It’s hard to get a good return on your investment in residential real estate without using leverage.
For instance: You don’t buy one place outright. You buy 5 with 20% down. You may not have positive cash flow, but at long as it isn’t negative not only do you get all the increase in value, you also get more equity every month as the tenants pay your mortgages.
If you bought it outright and over some period of time the tenants have paid your entire investment and the price of the property doubles, you doubled your money. If you buy 5 and over some period of time the tenants pay your mortgage and initial investment and the properties have doubled in value you have increased your initial investment 10X. And before the big expensive renovations come in, you can sell and buy something else if you’re not equipped to deal with that.
Also if you are just breaking even to get free property but you want to start getting passive income, after a few years you can refi to a longer term and lower your mortgage payments to get in the black every month.
This isn’t advice, fuck anybody buying up single family homes to rent, just showing one way they can generate both wealth and passive income for nothing. Literally nothing if they’re using a property management company.
Fuck anybody buying up single family homes to rent. I know I already said that, but it bears repeating.
Buying here is cheaper (1600 per sq meter in the commie blocks part of the city) and rent is about the same. Outside of those blocks you’d usually get copper and no real insulation, with street parking. A brand new apartment in a nice place might net you 15-20 eur per square meter.
Of course, I live in the ass end of Europe where wages are half of what they are in the west so it makes sense our rents, food costs, etc are higher. The peasants shouldn’t have too much to their names.
Tenants also pay any loans associated with the apartment building repairs, or the repair fund collection, not by law but because apartments are in demand and tenants are not. The law actually says it’s the responsiblity of the owner, but there’s literally nothing saying that responsibility can’t be shifted.
That’s how a mortgage works. But the point is that after those 30 years you have a million dollar asset. That you had your tenants pay for.
For a regular plebs like us that’s not a winning proposition because we can’t have our money tied up for 30 years but for people who don’t need their money liquid, it’s free real estate
The big money’s isn’t in the rent, the rent is just to pay the mortgage and upkeep. It’s that you’re getting in debt that someone else is paying for you while they gaurd your asset which is only gaining in value, you then sell that somewhere in the futute.
On average, the same amount of money dropped into the NASDAQ will have much better overall returns. Real estate ROI is about 4% per year, where the stock market has held close to 11% over the long haul nearly a century.
For small-time landlords, it’s often about “I have a place for me or a family member to live if things go bad”. For bigger ones, it’s the tax-shelter and the low volitility of real estate, as well as diversity in case you need to sell when their stock is down.
I’m on your side mostly but the property prices going up in those 30 years would net you a fortune alone. You could likely sell it as is and triple your money
The old saying ‘buy land because they aren’t making anymore of it’ is true. As the world population grows, owning large amounts of land will be scarcer and scarcer. Most young people can’t afford a home in any western nation across the world and it’ll only get worse the world over as time goes on and the population continues to grow.
Being a landlord isn’t a way for someone who doesn’t have wealth to acquire it. It’s a way to park your existing wealth in quickly appreciating assets preferably purchased from other losers when they lose their asses and collect monthly rent too.
If on day one you have 700k and you purchase an existing property and in 30 days after you rent it out your property is still worth 700k and you are now ahead of the game in 30 days not 30 years.
If you purchased at a reasonable time a year later its worth 750 and you’ve collected 84k 1% of property value per month.
quickly appreciating assets preferably purchased from other losers when they lose their asses and collect monthly rent too.
I wouldn’t say quickly appreciating, though. It’s a fairly slow growth rate for someone with that kind of money. They diversify into real estate because it creates some tax protections (your costs) and it’s fairly stable. Like buying into a terrible small business, but one that magically won’t fail. The things that could cause total loss to real estate are usually handled in standard insurance, unlike a business that can just tank.
The thing is, as you and the other person said, it’s all about the big companies who own tons of real estate AND the big companies that manage rental properties.
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It’s hard to get a good return on your investment in residential real estate without using leverage.
For instance: You don’t buy one place outright. You buy 5 with 20% down. You may not have positive cash flow, but at long as it isn’t negative not only do you get all the increase in value, you also get more equity every month as the tenants pay your mortgages.
If you bought it outright and over some period of time the tenants have paid your entire investment and the price of the property doubles, you doubled your money. If you buy 5 and over some period of time the tenants pay your mortgage and initial investment and the properties have doubled in value you have increased your initial investment 10X. And before the big expensive renovations come in, you can sell and buy something else if you’re not equipped to deal with that.
Also if you are just breaking even to get free property but you want to start getting passive income, after a few years you can refi to a longer term and lower your mortgage payments to get in the black every month.
This isn’t advice, fuck anybody buying up single family homes to rent, just showing one way they can generate both wealth and passive income for nothing. Literally nothing if they’re using a property management company.
Fuck anybody buying up single family homes to rent. I know I already said that, but it bears repeating.
Fuck anybody buying up single family homes to rent.
It was worth one more.
Guidelines for buying rental properties say they should pay off in 10 years.
deleted by creator
Buying here is cheaper (1600 per sq meter in the commie blocks part of the city) and rent is about the same. Outside of those blocks you’d usually get copper and no real insulation, with street parking. A brand new apartment in a nice place might net you 15-20 eur per square meter.
Of course, I live in the ass end of Europe where wages are half of what they are in the west so it makes sense our rents, food costs, etc are higher. The peasants shouldn’t have too much to their names.
Tenants also pay any loans associated with the apartment building repairs, or the repair fund collection, not by law but because apartments are in demand and tenants are not. The law actually says it’s the responsiblity of the owner, but there’s literally nothing saying that responsibility can’t be shifted.
That’s how a mortgage works. But the point is that after those 30 years you have a million dollar asset. That you had your tenants pay for.
For a regular plebs like us that’s not a winning proposition because we can’t have our money tied up for 30 years but for people who don’t need their money liquid, it’s free real estate
The big money’s isn’t in the rent, the rent is just to pay the mortgage and upkeep. It’s that you’re getting in debt that someone else is paying for you while they gaurd your asset which is only gaining in value, you then sell that somewhere in the futute.
On average, the same amount of money dropped into the NASDAQ will have much better overall returns. Real estate ROI is about 4% per year, where the stock market has held close to 11% over the long haul nearly a century.
For small-time landlords, it’s often about “I have a place for me or a family member to live if things go bad”. For bigger ones, it’s the tax-shelter and the low volitility of real estate, as well as diversity in case you need to sell when their stock is down.
If it’s a poor investment, why do it?
deleted by creator
I’m on your side mostly but the property prices going up in those 30 years would net you a fortune alone. You could likely sell it as is and triple your money
Wouldn’t that depend a lot on the area?
Well yes it would but not entirely.
The old saying ‘buy land because they aren’t making anymore of it’ is true. As the world population grows, owning large amounts of land will be scarcer and scarcer. Most young people can’t afford a home in any western nation across the world and it’ll only get worse the world over as time goes on and the population continues to grow.
Some areas are losing a lot of their value. Waiting for population growth to fix that is playing the really long game
Being a landlord isn’t a way for someone who doesn’t have wealth to acquire it. It’s a way to park your existing wealth in quickly appreciating assets preferably purchased from other losers when they lose their asses and collect monthly rent too.
If on day one you have 700k and you purchase an existing property and in 30 days after you rent it out your property is still worth 700k and you are now ahead of the game in 30 days not 30 years.
If you purchased at a reasonable time a year later its worth 750 and you’ve collected 84k 1% of property value per month.
Most owners are in the top 10% to start with.
I wouldn’t say quickly appreciating, though. It’s a fairly slow growth rate for someone with that kind of money. They diversify into real estate because it creates some tax protections (your costs) and it’s fairly stable. Like buying into a terrible small business, but one that magically won’t fail. The things that could cause total loss to real estate are usually handled in standard insurance, unlike a business that can just tank.
The thing is, as you and the other person said, it’s all about the big companies who own tons of real estate AND the big companies that manage rental properties.
deleted by creator