Re:Buying a Home Is Probably Even Worse Than NYTimes/NerdWal...
by dlcarrier on Tuesday July 08, 2025 @08:30PM
(#44505252)
That's usually called a negative cash flow, but it's not considered a loss. It's much riskier than owning a property with positive cash flow, so in areas where a mortgage payment would be larger than rent, it's much more common for investors to pay with cash, instead of borrowing against the property.
In theory it wouldn't have an effect on the rental market, but in practice cash buyers are much more likely to be corporate land owners, who tend to have higher margins than the casual investment property owner.
I was under the impression that this was actually fairly common in places with rapid house price appreciation. Which includes a good portion of the places where people want to rent. The main source of profit for the landlord is the capital appreciation rather than the rent, so they're willing to rent at levels that wouldn't be profitable if they weren't also planning on profiting from the rising prices.