[ApolloFortyNine]

>"renting is just throwing your money away"

Unless you think landlords are running a charity, some part of your mortgage is going to them as profit (over a large enough sample of renters anyways), and some percentage of your rent is covering 'bad tenants' (which you're not, right?).

Their entire improvement section is also something renters tend to not think about. It's a weird situation when renting that you aren't incentivized in any way to make improvements to where you live. You might not even be allowed to.

With home ownership though, things like a modern kitchen, a shed, new laundry machines not only better your life today but also (likely) have some value add. Though you also get the luxury of being able to ignore the value add if you just really want to paint that room neon pink for some reason.

[Fernicia]

> Unless you think landlords are running a charity, some part of your mortgage is going to them as profit (over a large enough sample of renters anyways), and some percentage of your rent is covering 'bad tenants' (which you're not, right?).

You can make the same argument about a bank not being a charity and making a profit from selling you a mortgage (both are true but are not helpful indicators about rent vs buying). Similarly the interest you pay is insuring the bank against bad debtors, which you presumably will not be.

> With home ownership though, things like a modern kitchen, a shed, new laundry machines not only better your life today but also (likely) have some value add.

You can improve your living situation in a number of ways when renting. If you want a new kitchen or bathroom, rent somewhere new with those things. Renting also affords you the freedom to leave when things go from good to bad (crime, noise, building ammenities, etc.).

[hx8]

> You can make the same argument about a bank not being a charity and making a profit from selling you a mortgage

So when you rent you have to cover the landlord's profit/risk and the bank's profit/risk because the landlord probably has a mortgage.

[hahajk]

> interest you pay is insuring the bank against bad debtors

I thought that was the govt:

> Loans securitized by government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac continue to dominate the market, comprising around 52 percent of all balances at roughly $6.5 trillion. Government-backed loans, such as those insured by the Federal Housing Administration (FHA) or Department of Veterans Affairs (VA), account for 19 percent or $2.5 trillion. FHA loans are designed for first-time and lower-income buyers and make up 12 percent of balances, while VA loans that are available to U.S. military veterans comprise 8 percent.

https://libertystreeteconomics.newyorkfed.org/2025/08/a-chec...

[naberhausj]

Absolutely true if you're renting a home, but I feel like people never address that most people are renting apartments. These have substantially lower operating costs.

Home buying/rental is a totally fair comparison, but I know several people whose main justification for buying a home, rather than continuing living in an apartment, was that they wanted to, "stop throwing their money away". Totally ignoring how home ownership is actually more costly than renting a suitable apartment.

Of course, I fully recognize their are a lot of advantages to home ownership. Some of which you already called out. However, I doubt those advantages are actually sufficient to justify a small, but significant, portion of home purchases.

[Lerc]

I think, in many places, landlords aim to break even with rent covering house expenses and interest on borrowing. The profit comes from capital gains. This works especially "well" when you keep buying places because with rent covering the interest you need very little capital so you can keep buying creating a demand that raises house prices that gives you your profit.

This works great until people are priced out of the market dropping house prices a bit and then you've just got a lot of debt and houses worth less, you go bankrupt and someone _really_ wealthy pick up all your houses at a discount.

You can at least hope that the really wealthy guy didn't get that way selling a "get rich in the property market" book.

[lesuorac]

> Unless you think landlords are running a charity, some part of your mortgage is going to them as profit

This isn't true due to market dynamics.

If a homeowners mortgage is say 4k/month and they list the property at 4.5k/month and receive no renters they can only do this for so long before they are forced to down the price.

Of course, what actually happens is that they list it for 5k/month because other properties are renting for that amount and that's the market price. But if supply increases in the area or demand decreases then prices will go down possibly below the owner's mortgage cost because uh getting 3.5k/month is better than 0k/month.

[skew-aberration]

Maybe OP is saying when you buy from a landlord, they still get their profit (you pay them the NPV of the expected future rents - it's neutral from their perspective).

In cases like your example, what forces landlords to lower the rent? Usually only a) cost of credit, as you said b) opportunity cost, and c) government intervention [land tax, property tax].

a) not all landowners have mortgages! many own outright. they make pure profit b) the game theory of this case is frequently misunderstood, landowners are a monopoly and are strongly incentivized to act as a cartel. same principle as walmart destroying old stock.

Landownership is one of the most lucrative and profitable enterprises in (American) history, so you might want to question the logic which has convinced you that market dynamics is so effective in taking its profits.

[lesuorac]

> a) not all landowners have mortgages! many own outright. they make pure profit

I mean they don't. They have expenses like taxes and maintenance regardless of the properties vacancy. Nominally this is more profit than somebody with additional expenses (mortgage) but not always more than somebody who has additional income from say stock returns (the whole buy-vs-rent argument).

While your entire post has been directly about homeowners, (a) is also a crucial point about investment rentals. Other commenters have pointed that many commercial loans allow you to tack onto the end of the loan periods of vacancy. So during a bull market you can refinance and draw out your initial investment so that only the bank's money is backing the mortgage and then during a bear market when you have vacancies you just tack onto the end of the loan.

> b) the game theory of this case is frequently misunderstood

It's not misunderstood. It's exactly market dynamics. You don't list your property for rent at 3.5k when you have a 4k mortgage; you live in it yourself!

The reason people get 4k/month mortgages to rent out a property for 5k/month is exactly because the current market demand is 5k/month. They didn't buy a house first and then decide to price it at 5k/month because it's higher than their mortgage; they saw the market demand first and then bought the house.

> Landownership is one of the most lucrative and profitable enterprises in (American) history, so you might want to question the logic which has convinced you that market dynamics is so effective in taking its profits.

If you have an item of limited supply and demand increases since you obtained that item then you're going to have an (on paper) profit according to market dynamics.

[skew-aberration]

I'm not really sure what you're trying to add, so here's a few questions and examples of my points. Have you read much economics?

a) Firstly, I said landowners, not home buyers. Are you claiming that nobody owns land without a mortgage? Most land value is in residential real estate these days, but not all of it. Much of that value is owned outright - either by homeowners or investors. This varies regionally but could be about 25-50% of the land. What do you think happens when a mortgage is paid off? What about a mortgage on an investment property? What about all the boomers who paid of their loans 20 years ago? While I did list taxes in my original comment, landowners do not necessarily need to pay significant maintenance, for example in the case of undeveloped land, or the case where the value of the house is very low relative to the value of the land.

b) Yes, market dynamics are frequently misunderstood. Do you deny that it is misunderstood, or are you implying it is misunderstood by me? As a case in point, your own example is actually simplified to the point of being wrong - investors frequently buy land with a loan such that the mortgage payment is greater than the (rental, business, etc) return. They do this on the expectation that future yields will make up for the losses. In most jurisdictions this strategy is actually incentivized by the tax system - money lost on the interest payments can be offset against taxable income from your other assets. Are you claiming this doesn't happen? Likewise, in my city, many commercial properties are unleased, but the asking rent is not reduced to the point that they get tenants. This is a 'feature, not a bug' of market dynamics - a fact which is frequently misunderstood by laypeople.

c) Again, what are you adding here? You are saying that the profits are not realised? This is simply untrue - property investors do realise their profits, typically via rent. Are you saying landownership is not profitable or it is not more profitable than other enterprises?

[verbify]

> With home ownership though, things like a modern kitchen, a shed, new laundry machines not only better your life today but also (likely) have some value add.

Just beware that it's usually much less than you put in though. We bought our house for £25k more than the next door neighbours even though they're cookie cutter houses sold within 4 months of each other. Our house was thoroughly modernised, new kitchen, all old windows replaced with double glazed windows, garage converted into home office and a bunch of other stuff. We definitely can't do all this work for £25k.

My understanding is that it does raise the value of the house, but less than you put in. I do find it strange, because personally I'd hate living in a building site or dealing with contractors, so if someone already did an extension/loft conversion that I would've wanted to do, I'd pay a premium. Apparently people want it done 'their way', which I can appreciate, up to a point.

[bombcar]

You also basically have to assume any and all repairs and upgrades were done crappy, the absolute opposite of what you’d want, and probably didn’t fix anything, either.

Which means that good deals are out there, if you’re willing to search and adapt

[barchar]

You are also not a charity and need to pay _yourself_ profits on the home you own yourself. Otherwise you're no different from a landlord offering below-market rent.