I need to unlearn the basic rules of property investment learned in Asia
- Except NYC, Queens (not long island), JC, and some parts of NJ, most other U.S. locations have no real (i,e. inflation adjusted) appreciation. Bayonne is one such location.
- due to the typical size, total cost of owning a home {tax … HOA … mtg interest … wood house repairs … lawn … heating…} is much higher in U.S. than in Asia, and often higher than renting.
- Bigger isn’t better. The bigger the house, the higher its running cost, but Americans are used to big houses.
- repair cost is much higher in US due to labor cost and wood structure. Many U.S. owners prefer DIY repair.
- In China and Singapore, you can leave a property vacant, but in U.S. pTax will force you to rent it or use it yourself.
Brian of RTS said owning a home is probably an expense rather than an asset. Brian’s view probably originated from the renter’s perspective. If there’s only small appreciation, then the additional outlay [1] of the home buyer compared to the renter basically contributes to the appreciation .. 羊毛出在羊身上. There’s no advantage to either option.
[1] including maintenance burden (none for the renter)
The renter has many advantages such as flexibility.
Brian countered every point I made about housing as an investment.
- rental income — is the more predictable “return” in the U.S. context. Capital appreciation is erratic and may not happen in many U.S. states.
- appreciation — in Asia and in NY region .. yes. The trend has been strong.
- maintenance cost — is lower in Asia but in U.S., it eats into your rental income
- pTax — much lower in many parts of Asia
- population growth — In Asia and in NY region, there’s growth, but not so much in U.S.. I see this as a fundamental factor. BGC and Cambodia beats SG in this respect.
Brian concluded that many of these factors are location-specific.