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10 sats \ 1 reply \ @SpaceHodler 23 Jun 2023 \ parent \ on: What’s your best investment (besides BTC)? bitcoin
If you pay $1000 rent and stay put for 25 years, your rent only goes up; at the end of the term you end up paying maybe 3x that and owning nothing.
But if you pay a $1000 mortgage with a 25 year term:
- Your payments don't change (or only change slightly) in fiat terms; they go down in real terms.
- At the end you end up with outright ownership of the property (wealth!), which has appreciated greatly in fiat terms over that period.
- Let's say $300 of it is interest, $700 is principal. Your housing cost is $300, less than a third of what the renter pays at the beginning and less than 1/10 of what the renter pays at the end. The $700 is a commitment to invest in real estate on a monthly basis, BUT - and this is a very important "but" - at a price locked in at the beginning of the term. Towards the end of the term, those $700 monthly investments buy you ~$2100 worth of real estate.
As a renter, the lower the interest rates, the more the system steals from you. By taking out a mortgage you become a beneficiary of the system; you get closer to the money printer and claw some of those 'stealings' back.
This shows how the system benefits the richer - those who can afford a down payment - and makes the poor poorer.
It's not fair, but that's the way it is.
Excellently explained. I actually tried explaining this to my parents after buying an investment property. Even though I knew in my mind what I was trying to say you've really solidified some of the finer points in your explanation. Thanks.
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