undefined | Better HN

0 pointsjjav5mo ago0 comments

> Point is, it’s a great way to make money and that is why people become landlords.

If it is, why not do it and become rich too?

It's not really a particularly good way to make money. I've run the numbers on hundreds of properties over the last two decades and I've yet to find a scenario where I could buy something and rent it out with enough profit to be worth the hassle. You'll be much better off investing in some index fund instead.

0 comments

3 comments · 1 top-level

pixelatedindex5mo ago· 2 in thread

> If it is, why not do it and become rich too?

If I had the capital I absolutely would have. It’s a bit worse now but any property you bought pre-covid (at least in big cities) can be rented out for more than what mortgage costs. I remember looking at houses in the Bay Area and the monthly mortgage would be 3K while you can rent it out for 4-5K. Anyone who owned property in the 90s and early aughts are absolutely rolling in it. You can invest the profits in an index fund on top of it.

jjavOP5mo ago

There's quite a bit of optimism in those numbers.

I bought a house in the Bay Area in the 90s and the mortgage was well over $3K (remember interest was over 7%) and an equal house back then was renting for $1300 (my rent at the time for a 3br house in south San Jose).

Try to run the numbers for any property you like. Remember to include taxes and insurance and maintenance. Just to break even is not easy and then you'll have to work for free on the maintenance. Or pay a rental management company, which is another 8-10% taken from the rent.

pixelatedindex5mo ago

Your house now can be rented for 4-5K a month if not more, you have no mortgage. Your property taxes are capped at purchase price due to Prop 13. All said and done can’t you net like 35-40K or so per year on a single home?

I agree that buying a home and immediately putting it up for rent would put you underwater these days but during ZIRP times rent and mortgage weren’t too far from each other.

1 more reply

j / k navigate · click thread line to collapse