6 ms·

I would argue that security, stability and hedge are all perceived and not actual risks. I don't own but have quite a large position in index funds. I am both f

I would argue that security, stability and hedge are all perceived and not actual risks. I don't own but have quite a large position in index funds. I am both financially secure and stable in one of the fastest growing city in the world. My rent hasn't increased in 5 years and I pay half of what I would pay in mortgage for the same property. The property market has put up nearly 20% gain in those years.

itchyouch 7y ago
You sound like you have the rarer, nice landlords with maybe a handful of properties that are being rented out. These are the landlords that as long as you pay their mortgage and provide little fuss, they are happy and not trying to constantly maximize their returns. I'd imagine your scenario would not be the case with a typical management company. While your scenario is attainable for a small amount of people, it would be difficult to see happenning for the masses.
cletus 7y ago
What city? Also, does it have any form of rent control? In terms of investment returns it should be pointed out that depending on country you can't get a lower rate of interest, better tax treatment and leverage than you can with your mortgage. Lastly, we're in one off the longest bull runs on the stock market in history and the last 2 years in particular have been insane. This should not be treated as representative.
- irq11 7y ago
  I’ll tell you two cities the OP could be in right now: SF and NYC. Lived in both, tried to buy in both, gave up both times because the numbers were silly. Neither one makes much sense from a rent/buy perspective. New York is closer, but most properties are still cash-flow negative relative to rent. You have to assume unrealistic rates of appreciation and/or indefinite tax deductions for the numbers to work (and folks are finding out, right now, that those deductions can go away!) People have been treating homes like investment vehicles for a while now, and there are actually very few big cities in the US where rental rates can cover costs of mortgage, taxes and insurance. Renting literally puts cash in your pocket.
  - CydeWeys 7y ago
    I'm renting in Manhattan right now and this is absolutely the case for me. At the same monthly cost, I'd have to live farther out in a less desirable location. A lot of apartments cost more to own in monthly taxes and fees than my entire monthly rent cost when I first moved here (though admittedly I had roommates). Note, I'm not talking about a mortgage; that'd be way more. I'm just talking about coop fees. You can spend more on them buying an apartment than it costs to rent a bedroom in a shared apartment. And as people like to say about rent, that is also just "throwing money away".
    - irq11 7y ago
      I don’t think it’s fair to compare renting a room to buying an apartment (even a studio), but you don’t need to do that. Right now, most properties in manhattan rent for less than their monthly carrying costs (including HOA fees). People have traditionally justified it via the mortgage interest and SALT tax deductions, but congress just blew the latter all to hell, and it’s making properties about 30% too expensive... So many units have priced in the SALT tax deductions! The rent/buy calculation was borderline before, but now it’s just comically bad.
  - cletus 7y ago
    Speaking as someone who lives in Manhattan and owns my apartment, I can say from my example at least that my mortgage payment (plus property taxes), tax-adjusted, is less than what the same apartment would cost me to rent. Now buying something to rent it out is a different story and I just don't see those numbers making sense from an investment POV if that's your point.
    - irq11 7y ago
      My point is that right now, for most units, it’s financially smarter to rent in Manhattan. It’s not even close. I’ve been doing a search in Manhattan this spring. On nearly every property I see, mortgage + hoa / taxes + insurance easily exceeds equivalent monthly rent. And not by a little bit, but by hundreds of dollars a month. Deduct mortgage interest and $10k of SALT, and a few properties (~10%) start to make sense on a 5-10 year timeframe. Most are nowhere close to affordable. Factor in opportunity cost at any reasonable long-term rate of return, and nothing makes sense (You basically have to assume that the stock market will underperform, and the housing market will over-perform to make the numbers work.) The few properties that make sense on a spreadsheet sell quickly. Most linger. Ask any real estate agent - the market is shifting, and the shift reflects the fact that prices got ahead of fundamentals. So it depends strongly on when you bought and how rare your deal was, but these days, the vast majority of the Manhattan market is overpriced, and implicitly betting on speculative price appreciation.
esotericn 7y ago
Can you live in the same property in 30 years? Would you feel comfortable installing a new kitchen or bathroom?
- Just_Smith 7y ago
  >Can you live in the same property in 30 years? ...can you? Even owning a home doesn't guarantee that you'll be able to live comfortably in one place for 3 decades. Median homeownership is usually shorter than 15 years[1]. (Per 2009* - more recent numbers that I've seen indicate that number is decreasing, not going up, but those are usually based on more short-term studies, post 2008.) And renovations aren't exactly something homeowners are comfortable with, even if they technically can do it. Source: I work for a homebuilder who aims to sell multiple homes to each customer (from first-time, to trade-up, to retirement.) If the median homeownership-length went up to 30 years, we'd have to reevaluate our entire business model. [1] https://nahbclassic.org/generic.aspx?genericContentID=194717 https://nahbclassic.org/generic.aspx?genericContentID=194717
  - toasterlovin 7y ago
    People renovate their houses all the time.
    - Just_Smith 7y ago
      SOME people renovate their houses SOME of the time. Our biggest market is trade-up buyers, which is usually viewed as the alternative to remodeling. The housing market has been on an uptick since 2008, which increases the rate of trading-up, as the hope of selling at a profit is one of the reasons people buy homes to begin with.
  - bluGill 7y ago
    Median home ownership is not the right metric. If you trade in one house for another you still own a house for the long term.
    - 7y ago

itchyouch 7y ago

You sound like you have the rarer, nice landlords with maybe a handful of properties that are being rented out. These are the landlords that as long as you pay their mortgage and provide little fuss, they are happy and not trying to constantly maximize their returns. I'd imagine your scenario would not be the case with a typical management company. While your scenario is attainable for a small amount of people, it would be difficult to see happenning for the masses.

cletus 7y ago

What city? Also, does it have any form of rent control? In terms of investment returns it should be pointed out that depending on country you can't get a lower rate of interest, better tax treatment and leverage than you can with your mortgage. Lastly, we're in one off the longest bull runs on the stock market in history and the last 2 years in particular have been insane. This should not be treated as representative.

irq11 7y ago
I’ll tell you two cities the OP could be in right now: SF and NYC. Lived in both, tried to buy in both, gave up both times because the numbers were silly. Neither one makes much sense from a rent/buy perspective. New York is closer, but most properties are still cash-flow negative relative to rent. You have to assume unrealistic rates of appreciation and/or indefinite tax deductions for the numbers to work (and folks are finding out, right now, that those deductions can go away!) People have been treating homes like investment vehicles for a while now, and there are actually very few big cities in the US where rental rates can cover costs of mortgage, taxes and insurance. Renting literally puts cash in your pocket.
- CydeWeys 7y ago
  I'm renting in Manhattan right now and this is absolutely the case for me. At the same monthly cost, I'd have to live farther out in a less desirable location. A lot of apartments cost more to own in monthly taxes and fees than my entire monthly rent cost when I first moved here (though admittedly I had roommates). Note, I'm not talking about a mortgage; that'd be way more. I'm just talking about coop fees. You can spend more on them buying an apartment than it costs to rent a bedroom in a shared apartment. And as people like to say about rent, that is also just "throwing money away".
  - irq11 7y ago
    I don’t think it’s fair to compare renting a room to buying an apartment (even a studio), but you don’t need to do that. Right now, most properties in manhattan rent for less than their monthly carrying costs (including HOA fees). People have traditionally justified it via the mortgage interest and SALT tax deductions, but congress just blew the latter all to hell, and it’s making properties about 30% too expensive... So many units have priced in the SALT tax deductions! The rent/buy calculation was borderline before, but now it’s just comically bad.
- cletus 7y ago
  Speaking as someone who lives in Manhattan and owns my apartment, I can say from my example at least that my mortgage payment (plus property taxes), tax-adjusted, is less than what the same apartment would cost me to rent. Now buying something to rent it out is a different story and I just don't see those numbers making sense from an investment POV if that's your point.
  - irq11 7y ago
    My point is that right now, for most units, it’s financially smarter to rent in Manhattan. It’s not even close. I’ve been doing a search in Manhattan this spring. On nearly every property I see, mortgage + hoa / taxes + insurance easily exceeds equivalent monthly rent. And not by a little bit, but by hundreds of dollars a month. Deduct mortgage interest and $10k of SALT, and a few properties (~10%) start to make sense on a 5-10 year timeframe. Most are nowhere close to affordable. Factor in opportunity cost at any reasonable long-term rate of return, and nothing makes sense (You basically have to assume that the stock market will underperform, and the housing market will over-perform to make the numbers work.) The few properties that make sense on a spreadsheet sell quickly. Most linger. Ask any real estate agent - the market is shifting, and the shift reflects the fact that prices got ahead of fundamentals. So it depends strongly on when you bought and how rare your deal was, but these days, the vast majority of the Manhattan market is overpriced, and implicitly betting on speculative price appreciation.

esotericn 7y ago

Can you live in the same property in 30 years? Would you feel comfortable installing a new kitchen or bathroom?

Just_Smith 7y ago
>Can you live in the same property in 30 years? ...can you? Even owning a home doesn't guarantee that you'll be able to live comfortably in one place for 3 decades. Median homeownership is usually shorter than 15 years[1]. (Per 2009* - more recent numbers that I've seen indicate that number is decreasing, not going up, but those are usually based on more short-term studies, post 2008.) And renovations aren't exactly something homeowners are comfortable with, even if they technically can do it. Source: I work for a homebuilder who aims to sell multiple homes to each customer (from first-time, to trade-up, to retirement.) If the median homeownership-length went up to 30 years, we'd have to reevaluate our entire business model. [1] https://nahbclassic.org/generic.aspx?genericContentID=194717 https://nahbclassic.org/generic.aspx?genericContentID=194717
- toasterlovin 7y ago
  People renovate their houses all the time.
  - Just_Smith 7y ago
    SOME people renovate their houses SOME of the time. Our biggest market is trade-up buyers, which is usually viewed as the alternative to remodeling. The housing market has been on an uptick since 2008, which increases the rate of trading-up, as the hope of selling at a profit is one of the reasons people buy homes to begin with.
- bluGill 7y ago
  Median home ownership is not the right metric. If you trade in one house for another you still own a house for the long term.
  - 7y ago