4 ms·

>Unless subsidized or losing money, the rent is more than a mortgage payment would be. That is demonstrably false. Renting is more than a mortgage interest pay

>Unless subsidized or losing money, the rent is more than a mortgage payment would be. That is demonstrably false. Renting is more than a mortgage interest payment would be. Unless you feel like you have some special knowledge about the local real estate market, your capital is likely better off in the stock market.

ams6110 10y ago
Mortgage paymenets are almost entirely interest in the early years. So in many cases there's little difference. Rental real estate works on leverage to a greater degree than is possible with stocks. Most banks won't make loans to invest in the stock market. They will make loans for investment property. So if you have $100,000 you can buy maybe 4 or 5 $100,000 rental properties, and have your tenants pay off the loans. Not as likely that you can take $100,000 and buy $400,000 - $500,000 of stocks, at least not as an unsophisticated individual investor.
- moultano 10y ago
  >Mortgage paymenets are almost entirely interest in the early years. So in many cases there's little difference. People generally don't buy houses in order to rent them. Usually houses are rented out when the owner is moving and decides to rent it out rather than sell, at which point the owner has a substantial amount of capital in the house.
  - aoeuasdf1 10y ago
    And? Are they supposed to let people use the house for free? It seems like communists are willfully ignorant of the time value of money.
    - ommunist 10y ago
      Quite the contrary. Communists understood that only labour creates value, and education gives more value providing opportunities to more sophisticated labour, aka technology, inventions. This is why they gave housing for free to everyone agreed to provide honest labour within the system. The system had flaws, was not free from corruption, but it worked. My mom spent 5 years in toxic plant, was awarded 3 bedroom flat in modern house for free. It allowed her to invest more into my education and give musical education to my brother.
    - moultano 10y ago
      I think you replied to the wrong comment?
- hibikir 10y ago
  While a regular bank won't give you a loan to invest in the stock market, stock brokers will: It's called margin trading, and it's exactly borrowing using the stock you have as collateral, just like you put the house as collateral in a mortgage. Since stocks are far more volatile than real state, you are allowing your broker to sell your assets if your account is about to go underwater, in what it's known as a margin call. You can have a 5:1 margin account, like the one you describe, as an individual investor: If you have 100K to put in a brokerage account with your own money, you definitely have enough money for a brokerage to let you do it. It's just that it requires attention, because with a 5:1 ratio, a 5% loss just became a 25% loss. Ignore the market in the wrong week(say, in early October 2008), and all your margins get called, and you are in deep trouble. Still, if you have 5 $100K rental properties, and you aren't bleeding a lot of money for a company to take care of it all for you, chances are you are still paying quite a bit of attention to your apartments anyway. As far as whether mortgages or rentals are more expensive, it completely depends on the local market and local laws: In a pro-renter environment, rental is more expensive, because nobody wants to rent apartments out: People would rather let apartments sit empty. In a pro owner environment, at a place losing population, renting might be cheaper.

ams6110 10y ago

Mortgage paymenets are almost entirely interest in the early years. So in many cases there's little difference. Rental real estate works on leverage to a greater degree than is possible with stocks. Most banks won't make loans to invest in the stock market. They will make loans for investment property. So if you have $100,000 you can buy maybe 4 or 5 $100,000 rental properties, and have your tenants pay off the loans. Not as likely that you can take $100,000 and buy $400,000 - $500,000 of stocks, at least not as an unsophisticated individual investor.

moultano 10y ago
>Mortgage paymenets are almost entirely interest in the early years. So in many cases there's little difference. People generally don't buy houses in order to rent them. Usually houses are rented out when the owner is moving and decides to rent it out rather than sell, at which point the owner has a substantial amount of capital in the house.
- aoeuasdf1 10y ago
  And? Are they supposed to let people use the house for free? It seems like communists are willfully ignorant of the time value of money.
  - ommunist 10y ago
    Quite the contrary. Communists understood that only labour creates value, and education gives more value providing opportunities to more sophisticated labour, aka technology, inventions. This is why they gave housing for free to everyone agreed to provide honest labour within the system. The system had flaws, was not free from corruption, but it worked. My mom spent 5 years in toxic plant, was awarded 3 bedroom flat in modern house for free. It allowed her to invest more into my education and give musical education to my brother.
  - moultano 10y ago
    I think you replied to the wrong comment?
hibikir 10y ago
While a regular bank won't give you a loan to invest in the stock market, stock brokers will: It's called margin trading, and it's exactly borrowing using the stock you have as collateral, just like you put the house as collateral in a mortgage. Since stocks are far more volatile than real state, you are allowing your broker to sell your assets if your account is about to go underwater, in what it's known as a margin call. You can have a 5:1 margin account, like the one you describe, as an individual investor: If you have 100K to put in a brokerage account with your own money, you definitely have enough money for a brokerage to let you do it. It's just that it requires attention, because with a 5:1 ratio, a 5% loss just became a 25% loss. Ignore the market in the wrong week(say, in early October 2008), and all your margins get called, and you are in deep trouble. Still, if you have 5 $100K rental properties, and you aren't bleeding a lot of money for a company to take care of it all for you, chances are you are still paying quite a bit of attention to your apartments anyway. As far as whether mortgages or rentals are more expensive, it completely depends on the local market and local laws: In a pro-renter environment, rental is more expensive, because nobody wants to rent apartments out: People would rather let apartments sit empty. In a pro owner environment, at a place losing population, renting might be cheaper.