3 ms·
Principal is only part of the cash flow. You're also paying for interest, insurance, taxes, and maintenance, which the renter does not, and these are also money
by svachalek 4y ago
Principal is only part of the cash flow. You're also paying for interest, insurance, taxes, and maintenance, which the renter does not, and these are also money down the drain. In my experience, owning a house in many (most?) areas is a losing proposition unless you assume that housing prices rise at an unreasonable rate for a long period of time. However, that's exactly what's happened.
- Idiot_in_Vain 4y agoDespite the interest, insurance, taxes, and maintenance when paying a mortgage the majority or at least a big part of your payment goes to pay off the house - so after 15 or 20 or 30 years you own a very expensive house. When renting all the money you pay goes down the drain and in 30 years you own nothing.
- rqtwteye 4y agoMy mortgage (including property tax and insurance) is 1300 of which 700 goes to principal. So the money going down the drain is around 600. A comparable rental would be at least 1500. So basically I can save 800 per month for maintenance. Even if prices don’t go up or even go down this is still a good deal. Especially since rents will probably keep rising while my mortgage will be flat for the next 14 years and then go to 0. This equation doesn’t work in California where buying makes financial sense only if house prices keep going up. But in a lot of other areas buying a house is a very good deal.