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Lazio
Joined: 15 Dec 2010
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 Posted: Sun Mar 24, 2013 12:00 am Post subject: |
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| Malislamusrex wrote: |
The idea of buying a house is insane as an investment. You can put 100 million in a bank and make a minimum of 3.75% a year for 10 year. That's a minimum of 40 million (even with a low exchange rate and compound interest I'd expect higher than 45).
If you put the same amount in a property for 10 years for a house worth 200 million you would pay 175 million on top of your 100 million deposit for something that looks like costing 180 million.
at the end of the day if you put your money in a bank you can make 40 million. If you buy a house the chances of losing 90 million are pretty high. |
You seem to forget about inflation. Bank rates are designed to keep up with inflation but not much more than that.
You gotta live somewhere.
If you rent than you will pay around 6% of the property�s market value/year. In 15-20 years you would pay off the entire house. In the meantime your savings won�t yield much more than the inflation so you end up losing money.
Buying a property at the right time and place is actually a pretty good investment. Rent it out with 6% return/year and the market value would normally keep up with inflation or even beat it. Sure there is more risk involved than keeping your money in the bank but you know what businessmen say about that. |
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12ax7
Joined: 07 Nov 2009
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| Posted: Sun Mar 24, 2013 4:00 am Post subject: |
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| Malislamusrex wrote: |
The idea of buying a house is insane as an investment. You can put 100 million in a bank and make a minimum of 3.75% a year for 10 year. That's a minimum of 40 million (even with a low exchange rate and compound interest I'd expect higher than 45).
If you put the same amount in a property for 10 years for a house worth 200 million you would pay 175 million on top of your 100 million deposit for something that looks like costing 180 million.
at the end of the day if you put your money in a bank you can make 40 million. If you buy a house the chances of losing 90 million are pretty high. |
I know someone who's made a quick 100 million in just one year flipping a house. |
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liveinkorea316
Joined: 20 Aug 2010
Location: South Korea
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| Posted: Sun Mar 24, 2013 4:31 am Post subject: |
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Malislamusrex you will find that tax structures in most Western countries promote housing as an investment over bank savings.
It was people buying houses as investments that contributed to the credit crisis of 2011. Again the selfish group of the economy that not only wanted their house or multiple houses but wanted massive gains from keeping or selling them, that both helped crash the economy and increased the number of young people who will never afford a home. |
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Malislamusrex
Joined: 01 Feb 2010
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| Posted: Sun Mar 24, 2013 7:50 am Post subject: |
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| 12ax7 wrote: |
| I know someone who's made a quick 100 million in just one year flipping a house. |
Me too when it was a sellers market, that time will come again, but I don't see it happening in the next few years. In the future it will be a buyers market and it's much better to have the cash with compound interest for when house prices increase with economic growth. |
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Malislamusrex
Joined: 01 Feb 2010
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| Posted: Sun Mar 24, 2013 7:59 am Post subject: |
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Investment in housing in a western country is not better than a bank in 2013. It was easy to make a 100% profit from 2003-2008, now most housing investors are keeping a hold of their property because they might as well keep them because they can't get much lower due to salary / house price ratios. With inflation most landlords are lucky if they don't lose money on maintenance if they have a mortgage. The real money comes when the house is sold.
The tax structure has nothing to do with this argument, rent income is classified as income in all western countries.
| liveinkorea316 wrote: |
Malislamusrex you will find that tax structures in most Western countries promote housing as an investment over bank savings.
It was people buying houses as investments that contributed to the credit crisis of 2011. Again the selfish group of the economy that not only wanted their house or multiple houses but wanted massive gains from keeping or selling them, that both helped crash the economy and increased the number of young people who will never afford a home. |
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atwood
Joined: 26 Dec 2009
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| Posted: Sun Mar 24, 2013 2:59 pm Post subject: |
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| Malislamusrex wrote: |
Investment in housing in a western country is not better than a bank in 2013. It was easy to make a 100% profit from 2003-2008, now most housing investors are keeping a hold of their property because they might as well keep them because they can't get much lower due to salary / house price ratios. With inflation most landlords are lucky if they don't lose money on maintenance if they have a mortgage. The real money comes when the house is sold.
The tax structure has nothing to do with this argument, rent income is classified as income in all western countries.
| liveinkorea316 wrote: |
Malislamusrex you will find that tax structures in most Western countries promote housing as an investment over bank savings.
It was people buying houses as investments that contributed to the credit crisis of 2011. Again the selfish group of the economy that not only wanted their house or multiple houses but wanted massive gains from keeping or selling them, that both helped crash the economy and increased the number of young people who will never afford a home. |
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Both of your views are simplistic. |
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Malislamusrex
Joined: 01 Feb 2010
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| Posted: Sun Mar 24, 2013 4:40 pm Post subject: |
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The argument for Korea is pretty simple but I did calculate those number with an estimation of house prices over the last 6 months and interest rates for 3.75 for 8 years and 4% for 2. Hypothetically speaking those are the returns after paying the mortgage interest and capital.
My view on housing on Western housing is around 90% accurate.
What I see happening is a reduction in house prices. New home owners will then have more cash in their pockets and less debt. They will spend and this will increase inflation. It will be good in the short term, but eventually house prices will go back up, inflation will be high and salaries won't keep up. Middle class families are those that will feel the pinch.
| atwood wrote: |
| Malislamusrex wrote: |
Investment in housing in a western country is not better than a bank in 2013. It was easy to make a 100% profit from 2003-2008, now most housing investors are keeping a hold of their property because they might as well keep them because they can't get much lower due to salary / house price ratios. With inflation most landlords are lucky if they don't lose money on maintenance if they have a mortgage. The real money comes when the house is sold.
The tax structure has nothing to do with this argument, rent income is classified as income in all western countries.
| liveinkorea316 wrote: |
Malislamusrex you will find that tax structures in most Western countries promote housing as an investment over bank savings.
It was people buying houses as investments that contributed to the credit crisis of 2011. Again the selfish group of the economy that not only wanted their house or multiple houses but wanted massive gains from keeping or selling them, that both helped crash the economy and increased the number of young people who will never afford a home. |
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Both of your views are simplistic. |
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atwood
Joined: 26 Dec 2009
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| Posted: Sun Mar 24, 2013 5:37 pm Post subject: |
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| Malislamusrex wrote: |
The argument for Korea is pretty simple but I did calculate those number with an estimation of house prices over the last 6 months and interest rates for 3.75 for 8 years and 4% for 2. Hypothetically speaking those are the returns after paying the mortgage interest and capital.
My view on housing on Western housing is around 90% accurate.
What I see happening is a reduction in house prices. New home owners will then have more cash in their pockets and less debt. They will spend and this will increase inflation. It will be good in the short term, but eventually house prices will go back up, inflation will be high and salaries won't keep up. Middle class families are those that will feel the pinch.
| atwood wrote: |
| Malislamusrex wrote: |
Investment in housing in a western country is not better than a bank in 2013. It was easy to make a 100% profit from 2003-2008, now most housing investors are keeping a hold of their property because they might as well keep them because they can't get much lower due to salary / house price ratios. With inflation most landlords are lucky if they don't lose money on maintenance if they have a mortgage. The real money comes when the house is sold.
The tax structure has nothing to do with this argument, rent income is classified as income in all western countries.
| liveinkorea316 wrote: |
Malislamusrex you will find that tax structures in most Western countries promote housing as an investment over bank savings.
It was people buying houses as investments that contributed to the credit crisis of 2011. Again the selfish group of the economy that not only wanted their house or multiple houses but wanted massive gains from keeping or selling them, that both helped crash the economy and increased the number of young people who will never afford a home. |
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Both of your views are simplistic. |
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It's not close to 90 percent correct. Most people buy houses not as an investment, but as a place to live. Your argument never considers that aspect of home ownership.
As for rental property, rents are currently high so landlords are doing fine. Any smart landlord will use leverage to maximize profit and so they have mortgages and are doing well. With interest rates so low, mortgages are dirt cheap.
As for inflation, can you tell us when and where it's finally going to show up? It's been at least five years now that the inflation hawks have been predicting inflation, even hyperinflation. Where is it? |
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Malislamusrex
Joined: 01 Feb 2010
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| Posted: Sun Mar 24, 2013 8:55 pm Post subject: |
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If you think landlords are doing fine now you don't know what it was like in the glory years. You could make twice as much in capital compared to rent revenue and you could borrow against money you didn't even have. Now it's average at best. I'd rather sell everything an put the cash in a 4.5% bond.
| atwood wrote: |
| Malislamusrex wrote: |
The argument for Korea is pretty simple but I did calculate those number with an estimation of house prices over the last 6 months and interest rates for 3.75 for 8 years and 4% for 2. Hypothetically speaking those are the returns after paying the mortgage interest and capital.
My view on housing on Western housing is around 90% accurate.
What I see happening is a reduction in house prices. New home owners will then have more cash in their pockets and less debt. They will spend and this will increase inflation. It will be good in the short term, but eventually house prices will go back up, inflation will be high and salaries won't keep up. Middle class families are those that will feel the pinch.
| atwood wrote: |
| Malislamusrex wrote: |
Investment in housing in a western country is not better than a bank in 2013. It was easy to make a 100% profit from 2003-2008, now most housing investors are keeping a hold of their property because they might as well keep them because they can't get much lower due to salary / house price ratios. With inflation most landlords are lucky if they don't lose money on maintenance if they have a mortgage. The real money comes when the house is sold.
The tax structure has nothing to do with this argument, rent income is classified as income in all western countries.
| liveinkorea316 wrote: |
Malislamusrex you will find that tax structures in most Western countries promote housing as an investment over bank savings.
It was people buying houses as investments that contributed to the credit crisis of 2011. Again the selfish group of the economy that not only wanted their house or multiple houses but wanted massive gains from keeping or selling them, that both helped crash the economy and increased the number of young people who will never afford a home. |
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Both of your views are simplistic. |
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It's not close to 90 percent correct. Most people buy houses not as an investment, but as a place to live. Your argument never considers that aspect of home ownership.
As for rental property, rents are currently high so landlords are doing fine. Any smart landlord will use leverage to maximize profit and so they have mortgages and are doing well. With interest rates so low, mortgages are dirt cheap.
As for inflation, can you tell us when and where it's finally going to show up? It's been at least five years now that the inflation hawks have been predicting inflation, even hyperinflation. Where is it? |
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Unposter
Joined: 04 Jun 2006
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| Posted: Sun Mar 24, 2013 9:27 pm Post subject: |
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| I'd just like to congratulate Swampfox on his child. I hope the home and family provides a lifetime of comfort! |
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Stan Rogers
Joined: 20 Aug 2010
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| Posted: Sun Mar 24, 2013 9:33 pm Post subject: |
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| Unposter wrote: |
| I'd just like to congratulate Swampfox on his child. I hope the home and family provides a lifetime of comfort! |
Nice. I didn't know he just had a child. Congratulations Swampfox! |
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atwood
Joined: 26 Dec 2009
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| Posted: Mon Mar 25, 2013 12:01 am Post subject: |
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| Malislamusrex wrote: |
If you think landlords are doing fine now you don't know what it was like in the glory years. You could make twice as much in capital compared to rent revenue and you could borrow against money you didn't even have. Now it's average at best. I'd rather sell everything an put the cash in a 4.5% bond.
| atwood wrote: |
| Malislamusrex wrote: |
The argument for Korea is pretty simple but I did calculate those number with an estimation of house prices over the last 6 months and interest rates for 3.75 for 8 years and 4% for 2. Hypothetically speaking those are the returns after paying the mortgage interest and capital.
My view on housing on Western housing is around 90% accurate.
What I see happening is a reduction in house prices. New home owners will then have more cash in their pockets and less debt. They will spend and this will increase inflation. It will be good in the short term, but eventually house prices will go back up, inflation will be high and salaries won't keep up. Middle class families are those that will feel the pinch.
| atwood wrote: |
| Malislamusrex wrote: |
Investment in housing in a western country is not better than a bank in 2013. It was easy to make a 100% profit from 2003-2008, now most housing investors are keeping a hold of their property because they might as well keep them because they can't get much lower due to salary / house price ratios. With inflation most landlords are lucky if they don't lose money on maintenance if they have a mortgage. The real money comes when the house is sold.
The tax structure has nothing to do with this argument, rent income is classified as income in all western countries.
| liveinkorea316 wrote: |
Malislamusrex you will find that tax structures in most Western countries promote housing as an investment over bank savings.
It was people buying houses as investments that contributed to the credit crisis of 2011. Again the selfish group of the economy that not only wanted their house or multiple houses but wanted massive gains from keeping or selling them, that both helped crash the economy and increased the number of young people who will never afford a home. |
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Both of your views are simplistic. |
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It's not close to 90 percent correct. Most people buy houses not as an investment, but as a place to live. Your argument never considers that aspect of home ownership.
As for rental property, rents are currently high so landlords are doing fine. Any smart landlord will use leverage to maximize profit and so they have mortgages and are doing well. With interest rates so low, mortgages are dirt cheap.
As for inflation, can you tell us when and where it's finally going to show up? It's been at least five years now that the inflation hawks have been predicting inflation, even hyperinflation. Where is it? |
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"The glory years" didn't end up so well. If you're smart, you can still use leverage and thus do better than your 4.5% bond, which is a nominal return that can be taxed as well.
And why would anyone predicting inflation want to buy bonds? |
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Malislamusrex
Joined: 01 Feb 2010
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| Posted: Mon Mar 25, 2013 12:14 am Post subject: |
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Yes, the glory years did end up very well if you bought at the right time. If you bought a house for 70k and it was worth 260k 4 years ago and it's worth 250k you haven't done badly.
Inflation is crippling the UK.
To answer your question why would anyone predicting inflation want to buy bonds? If you don't live in the country it's all profit. If it costs 5k to repair a roof now when it cost 4k a year ago it's better to just get rid of the property. If there is no gain in capital investing in property is going to end up in loss.
| atwood wrote: |
"The glory years" didn't end up so well. If you're smart, you can still use leverage and thus do better than your 4.5% bond, which is a nominal return that can be taxed as well.
And why would anyone predicting inflation want to buy bonds? |
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12ax7
Joined: 07 Nov 2009
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| Posted: Mon Mar 25, 2013 3:05 am Post subject: |
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| Malislamusrex wrote: |
| 12ax7 wrote: |
| I know someone who's made a quick 100 million in just one year flipping a house. |
Me too when it was a sellers market, that time will come again, but I don't see it happening in the next few years. In the future it will be a buyers market and it's much better to have the cash with compound interest for when house prices increase with economic growth. |
Depends where you buy. Those whose real estate investments are under-performing did not do their homework. |
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atwood
Joined: 26 Dec 2009
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| Posted: Mon Mar 25, 2013 3:41 am Post subject: |
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| Malislamusrex wrote: |
Yes, the glory years did end up very well if you bought at the right time. If you bought a house for 70k and it was worth 260k 4 years ago and it's worth 250k you haven't done badly.
Inflation is crippling the UK.
To answer your question why would anyone predicting inflation want to buy bonds? If you don't live in the country it's all profit. If it costs 5k to repair a roof now when it cost 4k a year ago it's better to just get rid of the property. If there is no gain in capital investing in property is going to end up in loss.
| atwood wrote: |
"The glory years" didn't end up so well. If you're smart, you can still use leverage and thus do better than your 4.5% bond, which is a nominal return that can be taxed as well.
And why would anyone predicting inflation want to buy bonds? |
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The government's austerity program is what's crippling the UK.
I'm from the U.S. No inflation in sight. |
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