this post was submitted on 30 Aug 2023
432 points (98.2% liked)
Canada
7230 readers
559 users here now
What's going on Canada?
Communities
๐ Meta
๐บ๏ธ Provinces / Territories
- Alberta
- British Columbia
- Manitoba
- New Brunswick
- Newfoundland and Labrador
- Northwest Territories
- Nova Scotia
- Nunavut
- Ontario
- Prince Edward Island
- Quebec
- Saskatchewan
- Yukon
๐๏ธ Cities / Local Communities
- Calgary (AB)
- Edmonton (AB)
- Greater Sudbury (ON)
- Halifax (NS)
- Hamilton (ON)
- Kootenays (BC)
- London (ON)
- Mississauga (ON)
- Montreal (QC)
- Nanaimo (BC)
- Oceanside (BC)
- Ottawa (ON)
- Port Alberni (BC)
- Regina (SK)
- Saskatoon (SK)
- Thunder Bay (ON)
- Toronto (ON)
- Vancouver (BC)
- Vancouver Island (BC)
- Victoria (BC)
- Waterloo (ON)
- Winnipeg (MB)
๐ Sports
Hockey
- List of All Teams: Post on /c/hockey
- General Community: /c/Hockey
- Calgary Flames
- Edmonton Oilers
- Montrรฉal Canadiens
- Ottawa Senators
- Toronto Maple Leafs
- Vancouver Canucks
- Winnipeg Jets
Football (NFL)
- List of All Teams:
unknown
Football (CFL)
- List of All Teams:
unknown
Baseball
- List of All Teams:
unknown - Toronto Blue Jays
Basketball
- List of All Teams:
unknown - Toronto Raptors
Soccer
- List of All Teams:
unknown - General Community: /c/CanadaSoccer
- Toronto FC
๐ป Universities
๐ต Finance / Shopping
- Personal Finance Canada
- BAPCSalesCanada
- Canadian Investor
- Buy Canadian
- Quebec Finance
- Churning Canada
๐ฃ๏ธ Politics
- Canada Politics
- General:
- By Province:
๐ Social and Culture
Rules
Reminder that the rules for lemmy.ca also apply here. See the sidebar on the homepage:
founded 4 years ago
MODERATORS
you are viewing a single comment's thread
view the rest of the comments
view the rest of the comments
It wouldn't make sense for a property owner to charge less to rent out an apartment than they are paying to buy it, in the same way it makes no sense to buy high and sell low on the stock market.
You need to cover your costs which includes the mortgage and maintenance fees. In the short term, those fees could be low, but when you need to get the roof or brickwork redone, suddenly you're losing money. Why would you spend money on property only to lose money on it?
Property shouldn't be seen as a commodity, but it also shouldn't be a useless money sink. Who's going to buy anything more than a single-family home if it's just going to suck money out of you forever? There would never be any high-density housing anywhere.
No, cash flow negative does NOT mean unprofitable!
Imagine you are a landlord that owns a $500k unit. You are renting it out for $2000, but it costs you $2001 after your mortgage, taxes, maintenance and fees. Is that worth it? Think about it this way: it costs you $1 a month to own a $500k appreciating asset. Thatโs a ridiculously good deal.
The reason why it can make sense that renting is cheaper (as a monthly ongoing expense) than buying is because you get less when you rent than when you buy: when you rent you merely get the right to use the property, whereas when you buy you get the right to use the property as well as the value of the asset itself.
The money you pay into a mortgage doesn't evaporate. Only a portion of your mortgage is considered a cost (interest and fees and the like) the rest goes into your home equity.
If a tenants rent payment doesn't cover all of your mortgage, taxes and maintenance it does not mean your not making a profit.