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Wow, buying a house and leaving it vacant most of the year doesn't seem like a very good investment. In my experience when people I've known bought an investmen
by spfzero 5y ago
Wow, buying a house and leaving it vacant most of the year doesn't seem like a very good investment. In my experience when people I've known bought an investment property the number one thing on their minds was occupancy, and if they thought it would lie vacant for more than a month or two, they wouldn't buy it.
I do see your point about foreign investors though, they will view the house as a bank account, one that won't lose money, and will probably appreciate, and is safe from the corruption (or corruption investigations) of their home country. And they have money they need to put somewhere, so why not there?
But even they would probably prefer someone to be living in it and paying them in the meantime, because that improves the return by a lot, and doesn't put the principal at risk.
- dnautics 5y agoIf it's not occupied isn't it losing money at least by bleeding to property taxes?
- onion2k 5y agoYes, but property values in London are increasing at a rate that more than pays for that (many times over actually).
- simfree 5y agoSame in Seattle, my block has a 2017 constructed home that has never had occupants, owned by a non-resident from China. He owns at least a few other empty new homes in the inner suburbs as well. About once every 2 weeks his son pops by to make sure the house has not burned down or had a pipe burst.
- iancmceachern 5y agoCan I rent one of his houses?
- maffydub 5y agoDo you have any data on that? Currently living in zone 2 north-east London and house prices have seemed pretty flat for the last couple of years. Flats have had a surge due to current stamp duty holiday... and prices outside London seem to have increased a lot with people anticipating a permanent move to remote/hybrid working. Taxes on empty properties aren't high, but you still need to consider maintenance... and there's an opportunity cost of leaving a house empty rather than renting it out. Just interested in your data - thanks! Update: found https://www.actiononemptyhomes.org/pretty-vacant https://www.actiononemptyhomes.org/pretty-vacant in one of your sibling posts - was that what you were referring to? I just read it (on my phone, so might have missed it), but didn't see any numbers for investment returns here... and there was a fairly-extensive section talking about London property being used for money-laundering instead - is that what you're referring to?
- __app_dev__ 5y agoIn CA (at least Los Angeles) there are some tax laws in place that allow a home owner to make more in tax breaks by not renting a house or building vs renting it out. I don’t know the details as I'm a renter but from speaking with a few Realtors they mentioned the companies the worked at did this.
- Klinky 5y agoHousing prices in my area have literally doubled in the last 5~ years. Sitting on a house doesn't look so bad with those returns. At the same time flipping is also a housing investment method that inflates prices while often diluting the quality of the housing market, as it's often not done properly. Let's also not forget the housing crisis saw a lot of money pouring into bad investments. Assuming people only make wise investments is naive. The market is crazy right now with people paying over asking and waiving inspections. A lot of people are going to ride that train over the cliff.
- JumpCrisscross 5y ago> Sitting on a house doesn't look so bad with those returns Those returns are underwritten by voters rejecting new housing. If that political landscape changes, the incentives for landholders evolve.
- Klinky 5y agoI dunno, I do see "luxury" apartments being built rather often around here, but starting at $2K/mn for a 1 bedroom isn't really affordable. Political NIMBYism probably does play some part along with the pandemic, but again, that doesn't mean these investors are paying attention to that. There is a gold rush on at the moment.
- ajmurmann 5y agoPeople who move into these more expensive units leave other, less-luxury units though that now someone else can move into. Of course, as someone else pointed out, there is actually pent up demand outside of major cities as well by people wanting to move to the city. But still our only realistic, long term solution out of this mess that 40 years of insufficient construction had gotten us into is unprecedented construction. Upzone and remove barriers to get permits.
- imtringued 5y agoSomeone is willing to pay that much, they will pay that much for an old apartment if they must.