Real Estate Crash thread

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Originally Posted by TAFKALVS

Man, my post really got some legs.

Yeah, buy and hold, but not hold it all, and not all the time. And sell it or rent it. At scale. Some units rented, some units not. Some units sold, some units not. Sales from one REIT to another.

Driven by algorithms and smart sciency math kids backed with big $$.

“Here’s 100 million, go buy me a portfolio of x homes that maximize value. Do what you need to do.”

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I dont doubt there is a point where buying and holding allows for such low supply that you can run up the prices (see the global diamond market). But, i think you have to own what amounts to a monopoly-share of the market for that to happen. So its gotta be something else.

In RE, its the land that appreciates, not the house. And renting the house out guarantees revenue, without affecting the value of the land. In 10 years the house itself will be outdated and need a remodel whether or not it has been lived in. And renting the house out takes the house off the market so supply scarcity is the same as leaving it empty.

I guess it might be that institutional investors bought houses with cash, and then counted on being able to finance remodels/renovations... but are not able to make it pencil with the current rates (or their umbrella companys current balance sheet). So they are caught with this deadstock inventory having not planned for a Plan B, so they are hoping that any month now they can secure loans to fund the remodel/flip. And when you are living month-to-month on maybe remodeling or not you cant really rent it out.

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Originally Posted by californiagrown

I dont doubt there is a point where buying and holding allows for such low supply that you can run up the prices (see the global diamond market). But, i think you have to own what amounts to a monopoly-share of the market for that to happen. So its gotta be something else.

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Like I said, think micro-markets, not macro. Neighborhoods, not cities/states. What's keeping investors from targeting particular smaller localized markets like mine with laser precision?

OK, its a start. Now create you own version of the future and tell me now the strategy makes money. You get to pick the time horizon, the interest rate path, and so on. You can tell me the size of the portfolio also.

Feel like giving me the zip code so I can see the type of houses you are talking about?

https://www.technologyreview.com/202...-neighborhood/

https://www.cato.org/blog/are-instit...orhoods%20that

https://cre.moodysanalytics.com/insi...et-conditions/

Usually the Real Estate Game is played cards face up. I can't find anything supporting your hypothosis.

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Originally Posted by MontuckyFried

Like I said, think micro-markets, not macro. Neighborhoods, not cities/states. What's keeping investors from targeting particular smaller localized markets like mine with laser precision?

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How long do you suppose these houses need to sit empty? What is the downside to renting them out in the interim while they are appreciating offmarket?

What is keeping me from buying 2 mins down the road in the next neighborhood where supply and prices are normal and the standard of living is nearly exactly the same?


If you have a safeway and albertsons right next to each other, it would be real stupid for the safeway to intentionally reduce inventory and jack up prices because people will just go next door to albertsons. It only makes sense if both safeway and albertsons do it, or if albertsons is 20 miles away so people are forced to putup with high prices and shit inventory (AKA a monopoly). So, what you are saying only works if there is a monopoly in place.

Here's a proposal to take Wall St out of the SFH market.



https://www.nytimes.com/2023/12/06/r...smid=url-share

GC, the algorithmic buying attempts to identify unique properties/'hood with more substitutability. That's part of the game. But the strategies I've seen are to either flip the house or rent. It's really no different than saying something like, "I heard they are gonna close down the prison, I think it might be smart to buy in Jailville". And the models are really sophisticated.

My proponents are backstepping a bit, but is seems like they are getting close to explaining there theories which is all I'm asking.

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Originally Posted by Foggy_Goggles

GC, the algorithmic buying attempts to identify unique properties/'hood with more substitutability. That's part of the game. But the strategies I've seen are to either flip the house or rent. It's really no different than saying something like, "I heard they are gonna close down the prison, I think it might be smart to buy in Jailville". And the models are really sophisticated.

My proponents are backstepping a bit, but is seems like they are getting close to explaining there theories which is all I'm asking.

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I just dont see the benefit of the supposed "buy and hold empty longterm" strategy being employed by large institutional investors. Why hold empty for years? That is what i dont understand.

At the risk of feeding the conspiracy theorists, I'd like to hear why this supposed strategy would be better than just renting out all of the houses. Say you own 100 houses and rent them out for $2000/mo. If you withhold 20 of them from the market does that increase the rent of the others by enough to offset the lost rent on the 20? That seems implausible.

Also, without evidence (ownership records, etc) the whole thing is speculation. I've also seen the weird vacant houses in my area, but I just assumed they were owned by people whose plans changed for whatever reason, not part of a nefarious plot by shadowy organizations.

Come on guys, he walks his dog enough around the neighborhood to clearly know the exact ownership structure and ulterior motives. It’s so obvious.

I think it would be more like, you buy 100 houses in your target (undervalued - rent, price, both) and slowly rent or sell such that only a few are available for rent each month. Once the rental portfolio starts performing at a desired level, you start selling at the price justified by the higher rent. This happens and is known strategy.

But I'm sure the isn't what is speculated, to simple. It must be something I don't understand.

If you are a Wharton grad, entrepreneur, and all around crazy- you rent and sublet-

https://www.jhnewsandguide.com/news/...e577d52ea.html

It might require signing up to read, but no pay, I would cut and paste but its relatively long.

Hey, it could be just straight up money laundering.


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Originally Posted by Skistack

Hey, it could be just straight up money laundering.


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Blow

Closets and cabinets are full of $100's [emoji16]

https://felt.com/gallery/percent-occupied-housing-units

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Originally Posted by SuperGaper

If you are a Wharton grad, entrepreneur, and all around crazy- you rent and sublet-

https://www.jhnewsandguide.com/news/...e577d52ea.html

It might require signing up to read, but no pay, I would cut and paste but its relatively long.

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I literally came in here to post this link but you beat me to it SuperGaper. Absolutely fucking crazy story.

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Originally Posted by SuperGaper

If you are a Wharton grad, entrepreneur, and all around crazy- you rent and sublet-

https://www.jhnewsandguide.com/news/...e577d52ea.html

It might require signing up to read, but no pay, I would cut and paste but its relatively long.

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Whoa, that's a pretty wild ride. What a nutcase.

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Originally Posted by dan_pdx

Whoa, that's a pretty wild ride. What a nutcase.

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Lotsa weird things in that article, LOTS.

I found Claire's profile on Twitter and her description line is "If I gotta be a bitch, imma be a bad one." Wharton MBA. Tricoastal world traveler."

Perversely respect the hustle. All those ppl who agreed to absurd rent for shit living could've said fuck that.

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Originally Posted by byates1

Perversely respect the hustle. All those ppl who agreed to absurd rent for shit living could've said fuck that.

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No surprise there. No surprise at all.

I knew a couple of rentals like that back in the 90s. Only one person on the lease, and every time one roomie would move out, the new one would pay more. The leaseholder wasn't paying rent and was pocketing a bit every month. Just without all the crazy.

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Originally Posted by Skistack

Hey, it could be just straight up money laundering.

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Woah! You might be on to something with that one!!!

US set to unveil long-awaited crackdown on real estate money laundering
https://www.reuters.com/world/us/us-...ng-2023-08-10/

Perhaps THAT explains why I've seen properties bouncing around from one LLC to another, the place staying vacant the entire time. "Value" is irrelevant. The more $$$ spent, the better! There is most certainly cartel in the region too, soooo... hmmm.....

EDIT: Upon further inspection, this really IS a thing!!! Holy crap!
https://www.expressnews.com/news/bor...g-17897552.php
"Villarreal once oversaw a real estate empire with residential and commercial properties across San Antonio and in Cameron County that he purchased through shell companies with money he and others stole from Coahuila’s coffers. In 2014, he pleaded guilty to money laundering conspiracy in a San Antonio federal court."

Cartel launderer pleads guilty in S.A. real estate deals
https://www.mysanantonio.com/news/lo...al-4539540.php

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Originally Posted by Foggy_Goggles

Usually the Real Estate Game is played cards face up. I can't find anything supporting your hypothosis.

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This. The property data is all public and these institutional investors are big shops.

They have revolving doors, they have to disclose things to their own investors, they have to disclose things to the banks financing them (they are gonna give you different terms if you are buying assets that you intend to let sit idle).

If they had some magic strategy, there would be stuff written about it in the financial press, on forums/twitter, research papers exploring the feasibility, etc. There wouldn’t just be speculation.

Or they are doing it but just keeping it super secret to thwart squatters.

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Originally Posted by dan_pdx

Whoa, that's a pretty wild ride. What a nutcase.

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A lil bit of the crazy eyes, no?

https://m.youtube.com/watch?v=G2StyiRGpuo

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The owners advertised their home in this newspaper for $12,500 a month and in September 2022 signed a 19-month lease with Tramm for November 2022 to June 2024.

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237K rental? Fuck these parasites, all of them. And also the idiots who agreed to rent from this biatch.