17 ms·
> If those buildings are “useless”, how is the developer going to make money on it? That doesn’t pass a basic smell test. By selling them to someone else who i
by roughly 2y ago
> If those buildings are “useless”, how is the developer going to make money on it? That doesn’t pass a basic smell test.
By selling them to someone else who intends to sell them to someone else, just like every other commodity on the market. Real estate as an investment is less a bet on rents and more a bet on land value.
- actionfromafar 2y agoWhich is why we need a land value tax.
- kortilla 2y agoThat’s some stupid shit. Nobody will pay money for it that can’t be supported by rent prices to float the mortgage. Think through stuff more before you post this.
- roughly 2y agoIf they expect the rate of return to exceed what they could get elsewhere, of course they will. Depending on what the investor expects to happen to land pricing, the math can pencil out just fine on letting an asset sit until someone's willing to pay enough for it. There's no deeper story here - invest X on the assumption it turns into Y, where Y is sufficiently larger than X to make it worthwhile. The fact that it's housing, as opposed to bonds, futures, paintings, crypto, whatever, is an interesting fact, but not really one that's relevant from a finance standpoint.