Quote:
Originally Posted by BlackArcher101
Could be just me here, and someone set me straight if so, but when I was younger I remember boomers investing into housing and treating it as a long term investment tool, and they were happy to have a renter helping out with the costs, not necessarily trying to break even. Was viewed that paying $150/mth into a mortgage while a renter pays $700 was still an excellent payoff at the end.
Over time, I have seen the mentality change to must break even, and now even must profit every month. I feel this has been a factor on how rents are out of control as well.
I mean, shouldn't an investment actually cost you money? To expect to not have to put cash in monthly/yearly while someone else does and still complain about it.... man....
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Yeah, with higher interest rates in the past, being significantly cashflow positive while having a mortgage wasn't really an option. With an 8-10% mortgage, you'd need gross rents to be something like 13-15% just to break even, which was a pretty tall order.
However, if you treated it as a long-term investment, then it was different. You start out maybe cash flow negative in the beginning, but as rents increase and your mortgage payments stay the same, you move into a better position over time and are eventually bringing in surplus money. And then by the end of the mortgage period, you've probably increased your initial down payment investment by 10x over 25 years (assuming modest price appreciation).