I feel like there should be a difference between "rent" and "mortgage rent"
I feel like there should be a difference between "rent" and "mortgage rent"
Since the housing market looks like a crowd of people just signing mortgages as fast as possible just to then turn around and charge that mortgage plus a little bit.
I shouldn't pay someone's mortgage like seriously this is just adding an unnecessary problem to the real problem of "living somewhere"
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Do you think rents should be less than the mortgage? Or are you complaining about rent-seeking?
rent-seeling
https://www.thefreedictionary.com/seeling
"To stitch closed the eyes of (a falcon)."
What?
(also TIL, and WTF...)
Sorry, rent-seeking. It's when capital buys a scarce or exclusive resource in order to charge consumers for access to it indefinitely. Finite expenditure for potentially infinite revenue.
It's generally considered extremely immoral when used on the means of survival. Not just profiting off the misery of others; but making others miserable specifically in order to profit from temporary relief of that misery.
Despite the name, it doesn't usually apply to real estate (since there's usually other real estate available); rather, that provides a good analogue for the model. A better example is buying the patent to a lifesaving medication and then charging exorbitant prices for it.
But there are cases when it definitely does apply to real estate, such as when the local primary employer also owns most of all of the housing stock in commuting range of where they enploy people. Think mining "company towns" or, say, the Hyde Park neighborhood of Chicago around the University of Chicago in the 80's and 90's (and, after a couple decades to let the outrage die down, again today). They control their employees' homes, giving them outsize leverage in labor relations, but they also can charge unfair rents due to their monopoly.
Right, wasn't sure if you meant that or something else.
In real estate, people often forget that houses are not forever. They require maintenance, sometimes full refurbishment to bring them up to code, then eventually they become condemned, with extra cost to clear the land, and even the land itself may need utilities renewed. They're long lasting, but ultimately perishable goods (in most cases).
Even in captive audience situations, the calculation is not as simple as comparing mortgage to rent, since rent is the final expense, but mortgage is only a part of it. Depending on how long the housing lasts, how expensive is the upkeep, and what is its final resale value, rent as high or even higher than mortgage, can be the cheaper option.
In some cities with controlled rent, and historical building protection laws, owners have been known to purposefully leave a building unoccupied and in disrepair, just so it would get condemned and they could build a new one in its place. Some cities have struck a deal where owners can tear down the inside of a building, as long as they preserve the facades.
There is definitely a bunch of people speculating, and housing seems to follow a periodic bubble cycle, but then they burst, leaving most of the small and naive investors as bag holders.
Rent seeking 🙂
Yeah, wasn't sure if seeking, sealing, or selling... so looked it up, and TIL seeling is an actual word, plus a common misspelling of ceiling. 🤷
The real problem is with corporate landlords who are attempting to buy up as much of Canada's housing stock as possible and control the market (rent-seeking as you say) otherwise the "mom and pop" landlord really is providing a service more than making much of a profit.
Years ago I moved out of my mobile and into a real house. The mobile was paid for by then and I thought hey, I'll rent it out instead of selling. Make some money, give someone a home.
What a nightmare. In the end I was forced to sell it just to be rid of the last in a long line of delinquent tenants, despite me doing my best to vet them.
Activist renters don't seem to realize that there's someone on the other end of the deal who is holding the bag. I agree, rent should be free, housing should be a right. But without a co-op or government to build the house and maintain it, the person who has to do that is your fellow working man, and do you expect them to do that for free or at a loss? The whole time while being treated with disrespect like they were some greedy billionaire?
Of course you are paying their mortgage. You're using their credit and wearing out their consumable asset (the house) the least you can do is cover the costs! If you don't like it, take out a loan, buy a house yourself and you'll soon find out how much it costs to own one! Hint: more than rent unless you bought with cash (And by doing that you have lost the opportunity cost. Which is fine if you live there, but not if it's supposed to be an investment)
Investing in rental stock only works in a rising housing market, or if you're a slumlord. Otherwise, just buy index funds, a lot less hassle and better returns.