8 ms·
The article's analysis missed one big thing in the comparison: rent (necessarily) includes a profit margin for the owners. In a mortgage this is the interest p
by WkndTriathlete 5y ago
The article's analysis missed one big thing in the comparison: rent (necessarily) includes a profit margin for the owners. In a mortgage this is the interest payment on the loan, but in a mortgage the owner gradually shifts from lender to buyer. (In fact, one way of looking at paying down a mortgage early is that the buyer is earning higher returns at the expense of the lender.)
It wouldn't surprise me at all that a mortgage, after accounting for all factors, is still cheaper than renting.
- rdw 5y agoRent does not necessarily include a profit margin for the owner. There is a rental market rate and if the landlord's expenses exceed that rate, they can and do rent out the unit at that rate. It's still better than leaving it empty. Loss-making business ventures are common, and if we're talking about owners who have a separate source of income than property ownership, loss-making side hustles are exceedingly common. (there's a lot of complexity that sometimes does incentivize big commercial-property landlords to leave office spaces empty in some cities, but, I think that's a different market yet again)
- hash872 5y agoIt does not necessarily include a profit margin for the owners, because houses & condos are simultaneously purchased by non-landlords who aren't trying to generate a return- so that's who sets the prices. And in practice real estate attracts the deeply financially unsophisticated, or the wealthy doctor who's willing to take losses for 5+ years for future appreciation. I mean, there's lots of small restaurant businesses out there, but they don't necessarily generate a real profit or make real financial sense. Some industries just attract irrational or unsophisticated people!