re: Housing

Ben Felix

  • Can’t compare rent to mortgage payments
  • Can compare unrecoverable costs: a cost you pay w/ no associated residual value
    • Rent: the rent
    • Buy: not mortgage payment, property taxes, maintenance cost, and cost of capital
  • Property taxes ~ 1%; generally higher in states w/o income taxes (like 2%)
  • Maintenance costs ~ 1% of the home’s value
  • Cost of capital
    • Cost of debt: interest costs ~ 3% (add with pt, mc = 5% rule)
    • Cost of equity capital: you put down 20% on real estate instead of an alternative asset.
      • Globally real estate returned 1.3% from 1900 – 2017; stocks returned 5.2% after 1.7% inflation. So a nominal return of 3% for real estate; 6.9% for stocks. Round it to 3% cost of equity capital in real estate.
  • 5% rule: take value of the home you are considering, multiply by 5%, and divide by 12. If you can rent for less than that, renting is sensible.
    • $500,000K home would have $25,000 in unrecoverable costs or $2,083 per month
    • Can go the other way. Rental of $3k, multiply by 12, and divide by 5 is $720k. SO renting for 3K is financially equivalent to buying a $720k home.
  • 5% rule becomes 4% if you are holding a less aggressive stock portfolio, if you are taxed harshly on those investments, etc.
  • Housing best investment ever?
    • Real estate return = net rental income + price increase in the home
    • If you live in the house, you don’t get the rental income
    • So really, if you are living in the house, you already aren’t the subject of most claims about real estate’s great returns
    • 1870-2015 for GLOBAL housing 7.05% compared to 6.89% for stocks
      • but that means that you had to invest in housing in ALL countries
      • plus, housing, unlike stock, is not homogenous
      • and if you could buy housing across the world, you still have to manage all the properties
      • investing in any one asset is not a compensated risk. uncompensated risks can usually be diversified away by investing in a whole asset class, but that is hard with real estate.
    • If your monthly housing cost is higher than what you could rent it for, that loss will decline over time assuming your mortgage is fixed and there exists some level of rent inflation
    • Missing a single month of rent per year crushes returns
    • You basically have to be perfect to match the stock market
    • And if you buy in a single locality, you are in a similar situation to buying a single stock: the idiosyncrasies of the locality profoundly affect you
  • Why rent instead of buy?
    • Less risk: Short-term (<10 yrs) price fluctuations can crush a buyer who has to move. Not to mention the risk of taking on debt.
    • Predictable cost: maintenance costs for homes that can be random
    • No investment illusion: homeowners will spend heavily on a variety of things under the guise of increasing the price of the home even though there is no such guarantee that such efforts will pay off
      • Buildings can never go up in value. Ever. Period. Only land can go up in value.
  • Homeowners also pay “rent”
    • Renting services from the city in the form of property taxes
    • Unrecoverable maintenance costs just to keep their house inhabitable
    • Renting money from the bank while they have a mortgage
  • What about once the mortgage is paid off?
    • $500k home. Could sell and keep $475. Could invest that money at 6% while the long-term expected return on real estate is only 3%. That difference is op cost or $14k per year. Plus you still have maintenance and taxes post-mortgage.
  • People think their homes are better investments than they actually were. Big numbers. Failing to understand compound returns and the costs along the way.  Not to mention inflation.


All Instapaper Notes

Our Teetotaling Elites | The American Conservative

That may come as a nasty shock to Christ Himself, who was known to serve wine at supper, and enjoyed the odd tipple with prostitutes and tax men.

Everything Is Broken

Anyone actually concerned with solving deep-rooted social and economic problems, or God forbid with creating something unique or beautiful—a process that is inevitably messy and often involves exploring heresies and making mistakes—will hit a wall. If they are young and remotely ambitious they will simply snuff out that part of themselves early on, strangling the voice that they know will get them in trouble before they’ve ever had the chance to really hear it sing.

Everything Is Broken

“You might not even realize you’re not where you started.” The machines trained us to accept, even chase, this high. Once we accepted it, we turned from willful individuals into parts of a mass that could move, or be moved, anywhere. Once people accepted the idea of an app, you could get them to pay for dozens of them—if not more. You could get people to send thousands of dollars to strangers in other countries to stay in homes they’d never seen in cities they’d never visited. You could train them to order in food—most of their food, even all of their food—from restaurants that they’d never been to, based on recommendations from people they’d never met. You could get them to understand their social world not as consisting of people whose families and faces one knew, which was literally the definition of social life for hundreds of thousands of years, but rather as composed of people who belonged to categories—“also followed by,” “friends in common,” “BIPOC”—that didn’t even exist 15 years ago. You could create a culture in which it was normal to have sex with someone whose two-dimensional picture you saw on a phone, once.

Everything Is Broken

The homogeneity of these spaces means that traveling between them is frictionless, a value that Silicon Valley prizes and cultural influencers take advantage of. Changing places can be as painless as reloading a website. You might not even realize you’re not where you started.



(Had Vincent succeeded? She felt by any rational measure she was living an extraordinary life, but on the other hand she wasn’t sure what the goal had been. later she stood alone on the terrace, filming the Mediterranean, and thought, Maybe this could be enough. Maybe not everyone needs to have a specific ambition. ic ould be the sort of person who just goes to beautiful places and owns beautiful things. Maybe I could film five-minute videos of every sea and every ocean and perhaps there would be some meaning in that project, some kind of completion.)

It wasn’t the romance of the century, but it didn’t have to be; if you genuinely enjoy someone’s company, she’d been thinking lately, if you enjoy your life with them and don’t mind sleeping with them, isn’t that enough? Do you have to actually be in love for a relationship to be real, whatever real means, so long as there’s respect and something like a friendship?

Anyway, it wasn’t just that. I was having one of those moments, where you look at your life and think, Is this really it? I thought there’d be more.

What kept her in the kingdom was the previously unimaginable condition of not having to think about money, because that’s what money gives you: the freedom to stop thinking about money. If you’ve never been without, then you won’t understand the profundity of this, how absolutely this changes your life.


My staff called it the family prayer. You have to thank another team for something that happened last week. You can’t thank yourself, and you can’t repeat what someone else said.

When a leader can get people past being passive-aggressive, then heated but honest arguments can happen.

… when it is called “debate” rather than “disagreement,” participants are more likely to share information.

When she was discussing a decision with her team, she always had to be the last person to speak. You may know the answer and you may be right, but when you just blurt it out, you have robbed the team of the chance to come together. Getting to the right answer is important, but having the whole team get there is just as important.

You tell the engineers the problem the consumer has. You give them the context of who the consumer is. Then let them figure out the features. They will provide you with a  far better solution than you’ll ever get by telling them what to build.

When you fire someone, you feel terrible for about a day, then you say to yourself that you should have done it sooner. No one ever succeeds at their third chance.

A coach is someone who tells you what you don’t want to hear, who has you see what you don’t want to see, so you can be who you have always known you could be.

Often, when people ask for advice, all they are really asking for is approval.

Saying what you really think in a way that still lets people know you care.

It is often the highest-performing people who feel the most alone. They usually have more interdependent relationships but feel more independent and separate from others.

… power creates a subjective sense of separation and distinctiveness from others


One of the things Ford Prefect had always found hardest to understand about humans was their habit of continually stating and repeating the very very obvious, as in It’s a nice day, or You’re very tall, or Oh dear you seem to have fallen down a thirty-foot well, are you all right?

“Now it is such a bizarrely improbably coincidence that anything so mind-bogglingly useful could have evolved purely by chance that some thinkers have chosen to see it as a final and clinching proof of the nonexistence of God.”

“The argument goes something like this: ‘I refuse to prove that I exist’ says God, ‘for proof denies faith, and without faith I am nothing.'”

“But,” says Man, “the Babel fish is a dead giveaway, isn’t it? It could not have evolved by chance. It proves you exists, and so therefore, by your own arguments, you don’t. QED.”

“Oh dear,” thought God. “I hadn’t thought of that,” and promptly vanishes in a puff of logic.

“Oh that was easy,” says Man, and for an encore goes on to prove that black is white and gets himself killed on the next zebra crossing.

The main reason he had had such a wild and successful life was that he never really understood the significance of anything he did.

One of the major difficulties Trillian experienced in her relationship with Zaphod was learning to distinguish between him pretending to be stupid just to get people off their guard, pretending to be stupid because he couldn’t be bothered to think and wanted someone else to do it for him, pretending to be outrageously stupid to hide the fact that he actually didn’t understand what was going on, and really being genuinely stupid. He was renowned for being amazingly clever and quite clearly was so – but not all the time, which obviously worried him, hence the act. He preferred people to be puzzled rather than contemptuous. This above all appeared to Trillian to be genuinely stupid, but she could no longer be bothered to argue about it.

became increasingly obsessed with he problem of what had happened to all the ballpoints he’d bought over the past few years.

For particulars, as everyone knows, make for virtue and happiness; generalities are intellectually necessary evils.

Ending is better than mending.

I’m thinking of a queer feeling I sometimes get, a feeling that I’ve got something important to say and the power to say it – only I don’t know what it is, and I can’t make any use of the power.

Bernard, by this time, was fast asleep and smiling at the private paradise of dreams. Smiling, smiling. But inexorably, every thirty seconds, the minute hand of the electric clock above his bed jumped forward with an almost imperceptible click. Click, click, click, click … And it was morning. Bernad was back among the miseries of space and time. It was in the lowest spirits that he taxied across to his work at the Conditioning Centre. The intoxication of success had evaporated; he was soberly his old self; and by contrast with the temporary balloon of these last weeks, the old self seemed unprecedently heavier than the surrounding atmosphere.


The urge to excel and the urge to lead aren’t the same. Sometimes I think they may be opposites.

You could tell a lot about a society by what topics of conversation came up.

Beauty was the promise of happiness, not happiness itself; and the anticipated world was often more rich than anything real. but this time who could say? This time might be the golden one at last.

Mutual professional respect, a great maker of friendships.

People didn’t understand that true intimacy did not consist of sexual intercourse, which could be done with strangers and in a state of total alienation; intimacy consisted of talking for hours about what was most important in one’s life.

So probably she would not want to find any such evidence. Would that disinclination bias her work? Well, sure. If not consciously, then deeper. Consciousness was just a thin lithosphere over a big hot core, after all. Detectives had to remember that.


Like a drowning man clutching a straw, my inborn optimism clung to this thought: These prisoners look quite well, they seem to be in good spirits and even laugh. Who knows? I might manage to share their favorable position.

I think it was Lessing who once said, “There are things which must cause you to lose your reason or you have none to lose.” An abnormal reaction to an abnormal situation is normal behavior.

I shall never forget how I was roused one night by the groans of a fellow prisoner, who threw himself about in his sleep, obviously having a horrible nightmare. Since I had always been especially sorry for people who suffered from fearful dream or deliria, I wanted to wake the poor man. Suddenly I drew back the hand which was ready to shake him, frightened at the thing I was about to do. At that moment I became intensely conscious of the fact that no dream, no matter how horrible, could be as bad as the reality of the camp which surrounds us, and which I was about to recall him.

For the first time in my life I saw the truth as it is set into song by so many poets, proclaimed as the final wisdom by so many thinkers. The truth – that love is the ultimate and the highest goal to which man can aspire. Then I grasped the meaning of the greatest secret that human poetry and human thought and belief have to impart: The salvation of man is through love and in love. I understood how a man who has nothing left in this world still may know bliss, be it only for a brief moment, in the contemplation of his beloved. In a position of utter desolation, when man cannot express himself in positive action, when his only achievement may consist in enduring his sufferings in the right way – an honorable way – in such a position man can, through loving contemplation of the image he carries of his beloved, achieve fulfillment. For the first time in my life I was able to understand the meaning of the words, “The angels are lost in perpetual contemplation of an infinite glory.”


And it is rare for sons to be like fathers; only a few are better, most are worse

There is no harm in mourning when a person dies; it is the only honor we can pay the dead – to cut our hair and drench our cheeks with tears.

So may the gods grant all your heart’s desires, a home and husband, somebody like-minded. For nothing could be better than when two live in one house, their minds in harmony, husband and wife. Their enemies jealous, their friends delighted, and they have great honor.

So you must never treat your wife too well. Do not let her know everything you know. Tell her some things, hide others.

I would prefer to be a workman, hired by a poor man on a peasant farm, than rule as king of all the dead.


There comes a point

when someone repeats a “fact” so often that the legitimacy of the “fact” becomes suspect. If it’s really that obvious and true, why must you keep declaring it?