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What a benevolent lord!
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this post was submitted on 19 Mar 2024
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Please expand.
Home value goes up over time.
Yeah but you're paying taxes and maintenance. It's actually not a great investment vehicle if it's sitting empty, it's just generally very safe.
Safe is the point. At least in the US, property taxes are substantially cheaper than anything you could do with liquidity, plus you can tap into the value partially or wholly without actually incuring much risk, or even taking that long. Owning property allows you to have collateral for loans and other financial investments which have larger yields, but require something up front. It is entirely possible to get a loan against a house for an investment, then pay it off with the yield of a previous investment so you don't have interest accruing. As long as you are savvy and intelligent with the investments, it is reasonably sustainable, especially if you are profiting off the property anyway. Who cares about an extra loan payment if you aren't the one paying it.
This all stems from someone claiming an empty property still generated profit. You seem to be arguing that if someone else is paying your mortgage (i.e. a renter) then you can profit by borrowing against the equity in the property. I agree with you, but I don't see the sense in borrowing against an empty place as you are just giving some of your profits to the lender.
The benefit of the ability to borrow against it comes from being able to take part in other investment opportunities. Someone has a company they are starting, you can take a mortgage to invest in it and a year later potentially pay off the mortgage (depending on the size) and it can be empty or not. There are other financial vehicles that have a similar pattern. Even taking a mortgage on a property to take advantage of stock shorting or w/e.
Short answer, if appreciation (the increase in value over time) exceeds costs (taxes, maintenance, mortgage interest, minimum utilities, etc), you are profiting (unrealized capital gains) just by owning the house, similar to stocks and bonds.
Understood. This stems from someone claiming that renting it out for profit is in and of itself wrong. Applying what you said, all renting is criminal according to their logic.