4 ms·

Rents are pretty much always going to be higher than a mortgage for the equivalent housing. It's why people are landlords. He dances around that in the article

Rents are pretty much always going to be higher than a mortgage for the equivalent housing. It's why people are landlords. He dances around that in the article by saying that people buy "nicer" places than they rent, but that doesn't have to be true.

tomjakubowski 1y ago
Rent only has to exceed the property's operating costs -- things like mortgage interest, property tax, paying a manager, insurance, repairs and maintenance -- for the landlord to come out ahead. Paying off the principal is a capital expense.
- cramsession 1y ago
  Landlords charge market rate, which includes mortgages.
Esophagus4 1y ago
But a mortgage isn’t the cost of owning a house. Rent payments are the cost of renting. If you want to compare the costs of renting and buying, you need to compare renting=(rent payments + renter’s insurance) vs. owning=(mortgage payments + property taxes + insurance + maintenance and repairs + equity appreciation / depreciation)
- cramsession 1y ago
  Landlords bake those costs into the rent price.
  - Esophagus4 1y ago
    Too hand waivey and doesn’t tell the whole story - even with the carry costs “baked in”, renting is generally cheaper in the short run because those costs are lower anyway. > Average rents are cheaper than average mortgage payments (homeowners insurance and property taxes included) in all 50 of the largest U.S. metros in 2025, with the cost difference between the two growing in all but 12 of those metros since last year, according to Bankrate’s Rent vs. Buy Study. > Over the last year, the study found average mortgage payments (including principal, interest, homeowners insurance and property taxes) increased while average rents either declined or remained stable in nearly all the metros we analyzed. > Housing experts said the fact that it’s cheaper to rent in all 50 metros in 2025 is a broader reflection of rental and housing market conditions across the country. [1] https://www.bankrate.com/real-estate/rent-vs-buy-affordability-study/ https://www.bankrate.com/real-estate/rent-vs-buy-affordabili...
    - cramsession 1y ago
      That compares average mortgage and average rent, but the average house you buy is going to be much bigger (and include a yard) than the average rental. They’d need to compare equal properties to have a meaningful study.
      - const_cast 1y ago
        The average home is also going to be in a very suboptimal location. If you compare homes and apartments in the same location, the gap grows even wider. Yes, $4,000 a month in Manhattan is expensive. But $4,000 might be JUST the HOA cost for buying in the same area. Never mind the 10 million dollar mortgage. (Spoiler: fake numbers, actually do the math for your city)
    - carlosjobim 1y ago
      > Average rents are cheaper than average mortgage payments The average mortgage is for a family, the average rent is for a broke young worker or student living in a much smaller and worse accommodation. Renting is always more expensive than a mortgage for the same housing unit, because the landlord needs to make a profit from his tenants. Cooking the numbers won't change reality. The truth beats all the lies, no matter how many lies.
      - Esophagus4 1y ago
        The median renter is 42 years old. Even a basic Google search would have saved you needing to post that comment. [1]https://www.zillow.com/research/renters-housing-trends-report-2024-34387/ https://www.zillow.com/research/renters-housing-trends-repor...
        carlosjobim 1y ago
        Age doesn't matter. The median renter has smaller and worse housing than the median mortgage payer. For the same accommodation, renting is always more expensive than owning.
        1y ago
wavemode 1y ago
No, this really is not always the case when controlling for location. (That is, if you're comparing apartments in the middle of the city to houses in the outskirts, you're obviously comparing apples and oranges.)
- cramsession 1y ago
  If you compare equally sized places, rent is pretty much always higher. At least it has been in every city/town I’ve ever lived in. Renting is not cheap, you’re paying a premium to the landlord.
  - phil21 1y ago
    Not all landlords min/max for peak financial outcome. My landlord for 15 years raised rent exactly once when property taxes had a large jump one year, and was already under market when I started the first lease. His mortgage was long paid off and he optimized for least hassle vs max money. Worked out for both of us - I called him maybe once a year at most, and he had a decent passive income stream reliably come in without worrying about 2am phone calls because a $50 thermostat broke. He had a nicely appreciated property to sell in his eventual retirement. It was a 3BR place with a yard larger than I own now. Granted fit and finish is nowhere comparable, but I pay about 4x in mortgage and taxes than what I was paying him for about 1.5x the space. Such arrangements are increasingly more rare as everything becomes a finance game, but they can still be sought out and developed.
    - bluefirebrand 1y ago
      > Not all landlords min/max for peak financial outcome An enormous number if rentals are owned by private equity not by individuals, so rental markets are pretty dominated by landlords min/maxing for peak financial outcome
jandrewrogers 1y ago
The carrying cost of a landlord is completely different than the carrying cost of a buyer with a mortgage. A landlord can charge a profitable rent on a property that doesn't even pay the mortgage interest if you were to buy it. This is a common case. I recently sold a house with a mortgage where my carrying costs were far below that of any buyer of the house, meaning I could break-even renting at a rate that would leave a new buyer losing thousands of dollars per month. You'd be an idiot to not rent in that market but there is no shortage of buyers.
- cramsession 1y ago
  Landlords charge market rate. It has little to do with their costs. The
  - jandrewrogers 1y ago
    Of course. But as several people have pointed out, the market rate can be far below the equivalent purchase cost and landlords can still make a profit in those markets. There are many markets where the rental rates are far below mortgage costs for long periods of time.

tomjakubowski 1y ago

Rent only has to exceed the property's operating costs -- things like mortgage interest, property tax, paying a manager, insurance, repairs and maintenance -- for the landlord to come out ahead. Paying off the principal is a capital expense.

cramsession 1y ago
Landlords charge market rate, which includes mortgages.

Esophagus4 1y ago

But a mortgage isn’t the cost of owning a house. Rent payments are the cost of renting. If you want to compare the costs of renting and buying, you need to compare renting=(rent payments + renter’s insurance) vs. owning=(mortgage payments + property taxes + insurance + maintenance and repairs + equity appreciation / depreciation)

cramsession 1y ago
Landlords bake those costs into the rent price.
- Esophagus4 1y ago
  Too hand waivey and doesn’t tell the whole story - even with the carry costs “baked in”, renting is generally cheaper in the short run because those costs are lower anyway. > Average rents are cheaper than average mortgage payments (homeowners insurance and property taxes included) in all 50 of the largest U.S. metros in 2025, with the cost difference between the two growing in all but 12 of those metros since last year, according to Bankrate’s Rent vs. Buy Study. > Over the last year, the study found average mortgage payments (including principal, interest, homeowners insurance and property taxes) increased while average rents either declined or remained stable in nearly all the metros we analyzed. > Housing experts said the fact that it’s cheaper to rent in all 50 metros in 2025 is a broader reflection of rental and housing market conditions across the country. [1] https://www.bankrate.com/real-estate/rent-vs-buy-affordability-study/ https://www.bankrate.com/real-estate/rent-vs-buy-affordabili...
  - cramsession 1y ago
    That compares average mortgage and average rent, but the average house you buy is going to be much bigger (and include a yard) than the average rental. They’d need to compare equal properties to have a meaningful study.
    - const_cast 1y ago
      The average home is also going to be in a very suboptimal location. If you compare homes and apartments in the same location, the gap grows even wider. Yes, $4,000 a month in Manhattan is expensive. But $4,000 might be JUST the HOA cost for buying in the same area. Never mind the 10 million dollar mortgage. (Spoiler: fake numbers, actually do the math for your city)
  - carlosjobim 1y ago
    > Average rents are cheaper than average mortgage payments The average mortgage is for a family, the average rent is for a broke young worker or student living in a much smaller and worse accommodation. Renting is always more expensive than a mortgage for the same housing unit, because the landlord needs to make a profit from his tenants. Cooking the numbers won't change reality. The truth beats all the lies, no matter how many lies.
    - Esophagus4 1y ago
      The median renter is 42 years old. Even a basic Google search would have saved you needing to post that comment. [1]https://www.zillow.com/research/renters-housing-trends-report-2024-34387/ https://www.zillow.com/research/renters-housing-trends-repor...
      - carlosjobim 1y ago
        Age doesn't matter. The median renter has smaller and worse housing than the median mortgage payer. For the same accommodation, renting is always more expensive than owning.
      - 1y ago

wavemode 1y ago

No, this really is not always the case when controlling for location. (That is, if you're comparing apartments in the middle of the city to houses in the outskirts, you're obviously comparing apples and oranges.)

cramsession 1y ago
If you compare equally sized places, rent is pretty much always higher. At least it has been in every city/town I’ve ever lived in. Renting is not cheap, you’re paying a premium to the landlord.
- phil21 1y ago
  Not all landlords min/max for peak financial outcome. My landlord for 15 years raised rent exactly once when property taxes had a large jump one year, and was already under market when I started the first lease. His mortgage was long paid off and he optimized for least hassle vs max money. Worked out for both of us - I called him maybe once a year at most, and he had a decent passive income stream reliably come in without worrying about 2am phone calls because a $50 thermostat broke. He had a nicely appreciated property to sell in his eventual retirement. It was a 3BR place with a yard larger than I own now. Granted fit and finish is nowhere comparable, but I pay about 4x in mortgage and taxes than what I was paying him for about 1.5x the space. Such arrangements are increasingly more rare as everything becomes a finance game, but they can still be sought out and developed.
  - bluefirebrand 1y ago
    > Not all landlords min/max for peak financial outcome An enormous number if rentals are owned by private equity not by individuals, so rental markets are pretty dominated by landlords min/maxing for peak financial outcome

jandrewrogers 1y ago

The carrying cost of a landlord is completely different than the carrying cost of a buyer with a mortgage. A landlord can charge a profitable rent on a property that doesn't even pay the mortgage interest if you were to buy it. This is a common case. I recently sold a house with a mortgage where my carrying costs were far below that of any buyer of the house, meaning I could break-even renting at a rate that would leave a new buyer losing thousands of dollars per month. You'd be an idiot to not rent in that market but there is no shortage of buyers.

cramsession 1y ago
Landlords charge market rate. It has little to do with their costs. The
- jandrewrogers 1y ago
  Of course. But as several people have pointed out, the market rate can be far below the equivalent purchase cost and landlords can still make a profit in those markets. There are many markets where the rental rates are far below mortgage costs for long periods of time.