunk. If your home appreciates at a modest 5% per year, the value of a $300,000 home would increase to $383,000 after 5-years. Subtract the remaining mortgage of $279,000 and you have a whopping $104,000 of additional net worth! Even if the appreciation level were at 3.5% or half the historical norm, the result would be $77,000 of additional net worth.

But if laying out the initial increase in monthly payment and having to wait for your tax benefit to show up next April is a tough nut to crack, the IRS wants to help. Instead of waiting to file for the tax benefits derived from your new home purchase, you can simply adjust the amount of your withholding. This allows you to have less tax withheld from each paycheck so you can handle the new mortgage payment more comfortably throughout the year. In essence, you are taking your tax refund as you go instead of letting Uncle Sam hold it all year, interest free.

Visit www.irs.gov and use the IRS withholding calculator. This very handy tool can quickly show you the effect a change in withholding will do to your net paycheck. Remember to balance this with the expected refund and it is always a good idea to check with your tax advisor.

Don't be victimized by the bubble hype. Buying a home is a big step, but it is almost always one in the right direction.

Compilation Including Barry Habib Seminars and Mortgage Market Guide.

Darren Meade

To share with you a brief history, I was homeless as a teenager for two-and-half years where I lived in the streets begging for food and change. As you can imagine, my life was filled with a great deal of uncertainty.

By divine grace and guidance, I took shelter in the parking lot of a gym. The owner of the gym noticed me camping out there and after several weeks took me in. Pretty soon I had been adopted by the group of bodybuilders there and was given the nickname 'Pup'.

However, it was after the very painful experience of my father committing suicide six months after getting off the street that I began my personal journey into spiritual growth and began questioning how I could affect a greater number people in a more loving, profound and personal way.

Over the course of several years I went from being homeless to living in a condo on a golf course and representing the United States in international events culminating in winning the middleweight title of the IFBB Mr. North America bodybuilding competition. At the same time I co-founded a nutritional which exploded in the nutrition market and by age 27 I made my first million. Being young, I then squandered my first 3 million to turn around and build it again and again...slow learner at times!

Many of my lessons learned through out my spiritual path have been in the face of adversity. While "crisis" has often had its own way of waking me to the moment and reminding me of what is important to me now, it is not a requirement of this journey.

Just when I thought I had a handle on life, the handle broke.

I've learned another new lesson about life; including truly releasing and forgiving those whom hurt you. In April 2008 my aorta (main artery from your heart) ruptured in three (3) places.

I was given less than a 10% chance of survival and I was on life-support for 3 weeks. During this time the charge nurse spoke to a family friend and informed them they were going to amputate my leg, and that I was to young to die and they needed to transfer me to a new hospital (UCLA).

While I lived, my personal relationship ended within 10 days of my being discharged from the hospital. To be fair the doctors said I might never walk again, and that they believed I would be on a catheter for the rest of my life. I lost 50lbs of muscle. So she was leaving someone who might never be able to walk; make love or be able to return to work. However I've always been an over-achiever.

For instance I went off diaylisis, my bladder which had nerve damage returned to normal, the catheters out and I the leg another hospital wanted to amputate is responding and I'm learning to walk on it once again. I no longer use my wheel chair and am learning to walk without crutches.

The only suffering came from my own thoughts, believing this person would be with me to over-come these issues. I now realize that was the largest blessing of all.

EXECUTIVE BIOGRAPHY OF DARREN M. MEADE


Darren Meade, of Kairos-Meade, has a life, which exhibits the quintessential triumphant story. He was abandoned by his parents and homeless at the age of 14, weighing less than 100 pounds and today negotiates multi-million dollar agreements.

His business career developed initially from his passion for body building. As a youth, after being homeless for two-years, he was taken in by individuals who allowed him to utilize their company gym. Darren focused that passion and successfully won several awards in competitive body building, culminating in winning the Mr. North America title for the middleweight division and represented the United States in international events. His extensive exposure in competitive body building assisted in developing relationships with industry leaders in the medical device and nutritional supplement industries.

As Darren rapidly progressed in
professional endeavors, he designed a new business model not yet used in the industry for a then unknown nutritional company. The retail experiment led by Darren worked, and within two years he drove sales from $1 million to in excess of $40 million.

Moving forward to his next success, Darren proved that he could do it again and took another company to $35 million in a single year. He diligently oversaw all facets of assisting an international research organization´s quest to gain acceptance in the U.S. biotechnology sector by partnering with one of the world´s largest biotechnology companies within only five-months. This was accomplished after the organization had tried for years and used over 50 consultants and development personnel without results.

A key to Darren´s success is his passion for each new business he enters. He specializes in building profitable long-term relationships with clients, vendors and staff.
He has proven that success is contagious.

In addition to his business accomplishments, Darren has actively participated through service of time and finances to homeless shelters and civic community organizations. He is a Deputy CEO of the Invisible Youth Foundation. Darren recently volunteered on Arnold Schwarzenegger´s successful run for Governor. Due to his efforts, he was offered a position in Sacramento. He was selected by the Orange County Register to write columns regarding the process of the campaign through to the inauguration and planning for policies.

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