5 ms·

The story I've heard is that if you look at the possible large investments available to a normal person, buying real estate involves the most local knowledge an

The story I've heard is that if you look at the possible large investments available to a normal person, buying real estate involves the most local knowledge and least technical skills. This means that unsophisticated investors are much more competitive at real estate than they are at, say, investing in auto-repair shops.

patio11 10y ago
I also wouldn't discount the trivially available 5X (or higher) leverage and tax benefits. If SaaS businesses were like houses you could buy ~$30k in MRR for $200k down with the other $800k at 2% APR fixed over 30 years... a proposition which would not be untempting to many people on HN.
branchless 10y ago
The least skills? Sounds like they should get minimum wage. My landlord works for about 10 hours a year. Parasites need land value taxing.
- sokoloff 10y ago
  Land value taxes will end up being paid by the tenant. The landlord will only handle the money. The tenant, as the one "consuming" the land for that term is the one who ought to pay the tax for the value of the land. It's only when the land is unoccupied that the owner/landlord will pay (which is also perfectly fair). With apologies to Henry Ford: https://www.brainyquote.com/quotes/quotes/h/henryford122318.html https://www.brainyquote.com/quotes/quotes/h/henryford122318....
  - branchless 10y ago
    Totally wrong. You can't pass on land value tax, prices are set by the ability to pay and taxing the landlord does not increase the ability of the tenant to pay. You don't know how prices are set.
    - sokoloff 10y ago
      Who do you think pays the real estate taxes now in an occupied rental? Where does the money come from? Why are those answers different (or the same)?
      - branchless 10y ago
        You have the same idea on how prices are set as children do.
        sokoloff 10y ago
        Yes, even my children can understand this.
        branchless 10y ago
        I guess George and Friedman were behind your kids then: http://www.wealthandwant.com/HG/why_the_landowner_cannot_shift.html http://www.wealthandwant.com/HG/why_the_landowner_cannot_shi... http://www.economist.com/blogs/freeexchange/2015/04/land-value-tax http://www.economist.com/blogs/freeexchange/2015/04/land-val... Friedman prefers it: https://www.youtube.com/watch?v=yS7Jb58hcsc https://www.youtube.com/watch?v=yS7Jb58hcsc
        sokoloff 10y ago
        I substantially agree with Friedman that taxing the unimproved value of land is the least bad tax, but I see no evidence to suggest that he thinks it will be paid effectively by the legal owner of the property (the landlord) rather than passing it along to the beneficial user of the property (the tenant). It would seem strange indeed that the user would pay the tax if they owned the house, but would avoid entirely the effect of the tax if they rented the property and the landlord would pay the tax entirely, passing along none of it to the tenant. I have serious doubts that either of us will convince the other on this topic. With that, I wish you well and if you wish to never own property, may you entirely avoid the effects of land value taxes.

patio11 10y ago

I also wouldn't discount the trivially available 5X (or higher) leverage and tax benefits. If SaaS businesses were like houses you could buy ~$30k in MRR for $200k down with the other $800k at 2% APR fixed over 30 years... a proposition which would not be untempting to many people on HN.

branchless 10y ago

The least skills? Sounds like they should get minimum wage. My landlord works for about 10 hours a year. Parasites need land value taxing.

sokoloff 10y ago
Land value taxes will end up being paid by the tenant. The landlord will only handle the money. The tenant, as the one "consuming" the land for that term is the one who ought to pay the tax for the value of the land. It's only when the land is unoccupied that the owner/landlord will pay (which is also perfectly fair). With apologies to Henry Ford: https://www.brainyquote.com/quotes/quotes/h/henryford122318.html https://www.brainyquote.com/quotes/quotes/h/henryford122318....
- branchless 10y ago
  Totally wrong. You can't pass on land value tax, prices are set by the ability to pay and taxing the landlord does not increase the ability of the tenant to pay. You don't know how prices are set.
  - sokoloff 10y ago
    Who do you think pays the real estate taxes now in an occupied rental? Where does the money come from? Why are those answers different (or the same)?
    - branchless 10y ago
      You have the same idea on how prices are set as children do.
      - sokoloff 10y ago
        Yes, even my children can understand this.
        branchless 10y ago
        I guess George and Friedman were behind your kids then: http://www.wealthandwant.com/HG/why_the_landowner_cannot_shift.html http://www.wealthandwant.com/HG/why_the_landowner_cannot_shi... http://www.economist.com/blogs/freeexchange/2015/04/land-value-tax http://www.economist.com/blogs/freeexchange/2015/04/land-val... Friedman prefers it: https://www.youtube.com/watch?v=yS7Jb58hcsc https://www.youtube.com/watch?v=yS7Jb58hcsc
        sokoloff 10y ago
        I substantially agree with Friedman that taxing the unimproved value of land is the least bad tax, but I see no evidence to suggest that he thinks it will be paid effectively by the legal owner of the property (the landlord) rather than passing it along to the beneficial user of the property (the tenant). It would seem strange indeed that the user would pay the tax if they owned the house, but would avoid entirely the effect of the tax if they rented the property and the landlord would pay the tax entirely, passing along none of it to the tenant. I have serious doubts that either of us will convince the other on this topic. With that, I wish you well and if you wish to never own property, may you entirely avoid the effects of land value taxes.