They mean if they sold it now they’d have 50 years of rent now, instead of waiting 50 years to accumulate that amount. All that money now is worth more then getting it later.
I think I do. I’ve been managing properties for some 20 years. Mostly commercial.
What I’m saying is that in order to understand why the landlord doesn’t just cash in on 50 years of rent, you first need to understand the difference between the profit/loss and assets/liabilities sections in a financial statement.
The tenants (income) are not paying for the building (asset). They only need to cover the interest (cost) from the loan (liability) in order for the the landlord to make money (profit).
The only time it makes sense to compare the rental income to the value of the asset is for the annual asset evaluation.
If the landlord waves the evaluation and rent around like OP says, it just shows that the landlord doesn’t understand it either and is just throwing numbers into the air to impress people.
It’s because your landlord never paid for it. The bank did. You’re paying the interest on his loan.
They mean if they sold it now they’d have 50 years of rent now, instead of waiting 50 years to accumulate that amount. All that money now is worth more then getting it later.
Don’t forget taxes. All they have to do is “move in” for a year or so to get a massive tax savings on the sale.
I know what they meant.
Renting out properties is not about making tenants pay the same amount as the property is worth over any period of time.
It’s about having someone else cover the cost of borrowing the money while the property increases in value by itself until they decide to cash in.
I don’t think you know how loans work.
I think I do. I’ve been managing properties for some 20 years. Mostly commercial.
What I’m saying is that in order to understand why the landlord doesn’t just cash in on 50 years of rent, you first need to understand the difference between the profit/loss and assets/liabilities sections in a financial statement.
The tenants (income) are not paying for the building (asset). They only need to cover the interest (cost) from the loan (liability) in order for the the landlord to make money (profit).
The only time it makes sense to compare the rental income to the value of the asset is for the annual asset evaluation.
If the landlord waves the evaluation and rent around like OP says, it just shows that the landlord doesn’t understand it either and is just throwing numbers into the air to impress people.