4 ms·

Houses also do not generate income. And many people also feel the urge to consider them an investment.

by magicroot75 4y ago

zenlikethat 4y ago
They do if you rent them out.
- charcircuit 4y ago
  You can rent out other collectibles too
  - zenlikethat 4y ago
    Is the income from that comparable to the income you can get from renting out a house?
    - charcircuit 4y ago
      You may be able to with cars.
- magicroot75 4y ago
  I'm aware. I meant personal homes not intended for rent.
  - majormajor 4y ago
    Not owning a home generates negative income in its own way...
hotpotamus 4y ago
Tell that to my landlord.
bruce511 4y ago
I assume you are talking about a personal home you live in. In this context a house generates income by reducing a non-optional expense. [1] In other words, once paid off, you are living rent free[2]. Since housing is usually a large part of any budget, this is a significant cash-flow gain. While paying it off it also has the effect of "fixing" rent [3] - potentially over a long period of time. This can work as a hedge against inflation - or to put it another way, in inflationary environments it can cause your housing cost to diminish. Ownership also provides a hedge against rampant house price inflation,which drives up rent. Lastly it acts as a store of future value[4]. If the market goes up then "downsizing" on retirement can free up cash. If the market goes down, then you have a place to live rent free. Either way you have a place to live. Whether home ownership is the right option for you depends on your circumstances. It can be a critical investment for some, or a hindrance to others. [1] there are clearly enormous differences in housing costs based on location, size and condition. You may get better returns by simply renting a cheaper house, and investing the difference. [2] while you won't pay rent, or mortgage, you will encounter very real maintainence costs and taxes. These will be less than rent, but still a very real number > 0. [3] if your mortgage interest rate is flexible then inflation will likely drive up interest rates, but this is a secondary effect and applies to the interest portion of loan repayment, not the capital portion. This can change literally overnight, a renter typically is insulated from this for the duration of the lease, but may then see an exaggerated increase on the next lease. [4] assuming you buy a house you can afford. If you reach for something you can't ultimately afford it will likely end badly.

Houses also do not generate income. And many people also feel the urge to consider them an investment.

zenlikethat 4y ago

They do if you rent them out.

charcircuit 4y ago
You can rent out other collectibles too
- zenlikethat 4y ago
  Is the income from that comparable to the income you can get from renting out a house?
  - charcircuit 4y ago
    You may be able to with cars.
magicroot75 4y ago
I'm aware. I meant personal homes not intended for rent.
- majormajor 4y ago
  Not owning a home generates negative income in its own way...

hotpotamus 4y ago

Tell that to my landlord.

bruce511 4y ago

I assume you are talking about a personal home you live in. In this context a house generates income by reducing a non-optional expense. [1] In other words, once paid off, you are living rent free[2]. Since housing is usually a large part of any budget, this is a significant cash-flow gain. While paying it off it also has the effect of "fixing" rent [3] - potentially over a long period of time. This can work as a hedge against inflation - or to put it another way, in inflationary environments it can cause your housing cost to diminish. Ownership also provides a hedge against rampant house price inflation,which drives up rent. Lastly it acts as a store of future value[4]. If the market goes up then "downsizing" on retirement can free up cash. If the market goes down, then you have a place to live rent free. Either way you have a place to live. Whether home ownership is the right option for you depends on your circumstances. It can be a critical investment for some, or a hindrance to others. [1] there are clearly enormous differences in housing costs based on location, size and condition. You may get better returns by simply renting a cheaper house, and investing the difference. [2] while you won't pay rent, or mortgage, you will encounter very real maintainence costs and taxes. These will be less than rent, but still a very real number > 0. [3] if your mortgage interest rate is flexible then inflation will likely drive up interest rates, but this is a secondary effect and applies to the interest portion of loan repayment, not the capital portion. This can change literally overnight, a renter typically is insulated from this for the duration of the lease, but may then see an exaggerated increase on the next lease. [4] assuming you buy a house you can afford. If you reach for something you can't ultimately afford it will likely end badly.