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Is the author accounting for the equity built up? Cash has to go out whether it’s a mortgage or rent. With a mortgage you are building equity. This changes the
by sanp 4mo ago
Is the author accounting for the equity built up?
Cash has to go out whether it’s a mortgage or rent. With a mortgage you are building equity. This changes the true math when you sell (leaving aside your ability to now get a HELOC).
- the_sleaze_ 4mo agoHe's saying - and rightly so - that outflow towards rent can be significantly less than outflow towards real property equity given the structure of a traditional mortgage + maintenance burden. And with (a large amount of) financial discipline that delta can result in substantial increase in wealth at the end of the day.
- adammarples 4mo agoYes the author is accounting for the equity buildup. They only count the interest part of the mortgage repayments as an expense. Any principal repayments are neutral.