3 ms·

Assuming fixed rate mortgage, in most places the rate at which rent can grow is faster than rate of property taxes+insurance can grow. So the cost of ownership

by oarla 2y ago

Assuming fixed rate mortgage, in most places the rate at which rent can grow is faster than rate of property taxes+insurance can grow. So the cost of ownership will generally be cheaper than renting. Not to mention increasing equity in an asset with time

DanielHB 2y ago
Not in the US, but I live in a CoL place in Europe and when I bought my first apartment I was baffled by the amount of money I was saving every month. My previous rent was about the same as my mortgage, but 40% of my mortgage was going down to reduce the principal. And I only had 15% downpayment. Bought the apartment in 2018, sold in 2024 (close to the bottom of the local-market slump). Still profited ~10% (before fees) compared to buying price. All that principal amortization payed for the downpayment (and some) of my much bigger current apartment.
- rightbyte 2y ago
  Ye it is strange. I mean to some extent the lesser service you get explains it. But shady land lords does not provide the required services and still charge a premium for rent. To some extent the apartment board might be to optimistic on future maintenance costs too.
  - DanielHB 2y ago
    No, it is just the messed up rental market in Stockholm. Government and HOA controls don't let people be landlords for more than 2 years of a time and require you to ask permission from the HOA and to have a reason. The actual apartment I was renting was pretty well kept though, proper cleaning, air ventilation inspections, very good laundry room, fully renovated less than 10 years before I moved in. The apartment I bought however was similar conditions. It is possible to get a first-hand rental contract but it takes years upon years and you can never get something in the location you want.
    - eru 2y ago
      Doesn't Stockholm have cray rent control, too?
      - DanielHB 2y ago
        Yes for first-hand contracts, which are impossible to get. So your options if you are not born into the first-hand contract queue (people put their 5 year old children on the queue) is to rent second-hand which was what I was doing. The HOAs don't let you be a landlord and rent out your apartment for more than 2 years at a time, and you need to have a reason like you are moving to another country for studies. Technically when you buy an apartment in Sweden you are (almost always) not actually buying the apartment, but rather just a stake in the HOA corporation with the attached right to live in the apartment. So the HOA has last say about who can live in the apartment (and what renovations you can do). It is all very complicated and specific to Sweden, but this HOA corporation thing avoids a lot of fees/taxes when selling/buying the apartment (which is a BIG deal, stamp tax alone is 4% of the asset last I heard). But you get these downsides as well. Detached houses usually don't have HOAs, those you can rent out more freely. However they are not exactly affordable housing, especially considering heating costs of detached houses triple during winter (maybe they only double _if_ you have modern heat pumps). Banks won't lend you money to buy real state with the intent to rent out either.
        eru 2y ago
        Renting second-hand means 'subletting'? Or something else? > It is all very complicated and specific to Sweden, but this HOA corporation thing avoids a lot of fees/taxes when selling/buying the apartment (which is a BIG deal, stamp tax alone is 4% of the asset last I heard). But you get these downsides as well. Yes, routing around regulation and taxes often gets pretty complicated. Here in Singapore we don't have rent control, but stamp duty can also be really high (especially for foreigners). Fortunately, we don't have capital gains taxes, so if you aren't particularly tied to owner-occupied housing, you can instead invest in the stock market and use the returns to pay rent.
        2y ago
kamaal 2y ago
>>So the cost of ownership will generally be cheaper than renting. Not to mention increasing equity in an asset with time With age your ability to earn decreases as well.

by oarla 2y ago

DanielHB 2y ago

Not in the US, but I live in a CoL place in Europe and when I bought my first apartment I was baffled by the amount of money I was saving every month. My previous rent was about the same as my mortgage, but 40% of my mortgage was going down to reduce the principal. And I only had 15% downpayment. Bought the apartment in 2018, sold in 2024 (close to the bottom of the local-market slump). Still profited ~10% (before fees) compared to buying price. All that principal amortization payed for the downpayment (and some) of my much bigger current apartment.

rightbyte 2y ago
Ye it is strange. I mean to some extent the lesser service you get explains it. But shady land lords does not provide the required services and still charge a premium for rent. To some extent the apartment board might be to optimistic on future maintenance costs too.
- DanielHB 2y ago
  No, it is just the messed up rental market in Stockholm. Government and HOA controls don't let people be landlords for more than 2 years of a time and require you to ask permission from the HOA and to have a reason. The actual apartment I was renting was pretty well kept though, proper cleaning, air ventilation inspections, very good laundry room, fully renovated less than 10 years before I moved in. The apartment I bought however was similar conditions. It is possible to get a first-hand rental contract but it takes years upon years and you can never get something in the location you want.
  - eru 2y ago
    Doesn't Stockholm have cray rent control, too?
    - DanielHB 2y ago
      Yes for first-hand contracts, which are impossible to get. So your options if you are not born into the first-hand contract queue (people put their 5 year old children on the queue) is to rent second-hand which was what I was doing. The HOAs don't let you be a landlord and rent out your apartment for more than 2 years at a time, and you need to have a reason like you are moving to another country for studies. Technically when you buy an apartment in Sweden you are (almost always) not actually buying the apartment, but rather just a stake in the HOA corporation with the attached right to live in the apartment. So the HOA has last say about who can live in the apartment (and what renovations you can do). It is all very complicated and specific to Sweden, but this HOA corporation thing avoids a lot of fees/taxes when selling/buying the apartment (which is a BIG deal, stamp tax alone is 4% of the asset last I heard). But you get these downsides as well. Detached houses usually don't have HOAs, those you can rent out more freely. However they are not exactly affordable housing, especially considering heating costs of detached houses triple during winter (maybe they only double _if_ you have modern heat pumps). Banks won't lend you money to buy real state with the intent to rent out either.
      - eru 2y ago
        Renting second-hand means 'subletting'? Or something else? > It is all very complicated and specific to Sweden, but this HOA corporation thing avoids a lot of fees/taxes when selling/buying the apartment (which is a BIG deal, stamp tax alone is 4% of the asset last I heard). But you get these downsides as well. Yes, routing around regulation and taxes often gets pretty complicated. Here in Singapore we don't have rent control, but stamp duty can also be really high (especially for foreigners). Fortunately, we don't have capital gains taxes, so if you aren't particularly tied to owner-occupied housing, you can instead invest in the stock market and use the returns to pay rent.
        2y ago

kamaal 2y ago

>>So the cost of ownership will generally be cheaper than renting. Not to mention increasing equity in an asset with time With age your ability to earn decreases as well.