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> "One of the fundamentals of a pyramid scheme is that early entrants profit, and continue profiting as the scheme plays out. How does this apply to the housing
by yen223 12y ago
> "One of the fundamentals of a pyramid scheme is that early entrants profit, and continue profiting as the scheme plays out. How does this apply to the housing market if you don't get continual returns on resale?"
You buy your first house, flip to to the next sucker/investor for a profit, use that profit to buy a second house, rinse and repeat. As long as property prices continue to increase, you'll always win. Until the world runs out of suckers.
At least, that's what's happening right now in my home country.
- technotony 12y agoThe key point here is leverage... because property is funded in part by debt when you increase your equity from the first sale then you can purchase a more expensive property (with even more debt) or possibly multiple second properties... in fact you can even do this without selling the first house by just increasing the mortgage.
- vskarine 12y agowhat's your home country?
- icebraining 12y agoThe Github profile says Australia.
- yen223 12y agoWhile Australia might be facing a serious property bubble soon, I'm not from there...
- bduerst 12y agoUsing returns to buy more assets is still not a pyramid scheme. I still don't get how they're extrapolating here.