traingang

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Post as many train pictures as possible.

All about urbanism and transportation, including freight transportation.

Home of train gang

:arm-L::train-shining::arm-R:

Talk about supply chain issues here!

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LANDLORDS COWER IN FEAR OF MAOTRAIN

"that train pic is too powerful lmao" - u/Cadende

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that's ok, i love not being able to own a home anyway. (hexbear.net)

submitted 2 days ago by Yuritopiaposadism@hexbear.net to c/urbanism@hexbear.net

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[–] hamid@crazypeople.online 32 points 2 days ago* (last edited 2 days ago) (1 children)

the benefit comes from treating the house not just as a place to live, but as a leveraged financial asset.

They probably didn't buy the house with cash; they used a mortgage. This is leverage.

Simple Example: You buy a $500,000 house with a $100,000 down payment (20%).

Your initial investment is $100,000. The bank "lent" you the other $400,000.
If that house's value increases by 20% to $600,000, you've made $100,000 in profit.
You just turned your $100,000 investment into $200,000 (your original down payment + the $100k in profit). That's a 100% return on your cash.

If you had invested that same $100,000 in the stock market and it went up 20%, you'd have made $20,000. The house gave you a 5x better return because of leverage.

Further you can borrow against an asset which is money that is taxed at capital gains and not income.

Speaking of capital gains, if you bought that $500k house and sold it for $800k, you made $300k in profit. If you're married, you pay $0 in capital gains tax on that profit (A single person can exclude 250k from taxes, married people can exclude 2x that). If that had been a stock investment, you could have owed over $45,000 in taxes. This is a massive government subsidy for homeowners.

In terms of income tax you can deduct the interest you pay on your mortgage from your taxable income bringing down your taxes.

[–] Philosoraptor@hexbear.net 21 points 2 days ago* (last edited 2 days ago)

This is slightly less effective now that interest rates have come up some, but for people who bought at like 2% in the 2010s, yeah: it was basically just the bank (and government) funding the most profitable investment possible for you with no downside or risk at all. That's how a lot of boomers see their house.

That other half of this "trick" is to then leverage your (now more valuable) asset to buy another house and rent it out. You take your $100,000 in profit that you made from sitting on your "asset," pull it out, and use it as the down payment on another property, then get some poor desperate person to pay the mortgage on that while you pocket the appreciation and get the property at the end. The faster prices go up, the easier it is for people who already have their foot in the door to just keep doing that over and over. It's braindead easy if you have no soul.