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Old 05-13-2018, 04:59 PM
 
18,481 posts, read 15,427,784 times
Reputation: 16129

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Quote:
Originally Posted by vanquishedagain View Post
The level of stupidity on this thread is making my head hurt. Renting is a guaranteed loss. Most of the time buying is not a loss or at least is a MUCH smaller loss. These are facts, this little group of trolls here are the only people I've ever heard try to argue otherwise. This conversation also has zero to do with the OP, lol.
You are only saying this because you haven't factored in all the costs of owning or have assumed that the appreciation will always be well in excess of the inflation rate. Or you are generalizing from your area to everywhere else. Run the numbers in an area that is HCOL but not appreciating faster than inflation and you'll see what I mean (if you do it honestly and account for all costs).

 
Old 05-13-2018, 05:02 PM
 
9,613 posts, read 6,846,747 times
Reputation: 6842
Quote:
Originally Posted by ncole1 View Post
Paying rent is not paying someone else's mortgage. It is paying for the temporary use of someone else's property. Whether the landlord has a mortgage or not has no effect on the rent I pay, as the latter is set by the rental market.
Ok, paying their profit. Either way, they’re not renting out their house to you out of charity. They’re getting their cut and they’re building wealth with your money.
 
Old 05-13-2018, 05:06 PM
 
18,481 posts, read 15,427,784 times
Reputation: 16129
Quote:
Originally Posted by Ziggy100 View Post
Ok, paying their profit. Either way, they’re not renting out their house to you out of charity. They’re getting their cut and they’re building wealth with your money.
Explain all the hits on Google when I type in "negative cash flow rental property". You seriously think this is all made up?
 
Old 05-13-2018, 05:11 PM
 
9,613 posts, read 6,846,747 times
Reputation: 6842
Quote:
Originally Posted by ncole1 View Post
Explain all the hits on Google when I type in "negative cash flow rental property". You seriously think this is all made up?
You can google anything and get hits. You’ll need more substantial data than just counting Google results.
Sure there are people in situations with negative cash flow, but if that were the norm nobody would rent out their property would they?
 
Old 05-13-2018, 05:21 PM
 
26,145 posts, read 21,360,942 times
Reputation: 22721
Quote:
Originally Posted by Ziggy100 View Post
You’re going to have to keep it simple if you want to make an apples to apples comparison. Yes people buy more house than they need, yes they upgrade and refinance and add pools and buy even bigger and bigger houses and more acreage.
Exhibit A

Quote:
That’s not at all a rent vs own argument. Claiming “it’s not what people actually do” is just purposely trying to muddy the waters to obscure what’s otherwise fairly straight forward.


If exhibit a is generally true then it’s absolutely something that needs to be considered when comparing renting to buying. If exhibit a is true and you ignore it to compare rent/buying of similar properties then it ends up being a poor comparison because as you’ve admitted people don’t actually shop that way
 
Old 05-13-2018, 05:25 PM
 
26,145 posts, read 21,360,942 times
Reputation: 22721
Quote:
Originally Posted by Ziggy100 View Post
You can google anything and get hits. You’ll need more substantial data than just counting Google results.
Sure there are people in situations with negative cash flow, but if that were the norm nobody would rent out their property would they?
Yes they would if they expected appreciation to outpace the negative cash flow. It actually happens and while a single google hit might not bring realistic scenarios on this topic it actually results in a lot of results which I’d deem relevant enough to give some consideration vs your entirely dismissive approach
 
Old 05-13-2018, 05:27 PM
 
18,481 posts, read 15,427,784 times
Reputation: 16129
Quote:
Originally Posted by Ziggy100 View Post
You can google anything and get hits. You’ll need more substantial data than just counting Google results.
Sure there are people in situations with negative cash flow, but if that were the norm nobody would rent out their property would they?
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.
 
Old 05-13-2018, 05:35 PM
 
26,145 posts, read 21,360,942 times
Reputation: 22721
Quote:
Originally Posted by ncole1 View Post
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 entirely legitimate and happen everyday across the nation
 
Old 05-13-2018, 05:40 PM
 
Location: Honolulu, HI
24,157 posts, read 9,097,694 times
Reputation: 22552
Quote:
Originally Posted by Ziggy100 View Post
People don’t rent because it’s a smarter financial strategy.
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?
 
Old 05-13-2018, 05:46 PM
 
9,613 posts, read 6,846,747 times
Reputation: 6842
Quote:
Originally Posted by Lowexpectations View Post
Yes they would if they expected appreciation to outpace the negative cash flow. It actually happens and while a single google hit might not bring realistic scenarios on this topic it actually results in a lot of results which I’d deem relevant enough to give some consideration vs your entirely dismissive approach
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.
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