this post was submitted on 03 Oct 2023
159 points (88.8% liked)
Asklemmy
43812 readers
985 users here now
A loosely moderated place to ask open-ended questions
If your post meets the following criteria, it's welcome here!
- Open-ended question
- Not offensive: at this point, we do not have the bandwidth to moderate overtly political discussions. Assume best intent and be excellent to each other.
- Not regarding using or support for Lemmy: context, see the list of support communities and tools for finding communities below
- Not ad nauseam inducing: please make sure it is a question that would be new to most members
- An actual topic of discussion
Looking for support?
Looking for a community?
- Lemmyverse: community search
- sub.rehab: maps old subreddits to fediverse options, marks official as such
- [email protected]: a community for finding communities
~Icon~ ~by~ ~@Double_[email protected]~
founded 5 years ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
Here's your error: you're assuming the mortgage will never be paid off. Which just isn't true.
You know what corporations do with a property that doesn't make money? Either they find a way to kick out the current residents to raise rent. If that is not possible they sell. A corporation doesn't give a shit about you still living in the building before selling.
you very apparently have no idea how property development works. Those companies have at any point in time almost no cash on hand and while they might pay a good chunk of a building out of pocket credit is usually still the way they go. There are very few companies that don't need credit for daily operations, in property development that number is even smaller because their daily operations include paying for construction basically all the time. Even if they were paying out of pocket the difference would be interest, not some magical 33% as you suggest.
Not sure what you are smoking but with a 25 year mortgage my calculator says that's ~2k a month (without interest). Now interest will add some to that but not 100%. Unless you are getting a loan from a meth dealer in a back alley. Without any upfront payment some random mortgage calculator spits out 2.4k per month on that property for me. We can talk about the math when you come back with numbers that add up. Going with the numbers of your closing sentence anyway here's some math for you: Rent: 2.8k / month House: 3k + 1k + 1k (1k repairs, 1k upkeep. Repair from earlier mentioned 20k/2years, upkeep from home owner annectodes around here estimated upwards)
25 years: Rent: 840k House: 1500
40 years (25 + 15): Rent: 1344k House: 1860k
50 years (25 + 25): Rent: 1680k House: 2100k
in which case yes, you are absolutely right. But that would also be the point at which I question how you arrive at a 4k or even just 3k 25 year mortgage for a ~600k property. To me that means either your bank is ripping you off or your credit history is so low the bank doesn't even think you can afford your next breakfast. That level of difference isn't even at a point where I can chalk it up to difference in interest rates. The number you gave me initially (4k) would be a 100% total interest rate. Again, I don't see how that works out.
If your mortgage numbers are correct then you are probably also correct in that the owner would be running a loss on the property (a steep one at that) assuming they are still paying a mortgage on it.
That's not at all what this conversation was about. It's about upfront costs.
Making money off the renter isn't needed when they can make money off of selling the property.
I never suggested anything of the sort. Please read my words better.
You are insane. You've dropped interest from your calculations entirely. It's like saying "I put in a 580,000 dollar down payment and now the monthly payment is 0 so checkmate!" Try to put a decent interest rate on that like 5%-10% Which the average for my area is 7%.
You literally ignored the interest which I gave the numbers for. You need to read better if we are to have a conversation otherwise this is pointless if you are going to drop one of the major components that make up the final monthly payment.
They aren't paying a typical mortgage on it though. Because they get a large business loan with a smaller interest rate overall to cover it then they build a portfolio from that and use the cash flow to buy properties outright for cheaper overheads than renting. So they then charge the renters a cheaper rate than the mortgage they could get. This is why renting entirely is important.