3 ms·

>So, point being, you can't have 3M houses ("home ownership being out of reach") AND 24k/year rent Sure you can. Because previous investors capitalized at the

>So, point being, you can't have 3M houses ("home ownership being out of reach") AND 24k/year rent Sure you can. Because previous investors capitalized at the old market rates (ie, what they really have is a $300k house investment w/ $24k annual cashflow). The main issue I see with that is competing uses of the capital, ie, if they can sell the $300k house investment for a $2.7M Profit and reinvest it at something > 1-2% w/ similar risk profile. But if we can put a lot more housing stock on the market the prices will decline and money will go elsewhere looking for returns.

nopriorarrests 9y ago
But why should anyone buy a house for 3M, if you can rent it for 24k/year? 3M gives you 125 years of renting. In fact, you can set aside 100K for 4 years of rent, and allocate the rest - 2.9M - into working somewhere else, like bonds. Look, you put 2.9M into bonds yielding very conservative 3% per year (say, a mix of AAPL bonds and US treasuries), and you have 87K per year. 24K covers your rent, you have 63K to spend on drinks, you are not tapping your main capital, _and you live in 3M house for free_. Buying the same house commiting all your capital into it is very definition of insanity. Obviously it's too good to be true, so rents should rise.