543 Investment Property

[Martin Hash]

Violating my cardinal rule of not predicting the future, I’m going to predict the future...

There is going to be a financial crash. Real estate will take a beating. I outlined what that beating will entail in my podcast. I wouldn’t be buying any triplexes today, and anybody who came to me and asked what would happen to their 20% down, I’d tell them they’ll lose it.

How? If you don’t sell then you won’t lose anything. You can wait it out as long as you can come up with the property taxes. That’s how people survived the Great Depression: they had 3-6 apartment brownstones that the whole family was able to live in plus rental income. My in-laws did it. So did other relatives. A multi family house is a hedge against disaster.

Hey, you should give financial advice.

[Speaker to Animals]

I think the bigger issue in the coming depression will not be housing so much (there will be more than enough, probably, since boomers will be dead), but access to food and resources. This time around, the government will radically expand the welfare state in a way they never could have accomplished in the 1930s. Which by itself wouldn't necessarily be a bad way to address the problem, but the American government being what it is (The Beast), this will be used to control and coerce people on an unprecedented scale. Especially if the democrats control it.

Personally, more than housing, I think your best bet is to have productive land. Something you can grow food on. Raise livestock. Whatever.

Housing is freaking everywhere right now. There won't be any shortage of that at all when boomers are gone.

My problem with Brewster's strategy is that it is geared towards a different time. The demographic winter is coming in only a few decades. This will radically change how everything works. There will no longer be less houses than people. Multi-unit dwellings are not going to be nearly as profitable as they are right now.

Right now, boomers are often sitting on large homes and many of them own second or third investment properties. All that gets liquidated. They can hand it down to their millennial spawn, but their spawn are deep in student loan debt and have no economic future in corporate America (most of them, anyway). It makes more sense for them to sell it all, and it's not like they are able to pay all the taxes anyway (which are bound to go way fucking up when the demographic pyramid inverts as it is).

I think real estate is a fine hedge, but productive land, not residences, and look far away from cities.

[brewster]

Honestly, ranting here about your apocalyptic self-justifying visions of the future is just fine. But I would think twice about investing based on them. People have been predicting the apocalypse for at least my entire lifetime. You know about the Ehrlich-Simon commodity price bet don't you? the failure of "peak oil" to end civilization is simply the latest iteration. A Jerry Pournelle fan like you must have read A Step Farther Out about how to avoid apocalypse?

[Speaker to Animals]

There is nothing apocalyptic about what I said. The demographic winter is happening. The population is set to rapidly decline. Residential prices, and especially rental income, depend on a growing population.

You have maybe fifteen to twenty years left before the demographic pyramid becomes a column and then starts to invert.

Economic depressions happen. There is nothing end times about it.

[C-Mag]

Honestly, ranting here about your apocalyptic self-justifying visions of the future is just fine. But I would think twice about investing based on them. People have been predicting the apocalypse for at least my entire lifetime. You know about the Ehrlich-Simon commodity price bet don't you? the failure of "peak oil" to end civilization is simply the latest iteration. A Jerry Pournelle fan like you must have read A Step Farther Out about how to avoid apocalypse?

True. I started our apocalypse thread and titled it uncertainty and self reliance, because I believe the best way to avoid the impacts of external forces, is to be less reliant on those external forces.

On topic, I agree that investment real estate is not right for everyone, just look at Time Shares, which have always been sold as an investment.

[C-Mag]

There is nothing apocalyptic about what I said. The demographic winter is happening. The population is set to rapidly decline. Residential prices, and especially rental income, depend on a growing population.

You have maybe fifteen to twenty years left before the demographic pyramid becomes a column and then starts to invert.

Economic depressions happen. There is nothing end times about it.

Depressions happen. But there is a huge business selling apocalyptic near future, there always has been. Agricultural land tends to be more of a long run investment, but you can often buy Ag land, and turn right around and lease it to someone for production.

[brewster]

There is nothing apocalyptic about what I said. The demographic winter is happening. The population is set to rapidly decline. Residential prices, and especially rental income, depend on a growing population.

You have maybe fifteen to twenty years left before the demographic pyramid becomes a column and then starts to invert.

Not that I want to divert this thread in this direction, but you do realize the simple answer to that potential population decline is immigration? The US will still be a more desirable place to live than most of the world for a long time. Do you really want to follow Japan down an economic sinkhole to maintain racial purity?

As for property, I would never invest in superluxury, it's value is as fictional as a diamond's. My rentals are all under 1000 sq ft and under $1750/mo, starter apartment territory around here. And no matter how low values and rents go, I still have zero personal housing expense, as I've had for 21 years. Given my apartment in the multifamily would rent for at least $3500/mo, that's about $60k in value, including income taxes I didn't have to pay. Just that is like having a 3rd income in the family.

[Speaker to Animals]

Immigration from where?

Everybody except Africa has low fertility rates right now.

Also, I would rather just deal with a real estate collapse than hand my nation over to foreigners. Your idea sucks on several levels.

[brewster]

Immigration from where?

Everybody except Africa has low fertility rates right now.

Crappy economies not population pressure is what makes people emigrate. By your reasoning no one would have left Ireland in the 1840's since the population was declining!

Also, I would rather just deal with a real estate collapse than hand my nation over to foreigners. Your idea sucks on several levels.

That's an ideological choice, not an economic one. The greatness of this country is directly based on 400 years of immigrants.

[Speaker to Animals]

Immigration from where?

Everybody except Africa has low fertility rates right now.

Crappy economies not population pressure is what makes people emigrate. By your reasoning no one would have left Ireland in the 1840's since the population was declining!

Also, I would rather just deal with a real estate collapse than hand my nation over to foreigners. Your idea sucks on several levels.

That's an ideological choice, not an economic one. The greatness of this country is directly based on 400 years of immigrants.

Again, from where? The only region with a fair replacement rate is sub-Saharan Africa.

Latin America has shit replacement too. Mexico is actually worse than the US.

Also, just assuming this pipe dream were possible, the only thing that will get you is murdered for your property, no differently than happens now in South Africa. These people are not talking out of their asses about wanting to exterminate us.