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this post was submitted on 22 Aug 2024
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Canada Housing
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Now I don't know Canadian taxes but just out of interest I investigated once what would happen if I rented out my house (it's still newly under mortgage so I can't but just to see what would happen.) I see some of my neighbors rent out theirs from for about this amount, 2500 euros.
After taxes in my part of the world I would retain just under 18000 euros in profit per year, which is a return on investment (~500k) of about 3.5% And this is not counting any repairs or maintenance the house will invariably need.
It's a crazy amount of rent for the renter but it's at best a poor return on investment for me, and if I'm a good landlord that actively maintains the place even worse. Sticking the money into even a so-so savings account will give a better return without any headache.
Having rented for most of my life (until very recently) I feel your pain but the real problem is the insane cost of real estate.
Why Landlords never seem to take into account that rises in property/land value also equal profit has always been a mystery to me.
How do you define "profit" here? Do you subtract mortgage payment? Because you only lose the interest portion of that; the principal payment is also profit (just not as a liquid asset).
Yeah if that's after mortgage payments then that extra is really just a dividend. You have to also look at property value increase as a potential proffit as well as the payment on principle since you could sell the property in a few years and make money on that sale.
Renting out SUCKS. Especially on a small scale. Renting out your house or condo is just headaches for a return on investment you probably could have matched with the market and not have to go through the lottery of asshole tenants.
Renting starts making sense once you've got 6+ units, then you can actually make a living, but until then it's just not worth it IMO
Some people will disagree, but those people are the kind of people that "love the grind" or whether, I just think life is too short for that kind of fuckery.
We have friends that rent out and it feels like they are constantly on edge. Always on call for some bullshit. Every vacation they have to be ready to take calls and deal with shit.
Well it’s still better than wage life but nowhere close to true richness
It’s like a poc slave overseer from django. Still fucked in the ass by true rich but also hated by lower class.
For those too dumb to climb the wealth ladder with their substantial starting position
I feel like renting / Airbnb is just the rich class selling the homeowner class a pipe dream that they will get rich like them if they juts grind and rent their homes.
It's all bullshit scams all the way down.
Also I didn’t mean someone who rents just one apartment but like four for example and isn’t employed to be clear. That kind of landoid
Well, yeah. You invest into real estate for it to pay off after 20 years and then generate you pure profit. The problem is that at that time, maintaining a 20 yo property isn't cheap either, especially with remodels in between that need to happen to keep it looking good and functional.
But if you do that for as long as your mortgage lasts, at the end you have a house worth $500k, probably way more, you haven't paid a single dollar of your own money towards that mortgage and still got $18k of profit per year.
To put that money in a savings account you would need to have liquid $500k to begin with. With a mortgage, you borrow money and then rely on somebody else to pay it back
Of course that tips ever more in your favor the more money you have to begin with. While I think anyone being landlord is unethical, by far the biggest problem are real estate investors that buy 100s or 1000s of homes
You can absolutely rent your house out while it's still under mortgage, most rentals are not paid off. The profit starts coming in later. 10 years from now your mortgage will be the same, but rent will be $1000 more per month. Plus you're getting someone else to pay off a major asset for you.