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Comment by dmurray | Hacker News Reader

I don't get the "billionaires buy property and leave it vacant, because it's more valuable as an investment" trope. Billionaires like to make money with their money. Sure, property prices increase, but rents are significant. If you can make 5% a year from your real estate appreciating, you can make 10% by renting it out. That's the difference between a mediocre yearly return and a fantastic one.

Maybe at the absolute top end, there isn't enough rental demand, eg the $90m apartment mentioned may not fetch $400k/month in rent. But I hear the same argument for middle-class apartments in moderately expensive cities: rich people buy $600k apartments in Dublin, Vancouver, Sydney, but turn down $2500/month in rental income even in red hot rental markets.

I don't buy it, though I don't have a clear alternative explanation.

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Because many of these billionaires come from countries where their political systems are rife with corruption or otherwise unstable, and oftentimes they received their wealth through dubious means. This has been well documented for many residences on Billionaires Row in Manhattan, so much that laws have been passed preventing hiding identities through shell corps.

Buying real assets is seen as a way to protect their wealth when it is at risk of being confiscated or devalued by their home governments.

Another way to think about these apartments is similar to art. Billionaires spend obscene money on art, and they aren't renting out those paintings or really even looking at them very much.

Here's how I've had this explained before. You see the same thing in California with their real estate market. Buying property in these markets is a foolproof investment. Even if it sits empty for 2-5 years, you will still make money.

Therefore, renting it out is a secondary concern. You could rent it out, but that comes with all sorts of liabilities - what if tenants damage your property, stop paying, claim squatter's rights, infest the property with bedbugs, etc. There's a number of things that could go wrong with renting, and many landlords rarely make much profit on rental units.

So for these millionaires and billionaires it's easier to simply not rent them out at all.

Why don't you rent out your car on Turo when you're not using it, or resell your items when you're done with them rather than throw them away? I suspect, for the car example at least, it's for similar reasons. The liability of damage and hassle of managing a tenant is greater than the potential upside of rent for them.

If the property is to park money and with US real estate you can liquidate it very quickly for a cash sale, a tenant will throw a huge wrench in that.

A tenant in a single unit/house will easily drop the price by 10% or more from my experience trying to buy a single family home in SoCal in 2016.

As well, who can afford to rent these units? The mortgage/break-even point for for a $8mil value would be $37,825 a month.

When you have billions of money, do you have really have that much drive to optimize your properties which might be nice to keep as occasional holiday homes? Sure you'd think that "ooh, 5% more income on my properties" would motivate them to rent their properties out but they might be perfectly happy just living off their other investments and not giving a damn about such tedious optimizations.

When you're a billionaire, you can employ dozens, if not hundreds of people, to do tedious optimizations for you all day. And if that's the difference between 5% and 10% RoI, those people even pay for themselves (and then some).

That is all well and good, but did you consider that it would mean that your house would become tainted with the poority of someone who cannot even afford to not live in it? Who knows if it's infectious? It would become a cheap second-hand house. And there's like a bunch of random strangers, one of who might be a serial killer. Better to just stay away from that.

... is how imagine their thought process.

Billionaires are more concerned with not losing their money than they are with growing it.

Completely agree, it's something that people repeat so much with no evidence.

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