it literally IS that simple, it's an economic model. The example I gave is, of course, incredibly stripped down and incredibly simplified; it's simplified for the purposes of discussing what a "rate of return" is.
The rates are adjusted for maintenance cost in the paper. The example I gave is a simpler model than what is presented in the paper:
> These net rental yields use rental income net of maintenance costs, ground rent, and other irrecoverable expenditure. These adjustments are discussed exhaustively in the next section. We use net rather than gross yields to improve comparability with other asset classes.
did you try opening the paper and searching "maintenance" before you posted?
> Where are all these $100K properties, btw?
For one thing, it's a thought experiment. We're using our imagination to define our words. Stop looking at everything so unbearably literally.
And for real, that is a ridiculous question even when taken literally. Finding houses under $100k is really not confusing so long as you look in places with low costs of living. Randomly picking Tulsa, Oklahoma, for example: https://www.redfin.com/city/35765/OK/Tulsa/filter/property-t...
The rates are adjusted for maintenance cost in the paper. The example I gave is a simpler model than what is presented in the paper:
> These net rental yields use rental income net of maintenance costs, ground rent, and other irrecoverable expenditure. These adjustments are discussed exhaustively in the next section. We use net rather than gross yields to improve comparability with other asset classes.
did you try opening the paper and searching "maintenance" before you posted?
> Where are all these $100K properties, btw?
For one thing, it's a thought experiment. We're using our imagination to define our words. Stop looking at everything so unbearably literally.
And for real, that is a ridiculous question even when taken literally. Finding houses under $100k is really not confusing so long as you look in places with low costs of living. Randomly picking Tulsa, Oklahoma, for example: https://www.redfin.com/city/35765/OK/Tulsa/filter/property-t...