5 ms·

Give me a break. You'd need a down payment of ~400K to have a mortgage low enough to barely break even at $15,000 in rent per year. None of his math makes sense

Give me a break. You'd need a down payment of ~400K to have a mortgage low enough to barely break even at $15,000 in rent per year. None of his math makes sense. Of course you would really rent a 500k property at something more like 2500 a month but even then you'd need a down payment near 200k to start making a profit.

foobarian 4y ago
You don't need to make a profit, there are ways to get loans against the property and continue acquiring more inventory.
- adamsmith143 4y ago
  Well this ain't a startup with VC funding. How long can you reasonably have negative cashflow like this before you personally go bankrupt?
  - Supermancho 4y ago
    Land is often leveraged by creation of negative (or net neutral) commercial enterprises to gamify population growth (and inflation). eg https://www.silverstarcarwashes.com/latest-news/silverstar-car-wash-breaks-ground-on-three-new-locations-in-fargo/ https://www.silverstarcarwashes.com/latest-news/silverstar-c... (this is of 6 planned) Because of the city tax conditions and depreciation schemes available, enough capital will turn a net negative run cost into a positive capital sale in less than 10 years. It's the same thing as flat asphalt parking lot developments that covered southern california commercial land until the 90s. It seems to be a gamification of city growth incentives.
    - adamsmith143 4y ago
      So we went from buying a home to rent out to buying land and you only need to be able to sustain losses for 10 years. Ok great. I'm sure you are already a Millionaire Real Estate Developer by now.
Supermancho 4y ago
Here's a mortgage calculator: https://www.google.com/search?q=mortgage+calculator https://www.google.com/search?q=mortgage+calculator 500k property at 2.75% is $200k down gets you under 15k (this is very similar to my current mortgage) Now you're going to object that the interest rate isn't that anymore, which is irrelevant. There are numbers that will work which are simply an example to illustrate how depreciation works, and you just don't like the arbitrary scenario. The math makes sense.
- llbeansandrice 4y ago
  Where on earth can you find a 2.75% rate?
  - Supermancho 4y ago
    Between banks and with very large real-estate purchases, it's still a thing. Before the rate hike at the end of last year, you could get it from many places. My wife and I happened to buy a home in ND last year. Here's a mortgage statement from US Bank showing the rate: https://imgur.com/a/Nq597zF https://imgur.com/a/Nq597zF
- adamsmith143 4y ago
  Mate who cares about rates from years ago. You aren't getting anything under 5 these days. Not to mention those rates are for primary residences, you get even worse rates for investment properties. The point is if you have 200k to put into a rental property you are already wealthy way beyond an average American.
  - deleted 4y ago
    [deleted]
  - Supermancho 4y ago
    > Mate who cares about rates from years ago. You aren't getting anything under 5 these days That is irrelevant. The point was the role of other vehicles in investment properties, wherein the GP diverted into arguing about the specific numbers being used. > The point is if you have 200k to put into a rental property you are already wealthy way beyond an average American. That's your point, which is not in dispute.

foobarian 4y ago

You don't need to make a profit, there are ways to get loans against the property and continue acquiring more inventory.

adamsmith143 4y ago
Well this ain't a startup with VC funding. How long can you reasonably have negative cashflow like this before you personally go bankrupt?
- Supermancho 4y ago
  Land is often leveraged by creation of negative (or net neutral) commercial enterprises to gamify population growth (and inflation). eg https://www.silverstarcarwashes.com/latest-news/silverstar-car-wash-breaks-ground-on-three-new-locations-in-fargo/ https://www.silverstarcarwashes.com/latest-news/silverstar-c... (this is of 6 planned) Because of the city tax conditions and depreciation schemes available, enough capital will turn a net negative run cost into a positive capital sale in less than 10 years. It's the same thing as flat asphalt parking lot developments that covered southern california commercial land until the 90s. It seems to be a gamification of city growth incentives.
  - adamsmith143 4y ago
    So we went from buying a home to rent out to buying land and you only need to be able to sustain losses for 10 years. Ok great. I'm sure you are already a Millionaire Real Estate Developer by now.

Supermancho 4y ago

Here's a mortgage calculator: https://www.google.com/search?q=mortgage+calculator https://www.google.com/search?q=mortgage+calculator 500k property at 2.75% is $200k down gets you under 15k (this is very similar to my current mortgage) Now you're going to object that the interest rate isn't that anymore, which is irrelevant. There are numbers that will work which are simply an example to illustrate how depreciation works, and you just don't like the arbitrary scenario. The math makes sense.

llbeansandrice 4y ago
Where on earth can you find a 2.75% rate?
- Supermancho 4y ago
  Between banks and with very large real-estate purchases, it's still a thing. Before the rate hike at the end of last year, you could get it from many places. My wife and I happened to buy a home in ND last year. Here's a mortgage statement from US Bank showing the rate: https://imgur.com/a/Nq597zF https://imgur.com/a/Nq597zF
adamsmith143 4y ago
Mate who cares about rates from years ago. You aren't getting anything under 5 these days. Not to mention those rates are for primary residences, you get even worse rates for investment properties. The point is if you have 200k to put into a rental property you are already wealthy way beyond an average American.
- deleted 4y ago
  [deleted]
- Supermancho 4y ago
  > Mate who cares about rates from years ago. You aren't getting anything under 5 these days That is irrelevant. The point was the role of other vehicles in investment properties, wherein the GP diverted into arguing about the specific numbers being used. > The point is if you have 200k to put into a rental property you are already wealthy way beyond an average American. That's your point, which is not in dispute.