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We’re talking about the entire real estate industry. Of course you’re going to get some hits for negative cash flow. Especially ones dating back to the downturn which have since recovered. You cannot be seriously using that to help your case. By your rationale you shouldn’t invest in a 401k because it’s not guaranteed and if you google “401k loss” a bunch of hits come up.
You can’t advise somebody to rent strictly because if they bought a home, it would probably be a large house and they would then buy a pool and neither are financially necessary. Those are completely different topics man.
If you go back in this thread you’ve made comments that no one,or no owner would rent at a loss or something to that end. Your statements weren’t general over the course of the thread. You are the one making the misstatements and errors
Ok, finally you concede that negative cash flow rentals exist. This is progress!
As to if anyone would rent out their property, yes, it does happen. Among other possibilities:
1. The landlord is an accidental landlord - for example, was previously an owner-occupier but then relocated for job/family and had difficulty selling the house, so put it up for rent.
2. The landlord has unrealistic expectations of property appreciation and has decided to hold on to it despite negative cash flow
3. The landlord has failed to include the infrequent large expenses in their monthly budget (for example, replacing the roof every 20 years, replacing the HVAC every 15 years, etc.) and believes that there is a small profit even though there is none.
4. The landlord does not account for vacancy when calculating cash flow.
5. The landlord has moved away but intends to move back in the future, so has decided not to sell the property.
6. The landlord cannot sell because he/she owes more on the mortgage than the property is worth and the bank refuses to work it out.
etc.
All 6 are exceptions rather than the rule, otherwise you’re simply counting on these very specific circumstances in order to get rent lower than a mortgage. If they were common, nobody would invest in rental markets.
There are apparently just 8 states were the average rent is cheaper than average mortgage payment and in most of those cases it’s not by much. While this list only considers the actual monthly payments, it does not include building equity or appreciation.
All 6 are exceptions rather than the rule, otherwise you’re simply counting on these very specific circumstances in order to get rent lower than a mortgage. If they were common, nobody would invest in rental markets.
There are apparently just 8 states were the average rent is cheaper than average mortgage payment and in most of those cases it’s not by much. While this list only considers the actual monthly payments, it does not include building equity or appreciation.
Comparing averages is meaningless you do understand how this works right? Two people on with an income of 1mm and the other 0 the average income is 500k.
Your link also compares median rent to median mortgage/tax/insurance but for some reason doesn’t mention maintenance. That doesn’t account for the fact that median rental vs median mortgage aren’t on the face comparable
This is blatantly false. Plenty of people rent because they don't want to put their money into the housing market wile making costly repairs for their primary residence. Plenty of people in San Francisco and other high cost housing areas did the math where renting makes far more sense.
A solid portion of these people already own single family or commercial real estate and use that income to pay their rent, allowing them to live in a far bigger house they could ever dream of or one they're not comfortable with paying for with debt..
You really think all the rich people out there renting expensive property don't know what they're doing?
No, but the rich people renting them that property sure do. They’re getting some other sucker to pay their mortgage in one of the most expensive housing market while they collect the appreciation and equity.
They’re renting not because they think it builds wealth (FYI rich people don’t always do things that make financial sense), they’re renting because they want to skip the hassle. Owning a home isn’t hassle free, but is an excellent way to build equity and preserve wealth. If you’ve already got wealth, we’ll that’s just not much of a problem now is it?
No, but the rich people renting them that property sure do. They’re getting some other sucker to pay their mortgage in one of the most expensive housing market while they collect the appreciation and equity.
Are you aware not all landlords hold mortgages?
Quote:
They’re renting not because they think it builds wealth (FYI rich people don’t always do things that make financial sense), they’re renting because they want to skip the hassle. Owning a home isn’t hassle free, but is an excellent way to build equity and preserve wealth. If you’ve already got wealth, we’ll that’s just not much of a problem now is it?
Is owning an excellent way to build equity and preserve wealth if you have to sell the property within the first 1-5 years?
If you go back in this thread you’ve made comments that no one,or no owner would rent at a loss or something to that end. Your statements weren’t general over the course of the thread. You are the one making the misstatements and errors
Of course they’re general. I can’t speak for the entire freaking real estate market.
You can’t give advice based on what a couple unique situations are and bank on that.
Yes buying a house is a great way to build equity. Over the long run you come out ahead.
If you rent you throw your money away for 30 years. That’s not really up for discussion I hope.
The newest premise you is if you’re renting much cheaper than the ownership cost would be, you can invest that extra savings and make your money that way in attempt to catch up. As I’ve illustrated there’s only a handful of places where that’s the case and it’s not even by much (feel free to invest that extra $12 in a 401k and hopefully that will make so much return that your housing cost will be more than paid for throughout retirement. )
Is owning an excellent way to build equity and preserve wealth if you have to sell the property within the first 1-5 years?
Landlords don’t have to hold mortgages, but there’s no incentive to receive low rent when their house is worth so much more if they just sold it. Of course somebody had to pay a mortgage on the property at some point and they didn’t pay off that mortgage by renting their whole life.
It’s not a direct relationship, but coincidently rent typically works out to more than an average mortgage regardless of the ownership cost of the landlord. I’ve explained why this is usually the case.
Funny enough, you’ve already asked about selling in the first 5 years. It depends on property appreciation and closing cost and how much rental prices in your area go for. For short term housing situations it makes more sense to rent temporarily, just as it does to rent a hotel room for a weekend rather than buying the hotel and reselling 2 days later, but neither are a good long term strategy. Moving every 5 years is a bad long term financial strategy anyway unless you rent out the property after you move rather than sell it.
Don't bother anymore ziggy. I have no idea where these comments are coming from. I just can't stop laughing at how stupid they are. My guess is these people in this thread had mortgages before 2008, lost their jobs in 2009 and then had their homes foreclosed on so they're bitter and this is the way they cope. My mother rented for years after selling her very large house but it was out of convenience not financial benefit. If you move around a lot then renting works for you. But these people saying renting is better financially are flat wrong. Rent will increase with the market, mortgage payments do not once you're locked in.
Don't bother anymore ziggy. I have no idea where these comments are coming from. I just can't stop laughing at how stupid they are. My guess is these people in this thread had mortgages before 2008, lost their jobs in 2009 and then had their homes foreclosed on so they're bitter and this is the way they cope. My mother rented for years after selling her very large house but it was out of convenience not financial benefit. If you move around a lot then renting works for you. But these people saying renting is better financially are flat wrong. Rent will increase with the market, mortgage payments do not once you're locked in.
Yeah I should have stopped after they brought up Google search hits, but I’m just passing time.
Landlords don’t have to hold mortgages, but there’s no incentive to receive low rent when their house is worth so much more if they just sold it. Of course somebody had to pay a mortgage on the property at some point and they didn’t pay off that mortgage by renting their whole life.
It’s not a direct relationship, but coincidently rent typically works out to more than an average mortgage regardless of the ownership cost of the landlord. I’ve explained why this is usually the case.
Funny enough, you’ve already asked about selling in the first 5 years. It depends on property appreciation and closing cost and how much rental prices in your area go for. For short term housing situations it makes more sense to rent temporarily, just as it does to rent a hotel room for a weekend rather than buying the hotel and reselling 2 days later, but neither are a good long term strategy. Moving every 5 years is a bad long term financial strategy anyway unless you rent out the property after you move rather than sell it.
You’ve already been given multiple reasons to carry a rental property at a negative cash flow none less imprortabt than your anticipation of appreciation. It’s not a one off situation
So buying is a great way to build equity and wealth unless you have to sell within the first 5 years? Yeah I’ve already pointed it out multiple times. It’s a downside to owning.
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