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Owning your own home doesn't shield you from rent increases, because you're still paying rent, since as a owner you're not getting paid the rent thay you would

by lottin 5y ago

Owning your own home doesn't shield you from rent increases, because you're still paying rent, since as a owner you're not getting paid the rent thay you would otherwise receive had you rented your property out. This means you are paying that rent out of your own pocket. This may sound like creative accounting to some, but it's not. The cost is very real, despite not being observable in terms of cash flows.

FooBarBizBazz 5y ago
This is completely backwards! Yes, you get value from owning a house, and you can measure that in dollar terms by looking at comparable rents, but this isn't a cost; it's more like a dividend.
yawnr 5y ago
This makes no sense. Owning a home is not paying rent. Paying a mortgage comes with the expectation of accruing equity in the home. Renting does not. You’re comparing renting with being a landlord.
ac29 5y ago
This makes no sense. If you are living in the house you own, you can't simultaneously rent it out. Any rent you might theoretically receive would be essentially canceled out by needing to rent another place to live in.
grey-area 5y ago
Nope. Inflation is the best thing that can happen to you if you owe highly leveraged debt on appreciating assets. The more debt the better. Your debt payments stay stable, the asset price goes up, your wages go up, and within a few years the payments are negligible compared to your salary. Compare this to a renter - your rental payments go up, your wages go up.
- azth 5y ago
  This is another reason why it is destructive to run society on a usurious financial system.
jjk166 5y ago
Shelter is a necessity. If you rented out your primary residence, you would then need to rent yourself, so if rent goes up everywhere then increase in rent prices is a wash.
- lottin 5y ago
  Good point, yeah, I hadn't thought this through.
BoiledCabbage 5y ago
> Owning your own home doesn't shield you from rent increases, because you're still paying rent, Yes it does shield you fron rent increases. Specifically because by owning a home you have also purchased an income producing asset that perfectly hedges your rent increase. For every dollar that rent goes up and you have to pay more, you also get an additional dollar in income from that increased rent. Ie shielding you from the affect of any increase. It's the same thing as buying a stock, and then shorting that same stock (or buying a put). Yes the stock may go down, but for every bit it does, your other investment up down meaning you are now shielded from (or hedged against) any changes in stock price.

by lottin 5y ago

FooBarBizBazz 5y ago

This is completely backwards! Yes, you get value from owning a house, and you can measure that in dollar terms by looking at comparable rents, but this isn't a cost; it's more like a dividend.

yawnr 5y ago

This makes no sense. Owning a home is not paying rent. Paying a mortgage comes with the expectation of accruing equity in the home. Renting does not. You’re comparing renting with being a landlord.

ac29 5y ago

This makes no sense. If you are living in the house you own, you can't simultaneously rent it out. Any rent you might theoretically receive would be essentially canceled out by needing to rent another place to live in.

grey-area 5y ago

Nope. Inflation is the best thing that can happen to you if you owe highly leveraged debt on appreciating assets. The more debt the better. Your debt payments stay stable, the asset price goes up, your wages go up, and within a few years the payments are negligible compared to your salary. Compare this to a renter - your rental payments go up, your wages go up.

azth 5y ago
This is another reason why it is destructive to run society on a usurious financial system.

jjk166 5y ago

Shelter is a necessity. If you rented out your primary residence, you would then need to rent yourself, so if rent goes up everywhere then increase in rent prices is a wash.

lottin 5y ago
Good point, yeah, I hadn't thought this through.

BoiledCabbage 5y ago

> Owning your own home doesn't shield you from rent increases, because you're still paying rent, Yes it does shield you fron rent increases. Specifically because by owning a home you have also purchased an income producing asset that perfectly hedges your rent increase. For every dollar that rent goes up and you have to pay more, you also get an additional dollar in income from that increased rent. Ie shielding you from the affect of any increase. It's the same thing as buying a stock, and then shorting that same stock (or buying a put). Yes the stock may go down, but for every bit it does, your other investment up down meaning you are now shielded from (or hedged against) any changes in stock price.