You have a nice car and holidays in good places? Well, fuck you I am off to buy a house :)
Well, as Marx could have told you, you need the initial capital to start :-D
But yes, it’s a common way of earning money. Typically you buy a house in dire need of TLC (because it’s cheap), fix it yourself, and then rent it. There are a lot of people who are landlords and rent is their primary source of income.
It’s not all roses, of course—it’s just a business and like any business it has its own failure modes.
But as Mises would tell you, capital is not necessary as you can borrow money and still pocket the entrepreneurial profit and managerial salary, having to pay only interest, now whom to believe :-D
I am joking, of course, capital being difficult / expensive to acquire is one of the primary problems of real-world market economies, in the ideal market simply presenting a good business plan, even without any sort of a collateral would get other people’s money thrown at it which requires perfect trust and perfect trustworthiness. Markets where only people who already have capital can engage in entrepreneurship end up with nasty outcomes, not only high inequality but also crappy entrepreneurs the customers must put up with.
in the ideal market simply presenting a good business plan, even without any sort of a collateral would get other people’s money thrown at it
Well, Silicon Valley functions more or less like this. Hedge funds can look like this, too.
Markets where only people who already have capital can engage in entrepreneurship end up with nasty outcomes
That’s basically a counterfactual—businesses have been able to borrow money for a very long time in human history :-)
In reality the situation is a mix: it’s not quite true that “A bank will only lend money to someone who can prove he doesn’t need it”, but it’s also not quite true that a solid business plan is all a bank needs to lend you money. Banks are sufficiently rational to want to have positive-expected-returns loans—they will lend money if they think the loan will be good.
I also suspect that entrepreneurship is noticeably easier in the US than in Europe.
Well, as Marx could have told you, you need the initial capital to start :-D
But yes, it’s a common way of earning money. Typically you buy a house in dire need of TLC (because it’s cheap), fix it yourself, and then rent it. There are a lot of people who are landlords and rent is their primary source of income.
It’s not all roses, of course—it’s just a business and like any business it has its own failure modes.
But as Mises would tell you, capital is not necessary as you can borrow money and still pocket the entrepreneurial profit and managerial salary, having to pay only interest, now whom to believe :-D
I am joking, of course, capital being difficult / expensive to acquire is one of the primary problems of real-world market economies, in the ideal market simply presenting a good business plan, even without any sort of a collateral would get other people’s money thrown at it which requires perfect trust and perfect trustworthiness. Markets where only people who already have capital can engage in entrepreneurship end up with nasty outcomes, not only high inequality but also crappy entrepreneurs the customers must put up with.
Well, Silicon Valley functions more or less like this. Hedge funds can look like this, too.
That’s basically a counterfactual—businesses have been able to borrow money for a very long time in human history :-)
In reality the situation is a mix: it’s not quite true that “A bank will only lend money to someone who can prove he doesn’t need it”, but it’s also not quite true that a solid business plan is all a bank needs to lend you money. Banks are sufficiently rational to want to have positive-expected-returns loans—they will lend money if they think the loan will be good.
I also suspect that entrepreneurship is noticeably easier in the US than in Europe.