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I'm interested to know what you think the connection between debt and inflation is in real terms (not so much theoretical), especially in the context of the deficits that governments are raking up to deal with this crisis.
The argument that the house doesn't produce anything, is the same as saying a bed and breakfast doesn't produce anything. It ignores the basic tenet of utility. By the same logic, the truck doesn't produce anything other than emission, and a retail stores don't produce anything other than jobs.
you could've nailed down the entire problem like this: your rent will go up 100% of the inflation, but your wages will only go up 50% of the inflation, whilst homes lose value, so you better just buy the land under the house. most workers aren't capable of seeing this.
It's interesting for the case of the Philippines for the least. Locals don't really like to live inside condominiums. They still buy them to use them for Airbnb. Even condo sales agents promote that and that causes problems for residents especially foreigners since they cannot own land by law.
I have a personal beef with holiday homes. I live in a small, rural village that a few decades ago could support itself easily. Everyone living in the village spent money in it too, so the local economy was great. Since then, however, half the houses have been bought out as holiday homes. The owners are only here a few weeks of the year and the economy has drastically fallen because of it. Damn near every shop has closed down, the few remaining ones are on the brink. Meanwhile people who genuinely want to live and spend in the village can't because the property price is hugely inflated by rich twats buying it all up...
Very legitimate concern. 2 potential solutions: One, build more of these homes and price will drop. But zoning law might limit constructions. So the other approach is passing law requiring outsiders to pay premium for homes (in Singapore the premium 20% I think) and use the premium to fund houses for locals. Of course, it's hard to get everyone together. Strong leadership is needed.
then perhaps your village should come together and buy up these properties, develop tourism attractions for your town and rent those properties out to tourists from out of town.
Actually I'd REALLY disagree with the statement. Because actually pushing dirt around is the often the basis of good economies. Because you need to push around dirt in many ways to farm, to create both transport and water infrastructure, and also to collect many soil based raw materials like mining, quarrying etc. These are key to forming the basis for a good economy. They are a powerful and strong foundation for stable economies that are not extremely dependent on others. Pushing around dirt is often very useful work and the foundation of a great economy. Pushing around pieces of paper that hold the rights to a pile of dirt is not. That doesn't do anything useful, at its best it a way of creating a "fixed" level of economic friction in order to move the rights to those best able to use them. But that is far far from what the residential real estate market in the developed world is actually like.
Trying to buy my first house and I'm competing with companies that rent houses out. I've literally had every offer turned down because they have more leverage and power over an individual home owner.
@@michaelmckeever2734 Get paid up a few months ahead as a cushion. Don't spend a lot on furniture. Buy used OLD PEOPLE furniture of excellent quality. Learn repair skills, Take PROACTIVE care of your house. Set an example for your neighbors in landscape. Always put a few extra bucks on the principle EARLY in the game as possible. New roof..new HVAC..ONLY in the off (not busy) season with QUALIFIED companies (no pickup truck roofers etc..) Good luck.
In Japan, due to the population decline and natural desaster issue, your house is worth almost nothing after 30 years. Edit: it was pointed out that Gozzila attacks also play a roll in the land value. Edit 2: maemorri points out a plausible reason below in the comments.
And also due to the bubble burst in the late 80s. Property prices has been in decline for almost 2 decades. Only recently they started to go up, even then its barely growing
T-Rex Hunter A house cannot be sold or leased separately from the land so when anyone speaks of the purchase and sale of a house it includes the land otherwise it’s a retarded conversation.
I studied economics in college, but my career has taken me elsewhere. These videos "scratch an itch" that bookkeeping and mundane payment processing just don't. Thanks for the great content!
I did a subject on economics in high school and loved it. Considered further studying economics but didn’t as there weren’t many post graduate job prospects so I’m a carpenter now. I love watching these videos and seeing what really goes on behind the scenes to provide us the things we take for granted everyday. brings back that same hunger for knowledge and desire to change the world for the better I felt in high school.
Same here. Majored in Econ, and although I work in imports, it’s still deviates from the subject. These are great and remind of what I studied long ago.
Never buy a house based on a market’s expected ROI. A real estate agent probably isn’t assigning as much value to my 13 minute commute to work as I am.
Another value is the idea of my housing costs not being changed at the whims of my landlord, and whether they want more money to buy a boat or send their kids to private school, or just because the 'market price' has increased. Granted, a homeowner is at the whim of the local property taxes and other homeowner expenses, but that's rolled into a lease rate, anyway. Better rental market, nicer car for my landlord because outside of taxes, management (if outsourced), and homeowner overhead, their costs largely remain the same.
Joseph Rabb well a real estate agents job is to sell,sell,sell! So obviously he will paint the property in the best light possible, but those circumstances will not always materialise, and if they do, it may be temporary. So it’s always down to the buyer doing their due diligence. As the old saying goes: “Caveat Emptor!”
@@AwesomeHairo is English your mother tounge? If not it would explain the problem, in English there is an assumed subject which is HE as in English nouns don't have gender like in Spanish la/el or French le/la etc.
How to invest in real estate Step 1. See houses are increasing in value. Step 2. Take a loan because you don't have enough money. Step 3. Buy house and wait Step 4. Someone wealthier sees houses are increasing in value
Buy something at an inflated price now with the expectation that an even bigger idiot will buy it at an even more inflated price in the future-- what could go wrong?
*1:41** - The Good - A Tangible Investment* *5:54** - The Bad - Understand The Real Estate* *7:27** - The Ugly - A Cautionary Tale* 15:50 - Final Thoughts
During a bear market, the headlines will focus on negative news, whether it's declining economic growth, geopolitical upheaval, cultural and legal turmoil, or some combination of all three. I listened to a podcast of someone that grew his reserve from $120k to almost $460k during this Red season, can you share tips on how to make such aggressive proceeds in short periods?
Thank you for sharing. I just Googled his name and his website came up right away. It looks interesting so far. I'm going to book a call with him and let you know how it goes Thanks
I've been in real estate for over 15 yrs (side business), but how you explained this has completely changed how I see Real Estate now. Thank you for this!
The land being a commodity and house being a consumer good. Also, the house losing value, but the land increasing in value over time really did it for me. New perspective.
As my grandfather once told me in relation to investing in shares vs investing in property: "You can't sell the back door of your house when the weather changes. But you can close it and ride out the storm." Even though the housing market in Australia is likely to tank, I'm glad I own my own home and am not beholden to landlord sharks anymore.
What about the property tax sharks, like roaches they don't seem to die, the vermin have been around for 300 million years according to fossil evidence. That gross value without regard to debts when I assess your property, you better have my money or we will have a discussion on what you own. Don't make your problem my problem, the funds, please!
@@mattja52 Currently states in Australia do not charge property tax to owner occupied homes. Property buyers pay a stamp duty at the time of purchase which is dependent on the property price. This is in a way a contributing factor in the difficulty of raising a deposit since the median house price in Sydney for example is about 1.1 million aud. The state govt is proposing abolishing the one of stamp duty in favour of an annual property tax though
Real Estate Investing isn’t done just for the market “share” of a property to go up, but more for the cash flow gained by collecting rent. It doesn’t actually matter too much if a property appreciates, what matters is positive cash flow over all expenses. It’s like running any business. You get the tenant to pay all the expenses, you keep a small slice of that pie for providing the resource, and over time you gain equity in the property. Property value matters, but it matters in relation to Cash Flow. That’s my understanding. But I am new to all this.
Landlords do the opposite of providing housing, by buying up more homes than they need they just make housing inaccessible. Housing prices, property taxes go up just as consequence of that. All while the tenants pay for the inflated expenses, with no property. That's no market, just pure abuse.
I love how all the AirBNB “investors” bought up all the real estate in the city, thereby raising rents, & are now facing bankruptcy. Capitalism at work
@@Augustin54 it's not socialism for the rich. Socialism isn't bailouts or even social welfare programs. Socialism is when the workers own the means of production. Socialism for the rich is an oxymoron
@@cyzcyt chinese investors are so horrible they reshaped housing market of several cities around Asia-Pacific and American regions Even here in Southeast Asia, most condos are owned by Mainland Chinese
The fact that you mentioned the value of land several times really helps make for a compelling case for land-value taxes as opposed to property taxes. Edmonton, in Alberta Canada is a great case of this, would love to see a video on land value taxes!
I would like to hear more in your perspective but I must say that that disturbs me on a personal level. As a single person and and gardener I find that I need more land and less house to fulfill my psychological needs compared to many others, thus I'm at first put-off by seeking to tax the needs of one person differently from those of another. However, I think this is a case of the little picture (individual diversity of needs) and the bigger picture (the real financial cost of real estate) being in disagreement. It's maybe a tiny bit like the issues that led the U.S. to have a bicameral house.
Your personal home is a liability (cost money to own and such). Investment properties (rentals, leases etc) are assets. What people fail to realize that buildings depreciate in value unless they are frequently renovated and updated.
@@jf6466work According to accounting standards (GAAP, IFRS, and just about any others) the home is an asset. Look at the balance sheet of any company. Vehicles, house/buildings, tools, machinery, an office chair are all classified as an asset on any balance sheet. Gold, silver, oil, wheat are all assets and technically cost money to own (storage & security costs), yet nobody is going to call a gold bar a liability. The price of oil went negative because oil has storage costs, yet nobody is going to call owning 1 million barrels of oil a liability.
"Real estate prices are a function of demand." True. However, they are also a function of supply. Real estate prices in some markets are high because of supply constraint often driven by zoning regulations.😃
That would indeed be a good video, provided that EE has not fallen into the CCP propaganda claiming that the belt and road would somehow be good for the participant nations other than China.
reichrunner1 Yeah obviously, they get to satisfy their own citizens with foreign goods while also exporting their own stuff which is a priority for China considering its history is basically export stuff to other markets to earn money.
When I got divorced, I had to sell my house. What I lost in the deposit would have covered rent for those 5 years, let alone flushing away the payments. I was also very aware that every month it took to sell cost me another $1200. I spent $6000 on a cheap, crappy RV and well remember the morning 2 years later when I realised that it had just paid for itself in saved rent. So now, I've got a van I converted myself. I can move to where the work is and save money on rent to go towards my own land where I can live full-time, maybe build a small cabin.
@@carlosqlv That was the learning curve that divorce doesn't involve sensible decisions. I realised that pretty quickly and split the non-portable assets. I pointed out afterwards that she could have had all that and more for the asking. Never get attached to what you can't hold on to and that includes real estate.
I'm glad that worked for you. I know a young family that after losing their home in the sub-prime crash, similarly were able to move-in with her parents until they could pay cash for a home in an area of relatively lower cost. Not everyone has such options, though.
This is a super interesting video! Living in Vancouver, BC, this is a topic I'm pretty passionate about. I've seen rising housing prices and empty homes ruining neighbourhoods all around the Greater Vancouver Area. Perfectly good homes are being ripped down in scores and replaced by absolutely characterless mansions and being put on the market for 2,3, or even 4 times what they were purchased for. The activity is really silly in my opinion, and it turns out that it is not a good investment in many cases because some of these homes will sit on the market for long periods of time, and sometimes they do not sell at all. I don't think that real estate should be viewed as an "investment" for these reasons. It is incredibly disruptive and disrespectful to people who are trying to work or live in neighbourhoods, especially to those who have lived there for their whole lives. Rocketing land value has also priced people out of neighbourhoods, property taxes become unmanageable for many middle class people. The empty home tax in Vancouver has helped, but it is not enough. I hope that in the future there can be more regulation to prevent speculation and stabilize the market. Perhaps implementing restrictions on foreign "investment" could help, as I believe is the case in New Zealand. In any case, it is a very interesting topic that has very real consequences for many people, if not most.
Interesting perspective, thank you for sharing. I too have wondered if there might be an appropriate reason and way to favor local investment over that of foreigners. That is one thing I find right about Congress promoting home buying to the detriment of renters (per a different video), since I see national interest issues in not letting our property be snatched up by those of foreign countries.
Well, I believe that a common mistake made by many people is that they buy a house without calculating all the monthly costs involved and wind up in positions where they are spending close to half their income or more on their house with the rest of it going to other miscellaneous bills. Leaving them with no savings other than the money they have invested in the house which is illiquid.
And what's even the point of this comment? if you spend the same money living in a rental but ultimately it goes to the pockets of the landlord. If you live paying the house at least it's for you/you can make it pretty and rent it for more/yadayada.
They needed someone to blame. Blaming the consumer for not being able to afford a house only started happening in the 90's when governments stopped investing in housing as infrastructure.
Its been bad the last 1 - 2 years globally already. That disease that shall not be named is just making the inevitable faster. The reopening tomorrow, I feel a sense of dread. That grinding again to get things back to normalish, then to increase wealth....
@@ruthrecalde2858 Renting does provide a larger amount of flexibility and decreased risk over home ownership, and from a purely financial point of view, purchasing costs take a few years to be made up for compared to renting. Owning units in a multi-unit building (condominiums) has risks and headaches that are usually greater than renting in the same type of structure. Purchasing is not necessarily worse than renting, but it is not ALWAYS better.
Put extra to pay down the principal on your debt if you can (save on interest and be out of debt sooner). You can always rent out a room in your house (vet your potential tenants carefully!) if you need so you can keep making your payments if your income gets reduced in a recession.
man this is unsatisfying. especially when I hear that real estate is becoming a large % of Canada's GDP. this feels like an unsolved problem and a ticking timebomb
Yes, there bud a “certain” group of people who have flooded the market with foreign capital, from money they make being producers of the cheaper goods we demand. Vancouver is the ideal example of what foreign investment can do to the citizens of they city.
I like what you said "my home is my castle and it's all mine". I think there is something very beautiful about someone who has a completely paid off house. Nothing fancy, but it's shelter with the minimal expense of taxes and insurance. What a beautiful thing that, unfortunately, I think we have forgotten our society. Houses are for shelter 1st and foremost!
One thing to remember is that the economists aren’t the ones making money it’s the investors and business owners. Real estate (to be successful) should be run like a business. everyone needs a place to live and that is inherently valuable not sure we need an economist to tell us that. People are super scared of the leverage part but forget that RE has so much flexibility. You can buy and hold in down markets. Sell / Flip if the appreciation is in your favor. You can rent to a single family or rent a SFH by the door ( in expensive markets)
What has helped me so far 1. Save 20% downpayment while Researching thoroughly your target market. Look at home value prices for at least 3 months. Look at population increase or decrease. Reasearch how your target market performs in good and bad times, plan accordingly. Screen for effective property management and interview property management thoroughly and interview references for property management. 2. Save cash reserves for 6 months of all expenses (mortgage, insurance, property tax light repairs, poperty management, likely expenses plus a possible eviction cost and then "make rental ready for new renter to move in" expenses in your target market. Reasearch your target market and find out what these expenses are then plan accordingly. Then submit offers on a possible property once all reserves are met. 3. Buy realestate with 20 percent down in a low crime neighborhood with increasing population and below market value that will rent for what you can expect and provide POSITIVE cash flow in a neighborhood that is in demand. 4. Perform "make ready" repairs and Rent to qualified tenant thoroughly screened by property management. 5. Save 6 months of gross rental income from said tenant. 6. Repeat steps 1-6.
This episode really nailed it when you said "no great economy was ever built by shuffling around piles of dirt". Really going to give me a good night of sleep knowing I am on the right side of things.
You forgot to mention that regulation can also appreciate the value of existing property. For example if I own a property in a area that is heavily regulated and very costly to get planning permission etc then the value of the existing property will go up. This also contributes towards appreciation of housing prices. Silicon Valley is a prime example where people need housing for work, and the ability to build new houses was limited due to regulation. Therefore the existing value of properties shot up.
I've enjoyed your every video. You make finance and economics, and understanding our global finances fun. You have great knack of making use of often boring and fake stock footages.
Thank You very much. I like how you distinguish the difference between the house itself which does deteriorate over time and therefore is always in need of repairs and renovation and the land itself which usually appreciates , depending on location of course. A home should not be an investment , it should only be a place to live , to raise a family.
Since there’s an inverse relationship between interest rates and housing prices, some are waiting for interest rates to go way up, and buy the home in cash at a lower price.
would it be fair to say, then, that the reason why we have been accustomed to 'real estate only appreciating over time' is because of the fact that the human population has been increasing since, well, forever?
Yes. I believe that the moment human population starts stabilising, or worse yet, reducing, we'll start having a decline in the financial state of the world.
@@heerakathakor6016 I'd say we are starting to see somewhat a stabilization to decline with Millennials and Zoomers. A lot of millennials are opting to not to have kids due to diminishing resources and global warming. Why put kids through that.but some still will have kids due to way of life
@@kumar01234 But still, millenials and zoomers represent a tiny sliver of all 1980+ born humans. They're tied into one of the major cultures of the world, but there are still cultures where people are normally having 2+ kids. Expect major shifts in population densities in many areas far sooner than the population stabilisation on global levels.
Not really, it is just supply and demand. If every person only ever bought one house in their life, prices would probably rise and fall with overall wage level, but if wealthy people invest in real estate they will drive up prices. Usually the market would react by increasing supply, but space is limited, especially in cities and there is all kinds of additional complexity on top of this.
@@goliathsteinbeisser3547 Sure... that's why many properties are not sold for a long time. You're buying shit with a million $ today vs 50 years ago adjusted for inflation. There's so much wrong with this you can't deny it.
I work in infill real estate development and investments in a major city so know this subject quite well. I was a bit concerned when I saw this video as I really liked your others and was concerned that I'd realize that I'd been feed poor info on the other subjects that I'm not an expert in. However, you nailed it! Great video! One point that wasn't really addressed that I think could have added to this is that in the time since the great recession is that the minimum Debt Service Coverage Ratios (DSCR) for commercial/investment grade properties generally held steady at 1.35 meaning that cash flow generated from the property must be 35% greater than the cost of the loan, or essentially a 35% cushion. Those rates were much lower before the great recession and were still at those increase rates as of 3 months ago. So essentially, the debt market has been fairly well disciplined over the past 10 years and its led to more cushion in the system. What has really driven the exceptional increases in commercial real estate values has been the decreasing cost of debt, as unusually low interest rates over the past decade as been driving pricing increases as you essentially need less income from the property to generate the same return to the investor. What will likely cause that bubble bursting would be the Fed taking a sudden reversal of their interest rate slashing policies and forcing the prices of assets to readjust for the loss of return potential. Another point is that the productive or useful value of a property is only limited by highly restrictive single use zoning the forces horizontal integrations of uses and doesn't allow the property to become progressively more productive/useful to more people/businesses over time as areas densify. Higher density mixed use zoning that allows property to progressively densify through the addition of more business/homes on the property can evolve to become more productive and valuable to more people over time. The ability to use the property in different ways also serves as a risk hedge in the case where the demand currently existing on the property vanishes and the property is allowed to more easily and rapidly adapt to changing economic circumstances. Current overzealous zoning regulations have a far greater impact on the increase of risk in real estate by eliminating natural risk hedges for real estate such as the evolution of its productivity through densification and static use classification making repositioning to new demand much tougher.
So, if i were looking at buying a property which has "current land use" zoning as single family home, and now the "future land use" is slated to be "commercial", this would be considered a net positive, because it has more options than before?
Small nit: technically a house could appreciate in value even as it ages. For one, it could be of a style or building code that is no longer available and has some desirable affect. Second, while you are correct that buildings depreciate, the relative cost to replace the raw materials and labor contributes to rise. This a specific home with specific sq footage may be worth less per unit than a new home, but still more than it was when it first sold. It's not just the land itself that appreciates. (Wether the house value rises faster than other investments is unlikely, but still non zero)
I was thinking the same thing. Although the way some of the newer homes are built these days, they might not be worth much in a few decades. Full brick homes are the way to go - ones built around the turn of the last century. They age well.
I disagree with the analysis that houses don't produce anything in the way that a manufacturing business does. They make uninhabitable spaces habitable. That's a service. I can grow food in the garden, that's a good. Just because something is not a physical object doesn't mean it's not generating value. People pay money for digital items, people pay for "experiences". I think the argument is flawed.
True, but i think he just meant that houses don't add to the economy in the way a business does. Houses vs economy is pretty messy when we talk about it rationally like you have mentioned.
I am a landlord and an economist, and I think real-estate is considered a good because it produces services to buyer who needs a shelter or space. Most of these people rent to cut cost of their direct expenses and convert it to a variable expenses. The leverage can be seen if the direct expense depreciation is greater that of the monthly rent, those giving the buyer profit which can be used to further increase their productivity. Example, if a tenant is working from far, he justified his rent by looking on to his daily logistical cost and comfort, since the travel time can also be converted into a value, plus the actual fare, etc. Renting a land too to a company may maximize the company's profit, as well as the landlords. It all depends anyway to the entrepreneurial capability of the host.
^ I believe EE undervalues the real benefit of people without enough money to buy a house having the option to rent. It's not a tangible good that's produced, but shelter is pretty important. Now, you could say that maybe they'd be more able to buy if landlords and speculators hadn't inflated the price. I don't know, if someone wants to run the numbers on the house price shift brought on by investment properties let me know what you find.
Anthony Pillarella I would intuit that government secured home loans is more to blame for inflated home prices than landlords buying up houses to increase rental property demand. In most places I’d say there are just the right amount homes for prospective home buyers. Otherwise that demand would be met by new construction, which always happens. It’s known that when considering which is cheaper(home ownership vs renting) the deciding factor is how long you’re planning on staying put. Obviously this is partially responsible for rental property demand. The rest is probably due to individuals lack of financial literacy. I doubt very much that government insured home loans is less than 80% responsible for the housing bubble. If they weren’t in the business, homes would be harder to acquire, Lowering prices extending the demand for rentals. (Short term because people need to save to buy, not be financially irresponsible)( and long term because people will always be financially irresponsible and rent for 30 years never escaping poverty.
Anthony Pillarella also, I’d say the shift in home prices due to investment properties is almost nonexistent. Most homes are owned by home owners. Rental properties are mostly multi family complexes as this is more cost effective as a landlord, and also due to HOAs and other regulatory forces limiting the total number of rentable homes in a association. As stated previously, the inflation of home prices (excluding certain scenarios) is mostly due to how easy it is to buy a home for someone who isn’t financially ready to. It should be known I’m in a family of real estate sales people and landlords. Realtors sell homes all day long to people who really shouldn’t own them. But hey, anything to make the banks more money.
68 years old.Built and payed off my house 28 years ago. Smallish house. Been livin the dream every since. Work if I want to. Drive older cars. No debt. Could care less if housing market crashes. Apparently basic math is not tought in schools anymore. If you remove your largest expense in life (housing), it takes very little to get by nicely.....
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I think it's more accurate to say that landlords shouldn't be highly levered, making their money on the spread between the cap rate and the interest rate. Instead, they should make it their aim to make their profit on owned assets.
@@hedgemage5061 wrong! Putin literaly said that America only buys each others houses. In russia they built massive blocks of houses. America economy fake and weak. Russia ECONOMY STRONG AND POWERFUL
Good planning the time to buy will be soon. Keep being patient and look for deals. Don't be afraid to offer below market by 20% for a home or have seller pay all closing costs.
Same here I was in no rush to do it because I knew there would be some sort of economic down turn. I didn’t know it’s be this bad but I did see something coming. The real estate bubble in my city in Ohio is at bursting levels just waiting for the right time to pull the trigger lol
Loves these guys. Just wondering was the illiquid nature of the real estate mentioned in this or the high level of transaction costs? I believe both of these are extremely important points when considering real estate versus other asset classes.
@@gangsterbroccoli a mcmansion is a cookie-cutter mid-size home, that is larger than most, but not a real mansion. This gives the owner a bit of an inferiority complex, so they'll add mansion-looking bits like gables, turrets, or even (whispers) *gargoyles* These are merely rooms built inside an aesthetic decision, not replacements for these things, so its kind of a waste, and thats why people don't like them. And they're FUGLY
-Respect for your knowledge and understanding of economics. I have been watching your videos for probably years now... very good content. -I have a question for discussion. -What do you feel about investing in markets( in business, equity markets etc.) taking money from countries of low-interest rates to higher interest rates, for example, From UK or Germany to India? - this is assuming the cost to raise the capital is lower where interest rates are lower.
I think the whole "treat your home like an investment" thing is overblown. Everyone needs a place to live. You can either rent and keep nothing, or buy and eventually get something. Obviously some homes are better financial decisions than others, and renting might even make sense for some people, but the investment aspect is secondary IMO
except that money exists in far larger amounts than there are people to spend. that, and credit to compound the issue. so yes, houses are investment vehicles now.
But in large terms, your home will likely be the biggest investment you will ever make, so why shouldn't you think about it at least partially as an investment? You could spend a life time of stock trading and only make a fraction of the lost potential gains on your much larger investment on a house. You could buy a big $500,000 suburbian home that will be worth $350,000 in 25 years, and then risk alot of your free flowing crash in the stock market and make a whole lot less than $150,000 over those same years. Alternatively you could finance a $1,000,000 urban home that will net you a profit after mortage expenses, and whatever other investing profit you make is not shadowed by your biggest bad investment.
Shelter is a basic necessity for survival. If you can afford it, buy. Even if it doesnt appreciate one cent and you sell it for the same price you spent on it, you get your money back at closing. If you rent, the landlord steals your security deposit. 😳😂
What about all the things that go into the house; ie, plubming, electrical, appliances, roofing, furniture, etc? Now, I'm not saying that it's enough to break even, but it does offer an outlet for produced goods which also creates jobs
Whole story, Buy land, it costs money , it might not appreciate, the tax burden never goes away... And here I go to make an offer on my 7th property. Hmmmmmm..... This video would have been more useful 20 years ago...
they are making land all the time because is often cheaper than buying the vacant land that already exists in proximity to major population centers, just look at dubai, hongkong and incheon.
Few things I learn from this. 1. Living with your parents until you earn enough money to buy a house without taking a loan. 2. Don't take housing loan.
Yep and it works great until someone starts snitching , then you get audited and forensic accountants go through your finances and begin to wonder why the vending machine company you started orders about a quarter of the product the sales side of your balance sheet in implies it should. Or why that laundromat uses a fraction of the energy the supposed business implies.
Matthew Stinar Hope that laundromat is incorporated and the owner stays away from direct contact with the illegal dealings. That way, at least all of his/her personal property isn’t seized
I don’t recall much about the effect of taxation and regulation on housing but it is a major investment factor. Americans have always paid for schools through property taxes, a tax which is not only heavy but completely unfair for occupants without children.
FACTS you can’t even save on rent if you completely own your home because you gotta pay for someone else’s kids that is apparently your responsibility even though you won’t even benefit from the economy those kids create thirty years down the road
Years ago a man who was part time professor but mostly involved in running hedge funds told me airlines are very highly leveraged. If this is still the case, the current situation could be very interesting. I also heard someone with seemingly less intimate knowledge of economics say flight attendants make much more than most people, at least where I live now. Could you do a video on "the economics of aviation"?
This is reflected in my city Adelaide, realestate is so expensive that businesses Ive known to be in one spot for 20 years are moving further out away from the city or its surrounds OR just go out of business as is a testament to the many many empty shop fronts. Anyway Ive opted out of the madness and built a lovely mortgage free home in a truck, I live rent free close to the city and if/when this situation ends I will just drive it to the next advantageous arrangement.
I really appreciate how the clips are actually matching the subject in this one, It's much easier to follow along and absorb all the information being conveyed. CUDOS AND BRAVO! :D
You never mentioned that Rental Real Estate tends to work as an inflation hedge. While real estate values change significantly with a 2% interest rate change. When interest rates go up the real estate values go down. We have had a very long term series of interest rate drops causing real estate values to rise. the rental income from a property tends to go up even as property values drop with interest rate increases. In the end the payment you have to make on the 30 year loan is the critical number.
Ok so I’ve looked everywhere but I believe the most interesting economies have not been discussed yet! Can you please do Argentina, Saudi Arabia/ Arabian peninsula and Portugal. All unique bc of different reasons but super interesting. Also can you do an analysis of how the inflation of the dollar will affect different economies? And what that could look like for the USA?
If you’re comparing real estate to other investments like stocks, bonds, commodities you must factor in all costs including mortgage interest, property tax, insurance, maintenance. Also when you sell you will pay a broker 5% in most cases to list it. Of course on the flip side there is a capital gains tax loophole for lower price real estate, and it a tangible asset that will never be worth zero.
Sure but many of these costs are the same for renters so cancel out. I did not pay 5 percent to sell my last house but less than $150, and I payed my last mortgage payment over ten years ago. The biggest benefits of owning your own home come when you have payed off your mortgage.
Do you mean to tell me, Katie Scarlett O’Hara, that Tara, that land, doesn’t mean anything to you? Why, land is the only thing in the world worth workin’ for, worth fightin’ for, worth dyin’ for, because it’s the only thing that lasts.”
A house does produce something. It produces rent if you are an investor or housing if live in the house. Unless you don’t want to live in an apartment or house it’s something you need to spend your money on regardless. I pretty much only buy fixer uppers and rent them out. After the renovation the house provides great cash flow and housing for a tenant. I pay down my mortgage and the longer I own the house, typically the more cash flow I get. I pay 40% down when I buy a house and pay cash to fix it up so I end up with about 40% LTV so they way I look at the debt is that it increases my upside but I also don’t have as much risk in losing my equity if the value goes down. I’m in it for the long term though so a short downtown in the market only gives me better deals when I buy.
Seems like local government should work to stop housing being treated too much like a pure investment. Here in Boston lots of downtown apartment sit empty because they are owned by investors for years while people that have lived here their whole lives can’t find a place to live.
12:01 this is technically wrong. I think you can be in a 10:1 leverage position from a risk perspective by taking a long-call position on options where the premium paid is high relative to the strike price. Before the exercise date, you would be in the same risk position having paid the premium as the person in your example putting 10% down on an investment
This really is very good - as far as it goes. It has at least made the distinction between land and buildings. It has also, without spelling it out, exposed the primary cause of the boom-bust cycle and other chronic economic problems. Unfortunately, it hasn't mentioned Ricardo's Law of Rent, which is key to understanding of the land market. Consequently, it comes across as rather confused because it does not explain that the primary value of land is its rental, not its price. This video would be really good if the producer re-made it after studying Ricardo and Henry George, who analysed this issue in depth. He would also have come up with the correct solution.
Yeah man! Not a lie. I just left real estate for crypto currency, (bitcoin). I earn pretty well with the help of Mr Jeffery Adams who I invest with. He’s a very good professional.
I’m usually not one to comment but I must say, Mr Jeffery is good, I’ve been investing with him for almost a year now, he has made me some nice profit in bitcoin. I invested $5,000 to get $22,500 after two weeks.
While I understand the premise, as a landlord's kid, I would like to note that housing isn't as black and white as producing something or not (per around 15 minute mark). My parents' rentals were a second job, not remotely about passive income or simply holding an investment. No, housing isn't as consumable as wheat, but like your car, it requires regular care and investment in it to keep it up and running. Thus landlords are somewhere in between investors and service providers like mechanics. In fact, it's no coincidence that my dad's other job was about repairs.
One extra added value of owning your own home, is that you can do pretty much what you want with that with no artificial restriction mandated by the landlord. You can have pets (in many rented flats you can't). You can change the layout of stuff, remove carpets, etc. (you may or may not be able to do it in a rented flat, but it's not convenient because you do it at your own expense).
@tdot22 limited contribution makes it a none sequitur for many individuals. 65k is nothing compared to real estate properties which are often over a million.
I'm working as an Assistant Manager HR here in India , in a pretty decent organization. We are already set to fire almost 30% of our workforce due to COVID-19. Trust me , the real estate right now is bad and is set to turn worse in the following months.
Good video. Buying real estate to use for a home, is often misrepresented as an investment. It can sometimes be an investment, but it’s first a means of shelter. The investment element of this purchase is speculative. The buyer is betting that the property will have greater appeal to a future buyer than it does in the current market. Inflation does play a role and is inherent to the equation, but the gamble is how this property appeals relative to other properties and to other competing investments. Using the property reduces value (depreciation), which requires maintenance, features lose appeal (obsolescence), requiring renovation, but the biggest factor, location, can offset any other part. If opportunities for work, education, and entertainment are better elsewhere, the property will drop. It is possible for the highest and best use for a property is not to use it. Ghost towns and Detroit, Michigan are testaments to this extreme.
A lot depends on how you think of home ownership. I don't think of it as an investment. Rather home ownership is an alternative to paying rent since you do need a place to live. At some point if you live in a home long enough the cost of buying the home become less than the cost of rent even if you get nothing for the house when you eventually leave it. Fortunately, a home seldom has zero value, so you further reduce your cost of a place to live when you do sell and move on. Personally I am very glad that I bought my home since I have been in it long enough that the cost of living there is now very small and becoming smaller every year is absolute as well as inflated dollars.
Real estate investments (not as a primary residence) are so popular due to the unique tax advantages they carry. Significant exemptions, pass throughs, itemization, and a whole list of things you can depreciate for paper loss that you will probabaly never have to pay back due to 1031 exchanges.
well put. One aspect that is often underrated is the fact that 80% of property is own by investors- giving the first timers slow and bad starts to their first purchases in a high demand low supply market. Low interests have aided in excusing record high prices and for properties riddled with maintenance of 1960-80's property that is already at half its economical useful life. So- expensive purchase because anything cheap is taken by investor combos with the maintenance or energy inefficiency and then top that off with the fact that these house are at their half life- means, no retirement money. You'd be lucky to get 1/3rd back from investment. the only thing that can save people is to never sell, RIDE OUT the low interest loan and increasing inflation and eventually have a renter to take care of the payments for you- but then you are again, beginning the cycle.
Housing speculation is one of the biggest banes to affordable housing in this country. Even the average home buyer who is looking for a place to live is getting caught up in this notion that their house needs to turn a profit for them when they sell. You need to stop thinking like this. For those of us with real financial sense, buying a home to live in is about recouping most of the money you would have paid in rent, not about selling the house for more than you paid. To put it bluntly, if you bought a house today for $100K and then sell it 20 years from now, you would have to sell it for $250k just to beak even on the cost of your mortgage, taxes, and 20 years of maintenance. When you look at it this way, it looks like your house is ultimately a loss. However, if you instead compare that to what you would have paid in rent for the same size house, things are different. For the above house, the monthly cost of ownership is $1k/mo. You would probably have to spend at least $1100/mo to rent a similar place, meaning that buying a house has already saved you money. Now, If you were to sell your house for a modest $150k after 20 years, your cost of ownership just dropped to about $400/mo, which is WAY below the $1100/mo you would have paid to rent for the same period of time. THIS is how buying a home makes you money...
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I'm interested to know what you think the connection between debt and inflation is in real terms (not so much theoretical), especially in the context of the deficits that governments are raking up to deal with this crisis.
Can you do a video on dollar-cost averaging?
The argument that the house doesn't produce anything, is the same as saying a bed and breakfast doesn't produce anything. It ignores the basic tenet of utility. By the same logic, the truck doesn't produce anything other than emission, and a retail stores don't produce anything other than jobs.
Tobias Burke GF eeuwhgEd
you could've nailed down the entire problem like this:
your rent will go up 100% of the inflation, but your wages will only go up 50% of the inflation, whilst homes lose value, so you better just buy the land under the house.
most workers aren't capable of seeing this.
A video specifically talking about how short term rentals I.e. Air bnb affect local and regional economies would be awesome!
indeed
: ))))))))
Short term rentals will turn into long term rentals, which kills the jobs cleaning and managing them.
VisualPolitikEn made an episode about it. It seems the conclusion is very negligible differences in rents.
It's interesting for the case of the Philippines for the least. Locals don't really like to live inside condominiums. They still buy them to use them for Airbnb. Even condo sales agents promote that and that causes problems for residents especially foreigners since they cannot own land by law.
High Airbnb rental areas more crime
I have a personal beef with holiday homes.
I live in a small, rural village that a few decades ago could support itself easily. Everyone living in the village spent money in it too, so the local economy was great.
Since then, however, half the houses have been bought out as holiday homes. The owners are only here a few weeks of the year and the economy has drastically fallen because of it.
Damn near every shop has closed down, the few remaining ones are on the brink.
Meanwhile people who genuinely want to live and spend in the village can't because the property price is hugely inflated by rich twats buying it all up...
sums up south west
that sucks
Very legitimate concern. 2 potential solutions: One, build more of these homes and price will drop. But zoning law might limit constructions. So the other approach is passing law requiring outsiders to pay premium for homes (in Singapore the premium 20% I think) and use the premium to fund houses for locals. Of course, it's hard to get everyone together. Strong leadership is needed.
then perhaps your village should come together and buy up these properties, develop tourism attractions for your town and rent those properties out to tourists from out of town.
Who was selling the properties?
That last sentence was great. "No great economy was ever built on shuffling around piles of dirt."
The British Empire has left the chat
@@spelcheak the British empire shuffled around slaves and tea
@@samuelthornton9179 Don't forget enough Opium to bring down China.
Actually I'd REALLY disagree with the statement. Because actually pushing dirt around is the often the basis of good economies. Because you need to push around dirt in many ways to farm, to create both transport and water infrastructure, and also to collect many soil based raw materials like mining, quarrying etc. These are key to forming the basis for a good economy. They are a powerful and strong foundation for stable economies that are not extremely dependent on others.
Pushing around dirt is often very useful work and the foundation of a great economy.
Pushing around pieces of paper that hold the rights to a pile of dirt is not. That doesn't do anything useful, at its best it a way of creating a "fixed" level of economic friction in order to move the rights to those best able to use them. But that is far far from what the residential real estate market in the developed world is actually like.
Hong Kong does it by restricting the movement of dirt forcing the market to only go one direction
Trying to buy my first house and I'm competing with companies that rent houses out. I've literally had every offer turned down because they have more leverage and power over an individual home owner.
@@CodeDoge Fortunately, I was able to get an offer accepted and just closed on my first house! I'm excited
Congrat bro
You can thank low interest rates for that.
This happened to me, too. I had to put in EIGHT offers before I got one accepted.
@@michaelmckeever2734 Get paid up a few months ahead as a cushion. Don't spend a lot on furniture. Buy used OLD PEOPLE furniture of excellent quality. Learn repair skills, Take PROACTIVE care of your house. Set an example for your neighbors in landscape. Always put a few extra bucks on the principle EARLY in the game as possible. New roof..new HVAC..ONLY in the off (not busy) season with QUALIFIED companies (no pickup truck roofers etc..) Good luck.
In Japan, due to the population decline and natural desaster issue, your house is worth almost nothing after 30 years.
Edit: it was pointed out that Gozzila attacks also play a roll in the land value. Edit 2: maemorri points out a plausible reason below in the comments.
12ken I’d like to have some real estate in Tokyo or any other metropolitan area in japan for free or cheap please.
So I can buy a 30 year old house for cheap? Sweet.............
TC ZH the house is worthless but the land is still very valuable in Tokyo or any other metropolitan area.
And also due to the bubble burst in the late 80s. Property prices has been in decline for almost 2 decades. Only recently they started to go up, even then its barely growing
T-Rex Hunter A house cannot be sold or leased separately from the land so when anyone speaks of the purchase and sale of a house it includes the land otherwise it’s a retarded conversation.
I studied economics in college, but my career has taken me elsewhere. These videos "scratch an itch" that bookkeeping and mundane payment processing just don't. Thanks for the great content!
Totally agree. Economics major here abut fell into accounting how HR which I like. This channel scratches an itch for sure.
I did a subject on economics in high school and loved it. Considered further studying economics but didn’t as there weren’t many post graduate job prospects so I’m a carpenter now. I love watching these videos and seeing what really goes on behind the scenes to provide us the things we take for granted everyday. brings back that same hunger for knowledge and desire to change the world for the better I felt in high school.
Same here. Majored in Econ, and although I work in imports, it’s still deviates from the subject. These are great and remind of what I studied long ago.
Never buy a house based on a market’s expected ROI. A real estate agent probably isn’t assigning as much value to my 13 minute commute to work as I am.
Another value is the idea of my housing costs not being changed at the whims of my landlord, and whether they want more money to buy a boat or send their kids to private school, or just because the 'market price' has increased. Granted, a homeowner is at the whim of the local property taxes and other homeowner expenses, but that's rolled into a lease rate, anyway. Better rental market, nicer car for my landlord because outside of taxes, management (if outsourced), and homeowner overhead, their costs largely remain the same.
Joseph Rabb well a real estate agents job is to sell,sell,sell! So obviously he will paint the property in the best light possible, but those circumstances will not always materialise, and if they do, it may be temporary. So it’s always down to the buyer doing their due diligence.
As the old saying goes: “Caveat Emptor!”
@@paulsz6194 Did you just assume the real estate agent's gender?
@@AwesomeHairo when Paul mentioned the gender did you feel annoyed because you have a need for equality?
@@AwesomeHairo is English your mother tounge? If not it would explain the problem, in English there is an assumed subject which is HE as in English nouns don't have gender like in Spanish la/el or French le/la etc.
So... what you're trying to say is, free real estate isnt free?
HERESY!
Just like freedom isn’t free. It came with a cost and sacrifices
Free, real, estate. You can only choose two.
TheRestedOne free estate I’ll take it
LOL WUT cardboard box it is!
If there's real estate
Then where can I find fake estate
Oh boy do I have a development to talk to you about in Kenya, it's gonna be great.
china maybe, the gov owns everything i think or hell not.
World of Warcraft.
Time shares
@@EconomicsExplained please do
Why bother breaking into the housing market when you can just break into the house itself.
Huzzah, a man of reason!! 😂
The Cocomonk savage. Hope u joking lol
Lol it also produces some goods out of it.. /s
B and Es are the real investments.
And trade drugs in it.
How to invest in real estate
Step 1. See houses are increasing in value.
Step 2. Take a loan because you don't have enough money.
Step 3. Buy house and wait
Step 4. Someone wealthier sees houses are increasing in value
Lazergurka - Smerlin Kind of like a ponzi scheme 🧐
Lazergurka - Smerlin
Possible downside: you end up being the last one to buy the property before the economic downturn.
Buy something at an inflated price now with the expectation that an even bigger idiot will buy it at an even more inflated price in the future-- what could go wrong?
Man, I should've bought those poppies back then!
If you buy a house for an investment you would usually rent or lease it out for a positive cash flow so you would make money
*1:41** - The Good - A Tangible Investment*
*5:54** - The Bad - Understand The Real Estate*
*7:27** - The Ugly - A Cautionary Tale*
15:50 - Final Thoughts
During a bear market, the headlines will focus on negative news, whether it's declining economic growth, geopolitical upheaval, cultural and legal turmoil, or some combination of all three. I listened to a podcast of someone that grew his reserve from $120k to almost $460k during this Red season, can you share tips on how to make such aggressive proceeds in short periods?
Do you mind sharing info on the adviser who assisted you? I'm 39 now and would love to grow my stock portfolio and plan my retirement
Thank you for sharing. I just Googled his name and his website came up right away. It looks interesting so far. I'm going to book a call with him and let you know how it goes Thanks
I've been in real estate for over 15 yrs (side business), but how you explained this has completely changed how I see Real Estate now. Thank you for this!
The land being a commodity and house being a consumer good. Also, the house losing value, but the land increasing in value over time really did it for me. New perspective.
"No great economy was ever built by shuffling around piles of dirt"
*Ancient Egyptians would like to know your location*
Ptaku93 not to be a stickler... BUT... it was their great economy that allowed then to move the dirt.
Mesopotamia wants to know your location
@@kolamoose8717 nobody cares about mesopotamia
The Pyramids were a massive economic sink.
White elephant, bridge to no where, literally a shrine for the leader who never did a days work in his life.
As my grandfather once told me in relation to investing in shares vs investing in property: "You can't sell the back door of your house when the weather changes. But you can close it and ride out the storm."
Even though the housing market in Australia is likely to tank, I'm glad I own my own home and am not beholden to landlord sharks anymore.
What about the property tax sharks, like roaches they don't seem to die, the vermin have been around for 300 million years according to fossil evidence. That gross value without regard to debts when I assess your property, you better have my money or we will have a discussion on what you own. Don't make your problem my problem, the funds, please!
Facts. Great point. Your father was a wise individual.
@@mattja52
Currently states in Australia do not charge property tax to owner occupied homes. Property buyers pay a stamp duty at the time of purchase which is dependent on the property price. This is in a way a contributing factor in the difficulty of raising a deposit since the median house price in Sydney for example is about 1.1 million aud.
The state govt is proposing abolishing the one of stamp duty in favour of an annual property tax though
Real Estate Investing isn’t done just for the market “share” of a property to go up, but more for the cash flow gained by collecting rent. It doesn’t actually matter too much if a property appreciates, what matters is positive cash flow over all expenses. It’s like running any business. You get the tenant to pay all the expenses, you keep a small slice of that pie for providing the resource, and over time you gain equity in the property. Property value matters, but it matters in relation to Cash Flow. That’s my understanding. But I am new to all this.
The last words of a US Realtor in 2007: 'and you can always sell it' ; not adding: 'at a huge loss'.
'No economy has been built by shoveling around piles of dirt'
Australia: Hold my beer
Housing is Shelter, First and Foremost.
It should be. It has been twisted by greed & debt-addiction into speculation.
roberto R well this... i cant blame you tho... either you are on the winning side or the losing side of this.
Landlords do the opposite of providing housing, by buying up more homes than they need they just make housing inaccessible. Housing prices, property taxes go up just as consequence of that. All while the tenants pay for the inflated expenses, with no property.
That's no market, just pure abuse.
@@profribasmat217 This should be illegal
@@profribasmat217 i hope your tenants go on a (well deserved) year long rent strike. good luck with your debt.
I love how all the AirBNB “investors” bought up all the real estate in the city, thereby raising rents, & are now facing bankruptcy. Capitalism at work
Martin S wait til they get bailed out. Socialism for the rich capitalism for the poor
that's the rules of capitalism and chaos. It's working. You win some, you lose some.
Carlos Leon well I’m not a mega company so not likely
@@Augustin54 it's not socialism for the rich. Socialism isn't bailouts or even social welfare programs. Socialism is when the workers own the means of production. Socialism for the rich is an oxymoron
This is a great point. Capitalism is like starvation. It keeps populations in check. It is the great equalizer. People forget this.
Last time I was this early, Vancouver’s housing was affordable
i feel sorry for yall down there. I'm over here complaingn that i can't get rent in a nice area for under 1300
@@cyzcyt chinese investors are so horrible they reshaped housing market of several cities around Asia-Pacific and American regions
Even here in Southeast Asia, most condos are owned by Mainland Chinese
@@adiabd1 Blame it on your government. They're doing this to keep their economies going, as stagnant as they are.
The fact that you mentioned the value of land several times really helps make for a compelling case for land-value taxes as opposed to property taxes. Edmonton, in Alberta Canada is a great case of this, would love to see a video on land value taxes!
I would like to hear more in your perspective but I must say that that disturbs me on a personal level. As a single person and and gardener I find that I need more land and less house to fulfill my psychological needs compared to many others, thus I'm at first put-off by seeking to tax the needs of one person differently from those of another. However, I think this is a case of the little picture (individual diversity of needs) and the bigger picture (the real financial cost of real estate) being in disagreement. It's maybe a tiny bit like the issues that led the U.S. to have a bicameral house.
Your own home is not an investment, it’s a place to live.
it's still an asset lol, when you buy a new home and move there.
Your personal home is a liability (cost money to own and such). Investment properties (rentals, leases etc) are assets. What people fail to realize that buildings depreciate in value unless they are frequently renovated and updated.
@@jf6466work, I say that all the time. It’s the land that appreciates. Homes just lose value and it’s the reason flipping is possible.
both if you are intelligent tho
@@jf6466work According to accounting standards (GAAP, IFRS, and just about any others) the home is an asset. Look at the balance sheet of any company. Vehicles, house/buildings, tools, machinery, an office chair are all classified as an asset on any balance sheet. Gold, silver, oil, wheat are all assets and technically cost money to own (storage & security costs), yet nobody is going to call a gold bar a liability. The price of oil went negative because oil has storage costs, yet nobody is going to call owning 1 million barrels of oil a liability.
"Real estate prices are a function of demand." True. However, they are also a function of supply. Real estate prices in some markets are high because of supply constraint often driven by zoning regulations.😃
Economics of silver would be a really cool topic!
Or gold. People always ignore that the value of gold is as made up as the value of money.
At least housing provides shelter. Silver provides nothing. It is quite useless.
Or stock market speculation (I don't know if this was already discussed).
Robert Chitoiu really? Maybe you should look up the industrial uses of silver
Robert Chitoiu you couldn’t watch this video without silver as it’s key in most if not all electronic devices. LOL
You know you're watching a good economics lesson when the ad that interrupts is also an economics lesson and you watch it all the way through.
make a video on the belts and road initiative
That would indeed be a good video, provided that EE has not fallen into the CCP propaganda claiming that the belt and road would somehow be good for the participant nations other than China.
Internet User I mean you already have your opinion before the video was even made, not exactly unbiased either 🤔
Matt GT Yeah, that is so funny ^^ I think Internet User has a very high opinion of himself and his ability to know and understand economics.
@@internetuser2721 From what I've read it probably will be good for the participating nations. It'll just be far better for China.
reichrunner1 Yeah obviously, they get to satisfy their own citizens with foreign goods while also exporting their own stuff which is a priority for China considering its history is basically export stuff to other markets to earn money.
When I got divorced, I had to sell my house. What I lost in the deposit would have covered rent for those 5 years, let alone flushing away the payments. I was also very aware that every month it took to sell cost me another $1200. I spent $6000 on a cheap, crappy RV and well remember the morning 2 years later when I realised that it had just paid for itself in saved rent.
So now, I've got a van I converted myself. I can move to where the work is and save money on rent to go towards my own land where I can live full-time, maybe build a small cabin.
never marry.
@@carlosqlv That was the learning curve that divorce doesn't involve sensible decisions. I realised that pretty quickly and split the non-portable assets. I pointed out afterwards that she could have had all that and more for the asking.
Never get attached to what you can't hold on to and that includes real estate.
Can we assume that getting married and getting divorced are expensive?
I'm glad that worked for you. I know a young family that after losing their home in the sub-prime crash, similarly were able to move-in with her parents until they could pay cash for a home in an area of relatively lower cost. Not everyone has such options, though.
This is a super interesting video! Living in Vancouver, BC, this is a topic I'm pretty passionate about. I've seen rising housing prices and empty homes ruining neighbourhoods all around the Greater Vancouver Area. Perfectly good homes are being ripped down in scores and replaced by absolutely characterless mansions and being put on the market for 2,3, or even 4 times what they were purchased for. The activity is really silly in my opinion, and it turns out that it is not a good investment in many cases because some of these homes will sit on the market for long periods of time, and sometimes they do not sell at all.
I don't think that real estate should be viewed as an "investment" for these reasons. It is incredibly disruptive and disrespectful to people who are trying to work or live in neighbourhoods, especially to those who have lived there for their whole lives. Rocketing land value has also priced people out of neighbourhoods, property taxes become unmanageable for many middle class people. The empty home tax in Vancouver has helped, but it is not enough.
I hope that in the future there can be more regulation to prevent speculation and stabilize the market. Perhaps implementing restrictions on foreign "investment" could help, as I believe is the case in New Zealand. In any case, it is a very interesting topic that has very real consequences for many people, if not most.
Interesting perspective, thank you for sharing.
I too have wondered if there might be an appropriate reason and way to favor local investment over that of foreigners. That is one thing I find right about Congress promoting home buying to the detriment of renters (per a different video), since I see national interest issues in not letting our property be snatched up by those of foreign countries.
Property taxes in Vancouver are the lowest in North America FYI
Well, I believe that a common mistake made by many people is that they buy a house without calculating all the monthly costs involved and wind up in positions where they are spending close to half their income or more on their house with the rest of it going to other miscellaneous bills. Leaving them with no savings other than the money they have invested in the house which is illiquid.
And what's even the point of this comment? if you spend the same money living in a rental but ultimately it goes to the pockets of the landlord. If you live paying the house at least it's for you/you can make it pretty and rent it for more/yadayada.
They needed someone to blame. Blaming the consumer for not being able to afford a house only started happening in the 90's when governments stopped investing in housing as infrastructure.
Just built my first home. Really worries about this recession. It’s the first time I’ve ever had such a big debt and it’s looking scary.
Its been bad the last 1 - 2 years globally already. That disease that shall not be named is just making the inevitable faster.
The reopening tomorrow, I feel a sense of dread. That grinding again to get things back to normalish, then to increase wealth....
@@ruthrecalde2858 Renting does provide a larger amount of flexibility and decreased risk over home ownership, and from a purely financial point of view, purchasing costs take a few years to be made up for compared to renting. Owning units in a multi-unit building (condominiums) has risks and headaches that are usually greater than renting in the same type of structure. Purchasing is not necessarily worse than renting, but it is not ALWAYS better.
be proud of your home, unless youre in it for financial reasons in that case youre screwd
Put extra to pay down the principal on your debt if you can (save on interest and be out of debt sooner). You can always rent out a room in your house (vet your potential tenants carefully!) if you need so you can keep making your payments if your income gets reduced in a recession.
How are you doing now?
I appreciate how u 1) make this about the basics, and 2) make it as general across nationalities.
man this is unsatisfying. especially when I hear that real estate is becoming a large % of Canada's GDP. this feels like an unsolved problem and a ticking timebomb
Yes, there bud a “certain” group of people who have flooded the market with foreign capital, from money they make being producers of the cheaper goods we demand. Vancouver is the ideal example of what foreign investment can do to the citizens of they city.
@@paulsz6194 Vancouver is soon to be a territory of the CCP.
I like what you said "my home is my castle and it's all mine". I think there is something very beautiful about someone who has a completely paid off house. Nothing fancy, but it's shelter with the minimal expense of taxes and insurance. What a beautiful thing that, unfortunately, I think we have forgotten our society. Houses are for shelter 1st and foremost!
One thing to remember is that the economists aren’t the ones making money it’s the investors and business owners. Real estate (to be successful) should be run like a business. everyone needs a place to live and that is inherently valuable not sure we need an economist to tell us that. People are super scared of the leverage part but forget that RE has so much flexibility. You can buy and hold in down markets. Sell / Flip if the appreciation is in your favor. You can rent to a single family or rent a SFH by the door ( in expensive markets)
What has helped me so far
1. Save 20% downpayment while Researching thoroughly your target market. Look at home value prices for at least 3 months. Look at population increase or decrease. Reasearch how your target market performs in good and bad times, plan accordingly. Screen for effective property management and interview property management thoroughly and interview references for property management.
2. Save cash reserves for 6 months of all expenses (mortgage, insurance, property tax light repairs, poperty management, likely expenses plus a possible eviction cost and then "make rental ready for new renter to move in" expenses in your target market. Reasearch your target market and find out what these expenses are then plan accordingly. Then submit offers on a possible property once all reserves are met.
3. Buy realestate with 20 percent down in a low crime neighborhood with increasing population and below market value that will rent for what you can expect and provide POSITIVE cash flow in a neighborhood that is in demand.
4. Perform "make ready" repairs and Rent to qualified tenant thoroughly screened by property management.
5. Save 6 months of gross rental income from said tenant.
6. Repeat steps 1-6.
"Don't mistake leverage for genius"
-Steve Eisman
This episode really nailed it when you said "no great economy was ever built by shuffling around piles of dirt". Really going to give me a good night of sleep knowing I am on the right side of things.
You forgot to mention that regulation can also appreciate the value of existing property. For example if I own a property in a area that is heavily regulated and very costly to get planning permission etc then the value of the existing property will go up. This also contributes towards appreciation of housing prices. Silicon Valley is a prime example where people need housing for work, and the ability to build new houses was limited due to regulation. Therefore the existing value of properties shot up.
I've enjoyed your every video. You make finance and economics, and understanding our global finances fun. You have great knack of making use of often boring and fake stock footages.
Thank You very much. I like how you distinguish the difference between the house itself which does deteriorate over time and therefore is always in need of repairs and renovation and the land itself which usually appreciates , depending on location of course. A home should not be an investment , it should only be a place to live , to raise a family.
I learnt to manage my money through investments and it really works for me. They say money can't buy happiness but poverty can't buy anything.
Succeeding as a an investor seems like an easy task until proven difficult
Petition for economics explained ASMR channel with his soothing Aussie accent.
Today we are going to eat a bunnings snaggggg!
And don’t forget your victoria bitter
Since there’s an inverse relationship between interest rates and housing prices, some are waiting for interest rates to go way up, and buy the home in cash at a lower price.
Maybe that is part of why my mom has said that lower interest rates favor the poor and high interest rates favor the rich.
would it be fair to say, then, that the reason why we have been accustomed to 'real estate only appreciating over time' is because of the fact that the human population has been increasing since, well, forever?
Great point!
Yes. I believe that the moment human population starts stabilising, or worse yet, reducing, we'll start having a decline in the financial state of the world.
@@heerakathakor6016
I'd say we are starting to see somewhat a stabilization to decline with Millennials and Zoomers. A lot of millennials are opting to not to have kids due to diminishing resources and global warming. Why put kids through that.but some still will have kids due to way of life
Debt is ever increasing as well
@@kumar01234 But still, millenials and zoomers represent a tiny sliver of all 1980+ born humans. They're tied into one of the major cultures of the world, but there are still cultures where people are normally having 2+ kids.
Expect major shifts in population densities in many areas far sooner than the population stabilisation on global levels.
a strong property market is a burden to economy. mindblown.. totally true, it just sucks capital from where it can be productive
Incomes=adjusting for inflation (not really going higher)
House prices=outpacing inflation
huh. broken markets.
Not really, it is just supply and demand. If every person only ever bought one house in their life, prices would probably rise and fall with overall wage level, but if wealthy people invest in real estate they will drive up prices. Usually the market would react by increasing supply, but space is limited, especially in cities and there is all kinds of additional complexity on top of this.
Cheap loans = none fit market participants driving prices up
It's the Feds magical ability to expand money and credit which has skewed the market place.
@@goliathsteinbeisser3547 Sure... that's why many properties are not sold for a long time. You're buying shit with a million $ today vs 50 years ago adjusted for inflation.
There's so much wrong with this you can't deny it.
not really u forgot interest rates... which were like 20%. it's cheaper now then it used to be.
I work in infill real estate development and investments in a major city so know this subject quite well. I was a bit concerned when I saw this video as I really liked your others and was concerned that I'd realize that I'd been feed poor info on the other subjects that I'm not an expert in. However, you nailed it! Great video!
One point that wasn't really addressed that I think could have added to this is that in the time since the great recession is that the minimum Debt Service Coverage Ratios (DSCR) for commercial/investment grade properties generally held steady at 1.35 meaning that cash flow generated from the property must be 35% greater than the cost of the loan, or essentially a 35% cushion. Those rates were much lower before the great recession and were still at those increase rates as of 3 months ago. So essentially, the debt market has been fairly well disciplined over the past 10 years and its led to more cushion in the system. What has really driven the exceptional increases in commercial real estate values has been the decreasing cost of debt, as unusually low interest rates over the past decade as been driving pricing increases as you essentially need less income from the property to generate the same return to the investor. What will likely cause that bubble bursting would be the Fed taking a sudden reversal of their interest rate slashing policies and forcing the prices of assets to readjust for the loss of return potential.
Another point is that the productive or useful value of a property is only limited by highly restrictive single use zoning the forces horizontal integrations of uses and doesn't allow the property to become progressively more productive/useful to more people/businesses over time as areas densify. Higher density mixed use zoning that allows property to progressively densify through the addition of more business/homes on the property can evolve to become more productive and valuable to more people over time. The ability to use the property in different ways also serves as a risk hedge in the case where the demand currently existing on the property vanishes and the property is allowed to more easily and rapidly adapt to changing economic circumstances. Current overzealous zoning regulations have a far greater impact on the increase of risk in real estate by eliminating natural risk hedges for real estate such as the evolution of its productivity through densification and static use classification making repositioning to new demand much tougher.
So, if i were looking at buying a property which has "current land use" zoning as single family home, and now the "future land use" is slated to be "commercial", this would be considered a net positive, because it has more options than before?
Small nit: technically a house could appreciate in value even as it ages. For one, it could be of a style or building code that is no longer available and has some desirable affect. Second, while you are correct that buildings depreciate, the relative cost to replace the raw materials and labor contributes to rise. This a specific home with specific sq footage may be worth less per unit than a new home, but still more than it was when it first sold. It's not just the land itself that appreciates. (Wether the house value rises faster than other investments is unlikely, but still non zero)
I was thinking the same thing. Although the way some of the newer homes are built these days, they might not be worth much in a few decades. Full brick homes are the way to go - ones built around the turn of the last century. They age well.
I disagree with the analysis that houses don't produce anything in the way that a manufacturing business does. They make uninhabitable spaces habitable. That's a service. I can grow food in the garden, that's a good. Just because something is not a physical object doesn't mean it's not generating value. People pay money for digital items, people pay for "experiences". I think the argument is flawed.
True, but i think he just meant that houses don't add to the economy in the way a business does. Houses vs economy is pretty messy when we talk about it rationally like you have mentioned.
I am a landlord and an economist, and I think real-estate is considered a good because it produces services to buyer who needs a shelter or space. Most of these people rent to cut cost of their direct expenses and convert it to a variable expenses. The leverage can be seen if the direct expense depreciation is greater that of the monthly rent, those giving the buyer profit which can be used to further increase their productivity. Example, if a tenant is working from far, he justified his rent by looking on to his daily logistical cost and comfort, since the travel time can also be converted into a value, plus the actual fare, etc. Renting a land too to a company may maximize the company's profit, as well as the landlords. It all depends anyway to the entrepreneurial capability of the host.
^
I believe EE undervalues the real benefit of people without enough money to buy a house having the option to rent. It's not a tangible good that's produced, but shelter is pretty important.
Now, you could say that maybe they'd be more able to buy if landlords and speculators hadn't inflated the price. I don't know, if someone wants to run the numbers on the house price shift brought on by investment properties let me know what you find.
Anthony Pillarella I would intuit that government secured home loans is more to blame for inflated home prices than landlords buying up houses to increase rental property demand. In most places I’d say there are just the right amount homes for prospective home buyers. Otherwise that demand would be met by new construction, which always happens. It’s known that when considering which is cheaper(home ownership vs renting) the deciding factor is how long you’re planning on staying put. Obviously this is partially responsible for rental property demand. The rest is probably due to individuals lack of financial literacy. I doubt very much that government insured home loans is less than 80% responsible for the housing bubble. If they weren’t in the business, homes would be harder to acquire, Lowering prices extending the demand for rentals. (Short term because people need to save to buy, not be financially irresponsible)( and long term because people will always be financially irresponsible and rent for 30 years never escaping poverty.
Anthony Pillarella also, I’d say the shift in home prices due to investment properties is almost nonexistent. Most homes are owned by home owners. Rental properties are mostly multi family complexes as this is more cost effective as a landlord, and also due to HOAs and other regulatory forces limiting the total number of rentable homes in a association. As stated previously, the inflation of home prices (excluding certain scenarios) is mostly due to how easy it is to buy a home for someone who isn’t financially ready to. It should be known I’m in a family of real estate sales people and landlords. Realtors sell homes all day long to people who really shouldn’t own them. But hey, anything to make the banks more money.
68 years old.Built and payed off my house 28 years ago. Smallish house. Been livin the dream every since. Work if I want to. Drive older cars. No debt. Could care less if housing market crashes. Apparently basic math is not tought in schools anymore. If you remove your largest expense in life (housing), it takes very little to get by nicely.....
So, Landlords should get a real job and the property rental should be a side-hustle.
I am a landlord and I work 9-5.
Before you dedicate your life to working for money, consider making your money work for you!
Follow these 3 easy steps and you'll be able to retire at the age of 40!
believe it or not some landlords actually do all the work on their rentals, and treat it like a job! I do
@@Ourfairduke going to saves these lines on my desktop
I think it's more accurate to say that landlords shouldn't be highly levered, making their money on the spread between the cap rate and the interest rate. Instead, they should make it their aim to make their profit on owned assets.
"America doesn't make sense - they just buy each other's houses" - Putin lol
Russia is a second world country. Putin can talk when he can feed his people.
@@betterhomesnc2437 Calling Russia a second world isn’t saying much considering the West invented that term for Russia
I rather live in Russia then America. After all Russia offers the best standard of living
@@Pixel5564 lol, wut? ive been to Russia. It proved to me not all third-world sh*tholes have to be tropical.
@@hedgemage5061 wrong! Putin literaly said that America only buys each others houses. In russia they built massive blocks of houses. America economy fake and weak. Russia ECONOMY STRONG AND POWERFUL
17:35 *"in the mean time all we can do is avoid confusing leverage with genius..."*
Nice Steve Eisman reference :)
I'm glad I held off being a home owner for a year, preferring to build up a savings first. Prudence wins again!
Good planning the time to buy will be soon. Keep being patient and look for deals. Don't be afraid to offer below market by 20% for a home or have seller pay all closing costs.
Same here I was in no rush to do it because I knew there would be some sort of economic down turn. I didn’t know it’s be this bad but I did see something coming. The real estate bubble in my city in Ohio is at bursting levels just waiting for the right time to pull the trigger lol
Scott Bryan 👑
Saving for a home is a terrible idea.
For every dollar you save the house is going up by 2 dollars.
Prudence lost
Loves these guys. Just wondering was the illiquid nature of the real estate mentioned in this or the high level of transaction costs? I believe both of these are extremely important points when considering real estate versus other asset classes.
Oh god don't make me look at McMansions ever ever again. EVER.
I learned a new word today - And I also learned I am not the only one outraged by mindless architecture. Thanks, I guess.
@@goliathsteinbeisser3547 There are videos on it, you should look it up!!
Explosivefox109 what is a McMansion ?
@@gangsterbroccoli a mcmansion is a cookie-cutter mid-size home, that is larger than most, but not a real mansion. This gives the owner a bit of an inferiority complex, so they'll add mansion-looking bits like gables, turrets, or even (whispers) *gargoyles*
These are merely rooms built inside an aesthetic decision, not replacements for these things, so its kind of a waste, and thats why people don't like them.
And they're FUGLY
I'll look at McMansions for you for a small price! I think they are just fine.
-Respect for your knowledge and understanding of economics. I have been watching your videos for probably years now... very good content.
-I have a question for discussion.
-What do you feel about investing in markets( in business, equity markets etc.) taking money from countries of low-interest rates to higher interest rates, for example, From UK or Germany to India?
- this is assuming the cost to raise the capital is lower where interest rates are lower.
"sometimes we are over-rational, cold hearted, economists" , good on you man , you see the balance !
When the big company of the city go bust, the value of the houses plummets like mad and you cannot do anything against this.
Okay, sabotage the business and then buy all the destroyed house value and then await the rise
The value of a house is not just the sum of the value of the land and the materials, it also includes the cost of the labour to build it.
I think the whole "treat your home like an investment" thing is overblown. Everyone needs a place to live. You can either rent and keep nothing, or buy and eventually get something. Obviously some homes are better financial decisions than others, and renting might even make sense for some people, but the investment aspect is secondary IMO
except that money exists in far larger amounts than there are people to spend. that, and credit to compound the issue. so yes, houses are investment vehicles now.
But in large terms, your home will likely be the biggest investment you will ever make, so why shouldn't you think about it at least partially as an investment? You could spend a life time of stock trading and only make a fraction of the lost potential gains on your much larger investment on a house. You could buy a big $500,000 suburbian home that will be worth $350,000 in 25 years, and then risk alot of your free flowing crash in the stock market and make a whole lot less than $150,000 over those same years. Alternatively you could finance a $1,000,000 urban home that will net you a profit after mortage expenses, and whatever other investing profit you make is not shadowed by your biggest bad investment.
Shelter is a basic necessity for survival. If you can afford it, buy. Even if it doesnt appreciate one cent and you sell it for the same price you spent on it, you get your money back at closing. If you rent, the landlord steals your security deposit. 😳😂
@@mann8098 and you had a place to live the whole time. Any equity growth is a bonus
What about all the things that go into the house; ie, plubming, electrical, appliances, roofing, furniture, etc? Now, I'm not saying that it's enough to break even, but it does offer an outlet for produced goods which also creates jobs
"Buy land, they ain't making it anymore"
Archy Grey ha,ha . I quote I’ve heard from a real estate agent before!
Whole story,
Buy land, it costs money , it might not appreciate, the tax burden never goes away...
And here I go to make an offer on my 7th property. Hmmmmmm.....
This video would have been more useful 20 years ago...
the dutch would like to disagree
they are making land all the time because is often cheaper than buying the vacant land that already exists in proximity to major population centers, just look at dubai, hongkong and incheon.
@@IvarDaigon Yeah the exception is for coastal cities that are densely populated
Few things I learn from this.
1. Living with your parents until you earn enough money to buy a house without taking a loan.
2. Don't take housing loan.
1. GL saving 500k
2. Interest rates are
"Take your drug money and buy the neighborhood
That's how you rinse it"
Jay Z, Story of OJ
*Lots of dirty money flowing via real estate*
Lol how, jo where's ur Finance scrutinized more than when u purchase a home
@@salvab13 Certainly not the case...
Yep and it works great until someone starts snitching , then you get audited and forensic accountants go through your finances and begin to wonder why the vending machine company you started orders about a quarter of the product the sales side of your balance sheet in implies it should. Or why that laundromat uses a fraction of the energy the supposed business implies.
@@mrspeigle1 Hopefully you thought of all this before you chose the black market. And maybe you put your grow room in the basement of your laundromat.
Matthew Stinar Hope that laundromat is incorporated and the owner stays away from direct contact with the illegal dealings. That way, at least all of his/her personal property isn’t seized
I don’t recall much about the effect of taxation and regulation on housing but it is a major investment factor. Americans have always paid for schools through property taxes, a tax which is not only heavy but completely unfair for occupants without children.
FACTS you can’t even save on rent if you completely own your home because you gotta pay for someone else’s kids that is apparently your responsibility even though you won’t even benefit from the economy those kids create thirty years down the road
Years ago a man who was part time professor but mostly involved in running hedge funds told me airlines are very highly leveraged. If this is still the case, the current situation could be very interesting. I also heard someone with seemingly less intimate knowledge of economics say flight attendants make much more than most people, at least where I live now. Could you do a video on "the economics of aviation"?
Why do you think, Warren Buffet sold his airline stocks?
This is reflected in my city Adelaide, realestate is so expensive that businesses Ive known to be in one spot for 20 years are moving further out away from the city or its surrounds OR just go out of business as is a testament to the many many empty shop fronts. Anyway Ive opted out of the madness and built a lovely mortgage free home in a truck, I live rent free close to the city and if/when this situation ends I will just drive it to the next advantageous arrangement.
I really appreciate how the clips are actually matching the subject in this one, It's much easier to follow along and absorb all the information being conveyed. CUDOS AND BRAVO! :D
You never mentioned that Rental Real Estate tends to work as an inflation hedge. While real estate values change significantly with a 2% interest rate change. When interest rates go up the real estate values go down. We have had a very long term series of interest rate drops causing real estate values to rise. the rental income from a property tends to go up even as property values drop with interest rate increases. In the end the payment you have to make on the 30 year loan is the critical number.
Ok so I’ve looked everywhere but I believe the most interesting economies have not been discussed yet! Can you please do Argentina, Saudi Arabia/ Arabian peninsula and Portugal. All unique bc of different reasons but super interesting. Also can you do an analysis of how the inflation of the dollar will affect different economies? And what that could look like for the USA?
If you’re comparing real estate to other investments like stocks, bonds, commodities you must factor in all costs including mortgage interest, property tax, insurance, maintenance. Also when you sell you will pay a broker 5% in most cases to list it. Of course on the flip side there is a capital gains tax loophole for lower price real estate, and it a tangible asset that will never be worth zero.
Sure but many of these costs are the same for renters so cancel out. I did not pay 5 percent to sell my last house but less than $150, and I payed my last mortgage payment over ten years ago. The biggest benefits of owning your own home come when you have payed off your mortgage.
Do you mean to tell me, Katie Scarlett O’Hara, that Tara, that land, doesn’t mean anything to you? Why, land is the only thing in the world worth workin’ for, worth fightin’ for, worth dyin’ for, because it’s the only thing that lasts.”
Eh?😳
Mars ... here we come!
Lolz! and yet the South lost.
A dandy movie.
A house does produce something. It produces rent if you are an investor or housing if live in the house. Unless you don’t want to live in an apartment or house it’s something you need to spend your money on regardless. I pretty much only buy fixer uppers and rent them out. After the renovation the house provides great cash flow and housing for a tenant. I pay down my mortgage and the longer I own the house, typically the more cash flow I get. I pay 40% down when I buy a house and pay cash to fix it up so I end up with about 40% LTV so they way I look at the debt is that it increases my upside but I also don’t have as much risk in losing my equity if the value goes down. I’m in it for the long term though so a short downtown in the market only gives me better deals when I buy.
Seems like local government should work to stop housing being treated too much like a pure investment. Here in Boston lots of downtown apartment sit empty because they are owned by investors for years while people that have lived here their whole lives can’t find a place to live.
They have a perverse incentive to drive up real estate values though. As a huge percentage of their budget is based off of property tax.
I am impressed SimCity taught me half of what he is explaining in this video
Cities skyline taught me how the housing crisis happened. 🤣🤣 producing more houses doesn't make you more money
I think it would be interesting to see a video on the impact of Covid-19 on countries reliant on tourism.
I have watched a lot of your videos in the last month and I think this is the best one. A diamond among gems.
12:01 this is technically wrong. I think you can be in a 10:1 leverage position from a risk perspective by taking a long-call position on options where the premium paid is high relative to the strike price. Before the exercise date, you would be in the same risk position having paid the premium as the person in your example putting 10% down on an investment
This really is very good - as far as it goes. It has at least made the distinction between land and buildings. It has also, without spelling it out, exposed the primary cause of the boom-bust cycle and other chronic economic problems. Unfortunately, it hasn't mentioned Ricardo's Law of Rent, which is key to understanding of the land market. Consequently, it comes across as rather confused because it does not explain that the primary value of land is its rental, not its price.
This video would be really good if the producer re-made it after studying Ricardo and Henry George, who analysed this issue in depth. He would also have come up with the correct solution.
Nice video, picked up a couple things, but y’all should try investing in bitcoin, it’s paying even more than real estate now.
Yeah man! Not a lie. I just left real estate for crypto currency, (bitcoin).
I earn pretty well with the help of Mr Jeffery Adams who I invest with.
He’s a very good professional.
Oh! Jeff, I’m currently investing with him, I started with $10,000 bitcoin, after a week he made me a whooping $35,000. He’s so good.
I’ve heard a lot about this man, someone share his cöntact. Please, would love to invest with him too.
Paul Wilson, You can cöntact him on [ jefftradingservices g.m.a.ï.l c.o.m ].
He will surely attend to you.
I’m usually not one to comment but I must say, Mr Jeffery is good, I’ve been investing with him for almost a year now, he has made me some nice profit in bitcoin.
I invested $5,000 to get $22,500 after two weeks.
While I understand the premise, as a landlord's kid, I would like to note that housing isn't as black and white as producing something or not (per around 15 minute mark). My parents' rentals were a second job, not remotely about passive income or simply holding an investment. No, housing isn't as consumable as wheat, but like your car, it requires regular care and investment in it to keep it up and running. Thus landlords are somewhere in between investors and service providers like mechanics. In fact, it's no coincidence that my dad's other job was about repairs.
One extra added value of owning your own home, is that you can do pretty much what you want with that with no artificial restriction mandated by the landlord.
You can have pets (in many rented flats you can't).
You can change the layout of stuff, remove carpets, etc. (you may or may not be able to do it in a rented flat, but it's not convenient because you do it at your own expense).
The problem with real estate investment is that the government can tax away your equity
10:25
gotta love how you liked your own video
Wealth in real estate should be made slowly. Don't over leverage and you will be ok. Owning real estate is more tax efficient than owning stocks.
@tdot22 limited contribution makes it a none sequitur for many individuals. 65k is nothing compared to real estate properties which are often over a million.
Depends on which part of the world one is..
@tdot22 there are more write offs for real estate than for stocks. I love the TFSA but it has a contribution limit.
I'm working as an Assistant Manager HR here in India , in a pretty decent organization. We are already set to fire almost 30% of our workforce due to COVID-19. Trust me , the real estate right now is bad and is set to turn worse in the following months.
I misread that. At first I thought you were going to set fire to 30% of your workforce. 🔥☠️ That would be more of a Fortune 500 move, if you ask me.
Good video. Buying real estate to use for a home, is often misrepresented as an investment. It can sometimes be an investment, but it’s first a means of shelter. The investment element of this purchase is speculative. The buyer is betting that the property will have greater appeal to a future buyer than it does in the current market. Inflation does play a role and is inherent to the equation, but the gamble is how this property appeals relative to other properties and to other competing investments. Using the property reduces value (depreciation), which requires maintenance, features lose appeal (obsolescence), requiring renovation, but the biggest factor, location, can offset any other part. If opportunities for work, education, and entertainment are better elsewhere, the property will drop. It is possible for the highest and best use for a property is not to use it. Ghost towns and Detroit, Michigan are testaments to this extreme.
Shout out Detroit 🤘
No one - not a single person - called out the San Francisco stock footage from the Full House theme? I'm amazed.
A lot depends on how you think of home ownership. I don't think of it as an investment. Rather home ownership is an alternative to paying rent since you do need a place to live. At some point if you live in a home long enough the cost of buying the home become less than the cost of rent even if you get nothing for the house when you eventually leave it. Fortunately, a home seldom has zero value, so you further reduce your cost of a place to live when you do sell and move on. Personally I am very glad that I bought my home since I have been in it long enough that the cost of living there is now very small and becoming smaller every year is absolute as well as inflated dollars.
10:20 sometimes you just godda like your own content to get the ball rolling xD
Real estate investments (not as a primary residence) are so popular due to the unique tax advantages they carry. Significant exemptions, pass throughs, itemization, and a whole list of things you can depreciate for paper loss that you will probabaly never have to pay back due to 1031 exchanges.
I like this guy because even though he's an economist, he understands money isn't the only thing that matters (even if he does respect its influence)
His videos are feeding my addiction to personal investing.
well put. One aspect that is often underrated is the fact that 80% of property is own by investors- giving the first timers slow and bad starts to their first purchases in a high demand low supply market. Low interests have aided in excusing record high prices and for properties riddled with maintenance of 1960-80's property that is already at half its economical useful life. So- expensive purchase because anything cheap is taken by investor combos with the maintenance or energy inefficiency and then top that off with the fact that these house are at their half life- means, no retirement money. You'd be lucky to get 1/3rd back from investment. the only thing that can save people is to never sell, RIDE OUT the low interest loan and increasing inflation and eventually have a renter to take care of the payments for you- but then you are again, beginning the cycle.
Whatever happened to buying a house to just you know
live somewhere
Lol
what happened to working just to you know retire at age 65
weeb
Housing speculation is one of the biggest banes to affordable housing in this country. Even the average home buyer who is looking for a place to live is getting caught up in this notion that their house needs to turn a profit for them when they sell. You need to stop thinking like this.
For those of us with real financial sense, buying a home to live in is about recouping most of the money you would have paid in rent, not about selling the house for more than you paid. To put it bluntly, if you bought a house today for $100K and then sell it 20 years from now, you would have to sell it for $250k just to beak even on the cost of your mortgage, taxes, and 20 years of maintenance. When you look at it this way, it looks like your house is ultimately a loss.
However, if you instead compare that to what you would have paid in rent for the same size house, things are different. For the above house, the monthly cost of ownership is $1k/mo. You would probably have to spend at least $1100/mo to rent a similar place, meaning that buying a house has already saved you money. Now, If you were to sell your house for a modest $150k after 20 years, your cost of ownership just dropped to about $400/mo, which is WAY below the $1100/mo you would have paid to rent for the same period of time.
THIS is how buying a home makes you money...