Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

antimoneylaunderinglaw.com

Post reply on HN
Print view View original

161–170 of 174 posts

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

#161

Post by forgetsusername »

JoeAltmaier wrote: post #139
forgetsusername wrote: post #138

Earlier quoted context omitted.

> 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.

>You don't actually lose anything until you sell.

If the value of your asset falls, you've lost net worth.

It's preposterous to claim that, even though the price of your home has fallen by half, and you are servicing the mortgage on the old value, that you haven't lost anything. Or that the fact that you can offset capital gains with capital losses somehow makes a plunge in value "worth it".

"Paper losses" are losses. The value of the asset isn't based on the price you paid.

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

#162

Post by prklmn »

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.

If you think of it in these terms, that's about two years worth of rent. But as a renter, you have no chance at benefitting from future appreciation. If you think the housing market is going to be in decline from your move in time, then it might be a good idea to rent depending on your time horizon. Over the long term, it has proven to generally not be a good idea.

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

#163

Post by dmix »

a_bonobo wrote: post #13

This is a relatively big problem in Australia - there has been talk of a housing bubble in Australia for the last few years which in part has been propped up by Chinese grey money buying whole apartment buildings for investment, which drives up prices (they can just dictate prices) and keeps young locals out [1]. I cannot afford a house and I have a well-paying job. The government looks the other way since building i…

This was a common fear in Vancouver and Toronto in Canada, but I remember reading that a study found foreign Chinese investment was only 5-10%, while playing a role it wasn't the primary issue everyone made it out to be. Can't find the link just now.

I remember thinking they might have just been good at hiding the fact they were foreign by having their student kids or extended family who have moved here permanently buy the properties, or shell companies. Which wouldn't attract as much scrutiny. This is just speculation but it's good to be highly sceptical when people put all the blame on foreigners.

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

#164

Post by victorhooi »

rbg246 wrote: post #123
wycx wrote: post #114

Earlier quoted context omitted.

Centrelink has been speculatively invoicing people to recover undeserved welfare payments based on crude data matching with income tax datasets. How nice it would be if they did some data matching to determine who was actually living in a property as their primary residence, vs. changed their mailing address to that of their residential property to pretend it was their primary dwelling, and issued invoices for unpaid…

They most certainly do chase property investors who do claim incorrect primary residence. Remember primary place of residence is only while you live there so if you change it one month before selling it only offsets one month of profits and what if you have multiple properties you can't hide it all with that. However the bigger problem remains that capital is taxed at half the rate of labour and this matched with tax…

Are you sure about that part about only while you live there?

I have friends who tell me they "need" (well, want to) live in their investment property for 6 months every few years, in order to get a refresh on their tax breaks?

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

#165

Post by wiz21c »

forgetsusername wrote: post #136
wiz21c wrote: post #135

Earlier quoted context omitted.

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.

Yep you're right. I just wanted to explain that there is also a psychological argument at play. That warm comforting feeling...

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

#166

Post by nostrademons »

dmix wrote: post #163
a_bonobo wrote: post #13

This is a relatively big problem in Australia - there has been talk of a housing bubble in Australia for the last few years which in part has been propped up by Chinese grey money buying whole apartment buildings for investment, which drives up prices (they can just dictate prices) and keeps young locals out [1]. I cannot afford a house and I have a well-paying job. The government looks the other way since building i…

This was a common fear in Vancouver and Toronto in Canada, but I remember reading that a study found foreign Chinese investment was only 5-10%, while playing a role it wasn't the primary issue everyone made it out to be. Can't find the link just now. I remember thinking they might have just been good at hiding the fact they were foreign by having their student kids or extended family who have moved here permanently b…

5-10% of total housing stock, or 5-10% of houses on the market?

Prices are set on the margin, reflected by the goods that are actively on the market, and at any given time only a small percentage of housing units are on the market. If 5-10% of total housing units are owned by Chinese nationals, and that percentage has grown rapidly in the last few years, it could easily translate to > 50% of real estate transactions.

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

#167

Post by aianus »

wiz21c wrote: post #165
forgetsusername wrote: post #136

Earlier quoted context omitted.

> 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.

Yep you're right. I just wanted to explain that there is also a psychological argument at play. That warm comforting feeling...

I would feel like there was a noose around my neck if I couldn't move without paying $30k in realtors fees (and possibly incurring capital loss depending on timing).

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

#168

Post by raquo »

aianus wrote: post #42
raquo wrote: post #30

Earlier quoted context omitted.

Don't know their source, but I can confirm that relevant Canadian laws are wide open for abuse due to both being toothless and because of near zero enforcement, at both federal and provincial (BC) levels. You can google how CRA actively avoided auditing foreign buyers "for fear of racism allegations" (yeah right) or how people bring hundreds of thousands of dollars in paper bills on themselves and their children, pay…

> It's amazingly fucked up, I'm surprised Canadians are taking it so willingly. Nothing surprising about it, ~69% of Canadian households (and a much higher percentage of voters!) are homeowners and directly benefit from this influx of capital.

That home ownership rate includes everyone who lives in a dwelling owned by their family, so it includes the youth who lives with their parents because they can't afford to move out. Besides, all the home owners I know are not happy about constantly increasing prices either. Many of them think it's unfair, many don't like the foreign inflation aspect, and even pragmatically speaking it's harder to jump to owning a bigger dwelling now. So I don't know why this is going on, but it's not because most people want higher housing prices.

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

#169

Post by trace303 »

a_bonobo wrote: post #13

This is a relatively big problem in Australia - there has been talk of a housing bubble in Australia for the last few years which in part has been propped up by Chinese grey money buying whole apartment buildings for investment, which drives up prices (they can just dictate prices) and keeps young locals out [1]. I cannot afford a house and I have a well-paying job. The government looks the other way since building i…

You've described the same exact situation that is unfolding in Vancouver, Canada.

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

#170

Post by rahimnathwani »

a13xb wrote: post #132
rahimnathwani wrote: post #116

Earlier quoted context omitted.

"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.

> They are not at all equivalent.

Why not?

> Shares are a lot more volatile, and

This is irrelevant.

> your guess needs to be accurate within a very short term or you lose 100% of your investment.

It's also easy to lose 100% of your investment when you buy property with leverage. At least with a call option you can't lose more than your initial investment. You can with property, unless you live in a jurisdiction which cancels the outstanding loan on a property after it's repossessed by the lender.

Perhaps your point is that, with a property purchase, you can ignore short term price movements. As long as you have enough money to pay the mortgage each month, you get 100% exposure to the price increase over 25 years, even though you put only 10% down and borrowed the rest.

The volatility doesn't matter. If I buy a 1-year call option on a particular share, it doesn't matter if the price goes up and down every day during that year. What matters is the price at the time the option expires.

What _does_ matter, and this may have been what you were thinking, is that it's hard to buy a long term call option on an individual share. The longest you can buy easily is probably 2 years, which is much less than the length of a mortgage.

Post reply on HN