It’s a deep pocketed investor. Strictly looking for appreciation and not care about cash flow. I know someone who does that on this forum. Guess who might that be? 
Wqj
1 Like
My belief too. So I always laugh at any arguments that extrapolate rent increase indefinitely because of inflation.
I don’t think anyone should spend more than 2M on a primary. If you need a big SFH in prime neighborhood you’ll be much better off renting. Propert tax alone on a 3.5M house will be over 3.5k a month. Putting on interests (but not the principle) you will be likely over 10k a month.
If you can rent the same house for 7.5k you are stealing money from the landlord.
1 Like
You have to also count the appreciation.
How much appreciation on a 3.5m house?
Much better off to buy 3 1.2m rentals. Appreciate much faster.
Even if it appreciates 20% in 10 years that is 5000 every month. I assume for people buying 3M+ homes, their net worth is also high so it doesn’t matter much. Its a lifestyle choice.
People are extrapolating their current income far into the future. No doubt most will still make that much 20 years from now. But some won’t, due to family, health or recessions. What if you don’t have a high paying job but your housing expense is 15k a month. What’s the plan b?
Estimate too low. Should expect more than 5% per year in BA.
You don’t know about that. That’s only an extrapolation based on your personal opinion.
Nobody knows, y’all have been saying stock market bull run and stuff 
i’ts all about sentiment 
In your case, tomato, you should hope that I was right and manch was wrong
Since they are used to this level of lifestyle, government is obliged to maintain for them 
Which part of what I said is wrong? 
Which portfolio will double in value first?
A) 3.5M house in Palo Alto
Or
B) 3 townhouses in Sunnyvale each costing 1.2M
I wish one day I could be so rich I don’t care about a million here and a million there. 
Too greedy.
But I think you’ll get there eventually due to inflation 
1 Like
I always hope you are right. You being right works for me.
Zimbabwe people didn’t care about billions of losses.
1 Like
The answer is it depends. As with everything, if you try to maximize the value, you can build a brand new house. In PA, you may be able to sell it based on square footage. In sunnyvale, you can’t - it’d be overbuilding.
Buying a $3.5 house with barely any cash flow just as inflation hedge is strictly for very wealthy or foreign buyers that what to shelter money.
I know a Chinese investor the bought a $6m house in Atherton right before the Shanghai stock market crashed in 2015. Safe haven money. Didn’t bother to rent it out. It is not a coincidence that the Atherton market was soft in 2016. Looks like the current bear market in China may affect high end BA RE again.
2 Likes