Is there a cross-border arbitrage transaction after the liberalization of first-tier real estate?
A reader asked me an interesting question.
He said that he saw a popular view on the Internet that it meant that with the opening of the core areas of the first line.
Wealthy people will use real estate to engage in cross-border arbitrage transactions.
Specifically, you have 14 million RMB, buy a house in the core area of a first-tier city with full payment, and then make a mortgage, and then lend out nearly 14 million with more than 3 points of interest.
Because you bought it cheaply, your appraisal price may be 18 million, and you still took out a loan of 14 million in the end.
It means that your money is back.
At this time, you move the money to enjoy the high interest rate of the dollar, more than 5 points, which is 2 points more than the cost of your loan, and then with the exchange rate, in case the dollar continues to rise.
He asked me if the arbitrage trading model of the white wolf with empty gloves was correct.
I'm sorry, let's popularize a concept first.
There was a case that was deeply rooted in the hearts of the people, and it was written by a poor father and a rich father.
That is to say, if you sign a loan contract with A with an interest of 3 points, and then sign a loan contract with B with an interest of 8 points, you can not use a penny of principal and eat a 5-point interest rate difference for nothing.
You can sign unlimitedly, sign 100 A, 100 B, you don't need capital, the more such a contract is signed, the larger the principal corresponding to the 5 point spread you can eat, which is called empty gloves white wolf.
We will not discuss the practical significance of this model, which is the question of how you deal with the problem of the run, and the question of what kind of pool of funds you have to prepare.
At least, there is nothing wrong with this model in theory, and you are indeed running your own business with other people's money.
So let's take a look at your model now.
It also looks like you're taking advantage of it, borrowing only 3 pips and lending out 5 pips.
The question is, where did the first 14 million come from?
Isn't that still yours?
You're still spending your own money.
If you have the ability to have no collateral, borrow 14 million for nothing, and go to arbitrage the spread, which is called copying the poor dad and the rich dad.
The problem is that you actually paid 14 million yuan for the house yourself, but you only later borrowed it back at a price of 3 points.
So what is the essence of this matter?
It's true that you use 3 points of interest to win a house, and you have no down payment.
This house is definitely not rented for 3 points, and it can be rented for 15 points is good, very good.
Then 1 remains5 points that you have to count on to increase in the value of the property to complete.
In other words, the person who does this in reality is not trying to arbitrage, he is just trying to believe that the value-added margin of high-quality houses in the core areas of first-tier cities can outperform 15 points, he believes in this, so he does it.
As for him going to the United States to arbitrage, take two more points,That's just his desire to lower his own cost of ownershipDo you understand what that means?
It is equivalent to renting a house, only 15 points, he rents the house for 3 a yearFive points, two more points, were subsidized to him by the Federal Reserve.
He is actually still owning the house, and he believes that the price of the house is rising, which is the core appeal.
If this core demand is erased, he will not do it, he originally had 14 million, and he directly took it to carry interest, and even the borrowing cost of 3 points was waived, wouldn't it be more?
You have to understand what other people's purposes are.
People just believe that housing prices in the core areas of core cities will rise, so what if they won't?
He won't go up and won't lose, because he's already swapped the money. If the assets do not rise, the exchange rate rises, and the exchange rate does not rise, the assets rise, and he always makes a profit.
He is tantamount to making a seesaw between the two great powers.
A less symmetrical hedging model is established, because the relationship between assets and exchange rates is not so synchronized, but in the long run, it is at the same frequency.
So this is a long-term hedging mode, pay attention to the long-term, ** see him hedge so likely to lose, but the long-term problem is not big.
He didn't go for arbitrage, he just wanted to hedge risks.
It has nothing to do with arbitrage, and this kind of behavior is not called arbitrage.
He bought a house for 14 million, took out a loan of 3 points, and turned around and invested the money in a project that he thought was safe and could exceed 3 points, or he invested a little **, can you say that he is arbitrage?
If you think you can cover the cost of borrowing by 3 points, everyone can take out the house they live in and exchange it for money, and then invest in projects that you think have a stable income of more than 3 points, everyone can do that, you don't need to buy a new house, you don't need to.
So don't look at behaviors, a thousand people have a thousand behaviors, and those behaviors are theoretically rigid and plausible.
I joked with Li Jiaqi's eyebrow pencil the day before yesterday and talked about a very clear arbitrage model, what is a sell order, what your buying order can be, what is the trading volume per minute, what is the reference coordinate system of the small cap, as well as hedging, locking, and locking profits in advance.
That's a very standard and complete example of arbitrage, which has nothing to do with ups and downs, whatever it goes up or down, it makes money.
And the 14 million example you are talking about now is not arbitrage, it is a simple bet on the rise and fall of housing prices, and changes in exchange rates, which have a direct impact on your profit and loss.