4 ms·
In a way, you're always paying "rent". If you buy, you pay rent to the bank (principal and interest) for 30 years and rent to the government (property taxes) fo
by cko 11y ago
In a way, you're always paying "rent". If you buy, you pay rent to the bank (principal and interest) for 30 years and rent to the government (property taxes) forever. You also pay utilities and insurance, maintenance and improvements. Homeowners tend to spend money on renovations and stuff, which is a hidden cost.
Then there is the psychological cost of ownership, which to me is a mental burden knowing I have debt.
The way I see it, there's no such thing as ownership. You're always paying someone. Suppose you own your house free and clear - can you paint your house pink? Can you have a collection of junk cars on your front lawn? (The neighbors will complain.) Can you build a patio? (Not without a permit.) Can you blast music really loud?
I recently bought a mortgage note (which makes me the lender) and let me tell you, as much as the homeowner thinks she owns the property, in my mind I have all the control.
Just my two cents, from the perspective of being a lender and a landlord. And yes, I rent.
To me, the only time it old make sense to buy a house is if I would buy it as an investment. Or if I have a family and the price is right. Personally, I value flexibility and less stress.
- bane 11y ago> To me, the only time it old make sense to buy a house is if I would buy it as an investment. Or if I have a family and the price is right. Personally, I value flexibility and less stress. You are comparing two different kinds of things, financial sense and the intangible sense. Over a lifetime, renting almost never makes financial sense. Renting can have some benefits, but they tend to be intangible ones.
- cko 11y agoI agree with you 100%, thanks for pointing this out. Some intangible benefits do translate to financial benefits, though. Like as a homeowner you are more likely to pay for costly renovations. And this is a guess, but people tend to buy a more expensive place than they would rent. And renting closer to places you want to be might save money in travel, commute, etc.
- bane 11y ago> Like as a homeowner you are more likely to pay for costly renovations. Renter pay for those costs also. The money has to come from someplace. It's simply amortized over a longer period. For a property owner they have to swallow it at once. It's a really common misunderstanding on the part of renters that they believe their rent only covers the right of existing in a property. It covers all the costs of the property owner (and likely makes them a little money extra). However, let's suppose you're in month-6 of a 1-year lease and the owner decides to renovate the roof or something. You're protected from paying for that until your lease is up. But this is one reason why rent goes up over time. You, or the next tenant will eventually end up paying for these things.
- charlesdm 11y agoHow did you buy a mortgage note? Directly from a bank, or from a fund? How much did you pay for it/what's the yield? (curious to see how the math works out)
- cko 11y agoFrom a fund. It was at 60% of the loan balance and the annual yield is roughly 12% before taxes.
- charlesdm 11y agoInteresting - how much did you actually pay for it, i.e. what's the markup? I would assume you didn't buy it for 60% loan balance. Also, 12%? Did you buy that with 100% cash/equity, or a combination of equity and debt?