4 ms·

This is something I do not get. In my opinion renting a flat should be a more efficient form of living than owning a house and yet economically(&long-term) rent

This is something I do not get. In my opinion renting a flat should be a more efficient form of living than owning a house and yet economically(&long-term) renting is often the worse option.

bombcar 4y ago
If you fully account for everything, renting doesn’t always lose - it’s just we’ve had absurd appreciation for so long. Once you account for maintenance items owning becomes decently more expensive than a simple “mortgage + utilities + insurance + taxes” calculation shows. A $10k furnace every 25 years adds something like $40 a month and that’s only one of the many wear items there are. There are other non-tangible benefits to ownership, of course.
- ghaff 4y ago
  There's (mostly) a distinction between single family homes and condos (though high-end condos can have significant costs even if shared as well in addition to condo fees). But, yes, something on the order of hundreds of dollars per month should probably be budgeted to keep a single family house in steady state over a significant period of time.
- jjav 4y ago
  > A $10k furnace every 25 years adds something like $40 a month and that’s only one of the many wear items there are. Right, but remember that if you are a renter, the landlord is passing those $40 to you bundled in the rent (along with all other future maintenance projections). There's no free ride, the renter is paying for all of it plus profit margin to the landlord. You can sometimes get lucky as a renter by finding a small-time incompetent landlord who doesn't price these future maintanence costs into the rent, but that's not the norm.
  - hackerfromthefu 4y ago
    The reality is in many cases the 'profit' margin is negative! There's many many stories of owners that quit the situation in disgust and fear of how bad it is financially, due to running costs. A bad year of maintenance, a bad tenant, can cause big losses in a business where margins are usually slim for the first decade of ownership. If an investment house was a business, it often takes a decade to see substantial returns, sometimes after many years of hard slog and even losses. Would you accept that from the businesses that hacker news dreams of?
    - bombcar 4y ago
      Yeah, it's fun to hate on landlords but often they're not making much outside of appreciation - or they're basing their profit on renting a house today purchased ten or twenty years ago (which would be better to sell and do something else with the money, often). I think the fundamental issue is that the whole renting market is buying long and selling short (buy a dwelling for a long period, rent it for short periods) and that causes issues on one or another direction (either you rent for what appears "too much" because you need to build reserves, or you rent for what appears "fair" and the first major expense kills the landlord).
DangitBobby 4y ago
I don't really understand how renting could ever be more efficient. Landlords wouldn't rent out houses as a profession if they couldn't make money doing it. That money comes from renters paying more than the cost of home ownership by definition.
- Silverback_VII 4y ago
  it's more efficient in a physical sense, in other words, construction and heating.

This is something I do not get. In my opinion renting a flat should be a more efficient form of living than owning a house and yet economically(&long-term) renting is often the worse option.

bombcar 4y ago

If you fully account for everything, renting doesn’t always lose - it’s just we’ve had absurd appreciation for so long. Once you account for maintenance items owning becomes decently more expensive than a simple “mortgage + utilities + insurance + taxes” calculation shows. A $10k furnace every 25 years adds something like $40 a month and that’s only one of the many wear items there are. There are other non-tangible benefits to ownership, of course.

ghaff 4y ago
There's (mostly) a distinction between single family homes and condos (though high-end condos can have significant costs even if shared as well in addition to condo fees). But, yes, something on the order of hundreds of dollars per month should probably be budgeted to keep a single family house in steady state over a significant period of time.
jjav 4y ago
> A $10k furnace every 25 years adds something like $40 a month and that’s only one of the many wear items there are. Right, but remember that if you are a renter, the landlord is passing those $40 to you bundled in the rent (along with all other future maintenance projections). There's no free ride, the renter is paying for all of it plus profit margin to the landlord. You can sometimes get lucky as a renter by finding a small-time incompetent landlord who doesn't price these future maintanence costs into the rent, but that's not the norm.
- hackerfromthefu 4y ago
  The reality is in many cases the 'profit' margin is negative! There's many many stories of owners that quit the situation in disgust and fear of how bad it is financially, due to running costs. A bad year of maintenance, a bad tenant, can cause big losses in a business where margins are usually slim for the first decade of ownership. If an investment house was a business, it often takes a decade to see substantial returns, sometimes after many years of hard slog and even losses. Would you accept that from the businesses that hacker news dreams of?
  - bombcar 4y ago
    Yeah, it's fun to hate on landlords but often they're not making much outside of appreciation - or they're basing their profit on renting a house today purchased ten or twenty years ago (which would be better to sell and do something else with the money, often). I think the fundamental issue is that the whole renting market is buying long and selling short (buy a dwelling for a long period, rent it for short periods) and that causes issues on one or another direction (either you rent for what appears "too much" because you need to build reserves, or you rent for what appears "fair" and the first major expense kills the landlord).

DangitBobby 4y ago

I don't really understand how renting could ever be more efficient. Landlords wouldn't rent out houses as a profession if they couldn't make money doing it. That money comes from renters paying more than the cost of home ownership by definition.

Silverback_VII 4y ago
it's more efficient in a physical sense, in other words, construction and heating.