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At any point over those 5-10 you can turn around and sell the property and collect the full gain - it's entirely irrelevant to the mortgage payments being dedic

by prklmn 10y ago

At any point over those 5-10 you can turn around and sell the property and collect the full gain - it's entirely irrelevant to the mortgage payments being dedicated to interest. My $1 gets my name on the title, your 90¢ gets your name on the lease. Think about what your net investment is. So maybe my maintainance/tax/interest costs equate to 50¢. I'm still investing 50¢ compared to your 10¢. Also, I get incredible leverage. Let'say my property costs $1 million. I'm controlling a $1 million investment vehicle with a $4k/month mortgage payment + tax/maintenance. That's incredible. My return on the property is driven from the $1 million basis, and I get to keep all of it despite not having much of an equity stake in the property.

sanswork 10y ago
It sounds like nothing I will say will sway your beliefs so good luck with your investment.
tehlike 10y ago
it's how long term wealth is built best. until the bubble pops up, like it did in 2008, but it comes back up so it's a rather temporary set back. Also, rents rarely come down, so most often the property value decline is temporary, or it is another opportunity to buy when things are in water - when there is blood in the streets, there is money to be made.
deleted 10y ago
[deleted]
forgetsusername 10y ago
>My return on the property is driven from the $1 million basis, and I get to keep all of it despite not having much of an equity stake in the property And if that property falls to $900,000? Now you owe $1 million on a home worth less; literally throwing away $100,000.
- JoeAltmaier 10y ago
  You don't actually lose anything until you sell. A paper loss is a different thing. It has plusses and minuses.
  - webmaven 10y ago
    If you're willing to employ a "buy and hold" strategy for property to ride out the bottom of the RE market, you should be able to do it just as well with a diversified investment portfolio.
  - forgetsusername 10y ago
    >You don't actually lose anything until you sell. If the value of your asset falls, you've lost net worth. It's preposterous to claim that, even though the price of your home has fallen by half, and you are servicing the mortgage on the old value, that you haven't lost anything. Or that the fact that you can offset capital gains with capital losses somehow makes a plunge in value "worth it". "Paper losses" are losses. The value of the asset isn't based on the price you paid.
- prklmn 10y ago
  If you think of it in these terms, that's about two years worth of rent. But as a renter, you have no chance at benefitting from future appreciation. If you think the housing market is going to be in decline from your move in time, then it might be a good idea to rent depending on your time horizon. Over the long term, it has proven to generally not be a good idea.

by prklmn 10y ago

sanswork 10y ago

It sounds like nothing I will say will sway your beliefs so good luck with your investment.

tehlike 10y ago

it's how long term wealth is built best. until the bubble pops up, like it did in 2008, but it comes back up so it's a rather temporary set back. Also, rents rarely come down, so most often the property value decline is temporary, or it is another opportunity to buy when things are in water - when there is blood in the streets, there is money to be made.

deleted 10y ago

[deleted]

forgetsusername 10y ago

>My return on the property is driven from the $1 million basis, and I get to keep all of it despite not having much of an equity stake in the property And if that property falls to $900,000? Now you owe $1 million on a home worth less; literally throwing away $100,000.

JoeAltmaier 10y ago
You don't actually lose anything until you sell. A paper loss is a different thing. It has plusses and minuses.
- webmaven 10y ago
  If you're willing to employ a "buy and hold" strategy for property to ride out the bottom of the RE market, you should be able to do it just as well with a diversified investment portfolio.
- forgetsusername 10y ago
  >You don't actually lose anything until you sell. If the value of your asset falls, you've lost net worth. It's preposterous to claim that, even though the price of your home has fallen by half, and you are servicing the mortgage on the old value, that you haven't lost anything. Or that the fact that you can offset capital gains with capital losses somehow makes a plunge in value "worth it". "Paper losses" are losses. The value of the asset isn't based on the price you paid.
prklmn 10y ago
If you think of it in these terms, that's about two years worth of rent. But as a renter, you have no chance at benefitting from future appreciation. If you think the housing market is going to be in decline from your move in time, then it might be a good idea to rent depending on your time horizon. Over the long term, it has proven to generally not be a good idea.