This was in interesting read, but I still believe the 1% rule is complete nonsense for european standards. For USA it’s maybe ok. First of all, she mentions something like replacing the garage door etc, so she’s talking about houses. I guess they have more overhead. In flats I cannot see how you could generate 50% overhead. Moreover, American houses are made of wood and siding, I guess are cheap to make and not very durable. Finally, in USA you have this real estate tax which can be about 2% of the property value annually.
I don’t get it why she insists on calculating the number of years the purchase pays itself off. She should be talking about something like ROIC, because that’s what you can compare to, say stocks or bonds. She could say: so you get 12% gross, but 6% is cost, so 6% net. And then she mixes mortgage in. Mortgage is leverage of your invested capital.
Well, but do they? Can you link an example? I think real estate development in Switzerland is pretty solid. Wherever I look there are some blocks of flats being built. Swiss real estate prices are high and the rents are low, but you can leverage them with a very cheap mortgage (1%), whereas in USA the mortgage cost is around 3-4% if I checked correctly.
Btw this page shows the huge disproportion of return over the World, but US cities have the highest rates. I’m not sure if the things I mentioned explain this anomaly in full, but I don’t believe that there is some kind of untapped market in the USA. Would be happy if someone offered a full explanation.