[fsckboy]

it's not poorly explained, it's poorly understood (to paraphrase Mr Miyagi, "no bad teacher, only bad students") This is like the Monty Hall problem and I am Vos Savant. Just listen and learn.

Part of the value of a house is the value of living in it, the rent. It costs to live in a house, and the amount it costs is the rent. And this is true whether you own the house or if somebody else owns the house.

Living in a house you own vs renting out the house you own decreases your net inbound cash flow by the amount of the rent; rent is paid, even if it is your house.

this is very basic economics, very basic finance, but, as understood by somebody smarter than all of you, who has kindly taken the time to explain it. You are welcome.

(Consider living in a house that you do not own, and paying the rent. Now, marry your landlord. What has changed? Answer: nothing, the rent you now save is also income the couple has now lost.

(you will need to make adjustments for depreciation allowance for investment property, tax deductibility of expenses, etc. but that's details, not conceptual. Do you suspect that these line items actually could make the difference between this being a wash vs a no-brainer money machine? they don't. If tax deductions make landlordship more (or less) advantageous, then the market will shift landlords⇔tenants till a new equilibrium is achieved where the rents and deductions balance out, with people living in all the same places. no value was created or destroyed, except less govt interference in markets is better, dead weight losses and all that))

[gnarlynarwhal42]

You are completely ignoring equity

[ralferoo]

Equity isn't relevant to the argument, that's why.

The argument is simply that by living in a house yourself, you are effectively paying rent on that property at the same rate that the house could be rented out if you were not living on it.

Any equity gain in the property itself isn't relevant to the rental value discussion, rather the separate transaction between you and the bank, whereby they lend you money up front to buy an asset and the terms by which you repay that money and the capital gains on that asset in the mean time.

The potential rental income of a property may be similar to the value of the mortgage payments, but generally won't be over the lifetime of the mortgage. As I stated 2 posts up, the cost of a mortgage is front loaded, so the price you pay on a mortgage at the start is generally more than the equivalent rental price would be for the same house, and towards the latter stages of the mortgage it will be much lower, because the monthly mortgage payments are still the same but the real-world cost of those payments has decreased due to inflation.

The simple point is that any time you choose to live in a property, you are either paying rent for the privilege of doing so, or you are missing out on the rental income from someone else who could be paying you to live there instead.