In the same way the interest payments on a mortgage go the the bank. And the interest is often the majority of the payments people make on a mortgage. If you're renting, in a market where rents are about the same or lower than mortgage interest, then you keep the leftover cash that the buyer put into their house and you can put into whatever investment you choose.

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carlosjobim 20 hours ago | parent | next [-]

Paying rent is the same as paying 100% interest. You lose everything you have paid, it counts towards nothing for you.

Paying a mortgage, you pay part amortization and part interest. Even if only 10% of your monthly payment is amortization each month, it's better than paying rent.

> If you're renting, in a market where rents are about the same or lower than mortgage interest, then you keep the leftover cash that the buyer put into their house and you can put into whatever investment you choose.

Such a market doesn't exist anywhere on this planet. Rent is always higher than mortgage + interest.

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const_cast 17 hours ago | parent [-]

The main difference is that you can invest the difference in renting vs owning, and you might come out on top in the long run. It depends on the housing market, the stock market, and where you are.

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carlosjobim 15 hours ago | parent [-]

How do you invest a negative amount of money into an asset? Because the difference between renting and owning is always a net loss, a negative value each month.

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const_cast 13 hours ago | parent [-]

No, it's not, not always is my point. We don't count the asset of having the home because we're comparing that part to the stock market investment.

Made up numbers: consider:

Mortgage: 2,000 Home price: 200,000 Difference from rent: -500

Rent: 1,500 Home price: 0 Difference from mortgage: +500

If (500/month invested over 30 years) > (200,000 appreciated home price over 30 years) then you came out on top by renting.

It might be or it might not be.

Also, the type of asset matters. Stock might be a more flexible asset than real estate, in which case you should probably rent depending on your location.

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carlosjobim 12 hours ago | parent [-]

What I'm trying to say is that there is nowhere on the planet where the rent is less than the mortgage. So your situation is impossible, it simply does not happen. If it happened for 10% or 20% of properties, then I agree with your considerations. But it happens for less than 0% of properties.

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const_cast 11 hours ago | parent [-]

For most places in the US rent is lower than a mortgage. Primarily because:

- multi-unit buildings are significantly more efficient in cost per-unit.

The cost of a 1500 sqft apt and 1500 sqft home is not the same, the home is going to cost a few times more. Because it's on its own lot, with its own land, and it's on the ground, and it gets its only municipalities (gas, water, steam, electricity), and then it also has its own road requirements.

Basically with, say, a 12 story block you can get hundreds of units for the same amount amount of land (and associate cost) as a few homes. And then you can spread the cost of municipalities, too.

Even with just a duplex or dingbat you're looking at the same land costs and the equivalent accomodations as a few homes. But it doesn't scale linearly, meaning a duplex != the cost of 2 homes.

Also large landlords (corps) can spread the cost of price across all their units. Meaning, like Walmart, some are loss leaders for competitive reasons and some make more money than they need to.

Interestingly, the cost per unit continues to go down until about 12 stories. Then it goes back up, because of building requirements. Which is why commie blocks were historically 8 to 12 stories tall, it's the cheapest way to build housing.

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carlosjobim 10 hours ago | parent [-]

You are totally comparing apples to oranges. Rent is never lower than a mortgage, not in any single place in the US or in the world. For the same unit.

What is the rent for a 1500 sqft apartment compared to the mortgage for a 1500 sqft apartment? The rent is always higher.

What is the rent for a 1500 sqft house compared to the mortgage for a 1500 sqft house? The rent is always higher.

	▲	const_cast 8 hours ago \| parent \| next [-]
		Right, I'm just telling you that's that's simply not true. And, if you really want to compare apples to apples, you have to compare properties in the same area. Its easy to make housing look cheap when you compare upper Manhattan to New Jersey. Suddenly that 4,000 dollar apartment looks pretty competitive when the alternative is 5 million mortgage + 3000 a month HOA.
	▲	foxglacier 3 hours ago \| parent \| prev [-]
		https://homes.co.nz/address/auckland/mangere-east/16-fleming... Estimated rent: $600/week Estimated mortgage repayment: $1000/week If you get a 30 year mortgage, more than $600 of that will be interest near the start. I didn't cherry pick this. I just clicked randomly on a big city until I found one with both estimates available.

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bluefirebrand a day ago | parent | prev [-]

> In the same way the interest payments on a mortgage go the the bank

Yeah, but at least you own something at the end of it

> And the interest is often the majority of the payments people make on a mortgage

Only if you're stupid and only ever pay the bare minimum. Of course many people unfortunately are