How could I invest the equity elsewhere, other than the down payment? I have a monthly payment for housing either way, and with rent it will be larger unless the local market is crashing.
> plus you are spending money on maintenance, which you don't fully recoup when you sell
Owners and renters both pay maintenance and taxes. The difference is that owners pay those bills directly and renters pay them indirectly. The idea that owners pay things renters don't is a fallacy.
The renters often pay less maintenance than the owners. It's true that they pay some of it - but not all. The idea that the owners can pass along full maintenance costs in the form of rent is also a fallacy Yes, the downpayment. The downpayment could be invested in a diversified basket of assets instead.
> The renters often pay less maintenance than the owners. It's true that they pay some of it - but not all. The idea that the owners can pass along full maintenance costs in the form of rent is also a fallacy.
If that was the case the landlord would be taking a loss on the property, since rent is the only appreciable form of revenue the landlord gets for the property. How do you think the landlord can avoid passing on the full cost of maintenance and still make money? Don't forget that the landlord still has to pay some amount of maintenance even when the property is unoccupied.
> Yes, the downpayment. The downpayment could be invested in a diversified basket of assets instead.
So it really depends on how much the down payment is then, and how much the down payment reduces the cost of housing. You can't make a blanket statement either way.
Landlords fight like hell to avoid doing maintenance. Why do you think that is, if they could simply pass along full cost to the renters? The reality is, maintenance is something they take a partial loss on
They fight like hell to avoid doing maintenance for the same reason any low-margin business avoids doing anything that isn't absolutely necessary: to protect their slim profit margins. They are not taking a "loss" on maintenance; maintenance is one of many costs of doing business and one slummier landlords try to minimize as much as they can get away with.
There is no fallacy here. For all maintenance done, either the renters cover the costs of the maintenance or the landlord loses money on the property. Trying to avoid performing the maintenance in the first place doesn't change that.
my point is that the renters do not fully cover the cost of maintenance for landlords, only partially. Landlords cannot raise rent by the amount equal to the maintenance they have to perform, the rent hikes in a market are a function of supply/demand of renters. Otherwise, rents would rise in places with old houses, independent of peoples desire to live in those places and that obviously doesn't happen
How could I invest the equity elsewhere, other than the down payment? I have a monthly payment for housing either way, and with rent it will be larger unless the local market is crashing.
> plus you are spending money on maintenance, which you don't fully recoup when you sell
Owners and renters both pay maintenance and taxes. The difference is that owners pay those bills directly and renters pay them indirectly. The idea that owners pay things renters don't is a fallacy.