I have heard of people having to choose between buying a property versus renting a property. Yet that seems like a weird dichotomy for me. Couldn't you do both?
- Buy a property and rent it out to someone else.
- Use the rental income to pay for your own rent on another property.
The only way this would be a profitable trade if you are renting your property at a higher rate than you are "paying" for your rental (you're charging rent for a two-story house while renting a one-room apartment). But even if the trade isn't profitable, you would still be in possession of an asset that can be liquidated when necessary, while having the costs of maintaining that asset defrayed by your tenant. This makes this approach more ideal than just paying rent for a bigger house (rent that you're not getting back).
Now, if you borrowed money to pay for the property, then it might be a bit more difficult to make this trade profitable, but one approach could be to increase the rent you are charging the tenant to help handle the interest payments.
Why is this "third way" not seriously considered? Is it just too complex to think about? Or require too much capital and micromanagement (needing to manage your landlord and your tenant)?