Working as intended.
We will own. Not you.
We will own
. Notyou.You are welcome!
What are the laws around renters eviction vs. housing eviction? Might be that it could cost a bank years of lawyers to get the money back on a house, but your junk can be all on the street and a new tenet in your apartment with a quick call to the cops about back due rent.
It’s even more obscene when you realize that part of that 1600 you are paying yourself. The interest is the only bit you lose, the rest is equity you own instead of the bank now. Equity that you can then use to get more money from the bank.
Whereas the rent is likely being used so that your landlord can pay themselves part of their mortgage and maybe keep some more on top of that.
Now while I agree this doesn’t make sense one thing someone pointed out to me is With rent that is the most you will pay(assuming rent includes trash water etc). With mortgage that’s the least you’ll ever pay(water heater dies, ac needs service, ceiling fan needs to be rewired, washer leaks and damages the walls and floor).
I’ve heard that argument as well. But what that implies, is that it’s cheaper to rent. More expensive to own.
How is the person renting out their property not losing money then? Because they have all the costs such as repairs, depreciation, future remodels, all worked into the price of rent, plus extra for profit.
These people aren’t running charities.It is cheaper to rent and more expensive to own for around the first ten years. It’s far, far more expensive to buy than to rent when you consider the down payment, and closing costs. Over a long period of time it becomes much cheaper to own, even considering repairs, unless you have something catastrophic happen, and then hopefully you have insurance.
You are correct. That’s why the rent is more expensive, if you buy a house and rent it for exactly your mortgage payment you will lose money due to all those things.
If x is mortgage and y is the average cost of all that stuff then x + y = z where z is the break even point. Now most places make a profit which we will call a. Z + A = rent payment. A lot of people compare rent to X and not Z. Now is A excessive sometimes/usually yes… But rent should always be higher than mortgage to take into account Y.
I hate when people say they are ‘losing’ money if the rent doesn’t cover the mortgage / taxes.
No bitch, you’re getting $2k a month outta me thats going into your equity. If you gotta chip in $500 to get my $2k you aren’t losing $500 a month.
Edit: just to clarify, I’m not saying they shouldn’t charge more, but fuck the losing money narrative if rent control or something else changes the situation.
You usually make money when you sell it or when your mortgage is paid, otherwise you’re likely breaking even in the meantime if you account for everything you had to spend for your property from the date of purchase.
What you can do though is use your equity to buy more and more of them so on paper you might be worth millions but truth is you’re likely still working a regular job until you reach a certain point where you’ve got units that are paid for.
That’s my experience from dating a girl who owned four 3 units buildings with her mother, they had to live in one and both had to keep working to pay for their own stuff… But I agree that when it’s an investment company it’s another level where you make a shit ton of profit.
A friend of mine made the calculation the other day and over 25 years buying a duplex would make him be 1m dollars poorer than continuing to rent and putting the surplus he would have paid for the mortgage in an index fund, even even taking into consideration that one unit would be rented…
Credit risk v tenant risk are two different assessments though. I get the point and the vibe but if people can’t notice this nuance, they have no business buying assets imho
I am all about discussing the inherent issue here but not noting risk analysis factors like this is disingenuous bait.
BTW that’s a tracking link, here is a clean one:
Rent payments aren’t reported to collection agencies so you’re absolutely correct, credit risk is a horrible metric risk to use when tenant risk could instead be used. I’m so glad you understand the on-time payment of rent is a much better way to determine whether or not someone can afford to a pay a mortgage, much less a mortgage with a lower premium. Credit risk is a bullshit metric that shouldn’t be used for mortgages at all; bank statements proving income and rent payments as well as whatever tenant letters you can scrape out of landlords are much better indicators.
If you think the history of money going to keep a roof over someone’s head is worse than a made-up, opaque number that is explicitly intended to benefit those with capital, you have no business talking about real people and should go back to talking about the stock market.
credit risk is a horrible metric risk to use when tenant risk could instead be used.
I don’t disagree with this statement but the formulas are set around “credit risk” and nobody got around to tracking “tenant risk” because that’s our society is structured.
Either way, people who own property want it this way.
You are implying a lot of things about how I think, which a quick background check would resolve btw.
You said that people that don’t understand the different between credit and tenant risk have no business buying assets. Either you are very bad at communicating or you don’t understand that most people can’t afford to look at a home as asset. That’s a very upper middle class and beyond perspective, similar to a car being an asset. They have utility; they are not financial instruments.
fair… i still stand behind that point too. i just don’t think rent seeker mortgage originator should be making that call since neither them or investor carries the risk, FHA and VA loans are backed by Daddy Sam, so why are they not front ending it?
Most sellers will take anything else before VA or FHA loans and most buying agents will try to get you away from them. Most sellers will also take cash over a loan, often even if the loan is a higher amount. I’m assuming a tight market like exist in most big US cities; reasonably priced houses go very quickly still in many places.
I don’t know why the real estate conventional wisdom goes against the loan; it really frustrates me and limits accessibility.
Cash buyer always asks for that discount though, u should know that ;)
When you take a mortgage, that is a secured loan, meaning the bank owns the house until you’ve paid it off. Additionally, if you don’t put 20% down, the bank requires you to carry mortgage insurance. Listen to landlords tell it, and tenants can basically stay in a house for months or a year without paying rent, all the while damaging the house. I don’t really understand why a mortgage with a lower monthly payment is harder to qualify for than rent would be.
Being a secured loan doesn’t mean the bank owns the house. You own the house, the house is collateral. There maybe terms on the loan, like requiring insurance, but still, your name is on the deed. Only you can decide to paint it or redo the bathroom, etc. the bank can take possession if you fail to pay, but until that point it is yours.
Tomato/tomato. The bank paid almost all of the money to the seller. If you stop paying the mortgage, the bank will take legal possession of the house and sell it to recoup its money. You may be able to paint it, but the bank owns it in the most important sense of the word.
I can’t disagree more with your last sentence. Seems more of an emotional framing than anything. I can’t think of a single way that the bank shows ownership over my home over myself.
Are you just upset you can’t stop paying for the house and keep it?
I’m not upset about anything. I just don’t see how something is “yours” if you’re still paying for it. Like, I guess it’s partly yours, but it’s mostly the bank’s for a long time.
Well see, I made a deal with a bank, that said I would like to borrow, say 100k, and I would be willing to pay it back over 30 years plus extra, or else the bank would have no incentive to do it.
Separately, they said they would be far more comfortable loaning me money, if I could guarantee that if things went south, there was some sort of asset they could take besides my money.
It didnt have to be my house, it could have been something else THAT I OWNED. Thats the important part. The house is only collateral because I own it, despite the outstanding mortgage payment.
Edit to add: this is also why I would keep the profits from selling my house, and would only have to pay off the loan.
Yes, I understand what collateral is. It’s something the bank owns, but allows you to use until you’ve paid it off. For example, the bank keeps the title to my car until I’ve paid it off, and then they send me the title.
that is a secured loan
Correct and great point. In fact, most loans, such as VA and FHA are daddy sam backed up. So you have make a good point where is the risk for these?
LMAO, how are they different. They’re both paying off mortgages the only difference is that they’re paying off yours and not their own.
Keep in mind that when you own you’re one surprise away from suddenly having to spend tens of thousands…
We rent an apartment and own a cottage we bought for peanuts (50k in 2020) and last time we went we realized we’ve got carpenter ants, that potentially means having to raise it higher off the ground, tearing down part of it and rebuilding the section we tore down… I’m expecting about $10k when all is said and done and if I do everything myself?
Now imagine owning a house that you can barely afford and there’s water infiltration in the basement and you need to spend 30k for new French drains or realizing you need to spend 70k for big work on your foundation or 20k on your roof… Leave it as is and the expense will only get bigger and bigger… What do you do?
What do you do? You sit in a house comfortably to ponder your future actions.
People who rent get kicked into the street to the searing heat or freezing cold and then they get criminalized for being homeless.
Not to diminish the woes of homeownership, but owning your own house already puts you in a tier of privilege that instantly disqualifies you from criticizing the people who are days away from sleeping in their car or under a bridge.
You don’t “sit in a house comfortably” if there’s water coming in, you’re potentially exposing yourself to mold as well.
Renters protection laws are the issue then, but it won’t make people financially able to own a house and having to spend money you don’t have on your house can make you end up on the street as well, the difference being that you will also have to go bankrupt in the process.
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Bruh, lmao, my husband and I have been paying off new siding and new plumbing since October 2022. It’s costing us $2600/mon to live in a 3 bed/2 ba 1500 sqft home in a neighborhood that does not rate that much.
(To be clear, we had planned on the siding, the plumbing happened to be a surprise in the same month we were getting the siding done).
We also replaced all the windows & traded out the sliding back door for a French door in 2022 (pre plumbing fiasco. Also planned.)
In 2022 we spent $60K alone between those 3 projects. Over the years we’ve also done the roof/HVAC/Water Heater/Foundation, new flooring and new counter tops.
And now? We’ve just secured a rental and we’re selling this bitch. I’m so over home ownership. I’m over the saving and saving and saving and saving and saving for months only to have some $20K cost crop up out of nowhere and just wipe it all out. I’ll gladly pay someone more than the mortgage/property taxes to handle that shit, so I can put my savings away in a HYSA or something and not need it until worst-case scenario: our cars break.
HUGE PRIVILEGED DISCLAIMER: Were both active duty military, so we don’t have to worry about Healthcare costs wiping us out. YES, I wish that was available to everyone. YES, I vote for socialized medicine. Just wanted to throw it out there that I’m aware that others have concerns that I don’t have.
Most people here think that if renting magically went away, they could get a house and maintain it. From comments it seems also magical - almost like someone was to give a house to them the minute that renting was cut. Like, people will sell their houses and now there’s 50% of the population that needs to buy a home ASAP. The prices would get even more bonkers. After that temporary rise, nobody would build anymore - since it wouldn’t be profitable anymore to do that.
Not only that but some people just don’t want to own! We moved away while I was fully remote knowing full well that might be temporary, so what, I should have been forced to buy a house instead of renting? How would I have bought something else when needing to move back if the house I was forced to purchase didn’t sell quickly enough?
What’s funny as well is that home ownership to the level we’ve seen it since the 50s is an historical anomaly, even today there’s more home owners than there was 100 years ago so the people we see complaining are mostly people that wouldn’t be able to afford a house no matter what or that are young enough that it will just happen later on in their life or (based on what I’ve seen with many of my younger colleagues) that don’t want to start with what they’re actually able to purchase as a first home and instead want to start big and potentially never have to move again.
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I mean, what I’d PREFERABLY like to see is a model like in large parts of Europe, where if you rent long enough, you are considered to own the apartment you’re normally renting. You still have to maintain it, but you do not have to necessarily pay rent (to my knowledge). I’d like to see more paths to owning your own space that is not necessarily a house - things like buying an apartment outright or a long-term lease that’s much harder to evict someone out of when you decide the rent needs to go up another $250.
Captain clueless here never heard of a money pit.
Some homes aren’t worth owning, dude get a clue.
Some homes aren’t worth owning therefore extorting people through rent is justified. Fuck’s sake, do you even listen to yourself?
It’s only a money pit of you’re so useless yourself that all you can do is try to control everyone around you with money. You think you’re big man taking care of business when you pay a plumber to address your tenant’s complaint? No. The plumber is the big man. You’re just playing with paper.
It’s more that some homes will make the average person to bankrupt. Hell, even with rental units it’s not necessarily profitable to own. My friend calculated that he would be a million poorer after paying his mortgage if he bought a duplex and rented a unit instead of just continuing to rent and investing in an index fund.
Sounds like he’s not factoring in the money saved after the mortgage is done. I’ll be done in a little over a year then my housing costs drop to property tax and insurance. That’ll come to a little under 15% of what rentals in my neighborhood go for. Even with an aggressive withdrawal schedule an extra million wouldn’t make up the difference.
Edit: I also doubt his calculations. Maybe he’s not taking inflation into account? When I bought my house the mortgage, property tax, and insurance was a little more than renting a house in my neighborhood. Almost 19 years later, the mortgage is the same, the property tax has gone up about 25%, and the insurance has increased about 50%. Since the mortgage is the largest part by far my total costs have gone down significantly adjusted for inflation and they are only around 50% the cost of rent. Even counting maintenance and remodel costs I would have paid much more in rent over the years.
Edit 2: If I had invested my 5% down payment in the s&p in August 2005, with reinvested dividends, before taxes, it would only be 13.7% of my current home equity. Your boy’s math ain’t mathin’.
His math takes everything but a maintenance budget on the duplex into consideration so he’s underestimating his losses.
I’m talking taking the surplus he needs to pay for the duplex vs his rent and continuously investing it over the next 25 years even when taking the average rent increase into consideration, not just the downpayment.
Well then, he must be blessed to live somewhere with very reasonable rents, and generous rent control, if he thinks he can save money renting for 20-30 years instead of paying a fixed mortgage plus other expenses.
Like I said in my first edit, although my expenses started out a bit higher than rent for a comparable house, 19 years of rent increases while my mortgage stays the same means I’d have to move to a shoebox on meth street to pay less than my mortgage now.
And it still seems like he’s not taking into account having a paid off asset with negligible housing expenses after the mortgage is paid off. In the case of a duplex, a money generating asset.
He’s taking everything into account and comparing to what he would expect to have if he sold it once the mortgage was paid.
You’re not taking into account that if he keeps it it appreciates at a slower rate than the average market return and that in the other scenario he’s got close to two millions he’s making interest on instead of having only an asset worth about 1 million at that point and no savings.
Ever heard of compound interest? 500$ in savings per month at 24 y.o. gets you 1.5m at 65, the same savings at 30 gets you 900k at 65 and 400k if you start at 40…
You can get huge collateral loans on homes, yes, even before it’s paid off. Equity is one of the safest investments you can make, and it can keep you above water for a long long time of you understand how to leverage it.
Sure, as long as you’ve got enough of it paid already. Maybe it’s different where you live but over here you can’t get a loan of more than 80% of your property’s value including what’s left to pay on your mortgage, but downpayments are 5% minimum so you can be years where coming up with cash to pay for maintenance is all up to you.
Also, you’re still getting indebted, which means your spend years paying more than you had budgeted for for work that doesn’t necessarily increase your priorities value so it’s money that’s basically lost.
What do you do?
Nationalize housing? Is that an option?
All housing? Not realistic.
All buildings over a certain number of rental units? Would make way too much sense.
What I would like to see is:
-Forbidden to own more than one property in a certain radius
-Buildings with up to 3 units could only be owned by private parties
-Buildings with 4 to 7 residential units need to be owned by a form of corporation or cooperative
-Anything bigger than that should be nationalized and ran by a State run non profit
I could be convinced to accept these terms, or at least use them as a starting point for working out details.
Unfortunately, I doubt either of us are policy makers.
You should give up and stop trying to own. Sounds like you can’t take care of the place yourself.
At any given time that person is trusted to owe $2,100 (maybe $24k on a year contact), not trusted to be on the hook for $350,000, and as much as people here won’t like it, the landlord is providing a service to house that type of person.
They’re trusted in the same way a Mafia boss “trust’s” his underlings to steal money for him.
Credit-worthiness is just math.
Math created by biased people.
No, it’s an interpretation of numbers.
