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Thursday, September 23, 2010

Review - Renters Win, Home Owner's Lose by Tom Graneau

There are lots of good thoughts in this book and it could help many take a serious look at their financial situation.

Renters Win, Home Owners Lose: Revealing the Biggest Scam in America by Tom Graneau.

    Renters Win, Home Owners Lose: Revealing the Biggest Scam in America
  • Paperback: 176 pages
  • Publisher: AuthorHouse (June 17, 2009)
  • Language: English
  • ISBN-10: 1438993188
  • ISBN-13: 978-1438993188
Genre: Non Fiction

My Rating: 4.0 of 5.0 (this isn't necessarily exciting or entertaining but it is well written and informative allowing the 4.0 rating)

Product Description
Home ownership has been widely regarded as the "best financial investment" in the pursuit of wealth accumulation. Americans believe that the appreciated value of a home provides a great hedge against inflation, giving home owners an opportunity to make a profit when they sell the property. Today, two-thirds of American families own their homes. Nearly 80 percent of the 78 million baby boomers are homeowners. Many of them have bought and sold several homes. Yet, close to 90 percent of American families are broke. Nothing consumes more of our hard-earned money than "home ownership." What if this popular, "best investment" choice is nothing more than a dangerous Dream? Is home ownership simply a huge economic scam designed to KEEP buyers broke? Could homeowners be working to pay a mortgage that make their lenders rich while they stay poor? What if "home equity" is only an illusion? Could renters be in a BETTER financial position than those who own their home? RENTERS WIN, HOME OWNERS LOSE: REVEALING THE BIGGEST SCAM IN AMERICA is a bold approach in unraveling the long-term financial reality of home ownership in America. The book compares buying a home vs. renting and reveals that renters clearly have tangible, financial advantages over the majority of home owners. RENTERS CAN TRULY BE WINNERS! Tables and models are used throughout the book to poignantly demonstrate that most homeowners receive no more than a zero percent return on their investment, and many lose money in the deal. Renters Win, Home Owners Lose: Revealing the Biggest Scam in America will get you to rethink the way you view home ownership vs. renting. The book is a thought-provoking masterpiece.
Review:  I welcomed the opportunity to read and review this book since I am in the real estate industry. I want to say at the outset that I had a hard time writing the review without jumping into “debate” or soap box mode. I have another whole page of commentary that I could post but decided not to include in the review.

The book is well organized and the author systematically points out that there are more costs to home ownership than just the downpayment and the mortgage principal and interest payments which are part of buying a home on credit, as most people do. At about the time the homeowner closes on their purchase they discover that they will need to pay money for real estate taxes, home insurance, homeowner maintenance or condominium fees (where applicable) and, of course, endless house repairs or remodeling.

Mr. Graneau uses “the Financial Chessboard” graphic to show income, expenses, assets and liabilities as they relate to home ownership. These graphics show a huge outpouring of money (paid to banks who get to make a profit by investing the funds again) and a minimal savings or equity effect. It is not uncommon for homeowners to spend all their money, including 401K monies, to maintain their expensive real estate investment and then wind up after many years with no savings and possibly no equity if the market crashes, as it has, or if they pulled all the house equity out for repairs, college or other expenses. Mr. Graneau makes a strong case for renting and saving that extra outflow of money rather than paying homeowner expenses.

I had to agree with many statements made in the book. Part of the American dream is to own a home and this dream is promoted by family, friends, the real estate industry and even the government. One section in the book addresses the real estate market crash with discussions entitled “The Blaming Game” and “But Really, Who is Responsible for the Crash?” Here Mr. Graneau compares the American consumer to the quote: “Those who live by the sword will also die by the sword” rephrased to read: “those who make it a habit to live on credit will also die by credit.” As Mr. Graneau points out it is "greed" that drives the big construction companies and the mortgage lenders but it is also "greed" that drives people to live beyond their means by buying houses that are too expensive and buying luxury cars and living off of credit cards.

Mr. Graneau proposes that renters are winners if they rent and then save the extra hundreds of dollars, if not thousands, a month not needed for taxes, insurance and house repairs. The idea has merit and Mr. Graneau makes good overall summaries, but in my opinion the book skims over many issues, and he does not provide detailed solutions for implementing the idea other than suggesting that renters seek financial planning, which I think is too simplistic and unrealistic. Also the book did not address some of the drawbacks associated with renting such as displacement requiring moving and increases in rental fees.

Perhaps the author plans another book to address the savings and investing issues in more detail or perhaps he just hopes that renters and disheartened homeowners will seek financial planning.  Considering the number of people struggling financially I wouldn't hold much hope for them to commit money to planning even though the immediate expense might well reap a long term benefit.  In any event, this book is easy to read and provides some good arguments to be considered not only by people thinking about buying a home, but by renters who might wish to control the temptation to buy a home and redirect their focus to other savings.
Thank you to the author and Pump Up Your Book Promotion for the opportunity to read and review this book.

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