One thing that puzzles me. Usually, if one buys a house with a loan and rents it out.
The rent shouldn’t theoretically be able to cover the mortgage/loan payment + maintenance.
Because the size of the loan is greater than the value of the house.
How in the world did we get to a point where every freakin influencer say buy a property and rent out and keep buying and renting etc.
What happened? When did this become normal? Or are these all lies?
The rent should ABSOLUTELY cover all expenses plus 10-15%+ of all preventative maintenance
Renters are happy to pay this. Why? They can "walk away" anytime (ignore contractual agreement violations).
But say you have two identical houses next to each other.
One is paid off, one has a loan.
The rule of thumb is value/10/12. So a $100,000 house should bring $10,000 a year, apex $800 a month.
The house next door with a mortgage, costs $120,000 even though it’s actual value is $100K. Why would anyone pay $1000 to rent there the same house in contrast with $800 the real value?
And you are saying it should make even 10%-15% on top of all that? Something is off here.
In a lot of situations like this, both houses are charging $1200 per month to rent
Correct. Add that additional 10-15% on top of that. Welcome to inflation. Until everything collaspes, which just resets credit market and therefore pushes currency prices even higher ('08)
Depends on the situation, lots of variables. It’s definitely not the slam dunk people make it out to be but there are some people who make USD profit on it. It makes for good “get rich quick” content because everyone wants to rent seek these days.
Theoretically NGU on the real estate market should make up for that. In the long term, house values have gone up by fiat standards.
It worked better with 2% rates, not so much with 7.5% rates.
This might the bubble again. Today on NPR they said there aren’t that many houses on the market to sell. People bought everything basically.
It’s hard for me to see the logic but it’s not my business I may be missing something
And this is why rent is so damn high, you are funding 3-4 of their mortgages plus insurance and maintenance with no utilities included.
It’s really a very strange problem. But it probably also highlights the wealth distribution/gap.
Why would the size of the Liam be greater than the value of the house? LTVs in rentals are capped - usually below 80%
