[EconProf]

BobS
Querty007: You are right–investing in houses or condos to rent out is a perfectly horrible investment right now. I speak as one who has made money at it since the 1980’s and am now largely out. It made money only because of appreciation…cash flow was never significant. Now with the rent/price ratio so out of kilter, cash flow is hugely negative. Add to that the declining value of the property and you have a recipe for disaster. At some bottom point, years away, it will make sense again. I’ll be a bottom-fisher then, as will many others on this site.

[EconProf]

BobS
Querty007: You are right–investing in houses or condos to rent out is a perfectly horrible investment right now. I speak as one who has made money at it since the 1980’s and am now largely out. It made money only because of appreciation…cash flow was never significant. Now with the rent/price ratio so out of kilter, cash flow is hugely negative. Add to that the declining value of the property and you have a recipe for disaster. At some bottom point, years away, it will make sense again. I’ll be a bottom-fisher then, as will many others on this site.

[EconProf]

BobS
Querty007: You are right–investing in houses or condos to rent out is a perfectly horrible investment right now. I speak as one who has made money at it since the 1980’s and am now largely out. It made money only because of appreciation…cash flow was never significant. Now with the rent/price ratio so out of kilter, cash flow is hugely negative. Add to that the declining value of the property and you have a recipe for disaster. At some bottom point, years away, it will make sense again. I’ll be a bottom-fisher then, as will many others on this site.

[EconProf]

BobS
Querty007: You are right–investing in houses or condos to rent out is a perfectly horrible investment right now. I speak as one who has made money at it since the 1980’s and am now largely out. It made money only because of appreciation…cash flow was never significant. Now with the rent/price ratio so out of kilter, cash flow is hugely negative. Add to that the declining value of the property and you have a recipe for disaster. At some bottom point, years away, it will make sense again. I’ll be a bottom-fisher then, as will many others on this site.

[EconProf]

BobS
Querty007: You are right–investing in houses or condos to rent out is a perfectly horrible investment right now. I speak as one who has made money at it since the 1980’s and am now largely out. It made money only because of appreciation…cash flow was never significant. Now with the rent/price ratio so out of kilter, cash flow is hugely negative. Add to that the declining value of the property and you have a recipe for disaster. At some bottom point, years away, it will make sense again. I’ll be a bottom-fisher then, as will many others on this site.

[EconProf]

BobS
I suggest that for the first half of the 20th century, investors did not build inflationary expectations into their investment decisions. Deflation was a HUGE problem for most of the period up to WWII. The assumption throughout the war was that we would return to a depression after the war’s end. Accordingly, anyone owning rental real estate had to get cash flow to offset the (probably) declining asset price.
By the mid-1960s and thereafter inflation took hold with a vengance. Investors in real estate now were parking their money in a growing asset, so rents could become a smaller % of the long run expected return.
Also, as has been mentioned, financing innovations and increased leverage over the decades played a big part. In the 1920s, home loans were rare and short in duration.

[EconProf]

BobS
I suggest that for the first half of the 20th century, investors did not build inflationary expectations into their investment decisions. Deflation was a HUGE problem for most of the period up to WWII. The assumption throughout the war was that we would return to a depression after the war’s end. Accordingly, anyone owning rental real estate had to get cash flow to offset the (probably) declining asset price.
By the mid-1960s and thereafter inflation took hold with a vengance. Investors in real estate now were parking their money in a growing asset, so rents could become a smaller % of the long run expected return.
Also, as has been mentioned, financing innovations and increased leverage over the decades played a big part. In the 1920s, home loans were rare and short in duration.

[EconProf]

BobS
I suggest that for the first half of the 20th century, investors did not build inflationary expectations into their investment decisions. Deflation was a HUGE problem for most of the period up to WWII. The assumption throughout the war was that we would return to a depression after the war’s end. Accordingly, anyone owning rental real estate had to get cash flow to offset the (probably) declining asset price.
By the mid-1960s and thereafter inflation took hold with a vengance. Investors in real estate now were parking their money in a growing asset, so rents could become a smaller % of the long run expected return.
Also, as has been mentioned, financing innovations and increased leverage over the decades played a big part. In the 1920s, home loans were rare and short in duration.

[EconProf]

BobS
I suggest that for the first half of the 20th century, investors did not build inflationary expectations into their investment decisions. Deflation was a HUGE problem for most of the period up to WWII. The assumption throughout the war was that we would return to a depression after the war’s end. Accordingly, anyone owning rental real estate had to get cash flow to offset the (probably) declining asset price.
By the mid-1960s and thereafter inflation took hold with a vengance. Investors in real estate now were parking their money in a growing asset, so rents could become a smaller % of the long run expected return.
Also, as has been mentioned, financing innovations and increased leverage over the decades played a big part. In the 1920s, home loans were rare and short in duration.

[EconProf]

BobS
I suggest that for the first half of the 20th century, investors did not build inflationary expectations into their investment decisions. Deflation was a HUGE problem for most of the period up to WWII. The assumption throughout the war was that we would return to a depression after the war’s end. Accordingly, anyone owning rental real estate had to get cash flow to offset the (probably) declining asset price.
By the mid-1960s and thereafter inflation took hold with a vengance. Investors in real estate now were parking their money in a growing asset, so rents could become a smaller % of the long run expected return.
Also, as has been mentioned, financing innovations and increased leverage over the decades played a big part. In the 1920s, home loans were rare and short in duration.

[EconProf]

BobS
Rustico: Do you know of lenders who will loan at less than 20% down to landlords? I don’t. Of course, one could always commit mortgage fraud and say they intend to occupy.

[EconProf]

BobS
Rustico: Do you know of lenders who will loan at less than 20% down to landlords? I don’t. Of course, one could always commit mortgage fraud and say they intend to occupy.

[EconProf]

BobS
Rustico: Do you know of lenders who will loan at less than 20% down to landlords? I don’t. Of course, one could always commit mortgage fraud and say they intend to occupy.

[EconProf]

BobS
Rustico: Do you know of lenders who will loan at less than 20% down to landlords? I don’t. Of course, one could always commit mortgage fraud and say they intend to occupy.

[EconProf]

BobS
Rustico: Do you know of lenders who will loan at less than 20% down to landlords? I don’t. Of course, one could always commit mortgage fraud and say they intend to occupy.

[Author]

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