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> that it ignores the option of selling the property While it does not speak to selling, it doesn't ignore it. It is factored in. > Why not wait 5 years for $

> that it ignores the option of selling the property While it does not speak to selling, it doesn't ignore it. It is factored in. > Why not wait 5 years for $5k? Well? Don't leave us hanging. > If it is a money losing money proposition, you can sell. And then what? Maybe in recent months the tide has started to turn, but over the past 10+ years interest rates were effectively 0 for a reason: Nobody had any idea what to do with money. Interest rates are a product of supply and demand like everything else. Real estate is the last resort where money goes when all other ideas have been exhausted. If real estate is what you are invested in, you got there by not having better ideas.

lotsofpulp 3y ago
> Well? Don't leave us hanging. Wait 100 years for $100k…it is meant to show why your scenario makes no sense. > And then what? And then someone who does want to do something productive with the property purchases it. Such as a homeowner, to live in. > but over the past 10+ years interest rates were effectively 0 for a reason: Nobody had any idea what to do with money. This is getting off topic, but interest rate and monetary and fiscal policy is a political thing. At least one person (me) has an idea of what to do with money. Providing kids with healthy meals at school would be a start.
- randomdata 3y ago
  > Wait 100 years for $100k…it is meant to show why your scenario makes no sense. If you have something to show, I'm interested. Why hold out on us? > And then someone who does want to do something productive with the property purchases it. And now the former property owner has nothing. What's the point of them going to all the trouble? I am sure they would rather use that time to post on HN, like you and I have the luxury to. > but interest rate and monetary and fiscal policy is a political thing. Interest rates are adjusted in accordance with certain political goals, yes, but they are adjusted in response to behaviour. Rates were lowered because people weren't looking for money, not that people stopped looking for money because interest rates were low. Basic supply and demand. > At least one person (me) has an idea of what to do with money. Providing kids with healthy meals at school would be a start. And if you invest wisely, you'll have even more money to help with that! So, we're back to trying to figure out what to invest in. Any ideas?
aesh2Xa1 3y ago
> While it does not speak to selling, it doesn't ignore it. It is factored in. I'm being dense; how have you factored that in? I agree that a higher tax will might not resolve the situation. I also think that a lower tax would not, either. First, some math: ((years_rent * months * rent) - (years_hosting * months * hosting)) - (years_tax * months * tax) The cost of renting immediately at $1,5000/mo and $1,000/mo tax: ((20 * 12 * 1500) - (20 * 12 * 500)) - (20 * 12 * 1000) = $0 The cost of renting immediately at $1,5000/mo and $500/mo tax: ((20 * 12 * 1500) - (20 * 12 * 500)) - (20 * 12 * 1000) = $120,000 The cost of losing 2 of the 20 years while speculating for a $2,000/mo renter and $1,000/mo tax: ((18 * 12 * 2000) - (18 * 12 * 500)) - (20 * 12 * 1000) = $84,000 The cost of losing 2 of the 20 years while speculating for a $2,000/mo renter and $5,000/mo tax: ((18 * 12 * 2000) - (18 * 12 * 500)) - (20 * 12 * 500) = $204,000 This shows that a lower tax is more profitable. The case where profit is <=$0 exists, but the the speculation also generally increases profit if we're just ignoring the part about it being speculation (with risk of never filling a spot or not having cash flow). A solution might be to lower taxes, but the incentive to speculate is still present (would you rather $84,000 or $204,000?). A better solution would be to punish the speculation directly. A variable tax rate where the unoccupied unit is taxed higher might accomplish this.

lotsofpulp 3y ago

> Well? Don't leave us hanging. Wait 100 years for $100k…it is meant to show why your scenario makes no sense. > And then what? And then someone who does want to do something productive with the property purchases it. Such as a homeowner, to live in. > but over the past 10+ years interest rates were effectively 0 for a reason: Nobody had any idea what to do with money. This is getting off topic, but interest rate and monetary and fiscal policy is a political thing. At least one person (me) has an idea of what to do with money. Providing kids with healthy meals at school would be a start.

randomdata 3y ago
> Wait 100 years for $100k…it is meant to show why your scenario makes no sense. If you have something to show, I'm interested. Why hold out on us? > And then someone who does want to do something productive with the property purchases it. And now the former property owner has nothing. What's the point of them going to all the trouble? I am sure they would rather use that time to post on HN, like you and I have the luxury to. > but interest rate and monetary and fiscal policy is a political thing. Interest rates are adjusted in accordance with certain political goals, yes, but they are adjusted in response to behaviour. Rates were lowered because people weren't looking for money, not that people stopped looking for money because interest rates were low. Basic supply and demand. > At least one person (me) has an idea of what to do with money. Providing kids with healthy meals at school would be a start. And if you invest wisely, you'll have even more money to help with that! So, we're back to trying to figure out what to invest in. Any ideas?

aesh2Xa1 3y ago

> While it does not speak to selling, it doesn't ignore it. It is factored in. I'm being dense; how have you factored that in? I agree that a higher tax will might not resolve the situation. I also think that a lower tax would not, either. First, some math: ((years_rent * months * rent) - (years_hosting * months * hosting)) - (years_tax * months * tax) The cost of renting immediately at $1,5000/mo and $1,000/mo tax: ((20 * 12 * 1500) - (20 * 12 * 500)) - (20 * 12 * 1000) = $0 The cost of renting immediately at $1,5000/mo and $500/mo tax: ((20 * 12 * 1500) - (20 * 12 * 500)) - (20 * 12 * 1000) = $120,000 The cost of losing 2 of the 20 years while speculating for a $2,000/mo renter and $1,000/mo tax: ((18 * 12 * 2000) - (18 * 12 * 500)) - (20 * 12 * 1000) = $84,000 The cost of losing 2 of the 20 years while speculating for a $2,000/mo renter and $5,000/mo tax: ((18 * 12 * 2000) - (18 * 12 * 500)) - (20 * 12 * 500) = $204,000 This shows that a lower tax is more profitable. The case where profit is <=$0 exists, but the the speculation also generally increases profit if we're just ignoring the part about it being speculation (with risk of never filling a spot or not having cash flow). A solution might be to lower taxes, but the incentive to speculate is still present (would you rather $84,000 or $204,000?). A better solution would be to punish the speculation directly. A variable tax rate where the unoccupied unit is taxed higher might accomplish this.