I might still not understand but… Landlords have to pay insurance as well. Why would they be the exception. They have all the same costs and also want to make a profit. How can rent be cheaper then?
Because if you buy a house, it’s just you and the bank, so you need to cover the banks risk for you as an individual, meaning higher interest rates. Larger purchases, or a group of houses are covered by different loan types, flexible rates at for example international rated plus half a point… and that is mich cheaper. The rate might fluctuate… but if the government strongarms the fed to keep the loans practically free, companies borrow for free plus half a point. And that is a lot of difference.
Also, the landlord is dropping that money into an asset that often appreciates in value. As long as they otherwise have cashflow to cover it, they can afford to “lose” money each month and make a big payday when they sell it.
Because on average, I imagine very few rental homes are brand new constructions/purchases so their mortgage is a couple years old and lower than if someone bought that same home today.
I might still not understand but… Landlords have to pay insurance as well. Why would they be the exception. They have all the same costs and also want to make a profit. How can rent be cheaper then?
Because if you buy a house, it’s just you and the bank, so you need to cover the banks risk for you as an individual, meaning higher interest rates. Larger purchases, or a group of houses are covered by different loan types, flexible rates at for example international rated plus half a point… and that is mich cheaper. The rate might fluctuate… but if the government strongarms the fed to keep the loans practically free, companies borrow for free plus half a point. And that is a lot of difference.
Also, the landlord is dropping that money into an asset that often appreciates in value. As long as they otherwise have cashflow to cover it, they can afford to “lose” money each month and make a big payday when they sell it.
Because on average, I imagine very few rental homes are brand new constructions/purchases so their mortgage is a couple years old and lower than if someone bought that same home today.