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You seem to be implying or assuming that increased real estate prices lead to increased rent, but that's a non-sequitor; in fact, rents have become decoupled fr
by nickff 4y ago
You seem to be implying or assuming that increased real estate prices lead to increased rent, but that's a non-sequitor; in fact, rents have become decoupled from real estate prices in many areas over the past 20 years.
- Sohcahtoa82 4y agoI find this incredibly hard to believe, especially when it's not hard to find people that buy houses for the sole purpose of renting them out[0]. In order to ensure you at least break even in the short term, you'd need to charge a rent at least equal to the mortgage + property tax.
- onlyrealcuzzo 4y agoThis is simplified. Negative cash-flow real estate (anywhere with absurd Price-to-Rent ratios) has DESTROYED the S&P 500 (on leverage) for the last 20 years because of abnormally high appreciation (leveraged) due to interest rates perpetually decreasing. Most R/E is leveraged. Historically, you did not need positive cash-flow in R/E to make a fortune, and a lot of the fortunes amassed came from negative cash-flow R/E that consistently become more and more negative cash-flowing... It doesn't really make any sense unless you believe interest rates will perpetually get lower. Anyone who took that trade over the last 20 years did very well.