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$2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

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Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#61

Post by prklmn »

sanswork wrote: post #23
an_account_name wrote: post #18

Earlier quoted context omitted.

Because you still have to pay rent - if you could buy, your housing costs would be earning equity.

It's not uncommon for it to be better financially to always rent and just invest the difference between rent and mortgage+maintenance+taxes. With interest first mortgages as they are it is generally a long time before you earn any equity at all.

This is very rarely true. The only case where I can think of where you may be right is when real estate is purchased at the top of the market and sold at the bottom. When you go to sell real estate, it doesn't matter how much equity you have in the property, you will fully collect the gain or absorb the loss resulting from the sale. Equity is usually only relevant when looking at creditworthiness.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#62

Post by radicaledward »

sanswork wrote: post #31
fratlas wrote: post #27

Earlier quoted context omitted.

Especially when rent for young people is around one third to one half of their income (I would know, it's about 1/3 of mine). Would take me about 6-8 years to save for a deposit on an older apartment.

If your rent is 30-50% of your income you are living in too expensive of an area for your means or need more housemates.

If your rent is more than 30% of your income and you are between the ages of 25 and 34, you are normal (46% of the renting population). Even at above 50% your rent to income ratio is still fairly common (23%). Having a rent to income ratio above 30% is also correlated with having an income that is very low [1].

If you are at 30%, you are also meeting one of the most common recommendations in personal finance (regardless of whether that recommendation is _good_ or not).

It seems obvious to me that recommendations of either moving or finding additional housemates both can have significant short and long term negative impacts on financial stability, emotional, and physical health (I didn't bother looking for a source for this because this is hacker news not a dissertation).

1. https://www.earnest.com/blog/rent-and-the-30-percent-rule/ which cites http://www.jchs.harvard.edu/sites/jchs.harvard.edu/files/jch...

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#63

Post by tehlike »

I wonder what ways US could prevent Chinese money buying real estate in the US?

1. Do what Vancouver did, add tax for foreign property ownership. 2. Tighten the checks on origin of money? How exactly, especially when it's coming as all cash? Maybe forcing it to go through a bank, where more thorough check is mandatory per IRS? But then again, banks are not the most trustworthy in this country. 3. Other ideas?

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#64

Post by sanswork »

fratlas wrote: post #53
sanswork wrote: post #31

Earlier quoted context omitted.

If your rent is 30-50% of your income you are living in too expensive of an area for your means or need more housemates.

I live with two other housemates, in one of the cheaper, older apartments in the area. I chose it because it's only one bus away from my work/uni, where a cheaper location (much further away) was only $30 a week cheaper, and saving 2 hours a day of commuting is worth $6 a day to me. I see other commenters saying 30-50% isn't that bad, but that's not taking Sydney's high cost of living into account.

What area are you in now and what area were you looking at because your experience really doesn't match up with mine of living in Sydney.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#65

Post by nostrademons »

ec109685 wrote: post #54
aianus wrote: post #40

Earlier quoted context omitted.

This. I did the math when I rented an apartment in downtown Toronto and the rent was less than mortgage interest + condo fees + property tax + maintenance.

Except if the value of the real estate goes up.

Usually when mortgage interest + etc. > rent, it indicates that the property is overvalued and the value (over the long term) is more likely to fall than rise. Every other buyer - or almost every other buyer, except the ones that need to launder money - is making the same economic calculation, and if the cost of money to buy the property is more expensive than the rent you can earn from the property, they're not going to buy the property.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#66

Post by sanswork »

radicaledward wrote: post #62
sanswork wrote: post #31

Earlier quoted context omitted.

If your rent is 30-50% of your income you are living in too expensive of an area for your means or need more housemates.

If your rent is more than 30% of your income and you are between the ages of 25 and 34, you are normal (46% of the renting population). Even at above 50% your rent to income ratio is still fairly common (23%). Having a rent to income ratio above 30% is also correlated with having an income that is very low [1]. If you are at 30%, you are also meeting one of the most common recommendations in personal finance (regardl…

I didn't say it was uncommon I said it was too much.

I would think the feeling that you're never getting ahead will have a more negative mental health cost than a housemate ever will.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#67

Post by prklmn »

aianus wrote: post #40
sanswork wrote: post #23

Earlier quoted context omitted.

It's not uncommon for it to be better financially to always rent and just invest the difference between rent and mortgage+maintenance+taxes. With interest first mortgages as they are it is generally a long time before you earn any equity at all.

This. I did the math when I rented an apartment in downtown Toronto and the rent was less than mortgage interest + condo fees + property tax + maintenance.

So let's say you save 10¢ on every dollar by renting in your scenario. You'd have to have a hell of a return on that 10¢ you saved to beat the 90¢ you would have invested in the property but instead flushed down the drain in the form of rent....

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#68

Post by semi-extrinsic »

sanswork wrote: post #23
an_account_name wrote: post #18

Earlier quoted context omitted.

Because you still have to pay rent - if you could buy, your housing costs would be earning equity.

It's not uncommon for it to be better financially to always rent and just invest the difference between rent and mortgage+maintenance+taxes. With interest first mortgages as they are it is generally a long time before you earn any equity at all.

I guess it depends heavily on the location's property market and the regional tax rules. E.g. here in Norway, good tax breaks for owning property means we're currently paying $1k/month on mortgage+maintenance+taxes, but renting the same apartment costs 50% more.

It also means you essentially can't rent anything bigger than a 2 bedroom apartment; bigger units make so much more financial sense to own (easily $1k/month cheaper even before you include the investment aspect) that there is no market for renting them.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#69

Post by sanswork »

prklmn wrote: post #67
aianus wrote: post #40

Earlier quoted context omitted.

This. I did the math when I rented an apartment in downtown Toronto and the rent was less than mortgage interest + condo fees + property tax + maintenance.

So let's say you save 10¢ on every dollar by renting in your scenario. You'd have to have a hell of a return on that 10¢ you saved to beat the 90¢ you would have invested in the property but instead flushed down the drain in the form of rent....

You seem to think that 90c is going straight to equity when for many years it will be going straight to interest payments. So for the first 5-10 years your $1 is going down the drain vs the renters 10c going into investments.

Re: $2T in Proceeds of Corruption Removed from China and Taken to US, AUS, CAN, NL

#70

Post by fratlas »

sanswork wrote: post #64
fratlas wrote: post #53

Earlier quoted context omitted.

I live with two other housemates, in one of the cheaper, older apartments in the area. I chose it because it's only one bus away from my work/uni, where a cheaper location (much further away) was only $30 a week cheaper, and saving 2 hours a day of commuting is worth $6 a day to me. I see other commenters saying 30-50% isn't that bad, but that's not taking Sydney's high cost of living into account.

What area are you in now and what area were you looking at because your experience really doesn't match up with mine of living in Sydney.

The east (think Kensingington/Kingsford), was in the south last year.
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