Housing Crisis

[RefluxSemantic]

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Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

Well, yeah, using all of your savings to pay off the mortgage isn't worth it. But owning a house in general is, because you're avoiding the insane rental costs.

Liquid capital needed for buying a house was about 5000 at the time we bought which was in 2018 (it was 8000, but 3000 of that we got back from tax deductions so it cancels out). Investing that 5000 in stonks, going with 10% yearly ROI, would've yielded 500 in the first year.

Mortgage interest payments are about 350 a month. In NL, you are required by law to pay off some of your mortgage every month as well, coming to a total of about 650 per month in mortgage payments.
Renting a similar space would cost about 1200 a month.

By avoiding rental costs, we are saving 1200 - 350 = 850 a month, which is 10200 per year. Now, yes, about half of that we are forced to use to pay off the mortgage, so your opportunity cost argument applies. But the other 5k could be invested into stonks, which would yield 500 in the first year again, coming to a total of 10700 of savings per year, compared to renting.

That's where the 200% figure in my previous post came from. That's about the yearly ROI we would've needed in the stonk market for it to have been worth it to invest that initial 5000 into stonks rather than a house.

Edit: I forgot the taxes. We're paying about 1000 in house ownership taxes per year so the total savings would be about 9600, not 10700

have you taken hypotheekrenteafrek into account?

[Goodspeed]

Show hidden quotes

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

Well, yeah, using all of your savings to pay off the mortgage isn't worth it. But owning a house in general is, because you're avoiding the insane rental costs.

Liquid capital needed for buying a house was about 5000 at the time we bought which was in 2018 (it was 8000, but 3000 of that we got back from tax deductions so it cancels out). Investing that 5000 in stonks, going with 10% yearly ROI, would've yielded 500 in the first year.

Mortgage interest payments are about 350 a month. In NL, you are required by law to pay off some of your mortgage every month as well, coming to a total of about 650 per month in mortgage payments.
Renting a similar space would cost about 1200 a month.

By avoiding rental costs, we are saving 1200 - 350 = 850 a month, which is 10200 per year. Now, yes, about half of that we are forced to use to pay off the mortgage, so your opportunity cost argument applies. But the other 5k could be invested into stonks, which would yield 500 in the first year again, coming to a total of 10700 of savings per year, compared to renting.

That's where the 200% figure in my previous post came from. That's about the yearly ROI we would've needed in the stonk market for it to have been worth it to invest that initial 5000 into stonks rather than a house.

What's your LTV? What would your return have been if you applied equivalent leverage to stonks?

3000 of tax deductions is generous, we don't really get that here.

LTV was 100% at the time of buying. Right now it's about 60%. Applying that leverage (so, x1.6 then?) to any stonk buys would've yielded 800 instead of 500 which barely makes a dent considering the numbers above. But how does this work? Does applying LTV leverage to stonks somehow equalize the risk factor?

The core concept here is that yes, you're losing money paying off a loan, but alternatively you're losing much more money renting. Even if the LTV ends up at 150% because the market takes a dive, you're STILL saving money because rental costs would still be higher than mortgage interest.
Besides, if the housing market takes that much of a dive, I don't think stonks would be doing particularly great. Your leveraged buys aren't looking good either at that point.

Housing has historically been a pretty safe bet too (and it has been, so far), and is certainly not more risky than your average stonk. Especially in a place like the Netherlands, where housing scarcity is pretty much guaranteed for the foreseeable future.

[Goodspeed]

Show hidden quotes

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

Well, yeah, using all of your savings to pay off the mortgage isn't worth it. But owning a house in general is, because you're avoiding the insane rental costs.

Liquid capital needed for buying a house was about 5000 at the time we bought which was in 2018 (it was 8000, but 3000 of that we got back from tax deductions so it cancels out). Investing that 5000 in stonks, going with 10% yearly ROI, would've yielded 500 in the first year.

Mortgage interest payments are about 350 a month. In NL, you are required by law to pay off some of your mortgage every month as well, coming to a total of about 650 per month in mortgage payments.
Renting a similar space would cost about 1200 a month.

By avoiding rental costs, we are saving 1200 - 350 = 850 a month, which is 10200 per year. Now, yes, about half of that we are forced to use to pay off the mortgage, so your opportunity cost argument applies. But the other 5k could be invested into stonks, which would yield 500 in the first year again, coming to a total of 10700 of savings per year, compared to renting.

That's where the 200% figure in my previous post came from. That's about the yearly ROI we would've needed in the stonk market for it to have been worth it to invest that initial 5000 into stonks rather than a house.

Edit: I forgot the taxes. We're paying about 1000 in house ownership taxes per year so the total savings would be about 9600, not 10700

have you taken hypotheekrenteafrek into account?

Actually no, I forgot about that. Not sure how much that is exactly, but it's probably somewhere between 1000-2000. So that puts it back over 10k.

[Goodspeed]

Actually about the LTV/leverage thing @Horsemen: Do you mean that, since we could theoretically be left with a huge debt if our house ended up worthless, you could say that the initial 5k investment was leveraged (value of house / 5000) coming to about x35, and if you applied x35 leverage to stonks we could've made more?

We could have, but that's not at all the same risk factor. Mortgages aren't actually leveraged. If the housing market dives 10%, we lose 10%, not 350%, so it's not a fair comparison.

[RefluxSemantic]

I don't understand where you're coming from @Horsemen, maybe because I don't get some of the terminology but I just don't get it. A mortgage is basically a cheaper way to live. It's just a way to cut on renting costs. If we completely ignore the value it gives you later on in life, it's still sensible to me that you'll cut costs, no?

Or is your argument that it's better to invest the downpayment that you're forced to make and that the returns on that investment will make up the difference? I think that'd be pretty hard given that the price difference between rent and mortgage is like a factor 1.5-2 (and then we're still ignoring that you'll eventually own the house).

Also with renting there's usually a pretty significant downpayment too. Usually somewhere between 2-3 times the monthly rent. Given the sort of costs that goodspeed mentioned, that could easily be 2000-3000 euros downpayment for the renting.

[Goodspeed]

See your point about leverage on second thought @Horsemen, but let's not forget we're actually using the place to live in. I suppose if we want to look at it purely as an investment, in order to be able to compare to stonks, we have to apply the 850 in difference between rent and mortgage interest as a sort of "not-living-in fee" for the stonks. After all, you're not using the stonks to live in, and you still need a house; You are forced to pay rent.

The question then becomes: Is the 850 a month fee for holding the stonks worth the opportunity to choose which stonk to invest in (as opposed to being forced to invest in housing). Essentially, you're buying this opportunity for 10k per year. I'd say that's a shit deal pretty much no matter what, considering housing is one of the safest investments (again, especially in NL).

We also have to take into account that this 10k a year can be invested in stonks, as well. Technically only 5k because only 5k is liquid. So there would be a 1 year delay until we can match the initial stonk investment. So your deal is even worse: You're buying the opportunity to choose which stonks to invest in for 1 year only. If, in that 1 year, you happen to get worse ROI than the person who bought the house, you're never catching up.

[princeofcarthage]

Well you guys are missing a basic point.

[RefluxSemantic]

Well you guys are missing a basic point.

No u are

[Riotcoke]

Just going to have to wait till my parents die to buy a house. I'm on 1.3x the median wage atm and it's basically impossible for me to get anything without either marrying or getting a massive loan from relatives.

[Goodspeed]

Well you guys are missing a basic point.

Enlighten us

[RefluxSemantic]

It actually seems like houses are even a good investment if you just rent them, the difference between mortgage and rent is so large that its profitable to do so.

[Riotcoke]

It actually seems like houses are even a good investment if you just rent them, the difference between mortgage and rent is so large that its profitable to do so.

You can't really buy a house to rent if it's your only property, at least in the UK. Banks just won't give you a buy-to-let mortgage if you don't have a house already.

[Dolan]

It actually seems like houses are even a good investment if you just rent them, the difference between mortgage and rent is so large that its profitable to do so.

I know someone who does this. He had such high income that he could save up and afford to pay 4 mortgages at the same time, then put them up for renting and use the rent income to pay back the mortgages.
So at the end of his career he could own 4 houses and either keep making extra income from rent or just sell them.
It can be risky if there's a major financial event or if you lose your high-paying job, but if you weather out those risks, you end up with a comfortable retirement.

[Goodspeed]

It actually seems like houses are even a good investment if you just rent them, the difference between mortgage and rent is so large that its profitable to do so.

Yeah that's one of the reasons the market is so fucked. It shouldn't be financially lucrative for some random chump with a couple 100k laying around to buy an extra house and rent it out. It doesn't add value to the economy and prevents young people from buying the place and starting to build up capital.
Imo they should significantly increase the property tax if the property is not used for living in. This tax is already higher (in Gouda it's 0.1% vs 0.3%) but not enough higher. 0.3% per year is still pretty much negligible.

[Dolan]

Yeah I hate that people do this, they are part of the problem. They're solving a problem for themselves by creating a bigger one for a lot more people.
They are real estate hoarders who want to profit from making housing scarce for others.

[Horsemen]

Show hidden quotes

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

Well, yeah, using all of your savings to pay off the mortgage isn't worth it. But owning a house in general is, because you're avoiding the insane rental costs.

Liquid capital needed for buying a house was about 5000 at the time we bought which was in 2018 (it was 8000, but 3000 of that we got back from tax deductions so it cancels out). Investing that 5000 in stonks, going with 10% yearly ROI, would've yielded 500 in the first year.

Mortgage interest payments are about 350 a month. In NL, you are required by law to pay off some of your mortgage every month as well, coming to a total of about 650 per month in mortgage payments.
Renting a similar space would cost about 1200 a month.

By avoiding rental costs, we are saving 1200 - 350 = 850 a month, which is 10200 per year. Now, yes, about half of that we are forced to use to pay off the mortgage, so your opportunity cost argument applies. But the other 5k could be invested into stonks, which would yield 500 in the first year again, coming to a total of 10700 of savings per year, compared to renting.

That's where the 200% figure in my previous post came from. That's about the yearly ROI we would've needed in the stonk market for it to have been worth it to invest that initial 5000 into stonks rather than a house.

What's your LTV? What would your return have been if you applied equivalent leverage to stonks?

3000 of tax deductions is generous, we don't really get that here.

LTV was 100% at the time of buying. Right now it's about 60%. Applying that leverage (so, x1.6 then?) to any stonk buys would've yielded 800 instead of 500 which barely makes a dent considering the numbers above. But how does this work? Does applying LTV leverage to stonks somehow equalize the risk factor?

The core concept here is that yes, you're losing money paying off a loan, but alternatively you're losing much more money renting. Even if the LTV ends up at 150% because the market takes a dive, you're STILL saving money because rental costs would still be higher than mortgage interest.
Besides, if the housing market takes that much of a dive, I don't think stonks would be doing particularly great. Your leveraged buys aren't looking good either at that point.

All of this isn't even considering that if we went back to renting now, we would've made about a 1200% profit on the initial investment. In 3 years. But sure, that's not really normal. Housing has historically been a pretty safe bet though, and is certainly not more risky than your average stonk. Especially in a place like the Netherlands, where housing scarcity is pretty much guaranteed for the near future.

Yeah I mean the highest LTV I could get here is 80%, on a decent flat worth 500k my downpayment would be 100k. Then I would pay 12.5k stamp duty (15k from October 2021) and probably ~5k in transaction fees, so the upfront cash requirement would be up to 120k. I would also be taking on incremental monthly fees - building service charges, home insurance etc. So in total I'd be saving ~1k per month on rent, which is pretty miserable given 5x leverage. Plus pretty much all newbuild flats here are leasehold so I will need to pay ~10k-20k at some point to renew the lease term.

Conceptually your Rental Yield - Mortgage Interest is the amount you save from owning vs renting, but your opportunity cost needs to be based on an alternative which is like-for-like on leverage and risk. I could buy a 2x leveraged ETF on the S&P 500 and make an average of ~20k per year on my 120k investment. I'm currently selling spreads on RUT and making 5-10% per month. Sure these investment strategies would fuck me in the event of a recession but if the housing market were to take a dip the value of the equity in my home would also be wiped. The value of my house would only need to fall 20% for the equity in my home to drop to zero. This would be disastrous for me if I was forced to sell in the event that I also lost my job and couldn't meet the interest payments.

Liquidity is also a problem here, I could sell my entire investment portfolio today if I needed the cash, but selling my home and finding a new place to live could take months.

[Dolan]

That's what you get for living in London. It's just not worth buying in London under any scenario, unless you're wealthy.

[RefluxSemantic]

It actually seems like houses are even a good investment if you just rent them, the difference between mortgage and rent is so large that its profitable to do so.

Yeah that's one of the reasons the market is so fucked. It shouldn't be financially lucrative for some random chump with a couple 100k laying around to buy an extra house and rent it out. It doesn't add value to the economy and prevents young people from buying the place and starting to build up capital.
Imo they should significantly increase the property tax if the property is not used for living in. This tax is already higher (0.1% vs 0.3%) but not enough higher. 0.3% per year is still pretty much negligible.

Id go even further: for profit rent adds nothing to society and there is no reason for us to tolerate it.

There are already laws that limit maximum rent, but its way too lenient (insane prices still, like the 700 rent for my studio). Furthermore, those laws are made so that the person renting the place needs to step up and legally enforce lowering the rent - this leads to a bad relationship with the landlord and usually leads to the landlord using scare tactics to get you out.

In my opinion we should lower the maximum legal rent, and actually make it explicitly illegal to rent for more than that. Society does not have to accept these greedy people that feast on the poor.

[Goodspeed]

Show hidden quotes

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

Well, yeah, using all of your savings to pay off the mortgage isn't worth it. But owning a house in general is, because you're avoiding the insane rental costs.

Liquid capital needed for buying a house was about 5000 at the time we bought which was in 2018 (it was 8000, but 3000 of that we got back from tax deductions so it cancels out). Investing that 5000 in stonks, going with 10% yearly ROI, would've yielded 500 in the first year.

Mortgage interest payments are about 350 a month. In NL, you are required by law to pay off some of your mortgage every month as well, coming to a total of about 650 per month in mortgage payments.
Renting a similar space would cost about 1200 a month.

By avoiding rental costs, we are saving 1200 - 350 = 850 a month, which is 10200 per year. Now, yes, about half of that we are forced to use to pay off the mortgage, so your opportunity cost argument applies. But the other 5k could be invested into stonks, which would yield 500 in the first year again, coming to a total of 10700 of savings per year, compared to renting.

That's where the 200% figure in my previous post came from. That's about the yearly ROI we would've needed in the stonk market for it to have been worth it to invest that initial 5000 into stonks rather than a house.

What's your LTV? What would your return have been if you applied equivalent leverage to stonks?

3000 of tax deductions is generous, we don't really get that here.

LTV was 100% at the time of buying. Right now it's about 60%. Applying that leverage (so, x1.6 then?) to any stonk buys would've yielded 800 instead of 500 which barely makes a dent considering the numbers above. But how does this work? Does applying LTV leverage to stonks somehow equalize the risk factor?

The core concept here is that yes, you're losing money paying off a loan, but alternatively you're losing much more money renting. Even if the LTV ends up at 150% because the market takes a dive, you're STILL saving money because rental costs would still be higher than mortgage interest.
Besides, if the housing market takes that much of a dive, I don't think stonks would be doing particularly great. Your leveraged buys aren't looking good either at that point.

All of this isn't even considering that if we went back to renting now, we would've made about a 1200% profit on the initial investment. In 3 years. But sure, that's not really normal. Housing has historically been a pretty safe bet though, and is certainly not more risky than your average stonk. Especially in a place like the Netherlands, where housing scarcity is pretty much guaranteed for the near future.

Yeah I mean the highest LTV I could get here is 80%, on a decent flat worth 500k my downpayment would be 100k. Then I would pay 12.5k stamp duty (15k from October 2021) and probably ~5k in transaction fees, so the upfront cash requirement would be up to 120k. I would also be taking on incremental monthly fees - building service charges, home insurance etc. So in total I'd be saving ~1k per month on rent, which is pretty miserable given 5x leverage. Plus pretty much all newbuild flats here are leasehold so I will need to pay ~10k-20k at some point to renew the lease term.

Conceptually your Rental Yield - Mortgage Interest is the amount you save from owning vs renting, but your opportunity cost needs to be based on an alternative which is like-for-like on leverage and risk. I could buy a 2x leveraged ETF on the S&P 500 and make an average of ~20k per year on my 120k investment. I'm currently selling spreads on RUT and making 5-10% per month. Sure these investment strategies would fuck me in the event of a recession but if the housing market were to take a dip the value of the equity in my home would also be wiped. The value of my house would only need to fall 20% for the equity in my home to drop to zero. This would be disastrous for me if I was forced to sell in the event that I also lost my job and couldn't meet the interest payments.

Liquidity is also a problem here, I could sell my entire investment portfolio today if I needed the cash, but selling my home and finding a new place to live could take months.

Fair point if you can't get a 100% LTV in the UK. That is possible here. If 80% was the max, we wouldn't (and couldn't) have bought a house. And yeah, obviously the numbers change if you can't get 100% LTV.
How does any young person buy a house in the UK unless they're rich? Wtf

[Horsemen]

It actually seems like houses are even a good investment if you just rent them, the difference between mortgage and rent is so large that its profitable to do so.

You can't really buy a house to rent if it's your only property, at least in the UK. Banks just won't give you a buy-to-let mortgage if you don't have a house already.

Yeah also BTL properties in the UK are subject to higher dividends tax, higher capital gains tax and higher stamp duty compared to stocks and shares. You can't count on your property being occupied 100% of the time and as the landlord you are required to oversee and pay for all of the maintenance. Then there's talk of jacking up taxes on BTLs even further. It's pretty miserable and not worth the capital risk.

[Dolan]

Id go even further: for profit rent adds nothing to society and there is no reason for us to tolerate it.

Rent is basically living space scalping.

[Horsemen]

Show hidden quotes

Don't buy housing, it's risky and tax inefficient. Invest in stonks instead.

The money you save from avoiding high rent costs easily makes up for that, at least here (and mortgage interest here seems similar to the UK). For us it's about a 10k a year difference, and we needed to "invest" about 5k to be able to buy. If I buy 5k worth of stonks, I wouldn't get 200% yearly ROI unless I went for meme stonks and got lucky. Seems more risky than buying a house ngl

You are still paying for your house even if you own it and have no mortgage. The equity in your home could be invested in something else. You could earn a 10% yield if you bought and held QYLD. Is that better than what you would save on rent from owning your own home? I'm not familiar with rental yields in the Netherlands but in London they are nowhere close to that high.

Well, yeah, using all of your savings to pay off the mortgage isn't worth it. But owning a house in general is, because you're avoiding the insane rental costs.

Liquid capital needed for buying a house was about 5000 at the time we bought which was in 2018 (it was 8000, but 3000 of that we got back from tax deductions so it cancels out). Investing that 5000 in stonks, going with 10% yearly ROI, would've yielded 500 in the first year.

Mortgage interest payments are about 350 a month. In NL, you are required by law to pay off some of your mortgage every month as well, coming to a total of about 650 per month in mortgage payments.
Renting a similar space would cost about 1200 a month.

By avoiding rental costs, we are saving 1200 - 350 = 850 a month, which is 10200 per year. Now, yes, about half of that we are forced to use to pay off the mortgage, so your opportunity cost argument applies. But the other 5k could be invested into stonks, which would yield 500 in the first year again, coming to a total of 10700 of savings per year, compared to renting.

That's where the 200% figure in my previous post came from. That's about the yearly ROI we would've needed in the stonk market for it to have been worth it to invest that initial 5000 into stonks rather than a house.

What's your LTV? What would your return have been if you applied equivalent leverage to stonks?

3000 of tax deductions is generous, we don't really get that here.

LTV was 100% at the time of buying. Right now it's about 60%. Applying that leverage (so, x1.6 then?) to any stonk buys would've yielded 800 instead of 500 which barely makes a dent considering the numbers above. But how does this work? Does applying LTV leverage to stonks somehow equalize the risk factor?

The core concept here is that yes, you're losing money paying off a loan, but alternatively you're losing much more money renting. Even if the LTV ends up at 150% because the market takes a dive, you're STILL saving money because rental costs would still be higher than mortgage interest.
Besides, if the housing market takes that much of a dive, I don't think stonks would be doing particularly great. Your leveraged buys aren't looking good either at that point.

All of this isn't even considering that if we went back to renting now, we would've made about a 1200% profit on the initial investment. In 3 years. But sure, that's not really normal. Housing has historically been a pretty safe bet though, and is certainly not more risky than your average stonk. Especially in a place like the Netherlands, where housing scarcity is pretty much guaranteed for the near future.

Yeah I mean the highest LTV I could get here is 80%, on a decent flat worth 500k my downpayment would be 100k. Then I would pay 12.5k stamp duty (15k from October 2021) and probably ~5k in transaction fees, so the upfront cash requirement would be up to 120k. I would also be taking on incremental monthly fees - building service charges, home insurance etc. So in total I'd be saving ~1k per month on rent, which is pretty miserable given 5x leverage. Plus pretty much all newbuild flats here are leasehold so I will need to pay ~10k-20k at some point to renew the lease term.

Conceptually your Rental Yield - Mortgage Interest is the amount you save from owning vs renting, but your opportunity cost needs to be based on an alternative which is like-for-like on leverage and risk. I could buy a 2x leveraged ETF on the S&P 500 and make an average of ~20k per year on my 120k investment. I'm currently selling spreads on RUT and making 5-10% per month. Sure these investment strategies would fuck me in the event of a recession but if the housing market were to take a dip the value of the equity in my home would also be wiped. The value of my house would only need to fall 20% for the equity in my home to drop to zero. This would be disastrous for me if I was forced to sell in the event that I also lost my job and couldn't meet the interest payments.

Liquidity is also a problem here, I could sell my entire investment portfolio today if I needed the cash, but selling my home and finding a new place to live could take months.

That's actually a fair point if you can't get a 100% LTV in the UK. That is possible here. If 80% was the max, we wouldn't (and couldn't) have bought a house. And yeah, obviously the numbers change if you can't get 100% LTV.
How does any young person buy a house in the UK unless they're rich? Wtf

TBF you could get a 95% LTV mortgage and access some government housing support schemes but these only apply to properties below a certain value so it's pretty much irrelevant for London

[Horsemen]

It actually seems like houses are even a good investment if you just rent them, the difference between mortgage and rent is so large that its profitable to do so.

Yeah that's one of the reasons the market is so fucked. It shouldn't be financially lucrative for some random chump with a couple 100k laying around to buy an extra house and rent it out. It doesn't add value to the economy and prevents young people from buying the place and starting to build up capital.
Imo they should significantly increase the property tax if the property is not used for living in. This tax is already higher (0.1% vs 0.3%) but not enough higher. 0.3% per year is still pretty much negligible.

Id go even further: for profit rent adds nothing to society and there is no reason for us to tolerate it.

There are already laws that limit maximum rent, but its way too lenient (insane prices still, like the 700 rent for my studio). Furthermore, those laws are made so that the person renting the place needs to step up and legally enforce lowering the rent - this leads to a bad relationship with the landlord and usually leads to the landlord using scare tactics to get you out.

In my opinion we should lower the maximum legal rent, and actually make it explicitly illegal to rent for more than that. Society does not have to accept these greedy people that feast on the poor.

would just make the housing shortage worse tbh

[RefluxSemantic]

@Horsemen going over the numbers you posted, doesnt that end up being a 100k investment with 10% ROI? That seems pretty decent, no?

[Horsemen]

@Horsemen going over the numbers you posted, doesnt that end up being a 100k investment with 10% ROI? That seems pretty decent, no?

No because I borrowed 400k on a 120k initial cash payment to make 10%.

I could invest 100k in QYLD and borrow 0 and still make 10%.

If the housing market fell 20% I would be fked, if QYLD fell 20% I would be fine.