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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

#131

Post by conanbatt »

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 think 90% of the mortgage is equity??

It would take you a decade for the equity you earn to match the interests you pay. (http://www.mortgagecalculator.org/ to fool around).

Theres property that rented out produces 2% income. If you can make more than 2% a year, then renters will be richer and compundingly so if they rent over buy.

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

#132

Post by a13xb »

rahimnathwani wrote: post #116
a13xb wrote: post #82

Earlier quoted context omitted.

Negative gearing is only one piece of the puzzle. There is also a 50% CGT discount if you hold an investment for more than a year. And yes, it applies to shares too, but it's not possible to get this amount of debt leverage for buying shares. There is also 100% CGT exemption if the property is owner-occupied. The worst part is that it extends up to 6 years after you move out (e.g. to rent somewhere cheaper). So you c…

"it's not possible to get this amount of debt leverage for buying shares" But it's easy to buy a call options on shares, which is equivalent.

They are not at all equivalent. Shares are a lot more volatile, and your guess needs to be accurate within a very short term or you lose 100% of your investment.

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

#133

Post by conanbatt »

sudeepj wrote: post #24

In India, "grey income" is called "black money". It is a hot topic in India right now. Recent activities on this: Note ban (Nov 2016) => https://en.wikipedia.org/wiki/Indian_black_money#Ban_on_1000... Using analytics (today's news) => http://economictimes.indiatimes.com/news/economy/policy/i-t-...

There is a distinction between corruption money and tax evasion. Hence the usage of gray vs black.

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

#134

Post by Hondor »

tehlike wrote: post #63

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?

Why ban Chinese money, not local money or money from other countries? What's your actual goal? To keep rich people concentrated in the places they came from?

Transferring money internationally is already a pain in the ass. You want to make it even harder? To outlaw bitcoin too? China itself is already restricting its people from taking money out of the country. It's nearly impossible for normal people to invest overseas because banks won't allow them to transfer their money.

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

#135

Post by wiz21c »

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.

But once you have completely bought your house/apartment, you have that warm comforting feeling that it's yours. Nobody will get you out to puts in his children, nobody will raise the rent because, you know, he has no choice, etc.

But in the case of a house, you'll have to repair it as times goes by and that can be quite expensive. But the one who rents it to you would have to do it as well, so, buying a house just makes sure you don't pay the little profit margin of the landlord (just the one of the bank :))

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

#136

Post by forgetsusername »

wiz21c wrote: post #135
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.

But once you have completely bought your house/apartment, you have that warm comforting feeling that it's yours. Nobody will get you out to puts in his children, nobody will raise the rent because, you know, he has no choice, etc. But in the case of a house, you'll have to repair it as times goes by and that can be quite expensive. But the one who rents it to you would have to do it as well, so, buying a house just m…

>so, buying a house just makes sure you don't pay the little profit margin of the landlord

Buying is not universally better than renting, period. There is no such thing as a free lunch; any profit received by owning the capital asset is compensation for the risk of holding that asset.

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

#137

Post by forgetsusername »

conanbatt wrote: post #131
prklmn wrote: post #67

Earlier quoted context omitted.

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 think 90% of the mortgage is equity?? It would take you a decade for the equity you earn to match the interests you pay. ( http://www.mortgagecalculator.org/ to fool around). Theres property that rented out produces 2% income. If you can make more than 2% a year, then renters will be richer and compundingly so if they rent over buy.

>Theres property that rented out produces 2% income.

Exactly right. Most people here have probably seen nothing but rising house prices their adult life. Even with a massive bust, people still believe it. In reality, real returns to real estate are barely above inflation.

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

#138

Post by forgetsusername »

prklmn wrote: post #92
sanswork wrote: post #69

Earlier quoted context omitted.

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.

At any point over those 5-10 you can turn around and sell the property and collect the full gain - it's entirely irrelevant to the mortgage payments being dedicated to interest. My $1 gets my name on the title, your 90¢ gets your name on the lease. Think about what your net investment is. So maybe my maintainance/tax/interest costs equate to 50¢. I'm still investing 50¢ compared to your 10¢. Also, I get incredible le…

>My return on the property is driven from the $1 million basis, and I get to keep all of it despite not having much of an equity stake in the property

And if that property falls to $900,000? Now you owe $1 million on a home worth less; literally throwing away $100,000.

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

#139

Post by JoeAltmaier »

forgetsusername wrote: post #138
prklmn wrote: post #92

Earlier quoted context omitted.

At any point over those 5-10 you can turn around and sell the property and collect the full gain - it's entirely irrelevant to the mortgage payments being dedicated to interest. My $1 gets my name on the title, your 90¢ gets your name on the lease. Think about what your net investment is. So maybe my maintainance/tax/interest costs equate to 50¢. I'm still investing 50¢ compared to your 10¢. Also, I get incredible le…

> My return on the property is driven from the $1 million basis, and I get to keep all of it despite not having much of an equity stake in the property And if that property falls to $900,000? Now you owe $1 million on a home worth less; literally throwing away $100,000.

You don't actually lose anything until you sell. A paper loss is a different thing. It has plusses and minuses.

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

#140

Post by forgetsusername »

prklmn wrote: post #96
sanswork wrote: post #72

Earlier quoted context omitted.

It isn't that rare actually in major western cities. So you are betting on large increases in property value to offset the loss from front loaded interest payments to make your investment better? That's a gamble.

The interest is part of the investment. It gives you control of the property and ability to collect all appreciation. It takes a very minor increase in value to turn a profit if your time horizon is short term. A renter doesn't have anything to show for his or her rent payment and cannot collect any appreciation.

>It takes a very minor increase in value to turn a profit if your time horizon is short term.

It's hard to believe that amateurs on this board actually believe house-flipping is a sure thing.

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