It’s clear there is a fundamental misunderstanding in the amount of capital required to own an investment property without first living in it as a primary residence for a few years.
If one were to purchase a property with the expressed intent of immediately renting it, most banks will require at least 25% down with no option to pay PMI to cover the difference. That’s an insane amount of money to put down just so the landlord can make a negative cash flow for the first 10 years. If an investor has that kind of money, and still want to be involved in real estate, they should buy a share in an apartment complex where the margins are more favorable, and the property actually has a positive cash flow.
Thus nearly ever single family home was purchased initially as a primary residence, with the intent to live there. But then by some circumstance one way or another they needed toove away. Selling a home will cost you 10% of the home’s value in fees. So if that person has any intent to return to the home in the future, it’s better to eat the temporary loss and rent out the property.
It’s clear there is a fundamental misunderstanding in the amount of capital required to own an investment property without first living in it as a primary residence for a few years.
If one were to purchase a property with the expressed intent of immediately renting it, most banks will require at least 25% down with no option to pay PMI to cover the difference. That’s an insane amount of money to put down just so the landlord can make a negative cash flow for the first 10 years. If an investor has that kind of money, and still want to be involved in real estate, they should buy a share in an apartment complex where the margins are more favorable, and the property actually has a positive cash flow.
Thus nearly ever single family home was purchased initially as a primary residence, with the intent to live there. But then by some circumstance one way or another they needed toove away. Selling a home will cost you 10% of the home’s value in fees. So if that person has any intent to return to the home in the future, it’s better to eat the temporary loss and rent out the property.
However you dress it up, charging others for shelter isn’t creating anything. It’s profiting off others.
Besides, the vast majority of tennants rent apartments, not houses, so don’t pretend that your very specific example is the norm.